Change and Continuity:

The Adaptation of Austrian Consociationalism
To New Realities



Paper prepared for the 
European Union Studies Association Conference in Austin, Texas
Panel 10H Saturday April 2, 2005


Reinhard Heinisch
University of Pittsburgh
heinisch@pitt.edu


March, 20 2005





	Over the past decade and a half Austria experienced no less than two exogenous shocks and one 
endogenous shock, each of which was capable of throwing into turmoil the country's political and 
economic system as it had existed since the end of World War II. The collapse of the Iron Curtain, 
Austria's integration into the Single European Market, and the rapid rise of the radical populist right 
threatened the existing socio-economic and political fabric precisely because the country had always been 
regarded as a model of ultra-stability. Yet, unlike, for example, the Italian Partitocrazia, where the end of 
the Cold War triggered a complete collapse of the ancien regime, Austria's political arrangements 
survived into the late 1990s. Even thereafter, the system managed to adapt, preserving several of its key 
elements. Unlike fellow corporatist Sweden, whose economy and economic system underwent a major 
crisis in the 1990s, Austria emerged from the difficult process of internationalization without a similar 
disruption. Instead, change came gradually and largely in an organized fashion. Moreover, unlike 
Germany, Austria's large northern neighbor, most important trading partner, and erstwhile role model, the 
Alpine nation continually managed to combine low unemployment with a reasonably solid economic 
performance. Since 1999, Austria surpassed (West) Germany in terms of per capita economic output, 
while maintaining unemployment at rates lower than most OECD countries. Although the jobless rate 
never exceeded 4.5% (even in the recent recession), the Austrian government managed to presented a 
balanced budget by 2001; a goal which had seemed unattainable just a few years earlier. Moreover, 
compared with Germany, Austria boosts a higher per capita purchasing power (€17,699 vs. 17,087), 
lower corporate taxes (25% vs. 39%), longer working hours (1750 vs. 1786), and a better earnings-to-
productivity ratio (1:1.8 vs 1:1.2).  In fact, when adjusted for purchasing power parity, Austria, along with 
Luxembourg, Denmark, Ireland, the Netherlands, is now among the richest member states of the 
European Union, surpassing even such successful economies as Sweden, Finland, and Belgium. A cross-
national study released in 2005, which compared 1207 regions in 25 EU countries, found that five of the 
top 20 areas were located in Austria.  Overall, the Alpine Republic took the second rank after only 
Ireland.
	Yet, Austria's relative success at adapting itself to new political and economic realities was 
neither a foregone conclusion nor free from severe problems and moments of crisis. Only five years ago, 
Austria found itself under political sanctions by its 14 EU partners and faced an uncertain political future. 
This paper is an attempt to provide an overview of Austria's coping mechanisms and seeks to explain 
their considerable success. Furthermore, the article also argues that the simultaneity of three major 
challenges – integration, the end of the Cold War, and the rise of the radical right - each served to 
stabilize certain components of the Austrian model at a critical juncture, while other elements were 
undergoing a necessary transformation. In many ways, the different shocks not only induced change but 
also served to mutually reinforce the Austrian system enough to allow for both a gradual and sequential 
adaptation.

Patterns of Erosion and Reinforcement in Austrian Consocialism and Consensus Politics
	By the late 1960s, Austria's specific political and economic arrangements designed to prevent a 
return to the violent partisan struggle and social turmoil of the inter-war period had become largely 
anachronistic. Since then political analysts kept forecasting the imminent demise of consensus democracy 
and consociationalism  (Pelinka 1981; Lehmbruch 1984; Katzenstein 1984; Gerlich, Grande, Müller 
1985; Talos, 1985; Crepaz 1994). This argument gained additional currency in the 1980s and 90s due to 
the so-called convergence hypothesis (Streek 1984; Lash and Urry 1987; Windolf 1989; Soskice 1990) 
stating that the internationalization of markets forces dynamic changes in domestic political-economic 
organization. Accordingly, in a global competition between governance systems, less efficient 
configurations are, by necessity, either converted or eliminated. Thus, the challenge is less to explain the 
decline of the Austrian model but rather to account for its astonishing longevity. Institutional "stickiness" 
and the status-quo orientation of Austria's political elites may account for some aspects but do hardly 
explain why phases of decline were followed by periods of reinforcement and re-stabilization. Thus, 
Austria has remained a case of careful and organized adaptation rather than convergence.
	In Austria's postwar political framework, the regularized interaction between fixed groups of 
actors gave rise to stable policy communities in areas like social and economic policy. These were 
entirely dominated by the two major parties SPÖ (Social Democrats) and ÖVP (Christian Conservatives) 
and their affiliated organizations. A range of specific political mechanisms and institutions such as 
Proporz,  Personalunion,  Clubzwang,  and Grand Coalition governments along with party-political 
patronage provided Social Democrats and Conservatives with special access to resources, information, 
and other power assets, thus affording them a privileged position in national politics.	
	The Austrian model extended also to economic governance, characterized by the consensual 
framework of the Social Partnership. It was defined by an inter-organizational concentration among the 
major labor market associations and the government as well as an intra-organizational aggregation of 
interests within each organization's domain. The institutions themselves were characterized by vertical 
integration, high levels of centralization, and overlapping responsibilities and personnel. Thus, bi-partisan 
Proporz-politics and Austro-corporatism remained the central and mutually reinforcing brackets of 
consensus democracy for decades.
	At the macro-political level, the Austrian system was designed to achieve stability and cohesion. 
It performed this function most effectively when instability and conflict threatened. Such dangers were 
greatest in the postwar years when Austrian democracy had not yet consolidated itself sufficiently. As the 
system matured and society itself became more cohesive, the legitimacy of the Proporz model was 
necessarily called into question. Nonetheless, whenever new threats appeared, the mechanisms of 
cohesion were reactivated. This happened for example in the 1970s when Austrian society was facing 
modernization pressures. Achieving political dominance in 1970, the Social Democrats were then in a 
position to carry out a process of sweeping reforms of state and society.  These however coincided with 
the global economic downturn of the 1970s. Committed to maintaining full employment, the SPÖ 
government thus engaged in a policy of explicit demand management that came to be known as "Austro-
Keynesianism." It relied strongly on the support by, and cooperation with the unions and employers' 
association.  As a result, Austro-Corporatism acquired a new legitimacy and raison d'etre. 
	This pattern repeated itself a decade later despite the fact that, by then, the demise of Social 
Democratic political hegemony had been widely predicted to spell the end of the Austrian model. The 
strengthening of the Conservatives under a new hardline leadership and the rise of neoliberalism abroad 
were expected to lead to a "normalization" of Austrian politics, specifically an orientation toward market 
mechanism and an explicitly pro-Western outlook in foreign and national security policy (Pelinka 1995). 
Following a watershed election in 1986, the ÖVP, however, missed a historical opportunity to prevail 
with its agenda. Instead, the Conservatives were forced to become the junior partners in a Grand Coalition 
with the Social Democrats. Although the SPÖ dominated key portfolios such as the chancellorship and 
finance, the presence of the Conservatives in the cabinet and Austria's mounting economic problems did 
bring about a reorientation in national policy making. Austria abandoned its active neutrality policy of the 
1970s pursuing instead an explicitly "European" foreign policy orientation. In terms of economic policy, 
Austria's elites had become convinced that a modernization and liberalization of the national economy 
were unavoidable to ensure international competitiveness and stave off the long-term insolvency of the 
national social system. Critically, this view also prevailed among many in the leadership of the Social 
Democrats and corporatist organizations. It was equally clear, however, that these sentiments were not 
shared by most rank-and-file members and lower-level functionaries politicized in the previous era of the 
political dominance of the left. 
	The new reform agenda also entailed considerable political risks for the Conservative Party, as 
the previous elections had shown. Much of its clientele included protectionist-minded small business 
owners, farmers, and many white-collar workers in Austria's large public sector. Thus, to prevent the 
modernization program from becoming a source of political and social conflict, both major parties 
resorted once again to tried-and-tested Austrian stability politics by reviving the Grand Coalition and 
dubbing it  "Sanierungspartnershaft".  Moreover, they enlisted the help of labor market associations in 
this endeavor for which the Social Partnership demanded certain concessions – see further below. 
Elsewhere, I  referred to the social partners' role in this context as "modernization brokers" (Heinisch 
1999, 2001). Once again, the Austrian stability model was reinforced by becoming a key factor in the 
country's "organized" liberalization and internationalization. 
	While at the macro-level, the Austrian consensus model had been moving through periods of 
decline and re-stabilization, society nonetheless continued to change and so did voter preferences. The 
1960s had given rise to a modern middle-class society that initially strongly supported the Social 
Democratic reform agenda. Most voters were beneficiaries of the ambitious program carried out under 
Chancellor Kreisky during three successive SPÖ majority governments from 1971 to 1982. Throughout 
this decade, the percentage of white-collar workers thus rose steadily, reaching 42% in 1980. However, 
the growing prosperity made many Austrians the subjects of the mounting tax burden required to sustain 
the expansive welfare state. The fiscal commitments necessary to ensure continued prosperity and 
Austria's relative economic autonomy from international economic trends became the major causes of the 
defections among middle-class voters from the Social Democrats. Many of them felt that they were 
footing the bill for the Austrian welfare model. Faced with a dramatic political decline in middle class 
voters' support,  the SPÖ sought to compensate its eroding electoral coalition with political coalitions 
with bourgeois parties it could dominate – first with the pre-Haider FPÖ from 1983-86 and subsequently 
the ÖVP from 1987-99.  In short, while the institutional arrangements of the Austrian stability model 
underwent their periodic reinforcements, the underlying political conditions continued to erode.
	A prerequisite for the dominant role of the two political parties had been their lock on the 
electorate, as they averaged a combined total of over 90 percent of voter support. In fact, the two major 
Austrian parties had far more card-carrying members than comparable political organizations elsewhere 
in the world. These conditions were irrevocably changing by the 1980s. The situation was compounded 
by the appearance of new quality-of-life issues, the neoliberal renaissance, and a growing culture of 
protest, all of which made it increasingly difficult for the dominant parties to recruit a new generation of 
voters.  The political and normative changes at the time fueled the growth of new political groupings 
such as the Greens, the new Freedom Party under Jörg Haider, and eventually the Liberal Forum. 
	The primary beneficiary of this trend was the New Freedom Party. Echoing the nationalist-liberal 
and pan-Germanic third camp in Austrian history, the party had traditionally played a marginal role in 
post-war politics. However, when Haider took over as chairman in 1986, he managed to remodel the 
thirty-year-old party completely. Since the FPÖ had been the consummate outsider of the Austro-
corporatist stability model, the new leader found it easy to reposition the party as a right-of-center anti-
government protest movement. Initially, he appealed especially to conservative and middle-class voters, 
thus critically weakening the Austrian Conservatives and making it impossible for them to surpass the 
Social Democrats in the 1986 elections. In fact, the FPÖ's constituency in 1986 consisted of about 10% 
more former ÖVP voters (32%) than Social Democrats (22%) (Plasser and Ulram 2000: 128-133). For the 
Conservatives, the only option of returning to government after 16 years of opposition thus lay in the 
SPÖ's offer of power sharing.
	The trend among middle-class voters to the FPÖ continued also in the 1990 election but was to 
change eventually when Haider began targeting the Social Democratic bastions in the larger cities and 
industrial regions.  By embracing social populism, thus appealing much more to the SPÖ's traditional 
clientele in the lower middle and working class, the Freedom Party began chipping away the support from 
both major parties. Their hold on power thus came to depend more and more on maintaining the Grand 
Coalition. 
	Although Haider had initially championed EC membership, his growing hostility to European 
integration after the fall of Communism, made the Freedomites ineligible as an alternative coalition 
partner for the ÖVP. It is thus ironic that the rise of the Freedom Party not only undermined the major 
parties electorally but simultaneously also reinforced the status-quo of coalition governments. For one, 
the Freedomites weakened the Social Democrats and Conservatives asymmetrically. Thus, while the 
competition for the number two spot in Austrian politics intensified, the SPÖ was actually locked in place 
as the dominant political force. Secondly, while the ÖVP gradually shrank to middle-party status, its 
central role as indispensable coalition partner for the Socialists de facto increased, for without the 
Conservatives, the SPÖ could not form a government. In short, the stronger the FPÖ became over the 
subsequent decade, the more the other two major parties needed one another and the less they competed 
with each other. Analyses of election results since 1986 show that "electoral volatility" (intra-coalition 
defections) between the coalition partners declined, markedly indicating the decreasing substantive 
competition between Social Democrats and Conservatives (Schedlar 1995: 21). Moreover, the radical 
nature of the FPÖ=s agenda made alternative coalition options all but impossible which in turn had an 
arresting effect on Austrian politics.	
	
