VZCZCXRO8518
RR RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHVI #0187/01 0251631
ZNR UUUUU ZZH
R 251631Z JAN 07
FM AMEMBASSY VIENNA
TO RUEHC/SECSTATE WASHDC 6075
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

UNCLAS SECTION 01 OF 05 VIENNA 000187 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL PGOV ECON EFIN AU
SUBJECT: THE GUSENBAUER GOVERNMENT'S COALITION PROGRAM 
 
REF: A) VIENNA 144 B) VIENNA 52 C) VIENNA 45 
 
Summary 
------- 
 
¶1.  (SBU) On January 16, Chancellor Alfred Gusenbauer 
presented the government program of the Grand Coalition 
between the Social Democratic (SPO) and the People,s Party 
(OVP) to parliament.  Stressing his vision of a &more social 
Austria,8 Gusenbauer outlined a program that primarily 
represents a continuation of the previous OVP-led 
government's economic course, with the inclusion of some SPO 
social priorities.  The foreign policy program carries 
Foreign Minister Plassnik,s handwriting and largely reflects 
long-standing consensus between the SPO and OVP on foreign 
policy issues.  In the defense area, the program calls for 
exploring the possibility of canceling or renegotiating the 
acquisition of Eurofighters for the Austrian military. 
 
¶2.  (SBU) The main opposition party, the Greens, 
characterized the coalition's program as disappointing and 
uninspiring.  The Greens and the other two opposition 
parties, the Freedom Party (FPO) and the Alliance Future 
Austria (BZO) criticized Gusenbauer for breaking election 
campaign promises to abolish university student fees and to 
cancel the Eurofighter acquisition.  FPO Chairman 
Heinz-Christian Strache proclaimed that Gusenbauer is &the 
first OVP Chancellor with SPO membership.8  End Summary. 
 
 
Foreign Policy and Security Policy 
---------------------------------- 
 
European Affairs 
---------------- 
 
¶3.  (U) A large portion of the coalition program's chapter on 
foreign policy focuses on European affairs.  The program 
expresses strong support for the EU aspirations of the 
Western Balkan nations.  The program calls for the EU to 
coordinate negotiations with Croatia &as soon as possible,8 
while other Western Balkan countries should have an 
&accession perspective.8  On Turkish accession, the program 
reiterates the GoA,s insistence on holding a referendum in 
Austria on Turkey's EU accession, should negotiations 
conclude successfully.  The EU Neighborhood Policy should 
encourage Ukraine and Moldova to adopt European standards and 
values, it says.  The government also would like to make an 
active contribution to the discussion of the EU constitution. 
 The GoA will support the establishment of the European 
Institute of Technology (EIT) with a secretariat in Vienna. 
 
 
Neutrality, Security and Promoting Peace 
---------------------------------------- 
 
¶4.  (U) The program underscores Austria's constitutionally 
mandated permanent neutrality in the context of the common 
European Security and Defense Policy (ESDP).  Stability in 
the Balkans remains at the core of Austrian foreign and 
security policy efforts and, the program says, contributes to 
Europe's security.  In the Middle East, Austria will continue 
to support a peace settlement on the basis of the Road Map. 
The GoA hopes to expand its assistance to the Palestinians, 
and further intensify dialogue with Arab civil society.  The 
program notes that relations with the Islamic world require 
Austria's &special attention.8 
 
 
United Nations, Multilateral Politics 
------------------------------------- 
 
¶5.  (U) Austria will step up its campaign to obtain a 
non-permanent seat on the UN Security Council in 2009-2010. 
Additional multilateral efforts will focus on further 
strengthening Austria's efforts to promote a dialogue of 
cultures, especially in European Islamic circles. 
 
