Austrians warned of threat from extreme right

After making a lacklustre start, Franz Vranitzky, the Austrian Chancellor, has come out fighting in his attempt to be returned to power in the general election on Sunday.

Presenting himself as a pillar of stability, Mr Vranitzky has warned that a poor result for his Social Democrats (SPO) could open the door to Jorg Haider, the populist leader of the far-right Freedom Party (FPO) and seriously damage Austria's international reputation.

At the same time, the Chancellor has been scornful of his former conservative allies in the People's Party (OVP) and their ambitious leader, Wolfgang Schussel, who has hinted that he might try to form a new coalition with Mr Haider.

"As far as I am concerned, Mr Haider - a man who once praised the 'orderly' employment policies of Adolf Hitler - can never qualify to be a member of the Austrian government," Mr Vranitzky said. "And if the Conservatives did go in with him, it would spell the end for them.''

According to the latest opinion polls, Mr Vranitzky's tactics appear to be working. While a few weeks ago the gap between the two main parties was down to just 1 percentage point, the SPO is now set to win 34 per cent, against 28 per cent for the OVP.

Snapping at their heels, on 24 per cent, is Mr Haider's FPO, which campaigns on an anti-immigration platform and which promises to smash the two-party monopoly of power, privilege and patronage.

The projected results are similar to those recorded in Austria's last general election, in October 1994, and, if confirmed, they may well lead to a continuation of the SPO-OVP coalition that has governed Austria for the past nine years. For the two parties to work together again, however, they will have to patch up their differences over how to reduce the country's spiralling budget deficit, the issue which precipitated the collapse of the last coalition two months ago.

Both parties agree the deficit, set to reach 120bn schillings (pounds 8bn) this year, must come down for Austria to meet the Maastricht criteria for economic and monetary union. But while the SPO favours tax rises to achieve it, the OVP wants large cuts in generous welfare payments and subsidies.

Mr Vranitzky, a former banker who is now into his 10th year as Chancellor, believes that a compromise is possible. Mr Haider, who has presided over a fivefold increase in FPO support since taking over a leader in 1986, is prepared to bide his time.

While not closing the door to participation in government now, he has indicated that he would be quite happy to see the two main parties joining forces in a new coalition which, he believes, would collapse within two years.

At that point he thinks the FPO would become the largest party and he could achieve his career ambition: to become Chancellor in 1998.