Realist, not conformist analysis of the latest financial, business and political news

Just What, Really, Is The Austrian Corruption Scandal?

It is, of course, difficult to project British standards of fair play or clean government onto other countries. Foreigners do things differently after all. We Brits would be entirely livid if, say, Lebedev buying the Evening Standard had been accompanied by cash payments to the political party that allowed him to do that. For that’s not how we do things.

Anyone who thinks that a British company doing business in Russia isn’t making payments is naive.

So, to the Austrian current scandal:

[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””] Fresh questions are being raised over former Austrian chancellor Sebastian Kurz’s bid for re-election after he was drawn back into the heart of a scandal over a fake Russian oligarch that brought his government down. Mr Kurz, who was, at 32, one of the world’s youngest democratically elected leaders, lost his grip on power earlier this year when he was forced lost a no confidence vote and was forced into a snap election. At the time, he distanced himself from leaked videos showing his far-Right coalition partners offering state contracts to a fake Russian oligarch in return for illicit financing back in 2017. [/perfectpullquote]

The thing being that Austrian business life is, and long has been, run on party political lines. As the US State Department says:

[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]Austria is a stable democracy. Historically, Austrian politics were dominated by grand coalitions formed by Austria’s two main centrist political parties (the center-left Social Democrats and the center-right People’s Party). The system known as “proporz” dictated which party controlled which ministries, which bureaucracies, and which (state owned or controlled) businesses. This created a tightly-knit fabric of contacts and patronage that often resulted in politicized management decisions and frustration for those without the right party affiliation.[/perfectpullquote]

Which does rather lead to two problems. The irruption of a new party into power will upset the current establishment who lose out on their proporz. And also the new party needs to be able to control some portion of the proporz just because that’s how the system works.

The actual allocation of state contracts upon political lines isn’t a scandal at all. That’s normal. Maybe asking for cash rather than patronage opportunities is different but not all that much. Although note they asked for financing of the election, not cash.

Which does lead to an interesting question. How much of this actually is a scandal and how much of it is simply Austrian business as normal? But with the usual beneficiaries of proporz being locked out, the very thing which is leading them to denounce it so viciously?

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