SPÖ-FPÖ Coalition, 1983-86

In the election of 1983, the SPÖ lost its absolute majority in the Nationalrat, although it remained the largest party (see End of the Kreisky Era). Kreisky fulfilled his pledge to resign as chancellor if the SPÖ lost its undisputed position in parliament. Fred Sinowatz, a rather colorless figure who had been minister for education under Kreisky, was selected as the new chancellor. The SPÖ decided to form a coalition with the FPÖ, marking the first time ever that the FPÖ had joined the government. Norbert Steger, the moderate chairman of the FPÖ, was named vice chancellor and minister for economic affairs, and other members of his party became minister for defense and minister for justice.

The SPÖ-FPÖ coalition lasted only three years and was not very productive. It faced a series of crises that never allowed it to become firmly established. Although the coalition had made progress on environmental protection a high priority, its decision to build a hydroelectric plant at Hainburg in a wetland forest east of Vienna provoked a storm of opposition from environmental activists. In the end, the government decided to cancel the project (see The Green Parties).

The coalition's image received another black mark in 1985 when FPÖ Minister for Defense Friedhelm Frischenschlager staged a welcoming ceremony at the airport for Walter Reder, a former Waffen SS member who had been serving a life sentence for executing civilians during World War II before being pardoned by the Italians. Some SPÖ members of the cabinet threatened to resign over this affair, but Frischenschlager was allowed to remain in his post. This incident hurt the SPÖ's standing among its own members, as well as among independent voters.

Neusiedler See (Burgenland) is one of the largest steppe lakes of Middle Europe. In cold winters it is frozen and people enjoy skating over the nearly endless ice surface. Photo courtesy H. Lohninger.

Austria received further unpleasant jolts in 1985. First came the news that diethylene glycol, a chemical used in antifreeze, had been added to Austrian wines in potentially lethal amounts. The wines affected came from Burgenland, the home province of Chancellor Sinowatz. Even more damaging to the country's selfimage , however, was the crisis in the state-run industrial sector that came to light at roughly the same time. The government announced that it had uncovered a financial scandal at the United Austrian Iron and Steel Works (Vereinigte Österreichische Eisenund Stahlwerke--VÖEST; commonly known as VÖEST-Alpine) in Linz. Public funds were required to cover large losses incurred through risky and unauthorized speculation in oil ventures. Moreover, the entire state industrial sector required streamlining, and jobs had to be cut.

The method of staffing these industries was a prime example of the ÖVP and SPÖ's Proporz system, which created fiefdoms in which political affiliations were the main criteria for filling high-level management positions. The crisis in this sector of the economy revealed that the Kreisky governments had been guilty of serious mismanagement. The confidence of the SPÖ in particular was shaken as it faced the need for privatization and layoffs. The government abolished the Proporz system at VÖEST-Alpine and appointed new management to rectify the problems.