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Thursday, March 07, 2013

Are anti-euro sentiments brewing in Austria?

Last weekend in Austria, "Team Stronach", a newly-founded political party which aims to abolish the euro in its current form, did quite well in two regional elections, winning 9.8% in the state of Lower Austria and 11.3% in the state of Carinthia.

The party was founded by Austro-Canadian billionaire Frank Stronach (pictured) who wants eurozone countries to have their own currencies whose value would fluctuate in line with their fiscal and financial strength (while toying with the idea of keeping the euro as a parallel currency). Although Stronach reacted by saying that "you always expect more", the party "passed the litmus test", according to David Pfarrhofer of the ‘Market’ polling institute.

This year, it's Superwahljahr (Super Election Year) in Austria with two more regional elections coming up in Tirol and Salzburg, and general elections on 29 September, with Stronach stressing that he is "very optimistic". Unsurprisingly given that he named the party after himself, he confirmed he'll be its leading candidate with the aim of becoming Austrian Chancellor. Currently his party is polling at around 10%.

Team Stronach already has a faction in the Austrian Parliament, composed of MPs which defected from other parties to join. This provides the party with some public funding in addition to the reported €26m Stronach himself has contributed. Speculation that he would attract Arnold Schwarzenegger, another successful Austrian expat to his party, has been denied by the latter. Stronach is one of the most prominent business people in Canada, where he emigrated to at the age of 22. His party has been accused of populism but unlike Austria’s established far-right, it is not opposed immigration.

Combined with support of around 20% for the far-right FPO party, which supports a Northern euro, around 30% of Austrians seem to support parties which favour an end to the common currency, and unlike in Germany, it seems people are actually willing to vote for parties which explicitly support this objective.  Stronach has a solid organisation and apart from shaking up Austrian politics, the signals he's sending out could spill over to that one country which more than any other holds the fate of the euro: Germany.


Freedom Lover said...

If Stronach is anti-the economically disastrous euro, then best of luck to him!

Henson said...

Stronach withdrew his proposal to get rid of the Euro long time ago. But still, he remains a threat to a european perspective.

Open Europe blog team said...

Thanks for your comment Henson, it looks the party's position on this is not fully clear. Wilhelm Hankel, Stronach's economic advisor said in an interview with Format 3 weeks ago that they could keep the euro as a parallel currency alongside the re-introduction of national currencies (we link to this interview in the past).

With that in mind we've tweaked the post to reflect that TS want to abolish the euro in its current form.

Anonymous said...

Any billionaire running for office in an EUSSR prisoner nation is going to be on the side of the EUSSR, no matter what he says.

It is foolish to think otherwise.

Rik said...

1. For a country like Austria (or Holland or Finland) a properly constructed Euro has some clear advantages. It links the country with its most important tradepartner, Germany and opens it up to the wide world. Even in the relation with a non-Euro South it would have advantages. They would have to trade only in Euros which they know and would be their most important foreign currency and not in Finn Marks, Guilders, Shillings etc. It would only as main disadvantage make them somewhat more expensive.
The issue for a country like Austria is mainly who is in and if several Latinos, including France btw or Eastern European countries are in, can these be kept under control (aka not cause problems for the rest). Well basically not of course for the latter question.
Before they were pegged to the DM and that worked pretty well. And Austria could do a Danemark or a parallel Danemark peg it 1:1 to the German currency. And adjust economic policies to that.

In all EZ countries there is huge potential for anti-Euro or more general so called populist parties. It should only be tapped properly. People are scared and rightly so and their fears are often not properly addressed by the traditional parties. Often basically ignored. Take the immigration example mainstream parties often still not a distiction between immigration that works (Western and undereducateed groups with often a completely different culture). The problem is clearly with the second group. However immigration is conveniently even after a few decades as mainly Western as best. basically not even listening to the complaints. Simply taking people not seriously (aka the way to scare away customers). Same with the Euro, Stammtisch disadvantages (supported in other words by half the economic world btw) were ignored and after a decade appeared to be the main problem. Very easy to shoot at that.

As well as the positioning in the local voter market should be done with care. Preferably close to power but not in a way that it seriously affects its status as protest party. You can be a complete outsider/outcast with 30-40% of the vote and a real power broker with 10-15%. Basically split the left-right block in your country and take care your party is in the swing position.

This is a proper businessman and likely proper manager with a decent financial backing for campaigns. He will likely make the main stream politicians look poor (as they usually are all over Europe even in the big countries like the UK, Germany and France).
And when the machine gets running the mainstrean parties do the rest. Calling people closet racist is hardly helpful in getting them vote for you. Defending policies like the Euro and immmigration with clear disadvantages as the best thing on Earth will not do them much good either. And the hysteric reactions will put the media on it and give free adds/publicity.

Inother words have a proper leader and some organisation and the potential is likley 10s of percents of the electorate.

jon livesey said...

It's perfectly correct to say that the euro ought not to be a problem for Denmark, the Netherlands or Austria, since they have all had currencies pegged to the DMark in the past.

Heck, all three countries have at different times in their history even been parts of Germany.

But that simply brings us back to what's wrong with the euro. A group of countries with similar wage/price inflation expectations and similar nominal wage settlements can easily share a currency.

The problem is with countries that for deep-rooted historical reasons have high wage/price expectations and aggressive labour unions pressing for high nominal wage settlements. As we have just seen, it take about a decade for things to blow up.

It would probably be practical for the core to share one common currency and the periphery to share another. The only alternative seems to be a degree of forced internal deflation that will produce social conditions worse than the Thirties, with who knows what result.

Protogonus said...

Second “Anonymous.” The EU, the political wing of NATO (which is the military wing of the American Empire), is anti-national. The non-exitable euro (there is no provision to get out of it once joined) is designed to be a pit of quicksand from which no national idea will ever emerge. The fact most Europeans are blithely unaware of the Frankenstein who lords over them is simply pathetic. Who controls the ECB? Goldman-Sachs!

Rik said...

1. Agree that the North could likely have the same currency without even less formal rules than now and make it work.

2. Re the South I doubt if one curency would be possible. The countries are much less linked to the worldeconomy (so simply less similar) and much worse organised (making measures less effective and more timeconsuming). Not even to mention still living in another financial culture that they simply have still not left.
What I mean is that say Spain's RE bubble could have been a problem for only Spain and not the others. Problem would likely have been mitigated by somewhat higher inflation all over the Southern board but a lot would still have been left. And Greece is simply not able to fit into any monetary union unless the government is taken over by responsible people. But as long as they are ruled by selfish, corrupt, incompetent, clowns with Swiss bankaccounts, they are likley to constitute a problem for anybody in the same monetary union. Be it a present EZ or a pure Southern one.

3. Internal devaluation is simply not working. In all PIIGS they still have inflation (while wages have dropped with 10s %). Economist focus way too much on only labourcosts. Laborcosts is a good measure if other costs are more or less pegged, but that is not the case. Only labourcosts go down the rest moves very similar to Austria or Holland for instance. You decide an investment more on cost in general than only labourcosts. And costs in general seen the inflationfigures (which look also pretty dodgy btw, huge gap between ECB and Eurostat figures for instance) do not get better.