The Rooster in Brussels or Austria’s Twitter ‘Evolution’

Photo: Students protesting in the streets of Vienna, Oct. 29. Photo Credit: Cremer / Der Standard.

“I feel already well-equipped, and speaking English daily will hopefully not cause me to forget German,” Johannes Hahn – the last name Hahn translated into English means rooster or cock – replied confidently in his first public interview with the daily Der Standard of Oct. 28, when asked about his English language knowledge after his surprise nomination as Austria’s EU Commissioner. The current Federal Minister for Science and Research, in office since January 2007, will be Austria’s most influential European politician as part of Emanuel Barroso’s second European Commission.

With the unanimous decision by the Austrian government of Oct. 27 lunchtime, the show-down between the two coalition partners – Werner Faymann’s Social democrats and Josef Pröll’s Conservative ÖVP – eventually found an abupt end. The contest of nomination was mere on the surface, though, as Faymann declared already months ago that his party – though strongest in the Austrian Parliament – would not nominate a commissioner, but played a risky tactical game of which Conservative nominee they would support.

EP Elections: ‘Where Do You Go?’

I admit: I have cast my vote in the elections to the European Parliament at about 10.40 am this morning. So, I am one of about 35 to 40 percent of the Austrian electorate – my estimation – that by the end of the day will have cast their vote for the 17 Austrian seats in the European Parliament. In 2004, 42.5% went to the polls.

There were a few novelties for me: For the first time, I made my way to the polling station without any idea who I am going to vote. As resident of Vienna’s most-populated district Favoriten, it is a five-minute walk to the primary school at Keplerplatz, right at the administrative center of Vienna’s 10^th district, just off the underground station of the same name and the pedestrian Favoritenstrasse.

While attentatively walking through the streets at a humid but cloudy Sunday morning, I recall No Mercy’s 1996-hit ‘Where Do You Go?’ Indeed, where is Europe heading, I wonder.

Paul Krugman: “Stating the Obvious”

“Absolutely absurd,“ stated Josef Pröll, Austria’s Finance Minister of the conservative ÖVP on Apr. 15 when confronted with the controversial remark by 2008 Nobel Prize Laureate and Princeton University economics professor Paul Krugman with regards to the possibility of Austria’s bankruptcy.

Krugman’s provocative statement with regards to the impact of the financial crisis on Central and Eastern European countries (CEE) at the Foreign Press Club in New York on Apr. 13 sparked high-profile responses and anger in Austria.

When responding to the question of high exposure of Eastern European debt by Austrian banks, and whether that might lead the country into bankruptcy, Krugman responded directly.

“Now it’s a tiny one, it’s Iceland, but that just shows that it can happen, even to advanced countries. Ireland looks pretty bad because of large financial exposure. And Austria would probably be my third candidate in those leads.”

And the New York Times columnist delights himself in his blog two days later of having created a stir by just stating the obvious.

Evidently, Krugman’s comment has revived a debate of the past month when media reports, such as by the Austrian daily Die Presse (‘When, exactly, will Austria go into bankruptcy?’), circulated, sparked by concerns of high account deficits in the CEE countries.

Austria’s banks (not including Bank Austria and Hypo Alpe Adria as foreign-owned), Pröll clarified, have lending exposures in the CEE area of about EUR 200bn – approx. 70% of Austria’s GDP – but they are apposed to savings deposited of 85% of that amount.

The Finance Minister also dismissed the scenario of a complete deficiency of lending, but rather estimates that 10% might have to be bailed-out. The latter seems inevitable, as the European Bank for Reconstruction and Development (EBRD) estimated already in February 2009, that bad debts are likely to exceed 10% of lending in the CEE countries.

Indeed, the severe financial troubles of Austria’s neighbours highlights the huge investment Austria’s banks did since the 1990s in the CEE countries. They are the exposed of all financial institutions invested in the area, led by Raiffeisen with 54% of its risk-weighted assets, and Erste Bank Group (38%).

Evidently Josef Pröll set off for a ‘face-list’ trip to Bulgaria, Romania, Croatia and the Ukraine in mid-February promoting the Austrian government’s proposal for a financial stability pact for the CEE countries.

