In July 2017, the leader of Austria's right-wing populist Freedom Party (FPÖ) and future vice chancellor, Heinz-Christian Strache, spent a vodka-and–Red Bull–fueled night on the Spanish island of Ibiza with one of his closest political allies, Johann Gudenus, the former deputy mayor of Vienna. Over drinks in a luxury villa, the two men attempted to collude with a woman they believed to be the niece of a Russian oligarch. Their aim was to use Russian money to sway the outcome of Austria’s upcoming parliamentary election. Unfortunately for Strache and Gudenus, the whole thing was secretly recorded on video.

The fallout from IbizaGate, as the scandal quickly became known, has plunged Austria into its biggest political crisis since the end of World War II. On May 17, two German newspapers, the Süddeutsche Zeitung and Der Spiegel, published extracts from the six-hour video. They showed Strache offering the Russian woman government contracts and a stake in Austria’s most important tabloid, the Kronen Zeitung, in exchange for her campaign support. Although it is still unclear who was behind the elaborate sting operation, its political consequences were immediate. At the time the videos were released, Strache’s party, the FPÖ, was the junior partner in a coalition government with the center-right Austrian People’s Party (ÖVP). Within 24 hours of IbizaGate, he resigned as party leader and deputy head of government. That same day, Chancellor Sebastian Kurz of the ÖVP called for snap elections and replaced all FPÖ ministers with technocratic caretakers. A mere nine days later, a parliamentary vote of no confidence forced Kurz and his entire government out of office. A new caretaker government, led by Austria’s first female chancellor, Brigitte Bierlein, will be in power until a new coalition government can be formed after elections in September.

Having served a mere 525 days in office, the thirty-two-year-old Kurz has entered the annals of Austrian history as the shortest-serving chancellor of the postwar era and the only head of government ever to be toppled by a no-confidence vote. His ouster was a stunning reversal for a politician whom the U.S. ambassador to Germany, Richard Grenell, had only a year ago praised as a “rock star.” Ultimately, the secret to Kurz’s success—his willingness to move the ÖVP to the right while bringing the FPÖ into government—also proved to be his undoing.

For many, including German Chancellor Angela Merkel, Kurz’s downfall offers one simple lesson: governing with the far right is not only morally repugnant but the pinnacle of political irresponsibility. Yet this view underestimates the complexity of Austria’s political situation and its implications for Europe. It also fails to offer any insights into how establishment parties should deal with far-right populist movements. For as temporarily embarrassing as IbizaGate has been for Kurz and Austria, it is also reassuring. The scandal has shown that a mature democracy such as Austria, with strong political institutions, a free press, and a centrist political establishment, is capable of defending established political norms against a far-right onslaught. It has also highlighted the center-right’s ability to curtail and even reverse the growth of the far right’s influence in government and—most important—among voters themselves.

Heinz-Christian Strache at a press conference in Vienna, May 2019 Leonhard Foeger / Reuters

AUTHORITARIAN DEMOCRACY?

Kurz’s bid to form a coalition with the FPÖ after Austria’s 2017 elections was controversial from the start. The chancellor enabled the far right to spread its xenophobic, far-right populist agenda into the upper echelons of government. And by bringing the FPÖ into government, Kurz also drew criticism for opening the country up to increased Russian influence. (The optics of Foreign Minister Karin Kneissl—an independent supported by the FPÖ—kneeling in front of Russian President Vladimir Putin at her wedding in August 2018 didn’t help.) Kurz even faced criticism from within his own party. In a book tour promoting his recently published memoir, former Vice Chancellor and ÖVP leader Reinhold Mitterlehner called Kurz a “right-wing populist” and warned that he was transforming Austria into an “authoritarian democracy.”