 
Transatlantic Relations 
----------------------- 
 
¶6.  (U) During his January 16 presentation to Parliament, 
Chancellor Gusenbauer reiterated Austria's commitment to 
strengthen transatlantic relations.  OVP Parliamentary Floor 
Leader (and outgoing Chancellor) Wolfgang Schuessel stressed 
that Austria desires and needs a good functioning 
relationship with the United States.  Referring to U.S. 
assistance to Austria after World War II, Schuessel said 
Austria should be thankful to the United States. 
 
 
 
VIENNA 00000187  002 OF 005 
 
 
 
Security and National Defense 
----------------------------- 
 
¶7.  (U) While emphasizing Austria's status as a neutral 
country, the government program on &Security and National 
Defense8 underscores Austria's commitment to the ESDP goals, 
ongoing cooperation within PFP, and continued engagement in 
international peacekeeping missions. 
 
¶8.  (U) The coalition pledges active Austrian commitment to 
goals within the ESDP, such as the EU,s &Headline Goal 
20108 and the EU,s civil crisis management goals for 2008. 
Regarding international peacekeeping/crisis management 
missions, the coalition plans to streamline, and, thus, 
expedite the decision-making process for sending Austrian 
personnel abroad.  To ensure adequate personnel for 
international operations, the government aims to make service 
in international missions mandatory for professional army 
personnel.  In addition, the coalition paper calls for better 
training and equipping of the military.  The GoA hopes to 
achieve these goals through &progressive adaptation8 of 
appropriate defense budgets. 
 
¶9.  (U) The coalition paper contains only brief reference to 
an &active and passive surveillance8 of Austrian airspace. 
However, Defense Minister Norbert Darabos will have the task 
of renegotiating the Eurofighter contract with a view to 
lowering the costs, or, if possible, to cancel the contract. 
 
 
Development Assistance 
---------------------- 
 
¶10.  (U) The GoA will continue to push, on the EU level, for 
a mechanism to better finance development assistance, e.g., a 
tax on foreign exchange transactions.  In accordance with EU 
goals, the GoA will strive to increase development assistance 
to 0.51% of GDP by 2010. 
 
 
Energy 
------ 
 
¶11.  (U) Energy policy ) domestic and multilateral ) is an 
area in which the GoA may become more active.  With Austria's 
oil and gas company OMV leading the development of the 
Nabucco gas pipeline, as well as investing in new Liquid 
Natural Gas terminals, the GoA will strongly support the 
&development of a common European energy policy8 and 
&stabilizing crisis regions8 (Caucasus) as part of their 
new &energy foreign policy8. 
 
¶12.  (U) Austria will also promote the research and 
development of renewable energy sources, but it will remain 
adamantly opposed to nuclear energy.  The GoA will speak out 
against EU funding for increasing nuclear capacity, and it 
will continue its vocal opposition to nuclear power plants 
across its borders, most notably the Temelin plant in the 
Czech Republic. 
 
 
Domestic Affairs 
---------------- 
 
Security 
-------- 
 
¶13.  (U) The coalition agreement stresses the ongoing need 
for international cooperation to fight organized crime, 
illegal migration, and terrorism.  This will require 
&adequate measures,8 such as data exchange, as outlined in 
the EU,s The Hague Program 2010 and in the Treaty of Pruem. 
Austria thus supports the establishment of EU-wide asylum and 
terrorism data banks.  Furthermore, Austria will also expand 
its regional cooperation with Balkans countries within the 
scope of the &Salzburg Group," a periodic meeting of 
regional interior ministers that Austria invited.  In this 
context, Austria at the same time pledges to honor citizens, 
basic rights to privacy and security. 
 
¶14.  (U) Regarding immigration policy, the coalition gives a 
higher priority to the integration of resident foreigners 
over new immigration.  The government wants to encourage 
stronger German language competency for immigrants.  The 
coalition urges increased reliance on Europol data and 
biometric information to fight illegal immigration. 
 
