The Pandemic Depression
The Global Economy Will Never Be the Same
On Sunday, the conservative People's Party (OVP) won the Austrian legislative elections, putting its leader, 31-year-old Sebastian Kurz, on a path to become the country’s youngest chancellor. The OVP secured over 30 percent of the vote, not only defeating the socialist party (SPO) of incumbent Chancellor Christian Kern but, more important, scoring a major victory over the populist right-wing Freedom Party (FPO), which had one of its best results yet. This was no small feat.
Only six months ago, the OVP trailed in third place behind the SPO and the FPO, which was in the lead with 29 percent of the popular vote. (Indeed, throughout 2016, as well as the last six months of 2015, polls indicated that the FPO had a solid lead over the other two parties, which put FPO leader Heinz Christian in pole position to become the next chancellor.) But in May, after Kurz, who had been serving as foreign minister since 2011, took over leadership of the OVP, the party began to climb in the polls. Kurz performed well during the televised debates, running on a platform that was tough on immigration but pro-market, pro-business, and pro-EU. He also projected experience, highlighting his ministerial position while simultaneously playing the role of an opposition politician with his movement, the New People’s Party, or the New OVP. He campaigned under the slogan “Zeit für Neues” (Time for Something New), a rebranding that gave the old party a facelift while leaving its structure in place.
In a sense, what Kurz did was inject respectability and rationalism into what was at heart a populist platform. He coopted some of the FPO’s ideas on immigration while simultaneously giving the OVP an air of change, à la French President Emanuel Macron’s En Marche! (Onward!). Kurz’s “populism light” embraced cultural pluralism and economic liberalism, but only up to a point. Unlike the FPO, it was not anti-elitist and it neither threatened existing political institutions nor attempted to undermine the rule of law. In this way, Kurz not only captured some of FPO’s right-wing voters but also held onto the OVP’s conservative and establishment base.
Crucially, Kurz recognized that the crisis of democracy in Europe in recent years was first and foremost a crisis of established parties. After all, it was he who in May 2017 called for snap elections to overcome the infighting between the governing coalitions, the OVP and SPO. The brawling not only hampered badly needed structural reforms in education, the pension system, and taxes, among others, but also played into the hands of the FPO populists who blamed the government, immigrants, and EU technocrats alike for economic and political stagnancy.
The FPO was the perfect channel for capturing discontent. For one thing, the party, which was founded in 1956 by a former Nazi functionary and SS officer to represent the pan-Germanists and national liberals, was formed to oppose SPO socialism and the OVP’s catholic clericalism. The FPO maintained no role in the federal government during the years of the Second Austrian Republic except from 1983 to 1986, which helped turn it into Austria’s most successful opposition party. (The FPO, however, has entered government at the state level, notably in Carinthia under Jörg Haider.) In effect, the FPO rose to power not necessarily because Austrians became less tolerant and more racist but because the party was able to present itself as the only true opposition to the grand-coalition government. If you disagreed with the government, you’d vote FPO.
By 2017, there were a lot of disgruntled right-of-center and extreme-right votes up for grabs as two smaller parties on the right, Team Stronach, a right-wing populist party founded by Austro-Canadian businessman Frank Stronach, as well as a more liberal-leaning FPO splinter group, BZO, dissolved during the last legislative election in 2013. Given that undecided right-wing voters were unlikely to support the SPO, the pro-European Union liberal NEOS party, or the Austrian Green Party, it left a binary choice between the OVP and FPO.
