EU politics: Austria is a different story - BBH

Analysts at Brown Brothers Harriman explained that the two-party condominium (Social Democrats and People's Party) since the end of WWII is in disarray. 

Key Quotes:

"That is how the Green's van de Bellen is running against the Freedom Party's Hofer in the presidential contest.  Van der Bellen won barely in the spring before the courts throughout the results due to irregularities in counting the postal votes.  Hofer enjoys a small lead in the polls that seemed in the UK and US to under appreciate the vulnerability of the status quo (Brexit and Trump).   

The Austrian president is a largely ceremonial office, but both candidates have promised to be activists.  The president signs the legislation, and can both approve and dismiss the government.  This power can be used,  but there are checks.  Perhaps, the most important check in Austria comes not from the Social Democrat Chancellor, with whom executive power is invested, but also Freedom Party's ambitions to move into the mainstream of the Austrian electorate.  It is serving in only two of nine Austrian provinces.   

The next parliament election, like in Italy, is slated for 2018.  However, like Italy, an election next year cannot be entirely ruled out.  Hofer has threatened to dissolve the government if it does not take a sufficiently hard stance against immigration.  Hofer wants to ally Austria with the populist-nationalist forces that have come to power in Poland, Hungary, the Czech Republic and Slovakia and takes an accommodative stance toward Russia.  Van der Bellen would strengthen the traditional links with Germany.  

After the UK had voted to leave the EU, Hofer implied that the Freedom Party (which he does not head) could call for a referendum too.  However, the suggestion did not find fertile ground.  The country is very integrated to Europe through, trade, tourism, and capital flows.  Nevertheless, the populist-nationalist forces appear to be filling the political vacuum in Austria, like in several other countries.    

A Hofer presidency does not mean that Austria will leave the EU or EMU or (somehow) opt out of the European Stabilization Mechanism, which Hofer has also suggested.  However, it would be the first far-right head of state in Western Europe since WWII.  It would another data point what some see as a broader wave of populism-nationalism, in a way that the Italian rejection of the referendum on the Senate does not deliver."