Mutually Re-enforcing Trends 
	Auto-corporatism became once more indispensable, when the realization dawned on the political 
and economic elites that decisive impulses for lasting economic reforms could only come from without. 
By seeking Austria's integration into the emerging European single market, many painful adjustment 
measures and thus costly political battles could then be either presented as a fait accompli or tacitly 
blamed on the "international circumstances" and "Brussels." Initially, most Austrian political leaders 
therefore avoided talking about full European Community membership. Many Austrians, particularly on 
the left, saw Brussels as dominated by corporate interests or felt that membership was incompatible with 
the nation's neutrality status. The government's rhetoric thus centered on "full participation in the single 
European market,"  so that the application for European Community membership in 1989 became 
something of an afterthought (Schneider 1994, Luif 1995). Officially, it was claimed that it was important 
to avoid the country's "satellitization."    Austria's attitudes in this regard were betrayed by the lengthy 
list of reservations and exceptions attached to the "letter to Brussels" making it seem it was the European 
Community that wanted to join Austria.
	What appeared to be a smooth road to EC membership was disrupted by the unexpected end of 
the Cold War and the resulting Maastricht process. This not only changed the kind of Europe of which 
Austria was planning to become a member. What is more, Vienna saw itself confronted with a 
fundamentally new situation as geopolitical questions surfaced that Austria had thought long resolved.
	The fall of the Iron Curtain, which had surrounded Austria on three sides, and the following wave 
of instability that followed in Eastern and Southern Europe, particularly the war in the former Yugoslavia, 
added a layer of complexity for Austrian decision makers. No longer was the political agenda defined 
merely by concerns over economic liberalization, privatization as well as greater democratic transparency 
and government efficiency but a whole new set of issues and priorities entered discourse. On a practical 
level, the open borders with a much less developed and politically unstable East European near-abroad 
meant a rapid increase in the influx of foreign migrants, a surge in crime, and unwanted economic 
competition with a labor force whose wage level was less than half of that in Austria. On a more 
fundamental level, Austria was confronted with nagging questions as to its identity and future in a new 
Europe. Thrust from the very margins of the Western World back into the heart of the new Europe, 
Austria was suddenly forced to face certain uncomfortable facts. The Cold War's political geography had 
created a stable environment in which Austria could be both Western and yet maintain a certain distance. 
Despite embracing democracy and a market economy after Word War II, most Austrians had remained 
highly skeptical of liberal capitalism, feeling instead that theirs represented superior model to both 
Western capitalism and Communism.   In terms of socio-cultural orientations, this anti-Western and anti-
modernist bias can be traced back to19th century romanticism, which had juxtaposed an idealized peaceful 
(nativist) nature with an (imported and alien) industrial revolution associated with social turmoil, human 
greed, and a soiled homeland (Pinson 1966). Moreover, Austria had benefitted from the long status quo in 
Europe by enjoying stability and security without having to contribute to any defense alliance. Likewise, 
as an associate member of the EC and economically linked to West Germany, Austria had enjoyed the 
advantages of European integration without having to contribute – at least this was the case before the 
EC's single market initiative. Lastly, Austria also fancied itself to be something of an exclusive bridge 
between East and West, which was not only reflected in the country's geographic location but, more 
importantly, also in its emphasis on social welfare and economic justice.
	Many in Austria were baffled that to the extent that East European Reformers wanted to reach out 
to the West, they turned directly to the centers of Western power, thus bypassing Austria and its model 
entirely. Eastern Europe's wholehearted embrace of the West proved confusing and unsettling to many 
Austrians (see Heinisch 2002a). In the emerging dichotomous world where one was either a full member 
of the "Western club"or otherwise classified as a lesser nation, Austria found itself strangely at odds with 
international developments. Unlike Switzerland and Sweden, the Alpine nation lacked the global presence 
of powerful domestic corporations that could have served as a conduit between the domestic and 
international environment. It was under these circumstances that Austria's political leaders initiated a full 
integration into the core of the emerging new Europe; that is full membership in the EU and the adoption 
of the single currency with all economic consequences. The Conservatives even favored abandoning 
neutrality but failed to overcome intense Social Democratic opposition.  Eventually, Austria's definition 
of neutrality changed as its comprehensive nature was reduced to the military core.
	Because the government was nervous about Austrian anxieties about full membership, nurtured 
also by the opposition of the Freedom Party and the Greens, it was eager to enlist the help of the social 
partners.  In return for their support, a grateful government provided them with a seat at the negotiating 
table and allowed labor and business associations to retain as many of the legal and political sources of 
social partner strength as possible (see also Pelinka, 1993). This way, the governing coalition could also 
ensure that potential  resistance from rank-and-file union members, farmers, and small business would be 
minimized (Luif 1995).
	Although joining the EU remained controversial with Austrian labor and legally reduced the 
social partners' macroeconomic leverage,  Austrian business associations and, most importantly, the 
leadership of the Trade Union Federation strongly advocated voting for EU membership in the 1994 
national referendum. A prolonged advertising campaign by the government and the social partners, in 
which the Industrialists' Association alone enlisted some 1200 companies in its "we vote for Europe 
campaign" and distributed hundreds of thousands of brochures, flyers, and pins, ensured a 66% majority 
in favor of EU membership.
	No sooner was membership secured, when the government was forced to admit that it would be 
impossible to meet the Maastricht convergence criteria without a further series of tax increases and 
substantial cuts in social programs. The government's policy of "pensioning off"  thousands of workers 
during previous periods of privatization and the restructuring of the country's heavy industry had resulted 
in a ballooning national debt and annual deficits that, coupled with the recession following Germany's 
brief post-reunification boom, was reaching crisis proportions.  Predictably, the Social Democrats and 
Conservatives suffered a humiliating defeat in the 1994 elections. Barely 62% of the electorate voted for 
one of the two major parties, which had thus lost about a quarter of their constituency within nine years. 
What is worse, every third Austrian who supported the coalition was already retired while only 24% 
(1983: 41%) of first time voters still opted for the SPÖ and only 23% for the ÖVP. Following the 
announcement of the retrenchment program in 1994, the SPÖ's standing with the public plummeted from 
43% in August to 35.2% in November while that of the ÖVP dropped in the same period from 30% to 
27.7%.  Meanwhile, support for the  FPÖ soared from 16% to 22.6% making it the largest right-wing 
populist party in a Western democracy. For the first time, the Freedomites made major inroads into 
traditionally Social Democratic areas such as the working-class districts in Vienna where they achieved 
between 23% and 26% of voters' support. In the final week before election day, the Austrian media 
reported frenzied scenes at FPÖ campaign rallies, where Haider was met by enthusiastic crowds. 
	The decline of the bipartisan status quo was evident not only in the declining government's share 
of seats in the legislature and the presence of new parliamentary parties; i.e., the Greens and the Liberal 
Forum. This trend manifested itself also  more generally in the rise of parliament vis-à-vis the government 
and the Social Partnership (see Crepaz 1994). An increasing number of bills was introduced as 
"initiatives" and the steadily growing parliamentary opposition made use of certain legislative procedures 
-- the so-called right of "requests" (Anfragen) and "urgent requests" (dringende Anfragen). Between 1986 
and 1990 the number of laws resulting from such initiates rather than from corporatist-adjusted 
government submissions had reached an all-time high since 1920 (Crepaz 1994: 59).  
	For lack of alternatives, the Grand Coalition (dubbed by Haider the "coalition of losers") was 
once again renewed in 1994, albeit with lackluster enthusiasm. This time however, the leadership of the 
ÖVP changed, to Wolfgang Schüssel, who was willing to take greater political risks and embrace more 
orthodox conservative positions to escape the status quo. Barely a year later, he would seize the initiative 
by forcing new national elections in a bid to overtake the Social Democrats. 
	The renewal of the Grand Coalition and the year thereafter was overshadowed by the public 
discourse on retrenchment. The inability of the government to resolve the deadlock concerning the reform 
agenda provided an opening for the social partnership, which subsequently underwent an unexpected mid-
1990s renaissance, reinforcing the Austrian stability model once again. When the government's 
compromise austerity package was rejected by the social partners, their veto triggered a split within the 
coalition government, which the ÖVP used in order to seek new elections in December 1995.  
	The run-up to the December elections in 1995 in what came to be known as "Austria's winter of 
discontent" was dominated by partisan acrimony and near paralysis within the coalition government. Yet, 
once the Conservatives had pulled out of the coalition, the SPÖ could revert to a more orthodox leftist 
rhetoric by embracing a social populist message ("Your pensions will be save with us!"). The strategy 
worked and the vote resulted in a backlash against internationalization and liberalization. It swept the 
Social Democrats (38.1%/+3.2%), who had campaigned on bread-and-butter issues, back into power, 
while clearly punishing those parties (ÖVP: 28.3%/+0.6%; Greens: 4.8%/-2.5%; Liberals: 5.5%/-0.5%) 
that had gambled on the theme of modernization and change.
	Even the relative slump of the FPÖ (21.9%/-0.6%) was an indication of the fact that many voters 
had grown tired of the party's harsh language and divisiveness, which was seen as contributing to the 
pervasive impression that the country was off-track. The general uneasiness strengthened political 
institutions that appeared to represent the 'traditional' Austrian values of consensus and shared sacrifice. 
This proved a special boon for the Austrian model and the groups most associated with it, the SPÖ, the 
labor organizations, and the Social Partnership in general.
	What editorials at the time dubbed "fear of change" (Profil 19 December 1995) was clearly borne 
out in opinion polls following the 1995 national elections. Asked to state their main political concern, 
56% identified the "budget deficit and taxes" and 30% mentioned "social justice and concern for the 
underprivileged" as their first priority.  Welfare abuse (15%) and political scandals (15%), major issues 
in previous elections,  seemed to matter far less. When respondents were asked to rank specific election 
issues, themes associated with social concerns ranked high, while post-materialist themes had dropped off 
in importance. 
	Media reactions and poll results confirmed the social partners emerged from the budget debacle 
strengthened  Ranking second (ÖGB), fifth (Chamber of Labor) and eighth (Economic Chamber) in a 
1995 poll on the "trustworthiness of institutions," the social partners far outperformed the government 
(ninth), political parties (11th), or even the Catholic Church (tenth) (SWS-Poll, 1995). 
	What Delor had called the "acceleration of history" not only confused many ordinary Austrians 
who had become used living in a "cozy niche on the continent" (Kramer 1988: 18). Economic integration, 
labor immigration, and the neoliberal public discourse heightened people's anxieties about economic 
security, social peace, and political stability.
	Particularly, the influx of foreign migrants and asylum seekers became increasingly a hot button 
issue. Initially, Austria's customs and immigration officials were completely overwhelmed by the large 
number of asylum seekers, refugees, and labor migrants that crossed what was essentially an unguarded 
1200 kilometer long border after the Iron Curtain had been dismantled in 1989. According to officials 
statistics, the number of legal foreign residents in Austria in 1991 reached nearly 520,000 of whom about 
263,000 had employment (Census 1991 in Wils and Fa?mann 1994: 342). About 200,000 resident aliens 
had come from (former) Yugoslavia and some 57,000 from Turkey. By 1993, the number of legal foreign 
residents rose to 625,000 including some 74,000 Bosnian refugees. Estimates for the number of illegal 
aliens present in Austria at the time varied widely, but credible accounts suggested that the true figure was 
somewhere around 200,000 (Wills and Fa?mann 1994: 344). In short, the total foreign population was 
somewhere in excess of 750,000 and thus close to 10% of the population, which was one of the highest 
ratios in Europe. In Vienna, a city of 1.6 million, the number of foreign workers reached the 100,000 
threshold in 1991. According to estimates by the Austrian labor inspection office, in 1992 the number of 
illegal workers and non-registered daily commuters from Eastern Europe was about 30,000 for the 
country's Eastern region alone (BfWuS, 1992). Overall, the number of foreign laborers doubled  between 
1989 and 1992, representing 8.8% of total work force. Most asylum seekers and war refugees were 
concentrated in certain Viennese neighborhoods reinforcing a general perception that the number of 
foreigners was actually higher than it was.  
	The combination of increased social needs, greater economic competition, and declining 
resources intensified both latent xenophobic feelings and material concerns. Although Vienna remained 
nonetheless one of the safest capital cities in Europe, the popular press painted a dark picture of the 
metropolis, portraying it as being in the grip of violent street gangs, ("Romanian") burglary rings, the 
Russian Mafia, and ("African") drug dealers. What is more, during 1993-95 Austria was also confronted 
with a right-wing bombing campaign, targeting individuals working for refugees and liberal politicians. 
This first homegrown terrorism in postwar Austria was responsible for killing four and severely 
wounding 13 other individuals, including the major of Vienna.
	In order to help mitigate the impact of Austria's internationalization and integration, the social 
partners acted as  "brokers of the economic and political transformation" by becoming the conduit or 
transmission for absorbing external pressures (Heinisch 1999, 2001). Austro-corporatism ensured above 
all the continuity of the political and economic system. To the extent that change became unavoidable, the 
public clearly preferred it to be channeled through the established mechanisms of interest representation 
and conflict resolution. In this process, corporatism's role was to refract external pressures and achieve a 
symbiosis between what the country's economic integration required and what was politically possible. 
Such a symbiosis, often dubbed an "Austrian solution," defines a constant give-and-take on a multitude 
of issues including store-opening hours, the regulation of social security deductions for temporary jobs, 
vocational training programs and numerous other ones. The role of modernization broker not only 
provided stability in a time of flux, but also served as a temporary new lease on life for the Austrian 
model and Social Democratic dominated government.
	The two major external shocks that impacted Austria thus triggered mutually countervailing 
adaptation processes in Austria. The very need for economic modernization, liberalization, and 
decentralization, which, politically, could most effectively be accomplished through integrating Austria 
into de Single Market, required the stability mechanisms of the Consensus democracy. The Grand 
Coalition and a series of social partner agreements became more indispensable than in previous years. 
However, the strengthening of the Consensus model along with its "insider politics," backroom deal 
making, political patronage, and carefully balanced tradeoffs fueled a growing opposition, particularly 
from the FPÖ. This gradually undermined the electoral basis for the stability model. This trend reached a 
climax in 1994 but a collapse of the system was averted when economic fears and perceived international 
threats interceded, changing the political dynamics once again. The complexity and fluidity of Austria's 
domestic and international political environment boosted those institutions most associated with cherished 
Austrian stability, social peace, and prosperity, thus leading to a temporary renaissance of the Austrian 
model. Ironically, the fierce hostility of the FPÖ to both European integration and Austria's consensus 
model made the party ill-suited as coalition partner, thus making the renewal of SPÖ-ÖVP coalitions 
always a foregone conclusion. Until 1999, the system proved thus able to cope and adapt sufficiently to 
maintain the status quo.

