VZCZCXRO8218
RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHVI #1392 2661155
ZNR UUUUU ZZH
R 221155Z SEP 08
FM AMEMBASSY VIENNA
TO RUEHC/SECSTATE WASHDC 0984
INFO RUCNMEM/EU MEMBER STATES

UNCLAS VIENNA 001392 
 
SIPDIS 
 
STATE FOR EUR/CE 
 
E.O. 12958: N/A 
TAGS: PGOV PREL AU
SUBJECT: AUSTRIAN ELECTIONS: SPO SEIZES AGENDA WITH NEW SPENDING, 
TAX RELIEF 
 
REF: a) VIENNA 1297, b) VIENNA 1284, c) VIENNA 1287 
 
¶1. Summary: In the run-up to the September 28 national elections, 
the SPO has seized the agenda by moving forward with a package of 
inflation relief measures.  The SPO managed to form a series of ad 
hoc alliances in order to schedule the measures for a vote.  The 
effort has sparked speculation about post-election coalition 
possibilities, though the SPO is likely aiming to gain momentum in 
the campaign rather than lay the groundwork for a post-election 
government.  End Summary. 
 
Faymann Anti-Inflation Package 
------------------------------ 
 
¶2.  SPO Chairman Werner Faymann set the agenda for the final weeks 
of the campaign with the announcement of a five-point program to 
mitigate the impact of inflation.  At a September 12 special meeting 
of parliament, the SPO managed to win approval to have the measures 
included on the agenda for September 24, the last parliamentary 
session before election day.  The SPO found various partners for its 
motions.  The OVP, the SPO's junior governing coalition partner, 
voted with the SPO on motions increasing home nursing care 
assistance for the elderly, continuing early retirement for laborers 
with long service in the workforce, and expanding child support 
benefits.  The opposition FPO and Greens joined the SPO on a motion 
to abolish university student fees.  The FPO also voted with the SPO 
on a motion to cut in half the value added tax (VAT) on basic food 
and medicine, while the OVP and Greens rejected the proposal as 
ineffective and costly. 
 
¶3. The OVP and Green MPs had enough votes to block the VAT proposal, 
but a number of their MPs were absent during the vote, a blunder for 
which OVP Chairman and Vice Chancellor Wilhelm Molterer immediately 
called his MPs to task.  For passage at the September 24 
parliamentary meeting, the SPO and FPO will need the votes of the 
BZO, headed by Carinthian Governor Joerg Haider, who remains 
uncommitted. 
 
Coalition Speculation 
--------------------- 
 
¶3. The SPO's use of assorted "coalitions of the willing" to pass the 
measures has nurtured speculation about possible governing coalition 
scenarios after the elections.  Observers have focused particularly 
on the possibility of an SPO-FPO coalition government, or an SPO 
minority government supported by the FPO.  Faymann has recently 
reiterated that he would not form a coalition with the FPO under its 
rightwing/populist chairman Heinz-Christian Strache.  He has not 
ruled out the possibility that the SPO could form a minority 
government, though he has said that is not his preference. 
 
SPO, OVP Play Politics with Budget 
---------------------------------- 
 
¶4.  The debate over "election candy" reflects basic differences 
between the major parties, which are now neck-and-neck in the polls. 
 The SPO under Faymann presents itself as caring for the needy and 
willing to widen the deficit to address their concerns.  The OVP 
supports some new expenditures but advocates for budget austerity 
and accuses the SPO and other parties of trying to lure voters with 
irresponsible handouts.  Lost are the voices of economists who fear 
an end to reform and outperformance (ref C).  In retrospect, 
classifying some revenues as "extraordinary" starting in 2006 -- an 
attempt to set aside funds for structural reform -- has backfired 
since voters see the state as awash in money. 
 
Comment: SPO Momentum 
--------------------- 
 
¶5.  While the SPO and OVP are close in the polls, the SPO has seized 
the agenda and appears to have gained some momentum at this stage. 
A recent poll placed the SPO in first with 29 percent, followed by 
the OVP with 26 percent.  The SPO campaign appears disciplined and 
well organized.  It is concentrated on introducing the media-savvy 
Faymann as the party's "new face."  Faymann maintains close 
relations with a number of media outlets, most prominently the 
mass-circulation Kronenzeitung.  The OVP appears to be having more 
difficulty in its efforts to promote Molterer as a leader who is 
trustworthy, honest, and reliable.  GIRARD-DICARLO