 
Civil and Constitutional Reforms 
-------------------------------- 
 
 
VIENNA 00000187  003 OF 005 
 
 
¶15.  (U) Reflecting a long-standing SPO demand, the coalition 
agreed to lower the voting age from 18 to 16.  The quid pro 
quo for the OVP is the introduction of absentee voting by 
mail.  The government will extend the legislative term from 
four to five years, following the 2010 elections. 
 
¶16.  (U) Addressing the ongoing dispute in the state of 
Carinthia regarding bilingual road signs, the coalition 
agreement calls for the implementation of the Constitutional 
Court's rulings to erect additional bilingual town signs in 
Slovene by summer 2007. 
 
 
Budget and Fiscal Policy 
------------------------ 
 
¶17.  (U) The GoA maintains the goal of balancing the federal 
budget over the economic cycle in line with the EU,s 
Stability and Growth Pact.  The GoA aims to reduce the 
federal deficit to 0.1% of GDP in 2010, with a small surplus 
thereafter.  Additional goals include full employment; 
strengthening Austria's competitiveness; ensuring sustainable 
financing of social security; and increasing efficiency of 
the public administration.  In mid-2007, the GoA plans to 
raise the diesel and gasoline taxes.  By the end of the 
legislative period in 2010, there should be enough scope to 
implement individual and corporate tax cuts. 
 
 
Business Climate, Labor Policy, and Privatizations 
--------------------------------------------- ----- 
 
¶18.  (U) The government program promises to promote direct 
investment and to further strengthen Austria's attractiveness 
as a headquarters for international firms.  The GoA will 
apply a 7-year transition period for Romania and Bulgaria 
before allowing free movement of labor from the new EU Member 
States.  Other plans include introducing a minimum wage of 
Euro 1,000 per month; reducing employers, wage costs through 
a tax cut towards the end of the legislative period; and 
introducing more flexible work hours, although ruling out 
Sunday shop hours.  The GoA foresees no further 
privatizations. 
 
 
Social Reforms, Health System, Pharmaceuticals 
--------------------------------------------- - 
 
¶19.  (U) In line with one of the SPO,s campaign themes, 
social reform is a main priority for the new GoA.  Important 
projects include the introduction of a basic social allowance 
of Euro 726 per month for &those in need8 and the 
establishment of a comprehensive care and nursing system to 
address the rising number of elderly people.  The GoA plans 
to mitigate some features of the 2000 and 2005 pension 
reforms.  The program also calls for continued harmonization 
of the various public pension systems.  The GoA aims to 
improve the family allowances system and expand child 
day-care centers.  To reduce the deficit in the social health 
insurance fund, the GoA will implement cost savings measures 
and increase social security contributions. 
 
¶20.  (U) U.S. innovative pharmaceutical firms in Austria will 
face Austrian efforts to slow down the rising costs of 
medicines and drugs.  The GoA plans to review the 
reimbursement system and to promote generics by allowing 
price competition with the providers of innovative new 
pharmaceuticals. 
 
 
Foreign Trade: Critical Towards Globalization 
--------------------------------------------- 
 
¶21.  (SBU) Although the GoA promises promote exports of goods 
and services and foreign direct investment (FDI) to Austria, 
the imprint of SPO critics of globalization is visible.  The 
GoA intends to &intervene8 in the process of opening up 
trade and calls for more emphasis on social coherence, 
cultural diversity, and environmental protection.  Austria 
opposes the liberalization of public services such as health, 
water supply, education and culture.  The new GoA favors a 
successful conclusion the Doha Round to increase market 
access for Austrian exporters. 
 
 
Tough Words Again on Biotechnology and Climate Change 
--------------------------------------------- -------- 
 
¶22.  (SBU) The Ministry of Agriculture and Environment will 
maintain its existing course with policies ) opposition to 
agricultural biotechnology and calls for mandatory emissions 
reductions ) that are often contrary to USG interests.  The 
 
VIENNA 00000187  004 OF 005 
 
 
GoA intends to defend national bans on biotech corn seeds and 
to support Austrian states, efforts to create biotech-free 
zones.  The GoA also hopes to invigorate the process of 
establishing a stricter EU-wide definition of co-existence. 
 