Breaking the Mold
	The 1999 national elections were a watershed in Austrian politics for they represented the end of 
the bi-partisan Consensus model as it had existed since the end of the war (Plasser, Seeber, and Ulram 
2000). While there had been six different government configurations  in Austrian postwar politics, for 
the first time there were now three nearly equally large parties (SPÖ: 33.4%, FPÖ: 26.9%, ÖVP: 26.9%). 
For the first time, the new government consisted of a coalition of two bourgeois parties (FPÖ-ÖVP) and 
also for the first time in 30 years, the chancellorship along with vital departments such finance, 
transportation, and social policy was not controlled by the Social Democrats. Moreover, the fact that a 
political party openly hostile to corporatist governance came to power also constituted a first in Austrian 
postwar politics. In previous times, even under a one-party government, the respective other party still 
enjoyed a great deal of influence due to  its affiliated labor market associations and large membership – 
much of which had eroded by 2000. Lastly, in times past, certain political taboos and the culture of 
consensus had prevailed in Austrian politics even during periods of one-party dominance. This time 
however, the government gave the impression that it actually relished a conflict with the social partners, 
particularly organized labor, which the Conservatives and Freedomites regarded as key obstacles to 
change. In short, there is general agreement in the literature that new ÖVP-FPÖ coalition which formed in 
2000 represented a radical departure from previous Austrian politics (Pelinka, Plasser, Meixner 2000; 
Müller 2002; Plasser Ulram 2002; Luther 2003; Heinisch 2002ab, 2003, Falland and Müller 2004). 
	This new situation can be explained best by the fact that the stability conditions underlying the 
consensus model had finally eroded. By 1999, Austria had more or less accommodated itself to EU 
membership, even had the EU-Presidency in 1998. The dire economic situation of the mid-1990s had also 
been mastered along with the Maastricht convergence criteria. Also, the geopolitical situation had not 
only stabilized but Austria's economy benefitted immensely from the emerging markets in Central and 
Eastern Europe. Ironically, and despite a different public perception of the matter, the Austrian 
government had been rather successful in managing Austria's modernization and integration. In fact, it 
became a victim of its success when the electorate freed from its mid-1990s anxieties was willing to 
embrace the idea of political change.
	After 1994, the surge of the Freedom Party allowed the Conservatives to move further to the right 
and pursue an array of issues on family policy, education, and immigration that provided constant friction 
in an already dysfunctional relationship with the Social Democrats. At the same time, the political 
common ground between Conservatives and Freedomites grew. This new explicitly conservative 
orientation supplied the ÖVP with a more defined profile in the coalition, while the SPÖ's ideological 
position was increasingly muddled. 
	After 30 years of uninterrupted leadership in government, the Social Democrats were exhausted 
in terms of new ideas, personnel, and party finances.  Its chairman, Chancellor Vikor Klima, a former 
manager it the nationalized oil industry, was claimed to be a vote-getter because of his good looks and 
charm. In fact, he appeared at times more popular with the tabloids than with many functionaries 
struggling with an  ideologically divided party. Fundamentally, the question was whether it should act as 
an agent of modernization and societal change, or instead return to its "roots" by emphasizing more 
strongly the interests of traditional core voter groups. In the eyes of the reformers, the SPÖ could thus 
only rebuild strength by defining and effecting change. According to the party's traditionalists, however, 
cutting so-called "well-deserved rights" (wohl erworbene Rechte) along with the emphasis on economic 
modernization and societal change was exactly what drove supporters away from the party. Thus, the 
strength of the FPÖ was seen as a consequence of the SPÖ's loss of social competence.
	Meanwhile, the Freedomites had learned their lesson from the set-back in the 1995 election by 
adopting increasingly an Austro-patriotic agenda and dominating the political discourse on foreign 
immigration. Simultaneously, they were very effective in attracting former Social Democratic voters 
alienated by the increasingly technocratic image of the SPÖ. Thus, for those in the electorate who were 
most concerned about foreign interests or motivated by xenophobic impulses not the stability model but 
rather the FPÖ now represented the best guarantee for putting "Austria First" as had been the slogan of 
the FPÖ's 1992 anti-foreigner initiative. Subsequently, this motto became the core concept of the 
Freedom Party's adoption of "Austro-patriotism" and incorporated as such into the party program by 
1998.  This was remarkable reversal for a party that had previously always been keen to invoked pan-
Germanism and whose leader, Haider, had once referred to the idea of an Austrian "nationhood" as an 
"ideological miscarriage." 
	Studies show that voter defections to the Freedom Party rose substantially throughout the1990s 
(Schedlar 1995: 21), as the FPÖ continued to build a new right-of-center electoral coalition by draining 
supporters from both major parties.  Generally, Social Democratic voters defected even in larger 
numbers than Conservatives (e.g., 162,000 in the 1995 and 169,000 in 1999). Typically, SPÖ sympathizes 
would first join the ranks of non-voters and then be picked up by the FPÖ in subsequent elections. It is 
significant, therefore, that the 75% voter turnout in 1999 was the lowest in Austrian history to date.
	Voters were also turned off by the perceived constant rancor overshadowing the final years of the 
Grand Coalition. The mutual dependence and asymmetrical power relationship between the two bred 
mutual resentments. The Socialists disliked having to put up constantly with a much smaller ÖVP, while 
the Conservatives resented their overbearing and politically more successful partner. Despite all internal 
problems, it was still easier for the Social Democrats by virtue of having the chancellor to claim credit for 
government successes. This mutual acrimony played out in tactical maneuvering and in petty, tit-for-tat 
squabbles making it difficult to "sell"an otherwise reasonably successful policy to voters. An major area 
of confrontation was European integration in which both parties essentially pursued similar goals. 
However, having pioneered EU membership, the ÖVP, which controlled the foreign ministry, regarded 
this issue as its exclusive domain. With the increased importance of foreign affairs and EU politics, the 
SPÖ could not leave this agenda to the Conservatives and thus took every opportunity to promote the 
Social Democratic chancellor in the international limelight. The rivalry between the coalition partners 
provided an opening for the FPÖ. Fear of the possibly negative impact of EU enlargement on the Austrian 
labor market and the influx of foreigners became overriding issues. To this, the SPÖ and ÖVP had either 
turned a deaf ear or proved no match for the Freedomites, who set the agenda and guaranteed rather 
drastic solutions (Wolfgruber 1994). 
	In the run-up to the general elections of 1999, the Freedom Party enjoyed tremendous political 
momentum. It had won decisively in three state elections, capturing the governorship of Carinthia 
(Haider's home state). By coming in first or second in 6 of 9 provinces, thus beating out the Social 
Democrats in the ÖVP-dominated states or the Conservatives in the SPÖ-dominated provinces, Haider 
challenged the electorate that it was finally time for a change at the national level. In fact, throughout the 
decade it had been Haider=s greatest accomplishment to sustain a diffuse promise of change which has 
proved appealing to a fairly diverse range of voters. 
	In the general election in October the FPÖ made gains in nearly every voter group, except old-age 
pensioners and certain segments of women voters. However, the subsequent creation of the ÖVP-FPÖ 
coalition in 2000 was not a foregone conclusion. As in times past, the mechanisms of the consensus 
system were quickly reactivated, hastened by the prospect that forming a government with the 
international pariah Jörg Haider might result in consequences beyond domestic Austrian politics. In fact, 
the Social Democrats expected the Conservative to open coalition negotiations quickly to deal with 
resurfacing budgetary problems. The elites, particularly the Austrian Federal President, regional party 
leaders of the Conservatives, the top officials of corporatist organizations as well as the national media 
along with many figures from public life vehemently advocated a continuation of the Grand Coalition. 
Opinion polls also showed that the overwhelming majority of Austrians favored this option over any other 
configuration of government (Müller 2000: 293, esp. fig. 3). Even the powerful, and generally Haider-
friendly, national daily Neue Kronenzeitung was calling for maintaining the status quo. Behind the scene, 
there was much maneuvering on the part of many to persuade the leader of the Conservatives, Wolfgang 
Schüssel, to conclude another agreement with his Social Democratic counterpart. Reportedly even French 
President Jacques Chirac  called to propose a deal.  
	Most crucially, however, for the leadership of the Conservative Party, the strategic calculus had 
shifted. Having slipped to third place in national politics, a continued coalition with the Social Democrats 
promised the inevitable decline of the ÖVP to small party status or fragmentation. Moreover, it was also 
foreseeable that sooner or later the Freedomites would be strong enough to form the government out of 
their position of power. Thirdly, the kinds of reforms and policies many in the ÖVP favored, particularly 
its increasingly influential ideological faction, could be more easily realized in a coalition with the FPÖ, 
provided the Freedom Party could be persuaded to tone down its rhetoric on EU enlargement. Finally, the 
deal was sweetened by Haider's secret offer of the chancellorship to Schüssel, whose party had actually 
received fewer votes than the FPÖ. 
	From the perspectives of the ÖVP leaders, they had little to lose but much to gain. Given that 
their party was still very strong in the provinces and could claim a host of affiliated business and interest 
organizations to draw from in terms of talent, experience, and expertise, the Conservatives' strength as a 
party was belied by the election results. These assets along with controlling the chancellorship meant that 
Schüssel's party would be better positioned to claim credit for government policy successes. Moreover, 
the inexperience of the FPÖ at governing, the difficulty of transforming itself from opposition to 
government, and the Freedom Party's complete lack of corporatist support system and party apparatus 
promised political windfall profit for the Conservatives. Naturally, a coalition with the untested Freedom 
Party and the unpredictable Haider also entailed certain risks. The FPÖ leader's antics could overshadow 
any serious government work while the new coalition might face international condemnation. 
Nonetheless, Schüssel calculated correctly that changing the status quo promised the only chance for a 
dramatic reversal of his party's fortune. As the only political grouping with various coalition options 
available, the ÖVP subsequently negotiated from a position of strength. In several months of negotiations, 
the Conservatives kept raising the bar of political concessions so high that the compromise-oriented SPÖ 
leader could not persuade his own trade union wing to endorse the deal, thus providing Schüssel with a 
pretext to conclude a coalition agreement with the Freedomites in a matter of days. 
	In short, key members in both the ÖVP and in the Social Democratic labor movement had come 
to the conclusion that stability and consensus should not be maintained at all cost; particularly since they, 
hardline Conservatives and the leftist union faction of the SPÖ, had been paying the heaviest electoral 
price for maintaining the Grand Coalition. While there were several other factors having to do with 
specific campaign-related developments,  the most important underlying cause for the sudden shift in 
Austrian politics lay in the erosion of the stability conditions of the consensus model.

