AUSTRIA: Pres. Holds Talks w/Moderate Party Leaders After Coalition Talks Fail
President Alexander van der Bellen has been holding meetings with the leaders of the conservative Austrian People's Party (ÖVP) and the centre-left Social Democrats (SPÖ) following the collapse of coalition talks involving the two parties and the liberal NEOS earlier today (see 'AUSTRIA: Liberal NEOS Leave Coalition Talks Saying 'No Progress Possible" 1006GMT).
- The four options on the table now appear to be:
- ÖVP-SPÖ coalition: two-party gov't would be simpler than tripartite agreement, but one-seat majority would risk individual lawmakers derailing policy.
- ÖVP-SPÖ-Green coalition: initially the ÖVP and SPÖ opted to work w/NEOS rather than environmentalist Greens. Green leader Werner Kogler has demanded answers on why they were left out of initial talks, and why negotiations w/NEOS collapsed. Greens and SPÖ are close, but ÖVP-Green links strained after 5 years in gov't.
- FPÖ-ÖVP coalition: Previously ÖVP refused to work with the largest party in parliament, the far-right Freedom Party (FPÖ) under leader Herbert Kickl. In order for this gov't to work it would need either Kickl or ÖVP chair, Chancellor Karl Nehammer, to be replaced.
- New elections: If absolutely no majority gov't is possible, the process to start new elections could get underway. This would prolong political paralysis, with a caretaker gov't remaining in place. Opinion polling also shows the FPÖ to make gains at the next election even compared to its record-breaking seat total in 2024.
Chart 1. Federal Election Opinion Polling, % and 2-Poll Moving Average
Source: IFDD, Market, Market-Lazarsfeld, INSA, Unique Research, OGM, Interior Ministry, MNI. N.b. First data point indicates result of Sep 2024 Federal Election.
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WHITE HOUSE: Trump Confirms Return Of Navarro To Trade & Manufacturing Role
In a flurry of announcements on his Truth Social platform, President-elect Donald Trump confirms that Peter Navarro, who served as Director of the Office of Trade and Manufacturing Policy during Trump's first term, will return as Senior Counselor for Trade and Manufacturing for his second. Navarro served a four-month prison term earlier this year for contempt of Congress after ignoring a subpoena from the House committee investigating the 6 January 2021 Capitol riot. There is the prospect that Trump could offer Navarro a pardon on taking office, with Trump saying on election day that "he’s a good man, he was treated very unfairly”.
- Trump: "During my First Term, few were more effective or tenacious than Peter in enforcing my two sacred rules, Buy American, Hire American. He helped me renegotiate unfair Trade Deals like NAFTA and the Korea-U.S. Free Trade Agreement (KORUS), and moved every one of my Tariff and Trade actions FAST. [...] His mission will be to help successfully advance and communicate the Trump Manufacturing, Tariff, and Trade Agendas...."
- Navarro is viewed as one of the most hawkish members of Trump's inner circle with regards to trade, not only towards China but also allies such as Germany.
- The president-elect also confirms the nomination of Daniel Driscoll as Secretary of the Army. He most recently worked as Senior Advisor to Vice President-Elect JD Vance. Meanwhile, Michael Whatley is set to return as chair of the Republican National Committee alongside Trump's daughter, Lara. A lead negotiator on the Abraham Accords team ,Adam Boehler becomes Special Presidential Envoy for Hostage Affairs, while entrepreneur and commercial astronaut Jared Isaacman heads up NASA.
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