From the outset, however, the FPO faced a more difficult environment. Its anti–European Union stance following Brexit had to be revised because, according to polls conducted after the referendum, there was an uptick in support for the EU among Austrian voters. Brexit woke them up to the likely negative economic consequences of leaving the EU. The country’s export sector benefits tremendously from the EU, as around 70 percent of its foreign trade is with EU member states. The FPO adjusted by adopting a more moderate position. It had to backpedal on a planned referendum on Austria’s EU membership in 2017. It stopped openly calling for an Austrian exit and an end to the euro currency, and instead advocated for stronger EU reform. These shifts, however, left the impression that the party was flip-flopping. Given that the FPO favored Donald Trump during the 2016 U.S. presidential race, FPO leader Heinz-Christian Strache, who openly backed Trump, found himself having to defend the U.S. president’s populist policies, only to publicly end his support following Trump’s decision to launch cruise missile strikes on the regime of Syrian President Bashar al-Assad in April 2017. There is a strong indication, however, that Strache’s decision was influenced by how unpopular Trump was among Austrian voters. According to one poll, only ten percent of Austrians would have voted for Trump. What’s more, the FPO lacked governing experience. Heinz-Christian Strache, the FPO’s front-runner, had to convince voters that he was more than just an opposition rabble-rouser and that he was actually fit to govern.
Kurz took advantage of the FPO’s weaknesses while coopting the FPO’s popular immigration policies. Following Brexit, while the FPO was seen as reversing course on its EU policy, the OVP, which had always been known as Austria’s “European party,” appeared steadfast in its stance. Kurz was also able to claim substantial governing experience. His go-to story to illustrate his political leadership was his work in closing the so-called Balkan Route, through which Syrian refugees were making their way to Europe. In February 2016, he hosted the West Balkans Conference in Vienna where the decision was made to shutter the route.
At the same time, Kurz played the opposition card by attacking the current government on being weak in its response to political Islam and repeatedly reiterated that he had not changed his stance on immigration and political Islam over the years. He noted that he had long pushed for the closure of Muslim kindergartens, and that he was also instrumental in pushing for a burqa ban that went into effect in October. The OVP began moving to the right on these issues following the immigration crisis in the summer of 2015. It started pushing for tougher border controls and advocated early on for the closure of the so-called Mediterranean passage.
The FPO repeatedly attacked the OVP for stealing its platform, which Kurz rebuffed by arguing that given his new movement, he naturally had a new party program. Although other parties also had gender-balanced party candidate lists, Kurz issued one too, proving himself a socially forward candidate. But he was careful not to abandon the traditionally popular OVP positions against same-sex marriage.
Yet all forms of populism share similar pitfalls. For one thing, Kurz will find it hard to maintain the movement’s forward momentum. Like any other charismatic candidate riding the populist wave, he will ultimately disappoint segments of his constituency, which could also splinter his own party. (The OVP is a collection of sub-organizations, each with its own set of interests, which caused the downfall of many former OVP chairmen.)
Over the next weeks, the OVP will enter negotiations to form the next coalition government. Although a small majority of voters support an OVP-FPO coalition, the SPO, under new leadership, could once more partner with the OVP. It is too early to predict what the likely outcome will be. When the FPO first entered government in 2000, the EU imposed sanctions on Austria. A renewed participation by the party of Strache is unlikely to trigger the same response because European politics has moved overall more to the right. Manfred Weber, the chair of the European People’s Party group—the political faction in the European Parliament that consists of members of the European People’s Party, the OVP’s sister organization at the European level—recently said that he thought an OVP-FPO coalition could be feasible as long as the FPO demonstrated a clear commitment to Europe.
Should the FPO join the government, Austria might adopt a more pro-Russia stance, since the FPO signed a cooperation agreement with President Vladimir Putin’s United Russia Party in 2016, and it could push more forcefully to end economic sanctions. An OVP-FPO government might lobby for stronger protection of the EU’s external borders and to strengthen Frontex, the European border control. It would also be more pro-business and may seek to reduce taxes and cut social welfare spending. At the same time, it could slow down defense integration across the EU, reinforcing Austria’s 1955 declaration of permanent neutrality, of which the FPO (and SPO) are active supporters.
As Henry Kissinger once said, Habsburg Austria was the “seismograph of Europe,” because of its relatively weak internal structure and exposed geographical position. More than any other power, it had to listen to the winds of political change and adopt its policies accordingly. In the twenty-first century, Kurz’s form of pro-establishment, conservative populism can perhaps serve as a blueprint for confronting the powerful tug of populism’s more destructive forms. As the United States’ tumultuous experience with the Trump administration shows, there is a significant difference between an extreme, nationalist anti-establishment right-wing movement and a right-of-center government with populist tendencies.