Adapting to New Realties – The Social Partnership's Role in the Process of Change
In the absence of a favorable Keynesian policy-environment after 1983, Austrian demand-side-
corporatism with its heavy reliance on state intervention had to transform itself gradually to retain some 
economic purpose.  Thus, corporatist legitimacy rested increasingly, on, what Franz Traxler (1995c; 
1996) called, supply-side corporatism with its emphasis on exploiting competitive advantages through 
macro-level economic coordination and upgrading. By supplying important regulatory frameworks, by 
providing comprehensive training programs, and by functioning as a catalyst for public-private 
partnerships, the social partnership produced indispensable collective goods which were inadequately 
provided by opportunistic market conditions and which the political system found increasingly difficult to 
deliver (Heinisch 1999). 
It is no coincidence that this transformation process was taking place at a time when political 
actors were increasingly constrained by internal difficulties (political fragmentation, fiscal limitations) 
and external pressures (internationalization, EU membership). Austro-corporatism's new role thus 
entailed securing competitive advantages through macro-level economic coordination, such as organized 
decentralization, flexibilization, and a corresponding incomes policy. Effective wage-coordination and 
incomes management were perhaps the single most important elements in Austro-corporatism's 
brokerage role, especially, in light of the declining regulatory powers of the state. Despite Austria's small 
and open economy, the country effectively maintained a stable exchange rate all the way through 
implementing the single currency without undergoing major systemic disruptions and periods of social 
unrest.  
Macro-level coordination also refers to the social partners' involvement in nearly all major policy 
decisions taken by the government in the decade and a half of the Grand Coalition. Corporatist actors 
helped draft a policy response to the influx of foreign laborers, collaborated on the budget consolidation, 
and orchestrated reforms of regulatory  and tax codes. Acting as modernization brokers also entailed 
efforts to move Austrian industry into market segments of high value-added products by achieving 
productivity increases and improvements in quality primarily through human capital investments.  In the 
absence of venture capitalists, corporatism's role also implied serving as a stimulus for joint ventures and 
production networks of small and medium sized firms. Macro-level coordination meant to achieve an 
effective and transparent balance of costs;  ensured broad access to upgrading of skills; and helped 
develop appropriate qualification criteria and a corresponding wage structure. 
Similar cooperative efforts aimed at creating locations for foreign investment (Chaloupek 1995: 
19). The combination of high skills, social peace, predictable wage/price trends and a well-developed 
public infrastructure helped attract a fair amount of foreign business, especially from Germany. One of 
the best-known examples of helping spawn new industries was the "automobile cluster" located in the 
province of Styria. In this and other cases, the Social Partnership's role meant forging a cooperation 
between many small and medium-size firms; making venture capital available in the absence of capitalist; 
providing public training and restructuring programs for the employees; organizing a division of labor 
between the firms; coordinating and sharing the cost of restructuring; administrating pooled resources; 
and providing legal, financial, and technical consulting. Success in niche and up-market production, an 
emphasis on quality and upgrading, technological modernization, and corresponding policy coordination 
became the most important new source of social partner legitimacy (Steiner, 1996; Aiginger, Gelder and 
Pendler 1998). As Traxler (1995c: 279) put it "beyond any normative consideration of social justice, 
centralized governance remains important for the mere reason of economic efficiency." In short, under 
supply-side corporatism, the social partners function primarily as producers of collective goods.
 In its core domain however, Austro-corporatism underwent a process of organized 
decentralization. The chief problem that Austrian associations have been facing is that their internal 
organization did not keep up with the new economic and political environment that the social partners 
themselves  helped bring about. The decentralization of collective bargaining has spawned sectoral 
demarcation problems and internal conflicts. Nevertheless, throughout the 1990s, the social partners 
remained key players in Austrian policy-making no government could afford to ignore. Rather than 
succumbing convergence pressures, Austro-corporatism in the 1990s represents an example of a  
reasonably successful but divergent adaptation of a labor market regime faced with international market 
pressures. 
With the change from the SPÖ-ÖVP duopoly to the new ÖVP-FPÖ coalition, the Social 
Partnership was facing its greatest challenge yet. With no stake in Proporz democracy, the Freedom Party 
was overtly hostile to the old model. Initially, it vehemently sought to reorganize the institutions, replace 
managers loyal to the old system, and aggressively counter the unions' opposition to the government's 
reform agenda. In fact, the Freedom Party and, to a lesser extent, the Conservatives deliberately courted 
confrontation. Calculated outrage and exaggerate claims about the "fat cats and the "knights of privilege" 
in Austria's "Verbändestaat" (state of associations) had long been part of the FPÖ's populist strategy. 
Framing the intended policy changes in terms of a "show-down" between the "forces of change" and the 
"old entrenched interests" added emotion, drama, and  political showmanship, thus providing welcome 
entertainment to a voting public that had come to expect no less from the Freedom Party. In the context of 
union resistance to a reorganization of the corporatist run national social insurance system, Jörg Haider 
even claimed to have information that the labor unions were planning a coup against government. 
Moreover, the hostility of organized labor to the government had additionally the benefit of serving as a 
source of cohesion for the government. 
 Bolstered by a nation closing ranks behind the government during the international sanctions in 
2000,  the ÖVP-FPÖ coalition effectively demonstrated that neither threats of strike and union mass 
protests nor appeals to the "Austrian way" would persuade the new national leadership to pursue 
consensus solution if that seemed politically inexpedient. It was made clear that the unions and 
employers' associations would be limited to their central function and no longer exert the broad political 
influence of times past. In fact, the new government made it a deliberate point to ignore the input of labor 
and business when carrying out its social policy reform agenda. The interest groups were invited for mere 
consultations rather than negotiations. Respectively, the government willing to negotiate "only about 
means but not ends" (Müller and Falland 2004) and allowed very little time for organized interest to study 
complex policy proposals.
 The coalition also took steps to counteract directly the influence of the labor market association 
on the legislative process and national policy making.  When introducing legislation, it was presented in 
the form of private member bills, thus circumventing the requirement of submitting government draft 
legislation first to the social partners for review (see Müller and Falland 2004: 816). Moreover, many of 
these reforms were pursued with great speed and  by means of omnibus legislation (packing in over 100 
amendments) to keep parliamentary review process short. Ominously, in 2001 FPÖ members floated the 
idea to impose legal restrictions on the ability of the leaders of interest groups to serve simultaneously in 
Parliament. This so-called Personalunion had been a key source of the Social Partners' strength by 
allowing them to influence the legislative process. The FPÖ also proposed cutting back the compulsory 
membership fees to the Chamber of Labor, generally considered to be the main "brain trust of the labor 
movement" (ibid.). In 2002 the government enacted a law forcing the unions to make public the volume 
of its financial resources for paying substitute income to people on strike.
Initially, the ÖVP-FPÖ government was highly unified and surprisingly effective in bringing 
about structural political change by deliberately challenging the traditional Austrian consensus model. 
Failing to get the government to negotiate substantively, a powerful union branch organization eventually 
called for a strike in 2001. The Federal Railway Workers' Union, organized a day of action against the 
reform of the public sector pension system. Labor officials threatened with the suspension of train 
services, prompting fears in the national media that the life of the nation might be brought to a standstill. 
Yet, to everybody's surprise, the strike turned into a complete fiasco, becoming a major embarrassment 
for organized labor.
 In Austria's political culture of consensus, any form of serious political confrontation had 
become such an alien concept that real conflict was simply unimaginable, even for a union that saw one 
of its central political goals, the retention of certain privileges under the public retirement system, in 
danger of being abolished. Accustomed to political access at the highest level, the unions found 
themselves unable to mount an effective counter campaign of street pressure and public information. 
Other protests followed with varying degrees of success. Eventually, an internal union referendum 
seeking a political mandate to escalate protests against the governments' social policy and pension reform 
measures succeed in received overwhelming support and drawing public attention.
The social policy changes pursued by the new government were such that they would have been 
nearly impossible for a coalition including the Social Democrats. First there was a pension reform which 
gradually raised the retirement age by two years. Other controversial measures included the taxation of 
injury-related social security payments, higher contributions by farmers to the public health and pension 
insurance, a reduction in unemployment money for single parents as well as cuts in the unemployment 
support for seasonal workers. As a first step to a pension model in which public support is complemented 
by a private scheme, the government created a major tax incentive/penalty for employees to invest in a 
private retirement fund. Then, departing from the Social Democratic model of the "free university," the 
new government introduced "course fees" for all students beginning in the fall of 2001. 
Fiscal need served also as justification for the wave of privatization of public and semi-public 
enterprises.  Other measures aimed at the liberalization of the Austrian economy, including especially the 
electricity and natural gas sector. Claiming to fight Proporz and party influence, the government initiated 
sweeping changes in the leadership of a range of public sector enterprises. Invariably, the previous Social 
Democratic top manages were replaced with individuals affiliated with the Conservatives or Freedom 
Party.  The most controversial such reorganization occurred in Austria's (quasi-monopolistic) public 
broadcasting company, ORF, a frequent target of party political intervention since its inception. The 
company's restructured management and oversight board provided the FPÖ-ÖVP government with a 
comfortable two-thirds majority. One of the most complex undertakings fraught with political resistance 
by local politicians and interest groups (including from within ÖVP itself) was the reform of the public 
bureaucracy and civil service administration. The first such effort since 1925 intended to cut some 13,000 
positions and save €1.1 billion along with the reorganization of public universities (greater autonomy and 
a new legal status of faculty and staff).To the extent that the semi-public, and the public sector had been 
key areas of social partner interest and influence, the fact that corporatist actors remained largely 
sidelined in these reforms gives further indication of the weakening of Austria's organized interest during 
the early phase of the  ÖVP-FPÖ government.
Politically the most far-reaching initiative designed to deliver a blow to Austro-corporatism was 
the aforementioned restructuring of the social insurance administration. The complex 110-year-old 
national social insurance system, commanding a budget of some €28 billion, was administered 
autonomously by the social partners (organized employees and employers interests), thus constituting a 
center piece of the Austrian consociational model. As private sector employees make up the bulk of 
contributors to the various pension and health insurance funds, the (Social Democratic-dominated) unions 
have traditionally played the principal role in this system.  Claiming organized labor was unwilling to 
carry out the necessary reforms to reduce the system's chronic deficits, the government (especially the 
FPÖ) was bent on altering the composition of the main executive board of the 27 insurance funds against 
the determined resistance by the social partners (particularly the unions). Moreover, FPÖ officials 
launched a campaign of fierce personal attacks against the chief executive officer of the social insurance 
administration, a high-ranking Social Democratic union leader. This was a clear break with previous 
Austrian political practices. The unions felt more provoked by this act than by any other single initiative 
of the coalition, in part, because this issue visibly demonstrated labor's powerlessness without an ally in 
the government. The social insurance reform went so clearly against the old spirit of bipartisan consensus 
politics that especially the Conservatives faced considerable internal resistance. Specifically, the ÖVP's 
own labor faction and even the employers' association opposed the government on this question. It 
required all of Chancellor Schüssel's authority to discipline his party and obtain the necessary votes in 
Parliament. 
Yet, over time, it was evident that parts of the ÖVP still remained wedded to the old model. 
When the initial drive of the coalition slackened in the wake of electoral setbacks and mounting problems 
within the  the FPÖ (see below), the unions became more effective in coordinating their protests with the 
political opposition and in criticizing the coalition's social retrenchment policy. Protests following the 
assault on the union strike fond, forced government to retreat quietly by accepting that the Trade Union 
Congress found a legal way to circumvent the voluntary organizations law in that the latter could transfer 
the strike money to a private foundation. Moreover, also the proposal to reduce interest group 
membership fees, respectively the idea to use a portion of these contributions for social insurance 
purposes was eventually dropped.  Other announced reforms such as a reduction in labor costs and the 
flexibilization of store opening hours were postponed indefinitely. Even the government's biggest coup, 
the restructuring of the national insurance system, was eventually overturned by a verdict of Austria's 
Constitutional Court. 
Summing up, despite the sweeping political changes, many aspects of the old system still persist 
– in their core domain of wage bargaining and labor market policy, the Social Partnership is likely to 
remain dominant (although the area has gone through decentralization and flexibilization). In other policy 
areas, the social partners have become severely weakened without a real partner in government. While 
organized labor eventually become more effective in its opposition to government policy and while there 
have been instances of across-the-isle solidarity between organized labor and industry, even in defiance of 
ÖVP party line, one cannot escape the impression that these relative successes had more to do with the 
problems within the government, specifically the implosion of the FPÖ, than with a genuine re-
stabilization of the Austrian model.