However, Pröll’s good-will tour sparked fresh concerns for the Austrian financial sector. The Romanian online business magazine Wall-Street consequently titled on Feb. 17 ‘Romania can drive Austria to meltdown.‘ At the same time, Austria’s daily Der Standard estimated that 10% failure of CEE lending would lead to crash of the Austrian financial sector.

Not surprisingly, the rescue plan failed to convince the other EU members, as it seemed motivated by Austria’s self-interest only.

Krugman’s pointed comment therefore, might be exaggerated as Austria’s bankruptcy seems unlikely at this stage, but has a valuable point: The European governments should not dismiss nor underestimate the effect a widespread financial collapse of financial institutions inevitably has when the CEE countries are not stabilized.

If this part of the financial crisis is mishandled, Daily Telegraph columnist Ambrose Evans-Pritchard predicts a “debacle (that) is big enough to shatter the fragile banking systems of Western Europe and set off round two of our financial Götterdämmerung.”

Austria would then certainly play the leading role.

End of an Era – The passing of two politicians who shaped late 20th century Austria

Helmut Zilk and Thomas Klestil

Photo: Helmut Zilk (left) and Austrian President Thomas Klestil. Photo Credit: Österr. Bundesheer

Far right leader Jörg Haider’s sudden and tragic death in the early hours of his mother’s 90th birthday celebration, mirrored his political life. The Carinthian regional governor was a whirlwind, a controversial and charismatic populist, who successfully dominated Austrian domestic and international politics for over two decades.

Less than two weeks later, Austria mourned yet another political firecracker: Helmut Zilk, former Social Democratic Mayor of Vienna (1984 – 1994) died peacefully in his sleep Oct. 24th. at the age of 82. Zilk, although nominally retired, was still was actively involved in Austrian politics until a few years ago, and certainly willingly offered criticism on almost anything to do with the SPÖ.

His reach beyond party politics brought him respect from political opponents. Among those was Erhard Busek, Zilk’s political adversary, who called him a “Streithansl (squabbler) but also a man with a sense for reconciliation.”

Discussing the “European Dilemma” – Interview with Erhard Busek

Copyright: Courtesy of Erhard Busek

In April 1994, after the negotiations for Austria to join the EU were successfully completed, the campaign for the enabling referendum on June 12, began to heat up. At the height of the debate, Brigitte Ederer, the then Social Democrats State Secretary for EU Affairs and now CEO of Siemens Österreich, projected that joining the European Union, every Austrian family would save about 1,000 Schillings a month (about €75) in living expenses through more competitive pricing.

Despite the ongoing political campaign for the general election Sept. 28, 2008, and a busy schedule as a leader of political dialogue, Erhard Busek, former Conservative ÖVP party leader, took time for a discussion about fundamental European issues.

Ederer’s ‘Tausender’ is a promise that has been criticized by political allies and opponents alike, even earning it a Wikipedia entry. Among those critics – then as today – was Busek, at the time Austria’s Vice Chancellor.

“No one can sensually experience this ‘Tausender’,” Busek argued assertively. He is still in disbelief that anyone could seriously make such an argument.

“Everyone expected that they would be handed 1,000 Schillings when leaving a supermarket,” he said incredulously. Not without irony, he points to the current general election campaign, and the “nonsense” – this time, that the Social Democrats could propose to cut the 10% VAT rate on groceries by half – is being repeated almost exactly.

Cash Off as Usual – Austrian Parliamentarians Hide Additional Earnings Still

Photo: For President of the Austrian Parliament, Barbara Prammer, catching a chicken seems evidently easier than having her colleagues agree to publish their additional sources of income.

This time, the debate – or better non-debate – was short-lived: On Oct. 29, 2007, First President of the Austrian Parliament, Barbara Prammer (Socialdemocrats), presented her ideas of improving the parliamentary debates and reforming internal procedures. Among the suggestions voiced was the mandatory registration and publication of MPs additional sources of income (German: Nebeneinkünfte) and make them accessible to the general public via Internet. Prammer referenced the German model, where Members of the German Bundestag have to publish a detailed account in their biographies on the website of the parliament.