Australian politics are in turmoil after a spectacular June 13 debut by the xenophobic One Nation Party. Created just 14 months ago, it picked up 1 in 4 votes in elections for the Queensland state legislature. The party, led by former fish-and-chips-shop owner Pauline Hanson, wants to raise tariffs, give farmers loans at 2% interest, curb Asian immigration, and limit foreign ownership to 49% of local businesses.

Prime Minister John Howard's center-right coalition is under siege. Business confidence and the dollar are at 7- and 12-year lows, respectively. Citibank economists warn that foreign investment could slump. Howard, who must call a general election by July, 1999, says he'll press ahead with tax reform and the sale of government shares in telecom giant Telstra Corp.

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