Austrian politics traditionally has been dominated by two parties, the center-left Social Democratic Party and the center-right Austrian People's Party. Since the end of World War II, these moderate parties frequently have jointly ruled in a coalition. But it appears that their dominance may be fading. Combined support for these parties fell from 78.8 percent in the 2002 general elections to 55.2 percent in 2008. According to recent polls, the Social Democratic Party and the Austrian People's Party would receive only around 53 percent of votes in the upcoming elections, confirming a slow but steady decline in popularity.
As support for these parties has fallen, two other parties have grown much more popular: the Freedom Party of Austria and Team Stronach. Both are shaking up the Austrian political system, but ideologically they differ greatly.
The Freedom Party of Austria, commonly known as the FPO, was created almost 60 years ago and has competed in Austrian elections since 1956. The party boasts a nationalist and populist agenda, promoting itself as the sole defender of Austrian identity and the welfare state amid deepening EU integration and rising immigration. It also criticizes how power has been concentrated in the hands of the traditional political elite.
The FPO became particularly popular in the 1990s under the leadership Jorg Haider, eventually becoming a member of Austria's coalition government between 2000 and 2005. The European Union strongly criticized its inclusion, which it saw as a legitimization of the far right in Austria. Notably, coalition membership led to a crisis within the party — some members believed that aligning with mainstream parties was tantamount to betraying the FPO's agenda.
After some of its most prominent members left the FPO to form the Alliance for the Future of Austria, the FPO chose Heinz-Christian Strache as its new leader. Under its new leadership, the FPO put anti-establishment, anti-immigration, anti-Islam and euroskeptical issues back at the center of its political agenda. Strache recently said that his party supports a referendum on Austria's EU membership, following British Prime Minister David Cameron's announcement that the United Kingdom would hold a referendum sometime after general elections in 2015. In the general elections of 2008, it received 17.5 percent of the vote, its best performance in a decade. Recent polls suggest it will get as much as 20 percent of the vote in the upcoming elections.
Team Stronach was created in September 2012 by Frank Stronach, an Austrian-Canadian businessman. The party focuses on Stronach's personality, presenting its leader as a successful entrepreneur who would shake up Austrian politics and take power away from the traditional elites. He has campaigned for smaller government and for lower taxes for companies. The party made its electoral debut in March, when it won seats in the state parliaments in Carinthia (with 11.3 percent of the vote) and Lower Austria (with 9.8 percent of the vote).
Originally, Stronach strongly supported Austria's leaving the eurozone and returning to the schilling. Over time, his team suggested that the transition back to national currencies could be slow and progressive, and flexible exchange rates should be introduced within the eurozone. Unlike the FPO, Team Stronach does not oppose immigration. Support for the party currently stands between 8 percent and 10 percent.
A Fear of the Future
Of all EU members, Austria has been one of the least affected by the European crisis. Unemployment is at around 4.9 percent — the lowest rate in the European Union, according to Eurostat. The Austrian economy felt the impact of the crisis in 2009, when its gross domestic product contracted by 3.8 percent, but its economy has since grown. The country has strong trade links with neighboring Germany, the strongest economy in Europe, and Switzerland, a non-EU member that has also been relatively sheltered from the European crisis. Austria also has relatively a low deficit and debt, particularly when compared to troubled eurozone countries in the periphery.
However, Austria has not been completely immune to Europe ills. The country's banks were affected by the financial crisis, particularly because of their exposure to countries in Central and Eastern Europe. Vienna was forced to nationalize some banks, most notably the Hypo Alpe-Adria-Bank in 2009. In addition, the International Monetary Fund has warned about Austria's expensive pension and welfare systems, which were described by the international organization as "complex and costly."
According to Eurostat, Austria has the fourth-highest level of expenditure on social protection per capita, behind only Luxemburg, the Netherlands and Denmark. According to data from the Organization for Economic Co-operation and Development, expenditures on social protection increased from 26.6 percent of GDP in 2000 to 28.3 percent of GDP in 2013. Vienna is not as pressed to reduce social spending as other eurozone nations, but Europe's low economic growth, along with its aging and shrinking population, is challenging the survival of the welfare state across the continent.
Because of its stable economy, Austria has traditionally been a country of net immigration. Regular immigration rose markedly since the beginning of the crisis, from 98,535 people in 2006 to 140,358 people in 2012. According to Austria's official statistics office, the country saw a 34 percent rise in immigration from non-EU countries, mostly from Russia, Serbia and Bosnia-Herzegovina, between 2010 and 2012. According to the 2011 census, 15.6 percent of the Austrian population is foreign-born, with Turkish nationals constituting the largest single immigrant group (and the largest Muslim population). In 2012, Austria saw a 21 percent increase in asylum seekers from North Africa and Syria — due in part to the political crises there.
Combined with public frustration with the traditional elites, this fear for the welfare state's future explains the growing popularity of anti-establishment parties, even if their agendas differ. This puts Austria in a similar situation as Nordic European countries, which have not been affected by the European crisis as severely as has Mediterranean Europe. But like the Nordic countries, Austria fears that its economic future is bleak, and that fear is undermining the traditional political establishment as it strengthens support for insurgent parties. Recent corruption scandals involving prominent politicians have also weakened popular trust in Austria's traditional elites.
Additional Challenges
Even if the Freedom Party of Austria and Team Stronach do not enter the government coalition after the elections, their strong performance probably will influence the traditional elites. Vienna was already wary of granting financial assistance to eurozone countries in distress, and the political controversy surrounding bailouts is likely to grow in the future. Anti-immigration sentiment in Austria is mostly rhetorical; immigration-related violence is rare in the country. However, the next Austrian government will be under great pressure to take a harder stance on immigrants, particularly those coming from non-EU countries. Moreover, Austria is likely to remain one of the countries blocking the accession of Romania and Bulgaria to the Schengen zone.
Most important, after a surprisingly strong electoral performance of Germany's euroskeptical Alternative for Germany party, support for anti-euro parties in Austria will confirm a trend Stratfor has long discussed: Weariness of the common currency is becoming a central part of the political agendas for core EU countries. This will only present additional challenges for the currency union in the future.
