Right-wing coalition prospects fade in Austria

Fri Oct 4, 2013 10:42am EDT
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By Georgina Prodhan

VIENNA Oct 4 (Reuters) - Prospects of a centre-right government in Austria faded on Friday as both the conservative People's Party and the far-right Freedom Party (FPO) moved away from a possible alliance with the new Eurosceptic party of industrialist Frank Stronach.

The 81-year-old billionaire Austro-Canadian car parts magnate tried to break the stranglehold of the Alpine EU nation's two mainstream parties by creating a pro-business force advocating deregulation and a possible withdrawal from the euro.

But Team Stronach fell into disarray this week after a weaker than expected result in national elections last Sunday, in which the centrist coalition retained a narrow combined majority despite a surge by the anti-euro FPO.

Eurosceptics and anti-immigration groups have gained ground in elections in many European Union states amid a voter backlash against the euro zone's nearly four-year-old debt crisis.

Austria, like Germany, escaped the worst of the crisis and has relatively low unemployment, but many voters resent funding bailouts for weaker southern euro zone partners.

The Freedom Party ruled out an alliance with Stronach's movement, which fired many of its leaders this week, while key provincial chiefs in the People's Party (OVP) also warned against letting Stronach enter a government.

"That would be negligence. We don't build on sand," FPO leader Heinz-Christian Strache told a news conference.

Even regional OVP barons opposed to continuing business as usual with the centre-left Social Democrats (SPO) expressed scepticism that a deal with Stronach was viable.   Continued...