The centre-right Austrian People’s Party (ÖVP) and the Social Democrats (SPÖ) have begun “exploratory” talks to determine whether they can resurrect their grand coalition of old.
The two parties started negotiations following the collapse of talks between the ÖVP and the right-wing Freedom Party (FPÖ), which in turn was preceded by a failure to form a government between the ÖVP, the SPÖ, and the liberal NEOS party.
Austrian parties have been unable to form a government since the parliamentary elections held last September—that is, for more than 140 days, which is a record for the country.
The centre-right and the Left would only have a majority of one vote in parliament. However, both the Greens and NEOS have signalled that they would support the two parties on certain issues.
Negotiations will be tough because the deep rifts that ended the previous talks between the ÖVP and SPÖ remain unresolved.
The most contentious issue is the budget: the Social Democrats want to introduce tax hikes to rein in the budget deficit which has surpassed 3% of the GDP—the threshold over which the EU can initiate an excessive deficit procedure and potentially impose a fine on Austria. During the January talks, however, the ÖVP rejected taxing wealth and inheritance.
Additionally, there is a heated debate about the distribution of portfolios, especially for the ministry of finance and the interior ministry, which both parties want to keep for themselves.
Reacting to the coalition talks, FPÖ leader Herbert Kickl said that neither the ÖVP nor the SPÖ should be allowed to control the interior or the finance ministry because both of them are responsible for indebting Austria and for the “migration disaster” of the past decade.
He called for new elections so that Austria can have a fresh start.
But the ÖVP is not keen on snap elections to be held because, according to the latest opinion polls, its support would drop by 7 percentage points compared to its last election result, and finish third with 19%. Meanwhile, the SPÖ would come second with 22%, and the FPÖ would increase its support to 35%—a seven-point increase.
If a coalition deal can be reached in the next few days, Austria could have a new government as early as next week. If talks fail, the country will head for new elections.