From the Consensus to a Majoritan Two-Bloc Model?
	The political developments in Austria since 2000 cannot be understood in isolation of the 
extraordinary events that have unfolded since then. There were first the unprecedented international 
sanctions against the ÖVP-FPÖ government (Schneider 2000). Then there was a string of electoral 
defeats for the government, particularly for the Freedom Party, which in turn was followed by escalating 
turmoil within the FPÖ, culminating in a near-split and a Haider-led rebellion against his on party in 
government. In response, Chancellor Schüssel dissolved the government, which resulted in elections in 
2002. In these, the Freedomites lost two thirds of their voters (-16.9%), thus plunging back to about the 
level at which they had been after Haider's first campaign in 1986. Gaining 600,000 voters from the FPÖ 
alone, the Conservatives achieved 42.3% of the votes, which represents a share of the electorate the ÖVP 
last commanded in the mid-1970s. 
	The dramatic collapse of the Freedom Party and the jump in support for the Conservatives were 
unprecedented swings in postwar Austrian politics. Short of realistic or numeric alternatives, the coalition 
between ÖVP and FPÖ was renewed while arrangements were made to contain Haider in Carinthian 
provincial politics.  However, the Freedom Party was now so diminished in stature that it could be 
comfortably ignored by the Conservatives. Its principal means of commanding attention left is to provoke 
another government collapse. Exactly this situation appears to be unfolding once again when these lines 
were written. Having lost, since 2003, six local and state elections as well as the European elections 
(nearly all by double-digit percentages), the FPÖ once again faces an attempt by its erstwhile chairman to 
take control of the party and reconstitute it. Depending on how it unfolds the current crisis has a great 
potential for bring down also the second ÖVP-FPÖ coalition.
	It is impossible here to discuss the many details surrounding the above events, all of which are 
well-documented by a considerable literature on the subject (Plasser and Ulram 2002, Luther 2003, 
Heinisch 2002b, 2003, 2004, Müller and Falland 2004). It is however important to consider the 
implications for the future of the Austrian model. First, the ÖVP-FPÖ coalition was not only marked by 
moments of crisis as the above paragraph may suggest. In fact, in its first  two years the government gave 
the appearance of unity and pursued a very ambitious agenda, while the opposition appeared to have great 
difficulty to regain its footing.
	In terms of their political agenda, the Conservative-Freedomite Coalition offered an eclectic mix 
of neoliberal, cultural-conservative, and populist elements. The boldest and most crucial initiative by the 
coalition was an ambitious drive to reform the budget. Originally, the intention had been to achieve a 
balanced budget by 2005 but the government deemed it more politically expedient to speed up the 
process, targeting the fiscal year 2001-2002 instead. There had been a general consensus in all Austrian 
parties that the reform of the budget was a major priority. 
	What followed was a brilliant exercise in political marketing. The new telegenic Finance Minister 
of the FPÖ, Karl-Heinz Grasser, by far the youngest and most popular member of the cabinet, announced 
that a "zero-deficit" was within reach by 2001. The symbolism of this goal proved irresistible, disarming 
the opposition strategy to deride this effort as "number fetishism."  Unlike the previous Grand Coalition, 
the new government was highly effective in translating its objective into a political formula voters could 
understand, thus generating enormous political momentum.
	Several policy innovations were the result of explicit ideological preferences of ÖVP and FPÖ. A 
center piece of the conservative family agenda was the introduction of infant money [Kindergeld] for all 
mothers. Its swift implementation by July 2001, reflected both the FPÖ's preference for the so-called 
"baby check" (a program that had helped Haider become governor of Carinthia) as well as the ÖVP's 
long-standing demand that all mothers, whether working or not, should be entitled to equal financial 
compensation.  The rapid realization of this political objective was all the more remarkable since it 
created a major new public expense (€400 for each child for up to three years) at a time of fiscal 
retrenchment. Another expensive policy commitment was the decision to purchase initially 24 (later 18) 
state of the art fighter planes for the traditionally poorly equipped Austrian military. Other political 
initiatives long favored by Conservatives and the right such as tougher police laws designed to combat 
organized crime and illegal immigration were instituted in the wake of September 11. In terms of law 
enforcement, the aspect of "punishment," especially for drug-related offenses, received greater attention 
than it had under the previous government. With respect to education policy, the reforms signaled a trend 
away from comprehensive schooling toward a renewed emphasis on more differentiation (school 
autonomy, school competition, student tracking), higher specialization, more market orientation, and 
greater student discipline.
	While being clearly a departure from previous administrations, these policy measures generally 
do not bear the mark of being far right or excessively populist. In part, this was due to the moderating 
influence of the Conservative Chancellor, the initial inexperience of the Freedom Party, and a growing 
willingness of the national FPÖ leadership to signal "respectability" and moderation.
	As expected, the shift to the right was most evident in Austria's immigration and European Union 
policy. Despite calls by the industry for "165,000 additional workers by 2005" (Der Standard May 4, 
2001), the FPÖ prevailed, permitting only marginal changes in the immigration quota and maintaining 
one of the internationally most restrictive regimes for reuniting immigrants with their families. 	
	In the context of EU-expansion, the Freedom Party continually bought up new issues and made 
certain demands designed to raise Austria's political leverage while slowing down the enlargement 
process. . Directed especially against Prague and Ljubljana, the FPÖ's campaign (including a referendum 
drive) exacerbated latent anti-Slavic sentiments in the population and overshadowed Austria's bilateral 
foreign relations at the time. 
	The Freedomites' general aversion to European integration was also evident in their constant 
criticism of the European Union, ranging from its handing of BSE and foot and mouth disease to rulings 
against Austria on transit traffic and anonymous savings accounts. Even after the sanctions, FPÖ 
members repeatedly launched fierce verbal outbursts against EU officials. 
	One of the most ominous developments in that time period concerned the FPÖ's attacks on the 
Austrian court system in general and the constitutional court in particular, whenever the verdicts seemed 
to conflict with FPÖ demands. This was the case in a ruling enforcing the erection of bilingual town name 
signs that the local (Haider) government had refused to set up in Carinthian towns with Slovenian 
minority populations. Haider and others in the FPÖ not only mocked the decision, but began a fierce 
campaign against the chief justice, denouncing the verdict as a "carnival joke" and "unpatriotic" while 
making thinly veiled threats against the local Slovenian population (Preglau 2001). In another instance, 
following court-ordered reversals of asylum and deportation cases, Haider demanded that the courts be 
"cut out" from the asylum process because it "irresponsibly...delayed the deportation of hardened 
criminals."  Right-wing populist reflexes on the part of the Freedom Party also surfaced on many other 
occasions but were usually contained by the ÖVP and more moderate voices within the FPÖ government.
	Generally speaking however,  the new government initiated a series of reforms, which, although 
unprecedented in Austria, were in line with conservatives policy changes elsewhere. While there was not 
the kind of "slash-and-burn" neoliberalism that some critics have alleged, the political culture in Austria 
became certainly harsher and more confrontational. Especially the Freedomites contributed to a climate in 
which corporatist interests and institutions such as the courts and the federal presidency as well as 
individual officials became the targets of sustained political attacks.
	Overall, we may agree with Müller and Falland (2004) that the political shift in 2000 changed the 
patterns of party competition from a consensus model to a majoritan one. The new political landscape is 
now dominated by two blocs,  the Conservative-Freedomite government and a Social Democratic-Green 
opposition. Evidence for the bloc formation can be found in the substantial policy agreement between 
Conservatives and Freedomites; the speed with which they concluded the coalition negotiations (11 days) 
in 2000; and their joint emphasis on priorities such as lean government, privatization, and greater 
competition. Moreover, the new government jointly pursued majoritan strategies by sidelining interest 
groups and the opposition whenever possible; by generally presenting a unified front in the policy 
process; by aggressively seeking to control, in terms of personnel and resources, all institutions the 
government deemed important; and by more aggressively asserting government control in areas that had 
traditionally been considered bipartisan or under corporatist influence.  Moreover, the government's 
internal coordination vis-à-vis the opposition was far superior to previous coalitions. It developed policy 
selling points and a coherent message, jointly orchestrated strategies to move legislation quickly (dubbed 
"speed kills"), and packed bills with amendments in order to overwhelm the opposition. As Müller and 
Falland  (2000: Table 3: 823) show, under the ÖVP-FPÖ government, a greater percentage of bills was 
passed with votes cast only by members of government party than in the past. Lastly, when, after the first 
series of electoral defeats, the Freedom Party became increasingly embroiled in internal conflict, the ÖVP 
tried to support their FPÖ government colleagues against the growing grassroots rebellion.
	In turn, the Social Democrats and Greens also constitute a natural bloc for they have a 
considerable overlap in terms policy preferences and ideology; particularly since the SPÖ has moved to 
the left after 2000. Like their German counterparts, the two Austrian left-of-center parties have long 
flirted with the idea of a coalition except that the combined share of votes had not yet been sufficient. The 
experience of the heavy-handed ÖVP-FPÖ tactics and a Conservative campaign, warning Austrians 
against a "Red-Green government á la Germany" also help push Social Democrats and Greens closer 
together. 
	All the above evidence clearly suggests increased bloc competition, showing that majoritanism 
has been on the rise. Nonetheless, there have also been contacts between the Conservatives and the 
Greens, including even a brief but substantive round of negotiations between Schüssel and his Green 
counterpart after the last national elections. In one Austrian Province, the Conservatives and the Greens 
recently formed a regional coalition government that could serve as a national model. By the same token, 
the relations between SPÖ and Greens have not been entirely free from friction. Incidences such as a call 
by the Social Democratic leader for a single member district voting system, which would surely eliminate 
the small Green Party, have strained relations. The Greens were also angered by the SPÖ's unwillingness 
to commit itself publicly to a coalition with the Greens prior to the 2003 elections. Particularly at times 
when the Greens seemed the more effective opposition party, the Social Democrats appeared anxious to 
go after the former as much as the government.
  	Surprisingly, there have also been contacts between the SPÖ and the FPÖ. The latter have 
become increasingly eager to signal social competence. Their plunge in the polls is generally attributed to 
having seemingly "abandoned" their clientele of "ordinary people." By standing up to the ÖVP's reform 
agenda and budgetary priorities, some in the FPÖ have hoped to regain some of the lost ground, even by 
seeking tactical alliances with the SPÖ. In Carinthia, Haider has even reclaimed the governorship with the 
support of the local Social Democrats in 2004. In short, while at the core, the two blocs are highly 
competitive, particularly between the ÖVP and SPÖ, at the margin of each bloc, the situation is more 
fluid. Falland and Müller (2004) have thus labeled the post-2000 Austrian party system "a weak version 
of the two-bloc system."
	Yet, a quick glance at the current political situation in Austria does remind one of the saying that 
the more things change the more they stay the same. Despite having won most local, state, and corporatist 
elections, despite now controlling three of nine governorships (even in the erstwhile Conservative 
bulwark of Salzburg), and despite leading time and again in national opinion polls, the Social Democrats 
have not succeeded in creating a "momentum for change."   Their chairman and top candidate, Alfred 
Gusenbauer, remains, at the worst, a liability and, at best, a rather uninspiring figure. Aside from his 
image problem, the party has failed to develop a programmatic alternative to the ÖVP-FPÖ agenda and 
has still not overcome the ideological divide the marked the SPÖ's final years in government. While 
Social Democrats have moved to the left, their rhetoric has been designed chiefly to lure back the 
disappointed FPÖ voters. Social populism, however, is hardly a substitute for a coherent program that 
could give an indication of a future government policy. As leftist opposition party, the Social Democrats 
have opposed the government nearly at every turn. It is however unlikely (and fiscally nearly impossible) 
that the SPÖ would actually reverse all Conservative policies. In that case, certain groups would quickly 
become disillusioned and defect once again in Austria's volatile political environment. In short, the SPÖ 
has thus far failed to make a convincing case for its own return to power but largely befitted from the 
FPÖ's problems. 
	The Conservatives on the other hand have been fairly successful both in terms of pushing their 
agenda and winning the most important election. They have become the natural party of government and 
Schüssel is its undisputed leader. Moreover, the ÖVP-leader has clearly halted and reversed the meteoric 
rise of the Haider and his party. Despite all this success, his and his party's future in government hinges 
on the increasingly unlikely prospect that FPÖ will survive as a functioning party until the next election 
(whether it would survive the elections, is another matter entirely). Following a dismal performance in 
election after election,  Haider obviously concluded that his part is irrevocably "damaged goods" and 
seeks to constitute it anew.  To this end he is engaged in eliminating his erstwhile hardline far-right 
supporters, whom he regards as chief detractors. As the show-down continues, the national FPÖ 
leadership in government is helpless looking on. As Austrian commentators have remarked on this 
occasion,  the coalition exists de facto "only on paper" given that FPÖ cabinet members appear to have 
lost their legitimacy in the eyes not only of voters, but also the party's base, and the bulk of 
functionaries.  However, Schüssel and the ÖVP leader have been reacting calmly to the new turmoil that 
gripped their coalition partner. He may calculate that with the complete fragmentation of the FPÖ, most 
voters would beat a path either to the Conservatives or the Social Democrats. Politically however, this 
would closely correspond to the political landscape of the early 1980s and Austrian politics would have 
come a full circle.