Yet Kurz’s embrace of populism was more strategic than his critics give him credit for. His alliance with the FPÖ was intended to stop the decline of the ÖVP, which has governed Austria in a grand coalition with the Social Democratic Party (SPÖ) for much of the country’s postwar history. This coalition was underpinned by a power-sharing system known as Proporz, in which the two mainstream parties divvied up all mid- and senior-level positions in government, the civil service, and the state-owned sector. This system can best be described as the “Portisch consensus,” named after the journalist Hugo Portisch, who hosted a pair of historical television documentaries, produced from 1981 to 1995, that exerted a powerful influence on Austria’s postwar identity. Portisch wove a narrative in which, after the civil war of the 1930s and the experience of Nazi rule from 1939 to 1945, the future SPÖ and ÖVP parties realized that they needed to work together to preserve the Austrian state. As the Portisch consensus emphasizes, the grand coalition and the Proporz system were the pillars of Austrian national unity and prosperity. The FPÖ, whose first leader had been a major general in the SS, had no place in Austrian democracy.

By the time Kurz became the leader of the ÖVP in 2017, both Proporz and the grand coalition were dying. Infighting between the SPÖ and ÖVP, and their inability to work together to pass much-needed tax and welfare reforms, had rendered the coalition deeply unpopular among Austrian voters. By the spring of 2017, the FPÖ was consistently beating both the SPÖ and the ÖVP in polls. And although the FPÖ had been dragged down by scandals and internal feuding every time it had previously approached power, Kurz and his strategists judged that ignoring the populist far-right party would only strengthen it in the long run. As long as the FPÖ stayed out of government, it could attract votes from Austrians fed up with what they increasingly regarded as a corrupt and sclerotic establishment.

The fallout from IbizaGate has plunged Austria into its biggest political crisis since the end of World War II.

With the FPÖ threatening to win a majority in the not-too-distant future, Kurz decided to act. He transformed the ÖVP into what he called a political “movement” and reformed the party’s structure to strengthen his leadership position. Kurz also began to make inroads among populist voters by moving the ÖVP to the right and adopting FPÖ positions on topics such as immigration and Islam. Notably, he openly challenged Merkel’s decision to welcome migrants to Europe in the fall of 2015 and advocated for a closure of the so-called Balkan Route in 2016. Yet Kurz was neither antiestablishment nor anti-EU; at his core, he remained a center-right politician, albeit an antiestablishment one who made occasional use of populist rhetoric.

The strategy worked: by the October 2017 parliamentary elections, the ÖVP was once again the most powerful political faction in Austria. Under the leadership of Strache, meanwhile, the FPÖ tried to make itself a more appealing coalition partner by purging some of its most extreme far-right elements. After the FPÖ entered government in December 2017, displacing the SPÖ from the coalition, Strache expedited this process, issuing official condemnations of anti-Semitism and Holocaust denial and softening the party’s stance on immigration. Strache also embraced Kurz’s liberal economic agenda and abandoned plans to introduce more direct democratic mechanisms, such as legally binding plebiscites without parliamentary approval.

By joining forces with the FPÖ, Kurz was able to move the far-right party closer to traditional center-right positions in select areas such as economic liberalization, deregulation, and the European Union. He also exerted discreet behind-the-scenes pressure to rein in the far-right’s rhetoric after a number of what he and Strache referred to as “isolated cases,” or Einzelfälle—their euphemism for xenophobic, anti-Semitic, and anti-Islam remarks by individual FPÖ party members.

The subsequent downfall of Kurz’s new coalition—which remained broadly popular throughout its time in government—arguably had less to do with the FPÖ’s far-right rhetoric than with its long history of being ostracized under the Proporz system. Because the FPÖ had been shut out of the federal government for most of the postwar years, it lacked the powerful patronage networks in government, civil service, and state-owned enterprises enjoyed by the ÖVP and SPÖ. These networks have historically determined who gets lucrative government contracts and plum posts at both state and federal levels.