¶23.  (U) On climate change, the GoA will not modify its 
emissions reduction goals, although Austria's deviation from 
its self-proclaimed target is the highest in the EU.  Austria 
strongly supports inclusion of aviation emissions in the 
EU,s Emissions Trading System. 
 
 
Other Reforms and Plans 
----------------------- 
 
¶24.  (U) Other reform measures and plans include: 
-- reform of the Austrian Financial Market Authority; 
-- reorganization of Austria's R&D policy and an additional 
Euro 800 million for R&D expenditures in 2007-2010, with the 
goal of achieving an R&D quota of 3.0% of GDP by 2010; 
-- reorganization of the Federal Competition Authority and 
the Federal Cartel Prosecutor; 
-- expansion of the powers of the broadcasting and telecom 
regulator (RTR); 
-- continuation of media digitalization, particularly of 
radio broadcasting; 
-- expansion of broadband availability to all of Austria by 
2009; 
-- extension of e-government services and distribution and 
use of digital signatures; 
-- administrative reform and streamlining the division of 
responsibilities among the various government levels. 
 
 
Coalition Mechanics 
------------------- 
 
¶25.  (U) The coalition parties have committed themselves to 
implement their program jointly in the cabinet and in 
parliament.  However, the coalition agreement allows 
individual parliamentary initiatives by the SPO and OVP.  The 
party undertaking such an initiative must communicate its 
intentions to its coalition partner a week in advance, with 
the goal of reaching consensus before introducing the 
initiative in parliament. 
 
 
Comment 
------- 
 
¶26.  (SBU) The SPO/OVP program is relatively vague, calling 
in many areas for exploring and discussing ideas, rather than 
stipulating concrete projects.  The need for compromise 
between the large center-left and center-right parties 
prevented the development of visionary reforms. 
Nevertheless, with a two-thirds majority, the Grand Coalition 
could push through constitutional changes. 
 
¶27.  (SBU) The coalition's foreign policy objectives 
represent a continuation of the outgoing government's 
policies: promoting EU accession for the Western Balkan 
nations; skepticism towards Turkish EU membership; 
continuation of the dialogue of civilizations to engage the 
European Muslim community; and lobbying for a set on the UN 
Security Council in 2009/2010.  The coalition's defense 
policy stipulates continued commitment to international 
missions within ESDP, particularly in the Balkans. 
 
¶28.  (SBU) Within the EU, the GoA will strongly support a 
harmonized energy policy and enhanced efforts to develop 
alternative energy sources.  Austria will arguably remain the 
EU,s most adamant opponent of agricultural biotechnology. 
 
¶29.  (SBU) The GoA will not reverse major structural and 
economic reforms, which the previous center-right coalition 
implemented over the last six years.  However, the SPO will 
insist on a more &social face8 for the reforms, such as 
softening some features of the past pension reforms.  Reforms 
will continue, albeit perhaps at a slower pace and with a 
different focus, i.e., with more emphasis on social and 
welfare reforms and less on deregulation, liberalization and 
privatization. 
 
¶30.  (SBU) Additional spending for growth and employment 
initiatives, and education and social benefits could render 
the goal of a balanced budget unrealistic.  Contrary to most 
economists, recommendations, the GoA is not taking advantage 
of the current strong economic growth -- the peak of the 
cycle is 2006/2007 ) to balance the budget.  Economists have 
also noted the GoA program does not specify cost savings, 
while criticizing the GoA,s budget revenue projections as 
overly optimistic.  It is therefore not clear whether the GoA 
 
VIENNA 00000187  005 OF 005 
 
 
will have sufficient scope at the end of the legislative 
period to implement the promised tax cuts. 
 
Kilner