Coalition talks in Austria have stalled as Beate Meinl-Reisinger, leader of the liberal Neos party, announced their withdrawal due to a lack of reform willingness from potential partners. The ÖVP and SPÖ hold a slim majority, but face challenges from the rising right-wing FPÖ. Economic difficulties, including a significant budget deficit and national debt, hinder government formation. Tensions exist among parties, and early elections may be a possibility to reshape the political landscape.
Failed Coalition Talks in Austria
In Austria, the attempts to establish a center-left government have come to a standstill. Beate Meinl-Reisinger, leader of the liberal party Neos, announced on Friday that her party would withdraw from the coalition discussions. The conservatives from the ÖVP and the social democrats of the SPÖ still hold a slim majority in the National Council, but this majority consists of only one mandate, making it a precarious and unstable situation.
Challenges and Political Dynamics
Meinl-Reisinger cited the lack of willingness from potential coalition partners to engage in necessary reforms as the primary reason for Neos’s exit from the negotiations. “We will not be available to create a larger majority for the status quo,” stated the 46-year-old. Neos, which garnered 9 percent of the vote, aimed to promote enhanced competitiveness, stricter budget discipline, and intergenerational equity. However, several fundamental reform proposals were rejected during the week, as explained by Meinl-Reisinger.
The political landscape following the September elections made it clear that neither the ÖVP, SPÖ, nor Neos was satisfied with the negotiation dynamics. The right-wing populist FPÖ emerged as the leading party but was not engaged in talks due to the other parties’ refusal to negotiate with their radical leader, Herbert Kickl. The Federal President subsequently tasked the losing parties with forming a government, although their shared goals beyond opposing the Freedom Party remained ambiguous.
The task of forming a government is further complicated by Austria’s ongoing recession, which is projected to persist into 2025. The current ÖVP-Green coalition is leaving a challenging legacy, including a budget deficit of 4 percent of GDP and an unprecedented national debt of 400 billion euros. This grim financial backdrop makes unpopular decisions, like cuts and tax hikes, almost unavoidable, creating significant pressure on any potential coalition.
Traditionally, both SPÖ and ÖVP have endorsed generous spending policies, often using the social partnership as a method for distributing funds among various stakeholders. However, this has also led to inefficient structures, as evidenced by the recent substantial increase in civil servant salaries despite the economic downturn. Similarly, raising the retirement age is unlikely to gain traction among voters of either party.
Conflicts have not only arisen between Neos and the larger parties but also among the parties themselves. While Neos shares some economic policy views with the ÖVP, the SPÖ has labeled these views as “neoliberal.” The social democrats, under their new left-populist leadership, have called for new taxes on banks and an inheritance tax, proposals that have found little support from other parties.
Neos positions itself as a socially and economically liberal party, advocating for innovative ideas to rejuvenate Austria’s governance. However, these ideas have not resonated broadly with the electorate; despite growing political discontent, Neos remains below the 10 percent mark in voter support. This raises questions about the viability of aligning its agenda with the ÖVP and SPÖ from the outset.
In contrast, the FPÖ has gained significant ground, moving further to the right under Kickl’s leadership since the pandemic. The party has secured governance in five of Austria’s nine federal states, achieving its best-ever result in the National Council elections with 28.8 percent. Its popularity has only increased in regional elections and polls, partly due to public dissatisfaction over their exclusion from coalition negotiations.
The future of government formation in Austria remains uncertain. The ÖVP and SPÖ could attempt to create a coalition with a minimal majority, which would only serve as a temporary fix. Alternatively, they might seek to include the Greens, although tensions between the ÖVP and Greens have been evident after four years in power.
There is also the possibility that the FPÖ could become involved in the negotiations, as not all factions within the ÖVP are opposed to Kickl’s leadership as strongly as current party head Karl Nehammer. After the recent setback, Nehammer’s position could be precarious. There are shared interests between the ÖVP and FPÖ in economic and migration policies, which they have previously collaborated on in government. Another option could be early elections, which might allow the FPÖ to increase its influence even further.