The decade-long dominance of the grand coalition guaranteed a balance of power based on corporatist interest groups affiliated with the two major parties—an arrangement known as social partnership, which to this day constitutes the fulcrum of the Proporz system. Although it fostered social cohesion, this system excluded everyone other than the ÖVP- and SPÖ-affiliated interest groups from influencing the political process at state and federal levels. This opened the door to corruption whenever the FPÖ came into power, as the party did not feel bound by the prevailing norms of the grand coalition. And although the establishment parties have had their fair share of corruption scandals, these cases were the exception rather than the rule, whereas the reverse has been true for the FPÖ.

IbizaGate was especially enraging to the public thanks to a recent shift in the norms of appropriate behavior under the Proporz system. Over the past decade, Austrian media and civil society organizations have led a general push for more transparency in politics and the public sector. One illustration of this shift has been the widespread criticism of the former ÖVP governor of Lower Austria, Erwin Pröll, for directing 1.35 million euros of public money to his private foundation in 2017. Only a few years back, such criticism would have been unthinkable —Pröll had governed the ÖVP’s most important state for decades, and such payments were considered one of the spoils of office.

At an anti-government protest in Vienna, May 2019 Lisi Niesner / Reuters

HE'LL BE BACK

IbizaGate has clearly tarnished Austria’s international image, but the scandal needs to be put in perspective. The FPÖ remains a party dedicated to democratic principles, and it still enjoys the support of between 18 and 25 percent of the electorate, although this number will likely decrease in the coming months now that Austrian tabloids appear to have turned on the party. The SPÖ, meanwhile, is slowly becoming a nonfactor. Crippled by an ongoing leadership debate and unable to articulate an appealing vision for social democracy in the twenty-first century, it now trails the FPÖ in some polls.

Even after his fall from grace, Kurz remains the country’s most popular politician and the ÖVP the leading political party, supported by over 37 percent of voters, according to one recent poll. Kurz will likely get his redemption in the elections scheduled for September. It is an open question, however, what his future government will look like.

The ÖVP could try to form a new coalition with the weakened FPÖ, although senior Kurz advisers I spoke to said that is unlikely. A new version of this coalition would require the FPÖ leadership to publicly demonstrate an increased respect for Austria’s political norms by, for example, embracing recent efforts to improve transparency (including through stronger campaign finance laws) and continuing to purge far-right elements from the party. It would also require the FPÖ to sideline its chief ideologue and party strategist, Herbert Kickl. As interior minister, Kickl was the most controversial cabinet minister in the Kurz-Strache government, thanks to his alleged role in a scandal involving Austria’s domestic intelligence agency, his attacks on press freedom, and his push for tough anti-immigrant policies. Kurz attempted to oust Kickl following IbizaGate but overplayed his hand—all of the FPÖ ministers resigned in solidarity with Kickl, leading to the announcement of snap elections. The main lesson for Kurz should be that he can enter into a new coalition with the FPÖ only if it is clearly the junior partner in government, with the ÖVP controlling all the major ministries.

Kurz’s only alternative, given his known opposition to a grand coalition with the SPÖ, is a coalition with the liberal New Austria (NEOS) party. At the moment, the ÖVP and NEOS are polling short of a parliamentary majority, which has led some to suggest an ÖVP-NEOS–Green Party coalition. Yet a large chunk of NEOS and Green voters vehemently dislike Kurz, and it is unclear whether Kurz, after dragging the ÖVP to the right, would be willing to move his party back to the center on issues such as immigration. The free-market NEOS and the left-wing Greens would also have to agree on a joint approach to welfare state reform—a difficult proposition. In that sense, Kurz, following the September 2019 elections, could have no alternative but to try another iteration of the FPÖ-ÖVP coalition.

The good news is that the past 525 days have shown the maturity of Austrian democracy. There is little danger of the country turning into a Hungarian-style illiberal democracy, even if the FPÖ does reenter government. The bad news is that such a new ÖVP-FPÖ coalition would not only further polarize Austrian society but almost inevitably end prematurely. Another failed coalition would, in turn, undermine public trust in the Austrian political process and hurt the country’s macroeconomic prospects. Kurz, even if he achieves a record victory at the polls in September, will be caught between a rock and a hard place.