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EXPLAINED: Why was Austrian Chancellor Sebastian Kurz forced to resign?

Austria's top diplomat Alexander Schallenberg takes over as chancellor on Monday as the ruling party tries to emerge from a corruption scandal that cost the job of one of Europe's youngest leaders.

Former Austrian Chancellor Sebastian Kurz.
Austria's former Chancellor Sebastian Kurz had defended the benefit cuts. STEFANIE LOOS / AFP

Sebastian Kurz, a 35-year-old once feted as a “whizz kid”, said late Saturday he was quitting the top job after being implicated in a corruption scandal.

Schallenberg, 52, will be sworn in by President Alexander Van der Bellen at 1:00 pm (1100 GMT).

Kurz’s centre-right People’s Party (ÖVP) and their junior Green coalition partners are hoping to move on from the scandal and serve out the rest of their term until 2024.

However, the fallout from last week’s events may continue to reverberate.

On Wednesday prosecutors raided several ÖVP-linked locations, including the chancellory and party headquarters, over allegations that between 2016 and 2018 finance ministry resources were used to finance “partially manipulated opinion polls that served an exclusively party-political interest”.

Prosecutors allege that payments were made to an unnamed media company — widely understood to be the Oesterreich tabloid, which was also raided on Wednesday — in return for publishing these surveys.

The offences were allegedly committed to help Kurz, already a government minister at the beginning of the period in question, take over the leadership of the ÖVP. 

‘Kurz system’

While Kurz initially insisted there was no reason for him to resign — and continues to vehemently protest his innocence — he then reversed course, saying he was putting the country before his own interests.

But many say Kurz bowed to pressure from the Greens and from within his own party. Kurz’s critics point out he will still be head of the ÖVP and will now sit as leader of its bloc in parliament — an ideal position from which to exercise influence as a “shadow chancellor”.

The opposition parties say the “Kurz system” will carry on unhindered through the presence of ministers loyal to him as well as high-ranking employees who look set to continue in post — some of whom are also suspects in the corruption inquiry.

Until now Schallenberg had served as foreign minister under Kurz and is widely seen as being loyal.

The latest scandal to hit Kurz adds to a list of corruption allegations against the ÖVP and several of its prominent figures, including Finance Minister Gernot Bluemel.

Those allegations surfaced in the aftermath of the so-called “Ibiza-gate” affair that in 2019 brought down Kurz’s first government, a coalition between the ÖVP and the far-right Freedom Party (FPOe).

Despite that Kurz came out on top in elections in autumn 2019 and re-entered government, this time at the head of a coalition with the Greens.

Schallenberg’s replacement as Foreign Minister was announced by the ÖVP-controlled ministry on Monday as Michael Linhart, the current Austrian ambassador to France.

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POLITICS

Austria’s Raiffeisen Bank replaces ‘misleading’ Russia job ads

Austria's Raiffeisen Bank said on Tuesday that it was replacing job ads that contained 'misleading wording' implying the bank was expanding its operations in Russia.

Austria's Raiffeisen Bank replaces 'misleading' Russia job ads

The bank has vowed to reduce its business in Russia following Moscow’s invasion of Ukraine in 2022 but has so far not sold or spun off its Russian unit.

The Financial Times on Tuesday said it had found dozens of postings for Russia-based jobs, touting its growth plans in the country.

One of the job postings said the bank was “looking for a client manager who will attract clients,” the paper reported.

“The quotes from the job advertisements do not reflect the measures taken by Raiffeisen Bank International to date to reduce its Russian business, nor do they correspond to the further plans for the Russian business,” the bank said in a statement sent to AFP.

It added to be able to sell Raiffeisenbank Russia — the biggest Western bank still in Russia — “job positions that are necessary for functioning banking operations will continue to be filled or refilled”, but they are “not related to business growth”.

“The very few job ads which contained old and misleading wording are/will be replaced.” the bank said.

Raiffeisen Bank International said in its annual report for 2023 that it had made 2.4 billion euros ($.2.6 billion) in net profits. It paid 464 million euros in income tax in Russia.

The group announced in December an agreement with Austrian construction company Strabag, involving Russian oligarch Oleg Deripaska, who is under Western sanctions.

The deal to try to recover assets frozen in Russia before selling or spinning off Raiffeisenbank Russia has drawn the US authorities’ scrutiny.

A senior US Treasury official — in Austria in March to discuss sanctions against Russia — met Raffeisen Bank International officials in Vienna to discuss the bank’s business in Russia.

Last year, a Czech rights group filed a criminal complaint against the bank’s Czech and Austrian units, claiming the bank is financing terrorism with its activities in Russia.

Raiffeisenbank has been in Russia since 1996 and employs more than 9,000 people there.

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