Billionaire turns Austrian elections into euro poll

Frank Stronach_Small Reuters.jpg

Billionaire auto parts magnate Frank Stronach has burst into Austrian politics with a call to abandon the euro, probably turning parliamentary elections due next year into a de-facto referendum on the country's role in Europe.

The man who emigrated to Canada as a 22-year-old pauper and made a fortune by building the Magna automotive supply empire has come home with a bang, insisting it is time to restore the schilling national currency as quickly as possible.

Stronach's party is so new that it still has no name and its support remains so far in single figures, but the 79-year-old is already drawing on the discontent about the cost of eurozone membership which is spreading in the bloc's wealthier members.

The latest Gallup opinion poll gave the party 8% support – still far behind the governing Social Democrats (SPO), their conservative coalition partner the People's Party (ÖVP), and the eurosceptic opposition Freedom Party (FPÖ).

But with the right-of-centre parties weakened by corruption scandals, Stronach has managed to drag the political debate in his direction just as more Europeans question whether the euro project can be saved in its current form.

"The currency is the economic reflection of a nation … You can create prosperity only by having your own currency in individual countries," he told Austrian broadcaster ORF.

Stronach left Austria in the early 1950s when it had yet to recover from World War Two and remained under allied military occupation. But while he built his business empire in Canada, Austria joined the group of strong European economies which are now having to fund bailouts for the eurozone's weaker members.

There is increasing evidence of bailout fatigue in the well-off countries, so having solidly pro-Europe Austria waver in its commitment would be an ominous sign for the currency.

Finland's foreign minister said last week that officials had prepared for the possible collapse of the single currency. Dutch voters go to the polls next month in an election dominated by the eurozone debt crisis and austerity measures.

"Clearly this is not just an Austrian development but more representative of the so-called stronger countries which have the highest credit rating," said Zsolt Darvas, research fellow at the Brussels-based Brugel think tank. "In Germany, Finland or the Netherlands you see exactly the same or similar movements."

FPÖ leader Heinz-Christian Strache, whose party is off highs but still gets around 21% in polls, is calling for the eurozone to be reduced to a group of strong members such as Germany, Austria and the Netherlands.

Even ÖVP leader and Foreign Minister Michael Spindelegger, a pro-Europe stalwart, has backed treaty changes to let the eurozone evict members that do not live up to financial commitments.

Killing the exporters

Stronach, who was born Franz Strohsack but acquired a new name for his new life in Canada, targets a hard core of around 30% of Austrians who polls show never wanted the euro. These people believe the country of 8.4 million would do better alone rather than pouring billions into bailouts of eurozone weaklings such as Greece or even Spain.

They shrug off arguments that half the jobs in Austria depend on exports, which could face huge pressure if financial markets pushed up the value of a newly recreated schilling.

Seventy percent of Austrian exports go to European Union countries and neighbouring Switzerland has already suffered the effects of a strong franc as investors seek a stable alternative to the troubled eurozone.

"The export sector would be killed" if the schilling came back, Brugel's Darvas said.

The schilling debate has diverted attention somewhat from a wave of corruption cases that have dragged down the conservatives and FPÖ in the polls, boosting Chancellor Werner Faymann's centre-left SPÖ and the opposition Greens.

The ÖVP suffered blows with the indictment of former Interior Minister Ernst Strasser on bribery charges and a regional party leader's confession he plotted to get kickbacks from the sale of a state bank.

Following months of hearings by a parliamentary panel investigating corruption, the party's problems prompted NEWS magazine to put an ÖVP obituary on its front page.

Strache's FPÖ has been rocked by turmoil in its southern stronghold of Carinthia, where its FPK sister party is fighting calls for early elections over corruption allegations.

The dirt sticking to the ÖVP and FPÖ has dashed, for now, prospects they could again join forces to unseat the Social Democrats after elections that must be held by September 2013.

But Austrian voters' memories are short. The Social Democrats had their own scandal before winning 2008 elections.

Debate is more likely to concentrate on matters close to Stronach's heart – Europe's new ESM bailout fund, how much money should be transferred from strong economies to help countries in crisis, and whether the eurozone should issue common bonds to help members such as Spain and Italy.

Wolfgang Bachmayer, head of the OGM polling outfit, warned against focusing too much on fallout from corruption scandals.

"I assume that next year all this will be over and forgotten and that there will be one main theme: the ESM, the debt crisis and the entry into a common transfer and debt union, yes or no," he said.

If so, he said, the FPÖ is poised for resurgence because its euroscepticism – its posters say "Our Money for Our People" – resounds with many Austrians who, like their German neighbours, oppose pooling debt among countries sharing the euro.

The FPÖ has the hot-button issue and the proven ability to mobilise votes, Bachmayer said.

What is often overlooked, he said, is that big blocks of SPÖ and ÖVP voters also oppose pooling debt. Only Greens voters have a clear majority for this, as evidenced by crucial Greens support for ratifying the ESM.

For Stronach, who like a number of his business peers once ran a top football team, the debate really starts next month when he unveils his party ticket and detailed platform in what promises to be a hot autumn for the eurozone.

  • Austria has to organise legislative election in or before 2013 at the latest, according to the country's constitution.

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