Conclusion
	Although the Austrian Consensus model had essentially outlived its original raison d'etre by 
1970, its mechanisms were periodically reactivated by policymakers to deal with extraordinary political 
challenges. Political leaders turned to consociationalism and consensus mechanisms precisely because the 
system had been designed to internalize social conflict as well as lower the political risk for the major 
parties. Spreading the electoral cost among a variety of actors provided not only political cover for 
unpopular decisions but the Consensus model also guaranteed continuity in times of change. Particularly 
after 1986, the social partners were enlisted as facilitators of economic flexibilization and 
decentralization. Nonetheless, the underlying stability conditions of the consensus model continued to 
erode. Its first and foremost anchor was the large electoral support, the erosion of which was hastened 
first by the Haider's anti-system populism and, later, by the FPÖ's anti-internationalism. While providing 
a new raison d'etre for the Social Partnership overall, Austria's economic integration nonetheless 
weakened Austro-corporatism in other respects by eliminating many of its formal powers and causing 
heightened internal friction. 
	Yet, a collapse of the system was averted when economic fears and perceived international 
threats changed the political dynamics in the mid-1990s. By virtue of its radical nature and its tendency to 
weaken the major parties asymmetrically even the FPÖ contributed unwittingly to the stability of the 
system, which proved able to cope until 1999. The two political developments impacting Austria thus had 
mutually countervailing effects prolonging the existing arrangements.
	When the stability conditions were eroded with the emergence of three equally large parties, the 
strategic calculus for the Conservatives changed in favor of a coalition with the ideologically closer 
Freedom Party. As a result, the consensus system gave way to a two-bloc model, in which the ÖVP-FPÖ 
government was able to embark upon an ambitious reform agenda against determined opposition of 
corporatist interests and opposition parties. Without an ally in the government, the social partners seemed 
helpless to affect significantly the policymaking process outside their core domain. However, the chronic 
weakness and near disintegration of the Freedom Party after the initial two years not only threatens the 
continued reform ambitions of the government but have strengthened elements in the ÖVP sympathetic to 
the consensus model. 
It is thus not inconceivable that we may see a re-formation of an adapted consensus model following new 
elections, particularly if the numerical distribution of seats in parliament makes a coalition with a small 
party all but impossible – we would then have to conclude about Austrian politics: plus ça change, plus 
c'est la même chose.

