Negotiations between Austria's far-right Freedom Party (FPO) and the conservative People's Party (OVP) in Vienna failed, marking the first such setback for the FPO, at least for now.
This is the second failed attempt to establish a coalition following the eurosceptic party's success in September's parliamentary election, where they garnered nearly 29% of the vote, surpassing the OVP's 26.3%.
The initial coalition effort, spearheaded by the OVP, aimed for a three-way partnership with the Social Democrats (SPO) and the liberal Neos, and later shifted to a two-way engagement with the SPO after Neos withdrew.
With only the Greens left out of coalition discussions post-election, the OVP remained the sole potential partner for the FPO.
The decision now rests with President Alexander Van der Bellen, who, as the former Greens leader and head of state, presides over government formation with limited possibilities.
Despite shared goals on tax and curbing illegal immigration, the conservative factions clashed on various issues including the European Union, Russia sanctions, the future of ORF (Austria's national broadcaster), and the oversight of key ministries. Even on immigration, they found themselves at odds.
Given the current stalemate in FPO-OVP talks, the SPO and Neos have expressed readiness to support renewed efforts towards a moderate centrist government. Previous negotiations were disrupted partly due to SPO leader Andreas Babler's policy shifts towards wealth and inheritance taxes, strongly opposed by the OVP and Neos.
A potential OVP-SPO coalition, although having a slim majority, faces challenges due to the risk of a single absence disrupting its agenda. Neos' participation in initial talks aimed to address this issue.
Neos could extend a more flexible form of support to an OVP-SPO coalition by endorsing previously agreed initiatives. Meinl-Reisinger, Neos leader, had proposed forming a budget-focused minority government with the OVP during past talks.
Still, an OVP-Neos collaboration would fall short by 23 seats in the 183-seat lower house, indicating a sizeable challenge compared to historical precedents. Failure to designate a party to form a coalition could lead to a snap election, paving the way for the FPO to solidify its lead in the polls, yet necessitating a coalition for stability.
Van der Bellen might opt for an interim government comprising civil servants or experts, lacking the mandate for significant actions as parties converge on the need for budget consolidation but diverge on implementation.