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The 'normalization' of the far right: Why Austria's election matters

Austria might not have the biggest prominence on the political stage but as a central European power, bridging eastern and western Europe, its politics can influence others around it.

As the country goes to the polls for parliamentary elections this weekend, CNBC looks at why the vote matters.

What's going on?

Austrian voters are heading to the polls Sunday in a parliamentary election expected to enable the far-right Freedom Party to enter a coalition government, marking an increasing trend in Europe.

Why does it matter?

If that happens, Austria will be the latest country to see a far-right, nationalist and anti-immigration party — the Freedom Party of Austria (FPO), in this case — do well in a popular vote.

Last month, the far-right, anti-immigration Alternative for Germany (AfD) party gained enough votes to enter the German Bundestag for the first time and, earlier this year, the Front National led by Marine Le Pen, was a forerunner in France's presidential election.

Heinz-Christian Strache, chairman of Austria's far-right Freedom Party FPOE, is pictured during his party's New Year's convention on January 14, 2017 in Salzburg, Austria.
BARBARA GINDL/AFP/Getty Images
Heinz-Christian Strache, chairman of Austria's far-right Freedom Party FPOE, is pictured during his party's New Year's convention on January 14, 2017 in Salzburg, Austria.

In Austria's presidential election in late 2016, the FPO's far-right candidate Norbert Hofer lost to the former leader of the Green party, Alexander Van der Bellen. But in parliamentary elections this Sunday, the FPO is expected to do well.

A bit of background

In a European context, Austria is interesting because it has seen one of the strongest public backlashes to immigration following the continent's migration crisis in 2015.

Like other eastern European countries, the Alpine nation wanted to be exempt from a European Commission plan to relocate and redistribute around 160,000 asylum seekers throughout Europe to ease the pressure on certain countries at the forefront of migrant inflows, telling the EU earlier this year that it had already fulfilled its obligation to take in refugees (it accepted 90,000 in 2015).

Migrants wait to be allowed to cross to Austria, in Sentilj, Slovenia. About 5,000 migrants are reaching Europe each day along the so-called Balkan migrant route, stoking tensions among the countries along the migrant corridor including Greece, Macedonia, Serbia, Croatia and Slovenia.
NurPhoto/NurPhoto via Getty Images
Migrants wait to be allowed to cross to Austria, in Sentilj, Slovenia. About 5,000 migrants are reaching Europe each day along the so-called Balkan migrant route, stoking tensions among the countries along the migrant corridor including Greece, Macedonia, Serbia, Croatia and Slovenia.

As such, negative public sentiment has influenced the main political parties in Austria to call for tougher immigration policies and the migrant issue is seen as having played into the hands of the right.

What the polls say

The latest opinion poll (and last poll before the election) showed the conservative, center-right Austrian People's Party (OVP) is expected to win the largest share of the vote on Sunday, with 33 percent of the vote. The poll was conducted by Research Affairs for the Osterreich newspaper on October 9.

Meanwhile, the right-wing Freedom Party is vying for second place — and the role of kingmaker — with 27 percent of the vote, closely followed by the center-left Social Democrats (SPO) with 23 percent of the vote. Christian Kern, Austria's incumbent chancellor, is the leader of the SPO.

What will happen next?

It's now widely predicted that Sebastian Kurz, the 31-year-old foreign minister and leader of the Austrian People's Party, is set to win the election and become the next chancellor, with the Freedom Party (FPO) likely to serve as his junior partner.

Head of the centre-right People's Party (OeVP) Sebastian Kurz greet voters while attending an election rally in Graz, Austria on September 04, 2017.
JOE KLAMAR/AFP/Getty Images
Head of the centre-right People's Party (OeVP) Sebastian Kurz greet voters while attending an election rally in Graz, Austria on September 04, 2017.

This scenario would mean the "breaking with the decades-old tradition of a grand coalition between OVP and the Social Democrats of incumbent Chancellor Christian Kern," Wolfango Piccoli, co-president of risk consultancy Teneo Intelligence, said in a note earlier this week.

Analysts predict that the OVP is far more likely to form a coalition with the Freedom Party given that the last coalition with the SPO was beset with friction and deadlock before it finally broke down earlier this year, triggering the forthcoming elections.

"It looks as if the far-right Freedom Party is heading back into government," Greg Fuzesi, an economist at JPMorgan, said in a note this week. "This raises questions about Austria's attitude towards the EU. We note that the FPO has moderated its tone significantly, even though it has sympathized with euro-sceptic parties elsewhere (e.g. the French National Front)."

When is the result due?

Exit polls and first projections are due as of 5 p.m. CEST (11 a.m. ET) Sunday; the interior minister usually declares a preliminary result around 7:30 p.m. (1:30 p.m. ET), according to Carsten Nickel, deputy director of research at Teneo Intelligence.

"This will, however, exclude postal votes, which will only be counted on 16 October… (although) the power balance between the large parties should be clear relatively soon on Sunday evening. Even a center-left coalition of all three small parties with the SPO would have no chance of overtaking the OVP and FPO," Nickel said in a note Wednesday.

What does it mean for Europe?

While the far-right Freedom Party, led by Heinz-Christian Strache, now explicitly rejects Oxit (Austria's exit from the EU) it remains broadly euroskeptic, according to JPMorgan's Fuzesi, arguing for deeper European Union and euro zone reform, clearer division of responsibility between the EU and member states, and reduced EU bureaucracy.

An over painted election poster of the election candidate chairman of the Freedom Party of Austria (FPOe) Heinz-Christian Strache is pictured in Vienna, Austria on October 02, 2017, ahead of snap parliamentary elections on October 15.
JOE KLAMAR/AFP/Getty Images
An over painted election poster of the election candidate chairman of the Freedom Party of Austria (FPOe) Heinz-Christian Strache is pictured in Vienna, Austria on October 02, 2017, ahead of snap parliamentary elections on October 15.

"Overall, we suspect that Austria will support EU reform, but will take a stance that is similarly cautious to that of Germany," Fuzesi said, adding that the anti-immigration (and mainly anti-Islam) party would likely maintain its "harder line… in managing integration in Austria and the EU's external borders."

Should we be worried?

Other economists have warned that the election is not being given enough attention despite the fact that another populist party was expected to re-enter government.

"The parliamentary election on October 15 has so far not been on Europe's radar screen. Wrongly so, as Austria could become (once again) the first core euro zone country with a populist party in government," Carsten Brzeski, chief economist at ING in Germany, said in a note Monday.

"At the end of a year in which populist parties had threatened the survival of the entire euro zone, the Austrian election could be an interesting hint for the entire euro zone: populism is not dead but the next stage of populism is acceptable populism," he said.

Brzeski added that the Austrian election could be "an important and interesting hint and precedent for the rest of the euro zone."

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