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20






	  For details see Baumann, Birgit Österreich schlägt Deutschland: Hightech-Regionen sind Europaspitze 
Der Standard, Print-edition, 18.2.2005

	  Under a system known as Proporz [proportionality], positions in virtually all public and quasi-public 
institutions (e.g., all levels of public bureaucracy, banks, utilities, schools, state media, the executive boards of 
public companies, etc.) were divided proportionally between the two political camps according to the parties' 
respective territorial and electoral strengths. Austria's "Proporzdemokratie" (Lehmbruch 1967) thus not only 
ensured inter-elite cooperation but also reinforced the hegemony of the two major parties in all areas of public life
	  Under this arrangement, leading corporatist functionaries routinely held principal positions in the two 
major political parties, were appointed to important government posts, and/or carried legislative mandates. 
	  Forcing members of a parliamentary faction to vote with the party line.
	 The new Social Democratic Party leader and Chancellor Bruno Kreisky had committed himself to the 
"Democratization of all Areas of Life" (Ucaker 1997: 260) and a sweeping modernization of "stuffy" post-war 
Austria. Path-breaking by Austrian standards were the reforms of the legal system (reforming the penal code), 
family law (e.g., the equal status of women, equalizing the status of "illegitimate" children), the legalization of 
homosexuality, the overhaul of the health care system, the legalization of abortion, the expansion and equalization of 
educational opportunities (e.g., sweeping curricular reforms and the introduction of free university education), the 
massive expansion of the social system (particularly with respect to heath care and pensions), the modernization of 
the bureaucracy and the voting system (e.g., lowering the threshold for smaller parties and introducing mechanisms 
of direct democracy) – see Bischof and Pelinka eds. 1994.
	 Inflation remained relatively under control thanks to the social partners' effective income policy, which 
combined wage-price coordination with wage restraint (Scharpf 1991: 56-69). Moreover, by jointly supporting the 
stable exchange rate between the Austrian Schilling and the German Mark and by consistently orienting Austrian 
nominal medium and long range wage increases to German wages, Austrian salaries kept pace with productivity, 
raising on average by 3.1% per year well into the 1980s.

	  A partnership to put the house in order. 
	  Particularly the Social Democrats felt the brunt of the disaffection but the Conservatives clearly failed to 
benefit sufficiently from the defections. As a result, there was a substantial decline in party identification among 
both blue-collar workers (-18%) and SPÖ supporters with subjective party ties (-31%) (Ulram 1994: 93). 
	  The discrepancy between the end date and beginning date of governments in Austria is due to the usually 
long period of coalition negotiations, delaying the formation of a new government by several months, typically from 
fall to early in the following year.
	 A series of political scandals and numerous cases of influence peddling and corruption that surfaced in 
the 1980s further undermined public confidence in the Parteienstaat (the Parties' State).  By the end of the decade, 
43% of the electorate (+10% since 1980) had the impression that "politics is always or often failing to resolve 
important questions," and 68% (+31% since 1980) believed that "politicians are corrupt and open to bribery." As a 
result, in the late 1980s, 47% of Austrians preferred "to see new parties in the political arena" while only 10% had 
favored this idea a decade earlier (Ulram 1994: 93).

	  "Volle Teilnahme am Binnenmarkt" cf.Rusinow 1987: 2
	  The argument was that if the EFTA member Austria became part of the new European Economic Area 
without full EU membership, Vienna would have had to abide by economic rules created in Brussels over which its 
had no say.
	  Hence, the widespread cliché that "Austria was an island of the blessed" and "a place in which the 
clocks were ticking at the different pace."
	  For the social partners, EU membership meant (i) the loss of policy instruments; (ii) the curtailment of 
legal powers; and (iii) the transfer of regulatory competencies to the supranational level (Karlhofer and Talos, 1993; 
see especially Falkner, 1993).
	 In 1986 some 102,000 Austrians worked in the nationalized industry. Five years later that number had 
shrunk to some 80,000, and finally by 1994, the labor force was to be cut by an additional 50,000. As a concession 
to the unions, the SPÖ sweetened the restructuring by offering generous social packages and early retirement 
options, which, however, exacerbated Austria's budgetary problems in the 1990s. By 1991, the government's 
contribution to the various national pension insurance funds rose to ATS 173 billion (about €12.6 billion), thus 
jumping by nearly 10% in one year and amounting to more than a third of the entire national budget of some ATS 
619 billion. In fact, 70% of all social spending was absorbed by the bloated pension system (see WIFO Monatshefte 
8 (August) 1992: 421).
	  Economic growth had slowed in 1994 to 1.8% and was predicted to decline further (0.8%). With a 
recession looming and the unemployment rate rising to 6.7% (OECD method: 4.4%), the annual budget deficit of 
4.63% of GDP was forecast to reach 5% in 1995.The total national debt was approaching 70% of GDP. 
	  Source ISMA, IFES, Fessel+GfK and OGM, see Profil October 11, 1994.
	 All three opposition parties sought to circumvent the influence of the social partners when drafting 
legislation by relying on so called "Parliamentary Initiatives" (Initiativanträge). These reduce the power of the 
social partners to affect a bill during its origination and presentation phase in Parliament.
	  With the government unable to deliver on its targeted savings in 1995, the social partners subsequently 
presented their own budget proposal with cuts of 34.5 billion Austrian Schillings (AS), the amount initially proposed 
by the government. The government intended to reduce the expenses on its own operations and personnel by some 
32% but also suggested cutting the federal subsidies for old age pension insurance (by 13.5%), families with 
children (by 6.3%), and unemployment insurance (by 5.3%). Simultaneously, the government planned to raise the 
taxes on upper-middle incomes, capital gains, energy consumption, cars and tobacco.

