Austria's Social Democrats (SPOe) and the mainstream conservative People's Party (OeVP) agreed Monday, Oct. 20 in Vienna to a schedule for coalition talks, after their previous joint cabinet had broken apart in July.
Gusenbauer and Faymann are considering going itno power with the conservatives
The economic and financial crisis and the death of far-right leader Joerg Haider on October 11 sped up the conservatives' decision to start talks with the Social Democrats, who won the September national elections with 29 per cent of the votes.
Although there was no deadline, a new cabinet could be formed before Christmas through "constructive talks", said Social Democrats chief Werner Faymann, after he had agreed with conservative leader Josef Proell to start formal negotiations on Tuesday.
Proell had initially announced his party needed time to decide whether they would go into opposition, as only 26 per cent had cast their ballots for the OeVP.
Arguing that Austrians needed a "new, stable government" as soon as possible in the face of the current financial crisis, Proell changed his mind last week and signaled his readiness to start talks with Faymann.
Austrian economists predict that the economy will grow by only 0.9 to 1.2 per cent in 2009, down from 2 per cent this year.
A right-wing coalition of conservatives and the two far-right groups Freedom Party (FPOe) and Alliance for the Future of Austria (BZOe) became even more unlikely after Alliance leader Joerg Haider died in a car crash at the age of 58.
The Alliance, which won 11 per cent of votes in September, faces an uncertain future as the party was fully geared towards its leader.
European Union policy is one of the potential breaking points in the talks between Faymann and Proell. The Social Democrats insist that new EU treaties should be subject to a popular vote, a position strongly opposed by the conservatives.
As the new Chancellor, Faymann would take over from fellow social democrat Alfred Gusenbauer, whose coalition with the conservatives broke up this summer after 18 months in office.