Austrian election could complicate EU Ukraine war policy

UPDATE 9/30 6a.m. ET: According to the Associated Press, preliminary official results showed the Freedom Party of Austria (FPÖ) finishing first with 29.2% of the vote and Chancellor Karl Nehammer’s Austrian People’s Party was second with 26.5%. The center-left Social Democrats were in third place with 21%. The outgoing government — a coalition of Nehammer’s party and the Greens — lost its majority in the lower house of parliament.

VIENNA/MUNICH - “Wars belong in museums” reads an inscription in front of the Museum of Military History in Vienna, Austria.

As the crow flies, there are less than 400 miles between Lviv in western Ukraine and Vienna. In the Austrian capital, however, the distance feels much greater. Unlike many German cities, no Ukrainian flags are seen in Vienna’s institutional buildings. In Vienna, one of the few reminders of the ongoing war in Ukraine is to be found behind the Soviet War Memorial, where a wall is painted in the colors of the Ukrainian flag.

Recent regional elections in Germany have been shaped by growing discontent with the country’s Ukraine war policy. Meanwhile, to Germany’s south, slight attention is paid to the ongoing war in Ukraine ahead of the Austrian parliamentary elections on September 29. The public debate in Austria is instead dominated by topics such as migration and asylum politics, and future coalition options.

The limited weight of foreign policy in the conversation can partly be explained by Austria’s specific circumstances as a neutral country. Austria has been a member of the European Union (EU) since 1995 but is not a member of NATO. After Sweden and Finland joined NATO in the wake of the Russian invasion of Ukraine, only three other European countries (Cyprus, Ireland, and Malta) share Austria’s category.

But foreign policy could play a significant role in negotiations to form a government coalition after the elections. The far-right Freedom Party of Austria (FPÖ), which is polling first at 27%, could put European Ukraine aid under the microscope. In its election program, the FPÖ opposes sanctions against Russia and demands a halt to Austria’s contributions to the European Peace Facility (EPF), the mechanism through which the EU has provided $6.8 billion in military support to Ukraine.

Hungary, led by Prime Minister Viktor Orbán, has long used its veto power within the EU to block military aid packages for Ukraine or allow them to be approved in exchange for concessions. Orbán, who has an alliance with the FPÖ in the European Parliament, is seen as a role model by Herbert Kickl, the FPÖ’s candidate for chancellor.

The FPÖ has never won a national election but it finished first in the elections to the European Parliament in Austria last June. A win for the FPÖ would not guarantee its participation in government, let alone the privilege of appointing the new Austrian chancellor. Still, forming a government coalition while bypassing the far-right party would be complicated.

The FPÖ is followed closely in the polls by the center-right Austrian People's Party (ÖVP), led by Chancellor Karl Nehammer. He currently leads a coalition government with the Green Party. Third in the polls comes the center-left Social Democratic Party of Austria (SPÖ). The two traditional center-right and center-left political forces would probably need a third party to reach a parliamentary majority. The ÖVP and the FPÖ, on the contrary, are likely to gain over 50% of the seats in parliament.

The conservatives appear ready to reach out to the FPÖ after the elections, although they have announced their opposition to Kickl, the FPÖ leader, serving in a future cabinet. The two parties already shared the government in the early 2000s and again later on, from 2017 to 2019. On both occasions, the ÖVP filled the chancellor position. It could be different this time, especially if the FPÖ wins by a significant margin over the ÖVP.

Christoph Schwarz, a Research Fellow at the Austrian Institute for European and Security Policy, said if the FPÖ enters the government, “one can assume that Austrian support for EU initiatives in support of Ukraine will be harder to attain.” Even so, he adds, much would depend on “political bargaining and the composition of such a government.”

The FPÖ and United Russia, Vladimir Putin’s party, signed a Friendship treaty in 2016. The FPÖ’s Russian connections have led to bizarre moments. Karin Kneissl, appointed Austria’s foreign minister on the FPÖ’s recommendation in 2017, danced with Putin at her wedding in 2018. Kneissl now lives in Russia, where she was recently appointed goodwill ambassador for Siberian tiger conservation. The FPÖ has since distanced itself from the Friendship treaty, but ties between the far-right party and Moscow have survived.