	  IMAS-poll quoted in Wirtschaftswoche 20 November 1995.
	  Ranking second: "protecting the pension system;" Ranking fourth: "maintaining the welfare state," 
Ranking sixth: "expanding citizens' rights" and Ranking 11th: "protecting the environment" -- Der Standard 2 
January 1996.
	  A sampling of newspaper headlines read: "Better Deal-Making than Chaos"  (Die Presse  9 November 
1995) "Crisis Revives the Social Partnership" Wiener Zeitung 1 October 1995). The Austrian media generally 
compared the performance of the interest groups favorably ("well-functioning institution," "providing stability," 
"capable of delivering") with that of the government ("unstable," "debacle" -- Wirtschaftswoche, 19 October 1995). 
	  The problem was compounded by a lack of acceptance on the part of many Austrians as well as 
restrictive integration procedures, preventing foreigners from becoming citizens and "merging" with the native 
population. Instead, they were often channeled into certain urban ghettos, resulting locally in high concentrations. 
The long presence in Austria of labor migrants from Yugoslavia, Turkey, and other parts of the Middle East 
naturally attracted new arrivals, who quickly gained a foothold in so called foreigner districts [Ausländerbezirke].
	  (ÖVP-led Grand Coalitions with the SPÖ 1945-66; ÖVP majority government 1966-70; SPÖ-minority 
government with tacit FPÖ support 1970; SPÖ majority government 1971-1983; SPÖ-dominated Small Coalition 
with pre-Haider FPÖ 1983-86; SPÖ-led Grand Coalition with the ÖVP 1987-99)
	 Müller and Falland (2004) report that the new SPÖ leadership inherited an accumulated debt of €25 
million. See also the discussion in Müller 2000: 297.
	   The program's Chapter III, titled "Austria First" was a departure from past practices in that it no longer 
emphasized Austria's allegiance to the German nation and cultural sphere but endorsed an explicit 
"Österreichpatriotismus" [Austrian Patriotism] (Programm/FPÖ 1999: 108), from which the program derived a 
number of principles such as protecting Austria's cultural heritage, environment, and regional identities
	  Haider: "You know as well as I, that the Austrian nation is a miscarriage, an ideological miscarriage, 
because belonging to a people is one thing, belonging to a state is another,.., then it must be possible to consider 
oneself a German-Austrian." (Trans. by author, ORF- Inlandsreport, August 18, 1988).
	 Out of a total population of some 5.7 million eligible voters, 91,000 voters switched from the ÖVP to the 
Freedomites in 1994. A year later, in the unscheduled 1995 elections, another 101,000 former ÖVP voters supported 
the FPÖ (News-Extra December 18, 1995:9) and finally in 1999, yet another  141,000 (Der Standard October 3, 
1999)
	  To the modernization losers in the industrial proletariat, Haider appeared as a politician who paid them 
the respect they craved. To the middle class voter, he represented relief from high taxes and fees. To the business 
community and the upwardly mobile, he held out the promise of trimming the maze of Austria's bureaucratic rules 
and economic regulations. To the nationalist terrified by globalization, he seemingly held the solution to containing 
the onslaught of Anglo-American culture and foreign immigration. To the traditionalist he not only appeared to 
honor >the great sacrifices of the war generation= but promised relief from a Europe without borders. To young 
voters Haider, in contrast to all other politicians, resembled one of their own, as his jovial demeanor, non-traditional 
rhetoric and trendy appearance exuded an aura of success, vitality and camaraderie. To the value-conservatives and 
right-wing activists, he held out the great promise of undoing what they perceived as the leftist hegemony in 
education, culture and the arts. To all of them, the FPÖ leader represented their best hope of changing the old 
political patronage system. 
	  This was revealed to the author in 2001 by Andreas Khol, former ÖVP head of faction and First Speaker 
of the Austrian Parliament. 
	  Among things, the SPÖ had planned on an issues-campaign. However, Schüssel's pledge to take his 
party into opposition if it came in third, changed the dynamics of the campaign in the final month. The horse-race 
aspect then trumped issues politics, creating a situation to which Haider and Schüssel responded masterfully while 
leaving the SPÖ sidelined.
	  Under this policy, wages have kept pace with productivity, increasing on average 3.1% per year from 
1960 to 1990. The appreciation of the currency and the resulting increase in buying power were not achieved at the 
expense of the competitive position of industry. Low inflation and gradual and modest real-wage increases coupled 
with relatively low unemployment reflect skilled macro-level coordination and flexibility over long time periods. 
	  Cf. the Social Partner Agreement on the Flexibilization of Apprenticeship Programs.
	  The Social Partnership organized and maintained extensive vocational training and apprenticeship 
programs combining a guaranteed work place with mandatory school attendance for most non-college-bound over-
16-year-olds. 
	  For instance, between firms that provide training programs and those that do not, or between areas and 
firms that have structural advantages and those that do not, etc.
	   Firms in which the state had a controlling interest: e.g., Austria Telekom, the national printing office, the 
Postal Savings Bank, the national Austrian Tobacco Company, and the Vienna Airport.
	  A typical case was that of the public electricity company Verbund, where three former SPÖ and three 
former ÖVP executive managers were replaced by six individuals affiliated with ÖVP and/or FPÖ (cf. Profil 
January 29, 2001: 20). Other examples of replacement were as follows: (Austrian Industries ÖIAG (5 SPÖ => 5 
FPÖ/ÖVP), Wiener Zeitung (2 SPÖ 1 ÖVP=> 3 ÖVP), Salzburg Festival Board (2 SPÖ => 1 ÖVP, 1 FPÖ), 
Brenner/Graz-Koflach Rail Companies (4 SPÖ =>2 ÖVP, 2 FPÖ), BUWOG (1 SPÖ => 1 ÖVP), Austrian 
Advertising (1 SPÖ => 1 ÖVP).
	  The FPÖ demanded initially to cut by 40% the mandatory contributions of individuals to the Austrian 
Chamber of Labor (Kammerumlage).
	  The court argues that the government's role in reorganizing the system violated the constitutionally 
guarantee principle of corporatist autonomy. Naturally, the government is free to pass a constitutional law turning 
the autonomous national insurance system into a state-run scheme.
	  One of the more unusual measures was to install Haider's sister in the cabinet and later as the de facto 
chair of the party. The hope was that this would prevent her brother from once again undermining his own people in  
government. 
	  In 1999 the country had the second highest annual deficit (2.1%) after Denmark among 15 EU member 
states. In terms of national debt (in percent of GNP), Austria ranked 10th with 65.5% and was thus behind all of the 
more advanced EU economies with the exception of Belgium and Sweden.
	  This point had been an anathema for the Left, who claimed that this was tantamount to rewarding 
motherhood and thus a ploy to drive women out of the workforce. Under the previous government, only working 
women on maternity leave received compensation along with a separate general family subsidy for each child.
	  The Freedomite insistence on  Integrierbarkeit (ability of foreigners to integrate themselves) not only 
has clearly racist overtones (who "blends" in best, respectively establishing a special applicant quota for non-
German speaking children) but also resulted in burdensome new requirements for all foreigners(incl. expensive, 
mandatary language acquisition). After September 11, FPÖ politicians repeatedly called for restricting political 
asylum laws, demanded that residency permits for spouses of international marriages be granted only after 7 years.
	  FPÖ government officials demanded that "enlargement must cost less" and threatened that Austrian 
contributions between 2004 and 2006 would be lower than demanded by the EU Commission (derStandard-online 
September 2, 2002) As a precondition for European Union accession, Freedomite (but also some Conservative) 
politicians demanded specifically that the Czech Republic rescind the "Beneš Decrees" and Slovenia the so-called 
"AVNOJ Mandates" to redress the grievances of ethnic Germans expelled after 1945. 
	 For example, at the height of the international sanctions against Austria, there were FPÖ demands to 
investigate Austrian politicians that showed disloyalty by criticizing the country abroad. Later, there were also calls 
to toughen libel laws to restrain "journalistic diatribes" against the government. Moreover, Freedom Party officials 
continued to bring libel suites designed to muzzle critics in the media and academe.
	  E.g., calling the Commissioner on Enlargement, Günter Verheugen a "coward" (derStandard-online) 
April 14, 2002 and EU Agriculture Commissioner, Franz Fischler, a "traitor" (derStandard-online April 08, 2002).
	  derStandard-online August 6, 2002
	 For detailed examples, see Müller (2000) and Müller and Falland (2000)
	  Cf. the interview with Austrian political scientist Fritz Plasser in Kleine Zeitung print edition February 2, 
2005:3.
	 FPÖ Vote Share and Losses / Gains in National, State, Communal, EU Elections 1999-2005:
------------------------------------------------------------------------------------------------------------------------------------
Nat.El. 1999 26.9% (+5.02%); SE Styria 2000 12.41% (-4.74%); SE Burgenland 2000 12.63% (-1.92%); SE 
Vienna 2001 20.16% (-7.78%); Nat. El 2002 10.01% (-16.9%); SE Lower Austr. 2003 4.49% (-11.59%); SE 
Upper Austr. 2003 8.40% (-12.23%); SE-Tyrol 2003 7, 47% (-11.64%); SE-Carinthia 2004 42.43% (+0.37); SE 
Salzb.2004; 8.69% (-10.89%); EU-E. 2004 6.31% (17.09%); SE-Vorarlberg 2004 12.94% (-14.47%); CE-Lower 
Austr.2005; 3.31% (-4.56%); CE-Styria 2005 6.05% (5.28%)
	  Michale Volker "Neuwahlen"  in derStanbdard March 11 2005.