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Austria joined the ranks of countries thrown into turmoil by a revolt against establishment parties, adding to the rise in political uncertainty as populism reverberates around the globe.
Austrian Chancellor Werner Faymann, the European Union’s longest-serving national leader after Angela Merkel of Germany, resigned Monday after a run of electoral defeats left his ruling Social Democratic party in disarray. He leaves a power vacuum as the Austrian Freedom Party, EU skeptics who espouse an anti-immigrant platform, climb in the polls, mirroring populist movements stretching across Europe, the U.S. and most recently in the Philippines.
“Add Austria to list of countries where governments are meaningfully impacted by anti-establishment and extremist movements,” Mohamed El-Erian, Allianz SE’s chief economic adviser and a Bloomberg View columnist, said in a statement on Twitter.
Faymann’s decision to quit brings more instability for investors to juggle as Europe’s political landscape shifts beneath their feet. From Poland to the Netherlands, in Germany and France, voters variously skeptical of EU power, alarmed by the refugee crisis or sick of austerity are flocking to punish political elites and undermine or replace governments.
The upshot is “a clear turning point in European history,” said Simon Quijano-Evans, chief emerging market strategist at Commerzbank AG in London. “The big challenge for foreign investors will be to understand the electorate’s clear turn away from ‘establishment’ politics.”
Added to the political mix in the coming weeks are the following:
- May 22: Austrians elect a new president in a runoff between the Freedom Party candidate and a Green. Whoever wins wouldn’t be able to swear in a new government until taking office in July.
- May 24: Euro-area finance ministers are next due to meet and discuss Greece, assuming no resolution of the current standoff with creditors is reached before then.
- June 23: U.K. voters decide whether to leave the European Union, with some polls suggesting the outcome of the referendum is too close to call.
- June 26: Spanish voters are asked to go to the polls to elect a new government six months after an inconclusive election that failed to yield a viable coalition.
Faymann said that dwindling backing in his own party left him unable to turn around the fortunes of the coalition he led since 2008. Vice Chancellor Reinhold Mitterlehner will lead the government on an interim basis.
“This country needs a federal chancellor whose party stands fully behind him,” Faymann said in a statement posted on the chancellery’s website. “This government needs a fresh start.”
Vienna’s ATX stock market was up 0.8 percent as of 9:40 a.m. on Tuesday, erasing most of the 1 percent loss it suffered in the wake of Faymann’s resignation.
Faymann’s resignation was set in motion by his party’s collapse last month in the first round of presidential elections in which the Freedom Party candidate won the most votes on the back of the refugee crisis. Faymann’s coalition partner, the conservative People’s Party led by Mitterlehner, also suffered a historic defeat in the vote. Vienna Mayor Michael Haeupl will take on the interim leadership of the Social Democrats, with a meeting of the 70-member national executive resolving to pick a new party leader by next week who will also become chancellor.
Possible contenders to replace Faymann named in Austrian media include Christian Kern, head of the state-owned railroad, and Gerhard Zeiler, a Time Warner Inc. executive who used to head Austrian public broadcaster ORF. Neither has declared and both declined to comment through spokesmen.
Kern, who oversaw a restructuring of the railway system, is backed by some regional party heads including Carinthian governor Peter Kaiser, and Josef Muchitsch, the head of the construction workers’ trade union. Zeiler is Haeupl’s favorite, according to Austrian media reports. Additional candidates from inside the party include Andreas Schieder, who leads the Socialist group in parliament, and Defense Minister Hans Peter Doskozil.
Haeupl told public broadcaster Oe1 that he doesn’t yet have a preferred candidate and will talk to his party members in the coming days.
“Believe me, in a week we’ll be done, and a beautiful butterfly will emerge from the cocoon,” Haeupl said.
Declining real wages, rising unemployment and Europe’s refugee crisis have eroded support for both socialists and conservatives, the parties that have dominated the nation’s politics since World War II.
While parliamentary elections are due only in late 2018, Faymann’s exit could accelerate the demise of the coalition and lead to an early vote. The Freedom Party led by dental technician Heinz-Christian Strache would win more than 30 percent if elections were held now, according to opinion polls. That’s about 10 percentage points more than either of the two ruling parties.
Strache called for early elections to end the “chaos” of the government. It’s up to the governing parties to “put themselves out of their misery,” he said.