Austria’s neutral status is key to understanding its foreign policy. Following its annexation into Nazi Germany in 1938, Austria did not fully recover its sovereignty until 1955 after reaching an agreement with the former Allied powers. An independent Austria was something both the U.S. and the USSR could accept as long as the country renounced union with Germany and remained neutral.

On October 26, 1955, the Austrian parliament approved a declaration of neutrality. The date is Austria’s national holiday, underscoring the importance of neutrality for Austrian national identity. During the Cold War, Austria’s neutrality contributed to the International Atomic Energy Agency, or the IAEA, and the Organization of Petroleum Exporting Countries, or OPEC, establishing their headquarters in Vienna. Vienna also hosts the Organization for Security and Cooperation in Europe (or OSCE) and is one of the four major U.N. headquarter sites.

Recent polls indicate that neutrality remains popular with some three-quarters of the Austrian population in favor of it. The Ukraine war has not had a major impact on the numbers. Schwarz argues that, in Austria, “foreign policy thinking has been largely outsourced to Brussels and any topic that could lead to a potentially uncomfortable discussion on neutrality is avoided at all costs.”

The meaning of Austria’s neutrality, however, is certainly far more diffuse nowadays than it was during the Cold War. As an EU member, Austria is part of its Common Foreign and Security Policy and Common Security and Defence Policy. The country has also participated in NATO’s Partnership for Peace since 1995. Some recent developments have brought Austria closer to NATO. In July 2023, Austria joined the German-led Sky Shield initiative, which seeks to strengthen Europe’s air defenses in light of the Ukraine War.

The FPÖ opposes this step, whereas the ÖVP promoted it in the government.

Broad support for neutrality does not necessarily mean Austrians want to keep their army small. A slim majority supports increasing military expenditures and the government has taken steps in that direction. As of 2022, only three EU countries were spending less than Austria on their armies in proportional terms. Back then, Vienna spent 0.8% of its GDP on defense. This year, it will be close to 1%. Schwarz believes that, regardless of the composition of the next government coalition, the current commitment to a military expenditure of 1.5% of the GDP by 2028 will be maintained.

In comparison to other EU countries, Austria retains significant ties with Russia even after the full-scale invasion of Ukraine in February 2022. Austria’s Raiffeisen Bank International (RBI) is the largest Western bank still operating in Russia. The Austrian government successfully lobbied in December 2023 for RBI to be excluded from the EU's 12th package of Russia sanctions.

Since then, the European Central Bank and U.S. authorities have continued to exert pressure on RBI and the government in Vienna.

Nevertheless, in 2024, over half of RBl’s profits came from its operations in Russia and Belarus. Although the bank’s stated objective is to “heavily scale back” from these markets, there is no clear path to repatriate the profits. The situation was further complicated in early September when a Russian court blocked any potential sale of RBI’s Russian subsidiary.

Aside from banking ties, Austria is heavily dependent on Russian gas. This year, Austria has imported at least 80% of its natural gas from Russia every month. That percentage is higher than in the previous two years. In this sense, Austria represents the reverse image of Germany, which has progressively diversified its energy supply away from Russia since 2022.

Although there was no time for parliamentary approval before the elections, the Austrian government recently agreed to review the current national security strategy, which dates back to 2013. Back then, Russia was described as a “partner.” The new national strategy, however, would define Moscow as a “threat” and emphasize the need to decrease Austria’s energy dependency on it.

Schwarz argues that “there is a good chance of this strategy being adopted in more or less its current form” if the next government does not involve the FPÖ. There will be far more uncertainty about the next national security strategy, and Austria’s foreign policy overall, if the FPÖ enters the government, especially if it fills the position of chancellor.

The elections on September 29 will determine the negotiating strength of the different parties, but talks to create a government are expected to take time. The EU will pay particular attention to the negotiations in hopes of avoiding a new Austrian government that complicates EU sanctions against Russia and military aid for Ukraine.