Sebastian Kurz: The chancellor in the shadows

Unless the European Union urgently addresses the growing threat to the rule of law, it will set a dangerous precedent of tolerance for corruption and lawlessness among the European political elite

Sebastian Kurz leaves after giving a statement at the federal chancellery in Vienna, Austria on October 9 2021
Image by Lisi Niesner

Europe has been shaken by three political earthquakes in quick succession. On 9 October, Austrian Chancellor Sebastian Kurz – previously celebrated as the Wunderkind of European conservatism – was forced to resign after being named as a suspect in a corruption probe. The same day, Czech Prime Minister Andrej Babis – who faces serious corruption allegations himself – lost to the country’s centre-right opposition in a general election he was widely expected to win. These upsets followed a 7 October ruling by Poland’s Constitutional Court that challenged the primacy of EU law, a decision that threatens to erode the foundations of the European Union’s legal order.

All three developments have created international headlines and underscored how the rule of law – and the threat of its unravelling – has become a defining issue for the stability of the EU. Yet, given Kurz’s personality cult at home and his notoriety internationally, it may be the Austrian case that contributes most to a culture of corruption in the union.

The Kurz affair

In 2017 Kurz became the world’s youngest democratically elected national leader at just 31. Less than four years later, he is accused of using taxpayers’ money to manipulate opinion polls and secure favourable media coverage, which helped propel him to power. At the heart of the criminal investigation into Kurz’s activities are allegations that, starting in 2016, he encouraged close ally Thomas Schmid, who then headed the Finance Ministry, to illicitly funnel €1.2m euros of taxpayers’ money to media group Osterreich. In return, the group allegedly manipulated opinion polls to paint the young foreign minister as the best candidate to lead the People’s Party, while also depicting Reinhold Mitterlehner, the party’s leader at the time, as ineffectual and weak.

Kurz’s resignation has rocked Austrian politics. But, in fact, what is now referred to as the ‘Kurz affair’ is just the latest in a steady stream of political scandals that have engulfed Austria in recent years – starting with the ‘Ibiza Affair’ in 2019. This scandal revolved around Heinz-Christian Strache, who was then Kurz’s vice-chancellor and head of the far-right Freedom Party. Strache attempted to offer government contracts and a stake in Austria’s largest tabloid, Kronen Zeitung, to a woman he believed to be the niece of a powerful Russian oligarch. That affair triggered the downfall of Kurz’s first government – which had been controversial to begin with, given the ideology of Strache’s party.

Corruption at this level of government is an overt attack on the rule of law not only in Austria but also the EU more broadly

While Kurz staged a comeback just seven months later, the Ibiza Affair in May 2019 set off a flurry of investigations into the young leader and his inner circle. These investigations led to allegations that members of both the People’s Party and the Freedom Party had conspired with gambling firm Novomatic to trade casino licenses in exchange for the appointment of Peter Sidlo as the chief financial officer of Casinos Austria. Numerous reports have suggested that Sidlo, a member of the Freedom Party, lacked the experience and qualifications that would warrant such an appointment. Only a few months later, Kurz and his inner circle hit the headlines once again due to fresh allegations that he had rewarded Schmid with the highly lucrative role of head of Austria’s sovereign wealth fund, Osterreichische Beteiligungs AG – and had gone on to mislead parliament about his involvement in the process.

A change of role, but not a change of course

Taken together, these scandals suggest that a culture of tolerance for corruption had taken root in Austria. The country’s ruling elite appeared to have taken comfort in the fact that, even if they got caught, they need not fear repercussions. Indeed, Kurz remains the leader of his party and will head its parliamentary caucus – a role that secures his seat at the table in negotiations over the formation of the cabinet. The fact that his successor, Alexander Schallenberg, is another loyalist all but guarantees that Kurz will remain a central player in Austria’s political landscape – and may even allow him to stage a comeback modelled on the that of his close ally, Russian President Vladimir Putin. “Kurz will remain Austria’s chancellor in the shadows,” warned Pamela Rendi-Wagner, head of Austria’s Social Democratic Party.

In other words, the political scandal that broke in early October may have stripped Kurz of his title, but – until now – it has done little to diminish his influence. And, so long as Kurz holds the reigns in Austrian politics, there is a risk that he and his inner circle will promote an agenda built on the abuse of political power and a systematic effort to undermine two key pillars of the EU: democracy and the rule of law.

A reckoning for the EU

Austria may only have nine million citizens, but it is central to the European project. The country’s current political turmoil, therefore, has far wider implications for the bloc. Corruption at this level of government is an overt attack on the rule of law not only in Austria but also the EU more broadly – especially if it is as systematic as is alleged. As journalist Sam Jones observes: “if the rule of law is faltering in Austria, then it is a damning indictment of the EU’s political health.”

However, the Kurz Affair has not occurred in a vacuum. Polish Prime Minister Mateusz Morawiecki has recently accused the EU of threatening to launch “World War III” for insisting that Poland should respect the primacy of EU law. Meanwhile, his Hungarian counterpart, Viktor Orban – whose government has been similarly under fire for backsliding on the rule of law and democracy – is echoing Morawiecki’s positions on the primacy of national constitutions. And Slovenian Prime Minister Janez Jansa has heightened tensions over eastern member states’ respect for the rule of law. A close ally of both Morawiecki and Orban, Jansa recently accused the European Commission of politicising disputes over the rule of law – and denounced a visit to Slovenia by eight EU lawmakers tasked with taking stock of the rule of law, media freedoms, and the fight against corruption in the country. As Belgian Prime Minister Alexander De Croo stated, Poland and its allies are “playing with fire when waging war with [their] European colleagues for internal political reasons.”

Recent events in Austria, Poland, Hungary, and Slovenia combine to mark a defining moment for the EU. Unless the bloc urgently addresses the threat, it will set a dangerous precedent of tolerance for corruption and lawlessness among the European political elite. It would not only embolden illiberal leaders such as Morawiecki and Orban, but would likely pave the way for the destruction of the EU as a project built on the rule of law.

To prevent this from happening, the EU and its member states will need to step out of their comfort zone. They will need to clearly communicate their refusal to tolerate either the abuse of political power or blatant defiance of the EU’s legal order. But the EU will need to go further than issuing ultimatums: it must use the political and legal tools at its disposal to defend the rule of law in the union. These include financial penalties on countries that are found to have breached EU law – as the European Court of Justice has just done in the case of Poland. The bloc should also trigger the newly established conditionality mechanism, which can suspend EU funds for states that fail to uphold the rule of law. In short, when more diplomatic approaches have failed, the EU may need to use money rather than words to protect its democratic and legal foundations.

The European Council on Foreign Relations does not take collective positions. ECFR publications only represent the views of their individual authors.


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