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New Leader Steps In After Corruption Probe Claims Austria’s Kurz

Bloomberg logo Bloomberg 10/10/2021 Marton Eder and Jonathan Tirone

(Bloomberg) -- Austrian Chancellor Sebastian Kurz resigned Saturday in the face of corruption allegations, a stunning blow for a rising star of European conservative politics. 

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Foreign Minister Alexander Schallenberg, whom Kurz recommended as his successor, now begins the work of salvaging the ruling People’s Party/Green Party coalition. He’s due to meet Green officials and Austrian President Alexander Van der Bellen on Sunday. 

By departing on his own terms, Kurz avoided an embarrassing no-confidence vote that had been set for Tuesday. He’ll now lead his party’s group in Austria’s parliament.

The Greens welcomed Kurz’s decision to step down, and said Schallenberg’s appointment would open the way to save the coalition that’s been in place since 2020. 

Schallenberg, 52, is the son of a diplomat who’s worked in Austria’s foreign ministry for most of his career. He held key positions in a caretaker government appointed while Kurz sought re-election in 2019.

Alexander Schallenberg’s CV © Bloomberg Alexander Schallenberg’s CV

Austria is an important cog in Europe’s political machine because it straddles east and west and has been a bellwether of anti-immigration populism and a thorn in the side of greater spending by the European Union.  

Kurz often aligned himself with Europe’s fiscal hawks, including the Netherlands, while giving space to the likes of President Viktor Orban in neighboring Hungary to test the limits of the EU.   

Even at 35, Kurz is known as a political survivor. By casting his departure as a patriotic act of country over person, and by putting forth a close ally as his successor, he seems poised to exert considerable influence while plotting a possible comeback.

“It shouldn’t be about personal interests, party interests or political tactics,” Kurz said Saturday. “My country is more important to me than my person.” 

His prospects may hinge, though, on the outcome of multiple criminal investigations: Kurz will need to convince his party that he can maintain public support.

Video: Austria's Kurz steps down over corruption probe (Reuters)

Opinion polls showed Kurz losing support in Vienna, Austria’s left-leaning capital and largest metropolis, even before the raids, underscoring his divisiveness among voters. 

The People’s Party, whose support nationwide has been capped below 40%, needs at least one of the country’s four other parties to form a government, but their choices have diminished amid the persistent taint of scandal. 

“Austria is becoming a country with a shrinking number of realistic government scenarios, and this is a reason for concern,” said Christoph Hofinger, director of the SORA Institute, a public-opinion researcher. 

“The People’s Party, who historically would negotiate and form coalitions with all other parties, is starting to run out of options,” Hofinger said. 

Kurz became Austria’s foreign minister at 27 and its youngest-ever leader at 31. His first government collapsed in 2019 after a scandal involving his coalition partners, the far-right Freedom Party. 

Kurz and nine others are suspected of funneling federal funds to a newspaper publisher to help orchestrate his meteoric rise with favorable coverage. Prosecutors raided the offices of several Chancellery staff last week to trigger the crisis that culminated Saturday. He’s denied wrongdoing, and called the allegations false. 

Vice Chancellor Werner Kogler, the Greens’ leader, had said the accusations against Kurz meant “business as usual” was no longer possible. On Saturday, he said the chancellor’s departure opened the door to maintaining the coalition. 

Coalition Arithmetic © Bloomberg Coalition Arithmetic

For the Green Party, staying in the coalition offers a way to push key policy measures and avoid a potential four-way coalition. 

Creating a majority in Austria’s 183-seat parliament would have needed some support from the far right, a potentially unpalatable option for the Greens. 

“The People’s Party’s message is still to frame the party of Kurz as an anchor of stability and continuity, saving Austria from risky political constellations,” said Christoph Hofinger, the head of Austria’s SORA Institute, a public-opinion researcher. 

Speculation has already started about what Kurz’s next chapter might be. As chair of the People’s Party he’ll have continued strong influence over policy.

As a lawmaker, Kurz will give up any immunity, allowing authorities to continue their investigation, the APA news service reported on Saturday, citing his party.   

“This has been crafted in a smart way. The Greens have their main claim of having a chancellor who is not in court, but he’s still there,” said Thomas Hofer, a political analyst and consultant in Vienna. 

Kurz “wants to come back. He’s in a waiting position,” Hofer said.  

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