Austrian Uncertainty · Chancellor Resigns Following Failed Coalition Talks
Far-Right Freedom Party Poised to Take Power in New Political Landscape
This article is an updated, extended English version of a conversation between journalist Núria Sala and senior analyst Adam Casals. The original version was published by Diari ARA in Catalan and Spanish, on January 5th, 2025, in both digital and paper editions.
Altogether, shortly after the inauguration of President Trump in the United States, Austria may experience the first of a series of significant political changes within a shifting geopolitical environment.
UPDATE: VIENNA, January 5th, 2025, 10:50h CET / Adam Casals
Austrian Chancellor Karl Nehammer announced on Saturday that he will step down in the coming days after negotiations between the country’s two largest centrist parties to form a coalition government, excluding the far-right, collapsed. The announcement came after the liberal NEOS party, the third participant in the talks, withdrew from negotiations on Friday, accusing the other parties of lacking a bold vision for the country, writes Núria Sala.
“I will resign as Chancellor and as leader of the People’s Party (ÖVP) in the coming days, enabling an orderly transition,” Nehammer declared in a video statement shared on X (formerly Twitter), after a final round of talks with the Social Democrats (SPÖ) fell apart on Saturday. Together, the two traditional political parties held a one-seat majority in the Federal parliament, theoretically sufficient to form a government, albeit a fragile one. However, longstanding ideological rifts between conservatives and social democrats, who have previously governed Austria together, proved insurmountable, weakening both parties, according to Austrian analysts.
The effort to form a three-party coalition was launched after the far-right Freedom Party (FPÖ) won September’s parliamentary elections with 29% of the vote. The coalition aimed to prevent the FPÖ from governing. Austrian President Alexander Van der Bellen, a former leader of the Greens, tasked Nehammer with forming a government. Now, with Nehammer stepping down, two scenarios emerge: either the Freedom Party is invited to form a government, or snap elections are called. Polls from December suggest fresh elections would further boost the FPÖ, placing it at 35–37% support, ten points ahead of both the ÖVP and the SPÖ.
The main sticking point between the conservatives and social democrats was Austria’s budget. The country is grappling with an economic crisis while needing to implement strict austerity measures to meet the EU’s financial stability requirements. The SPÖ’s expansive and tax-focused proposals clashed with the ÖVP’s commitment to austerity.
President Van der Bellen had previously vowed during the election campaign not to appoint Herbert Kickl, the Freedom Party’s candidate, as Chancellor. He had justified this position by pointing to the FPÖ’s lack of majority support in parliament. However, with the current deadlock, that option may no longer be viable. According to analyst Adam Casals, the most likely outcome now is another election.
The failed negotiations coincide with sensationalist speculation in Germany’s tabloid Bild Zeitung about the possible return of Sebastian Kurz, Austria’s youngest-ever federal Chancellor, who once led a coalition government with the FPÖ. Casals notes that if Kurz were to return to lead the ÖVP, a far-right-led government with the Freedom Party in charge and the conservatives as a junior partner becomes a plausible scenario. Kurz was forced to resign following a series of scandals involving alleged manipulated polls and media financing, the international relations expert recalls. Some criminal court proceedings are still ongoing.
In the morning, citing sources close to him, Austria’s tabloid Kronen Zeitung dismissed the possibility of a Kurz comeback. An urgent poll revealed that more than 70% of Austrian voters were opposed to it. The previous evening, the ZIB newscast had highlighted the challenges facing the ÖVP in selecting a new leader following Mr Nehammer’s resignation. Nevertheless, several economic and industry associations, typically aligned with the ÖVP, had publicly advocated for a coalition led by the far-right FPÖ, a scenario that now seems likely — either immediately or after an election — regardless of who becomes the new leader of the conservatives.
Such developments could send shockwaves across Europe, particularly in neighbouring Germany, where parties like the SPD (Social Democrats) and CDU/CSU (Christian democrats, conservatives) are determined to avoid similar scenarios at all costs. The country will hold a snap general election on 23 February.
Moreover, this serves as a stark illustration of the influence wielded by Silicon Valley ideologues such as Elon Musk. Through his social platform, X, Mr Musk is increasingly shaping the European and international political landscape, openly expressing support for the far-right Alternative for Germany (AfD) while levelling harsh criticism at the political leadership in Germany, Britain, and Canada. Mr. Musk has former business ties to German-American investor and prominent Republican donor Peter Thiel, who is connected to the future American Vice President JD Vance and former Austrian Chancellor Sebastian Kurz.
Even if he remains in the United States, Mr Kurz has re-entered the German press and talk shows, and his influence is likely to remain significant within his former party. Notably, Mr Thiel and his circle are garnering increasing interest among German-speaking political and financial elites.
Altogether, shortly after the inauguration of President Trump in the United States, Austria may experience the first of a series of significant political changes within a shifting geopolitical environment.
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About Adam Casals
Adam Casals is an expert in international relations who provides consultancy services to public organizations, corporations, and international bodies. He is a regular contributor to media outlets in Spain and abroad.
