Dispatch

Waltzing Past the Graveyard

Austria may have buried the final heir to the Habsburg crown on Saturday, but the empire's political culture is far from dead.

VIENNA — On Saturday, July 16, central Vienna assumed the bearing of a costume drama, as Austria's democratically elected leaders, members of the European aristocracy, church representatives and military regiments in historic dress assembled in St. Stephen's Cathedral to pay their respects to the House of Habsburg -- or, more specifically, to Otto Habsburg -- Lothringen, son of Austria's last emperor, who died two weeks ago at 98. He was born in Vienna on the cusp of World War I -- the conflict which put an end to his family's long-lived empire.

But the nation still focused its undivided attention on his funeral: indeed, the public broadcaster ORF covered the funeral for nine straight hours. The viewers at home, and the 1,000 guests invited to St. Stephens -- including the Austrian President Heinz Fischer, Chancellor Werner Faymann -- bore witness to formal funeral rites that may never be practiced again. They listened intently as representatives from the Vatican offered their condolences on behalf of Pope Benedict, and Cardinal Christoph Schönborn pronounced a solemn homage to the Habsburg family. A part of the audience then marched through the city center, past a cordon of tourists -- some bewildered, others in awe - toward the Imperial Crypt. There, the Master of Ceremonies knocked three times on the door before the monks inside opened it to make way for the coffin.

All this ceremonial pomp, however, was not a mere exercise in nostalgia; it was a tribute to a past that never really died. Yes, Vienna is no longer a world capital -- the ubiquitous portraits of the emperors have all been packed away, but Habsburg political culture (including some of its pernicious aspects) is still very much alive.

From the moment of its establishment in 1438, the House of Habsburg was never a modern centralized nation-state, but rather a multi-national empire that left its mark not only on Austria, but across the continent. The most concrete reminders of its rule -- in cities from Lviv to Warsaw, Prague to Sarajevo -- are the many remnants of Habsburg architecture in the form of train stations, schools, and government buildings.

But it is the Habsburg's animating political philosophy -- informed as it was both by hierarchy, and tolerance; authority, and plurality -- that is its most significant legacy. The nations subject to Habsburg rule earned the privileges of law, but were also forced to learn the caprice of imperialism, most prominently in the form of special privileges for a German-speaking minority, and the strict, unquestioned, power of the Roman Catholic Church.

The Habsburg indulgence of the Catholic Church, and its anti-Enlightenment and anti-Protestant fervor, led to cruelty across the continent. Protestant aristocrats were routinely beheaded, their heads and hands displayed in public as warnings to others. (In Prague in 1621, for instance, after the Habsburg regime quelled an incipient reformation, the Catholic rulers ordered that a Protestant city official be nailed to the gallows by his tongue and left to hang there for twelve hours.) Subjects of the Habsburg crown who practiced the wrong denomination of Christianity were often summarily disowned of their property. (Indeed, most of the opulent baroque palaces in Vienna that today attract tourists were built with the fortunes the Catholic aristocracy stole from Protestants.)

The Habsburgs also were Europe's major bulwarks against the advance of democracy. In the 19th century, the House of Habsburg continued to advocate a feudal notion of Europe, with its appointed frontman, Chancellor Klemens Wenzel von Metternich, spying eagerly and repressing any and all potential disruptions from the empire's burgeoning nationalists and democrats.

And yet, despite these reactionary traits, Habsburg monarchs also at times displayed forward-looking policies of cosmopolitanism and tolerance. These monarchs reigned over a multilingual and multinational empire, and they largely refrained from stoking anti-Semitism. Islam was declared an official religion in Austria in 1912.

Unfortunately, the Austria that buried its last heir to the Austro-Hungarian Empire on Saturday sometimes seems more inclined to heed the repressive, rather than the liberal, aspects of its imperial past. Austria, of course, is no longer as empire, but a small country in the European Union. Economically, it is one of the EU's richest countries and has long been an AAA-rated country, according to the OECD. Its infrastructure ranks sixth, and its overall competitiveness ranks 18th in the latest Global Competitiveness Report by the World Economic Forum. Banks like Erste Bank and Raiffeisen, insurance companies like the Vienna Insurance Group, and telecommunication companies such as A1 control large market shares in Eastern Europe.

And yet, while Austria celebrates its economic success, it has abandoned any pretense of international responsibility or far-sighted politics. Where the Habsburgs cultivated cosmopolitan virtues and European ties, Austria's political class today shuns cooperation with their neighbors. On the contrary: In modern Austria, party and fraternity allegiances have replaced the dynastic affiliation of the former days, and the spirit of Metternich has seen a certain renaissance in the past decade.

Indeed, when the political establishment is not indulging the nation's far-right radicals - as the conservative People's Party did by forming a national coalition with Joerg Haider's Freedom Party earlier this decade - it has tended to settle on Grand Coalitions between the main conservative and social democratic parties, governing sluggishly, and partly without accountability, on the basis of consensus and lazy populism. The important issues surrounding the integration of foreigners are currently under the sole purview of the law-and-order obsessed ministry of interior. The current grand coalition controls the public broadcaster and entertains close relations with political tabloids by offering them government money. And since most Austrian media organizations belong to two players on the market, there isn't much pluralism of public opinion. Civil society initiatives on human rights or education are tolerated, but their ideas don't get far with the risk-averse political establishment. The problem is compounded by the lack of a "Freedom of Information Act", which stifles investigations and leaves a large share of the public sector unchecked -- a problem which politicians don't seem in much hurry to solve.

Like the Habsburgs in their final days, Austria's political class is evidently fatigued, unable to stimulate innovation and to tackle overdue social reforms. Citizens with a non-Austrian background are severely underrepresented in political and public life, a problem that no one in the government seems concerned about. Although Vienna is home to immigrants from all around the world, and especially from parts of the former empire, cosmopolitanism is  absent in politics.

Instead, right-wing opposition leaders hold sway over social and international issues. Heinz-Christian Strache, successor of the right-wing maverick Jörg Haider, who died in a car accident in 2008, has rolled out a modern-day counter-reformatory campaign, promoting slogans like "pure Viennese blood" or "being at home; without Islam."

Mr. Strache often poses with a cross in his hand, alluding to the sermonizers of the Catholic Counter-Reformation. He protests the construction of mosques in Austria, and presents himself as a one-man fortress against Islamic intruders. Many Austrians find his message appealing: Strache's party has gained 26 percent in the Viennese municipal elections last year.

Contemporary Austria has a particular lack of fellow feeling for many of its neighbors, despite the fact that no other country has seen a higher per-capita profit from recent EU enlargement rounds. Not once since its EU accession in 1995 has a majority of Austrians declared the European Union to be "a good thing." Austrian companies establishing trade ties in Eastern Europe have benefitted until now from the region's shared cultural ties, but the economic success is being progressively poisoned by Austria's inward-looking general politics.

This anti-EU sentiment prevails even in the upper echelons of the political establishment. Three years ago, Chancellor Werner Faymann, a Social Democrat, wrote a letter to the editor of the Kronen Zeitung, an influential political tabloid, announcing his party's farewell from the pragmatic EU policies it had pursued until then. Faymann wrote that "any future change in the EU Treaty that touches Austrian interest will be put to a referendum in Austria." And Vice-chancellor Michael Spindelegger, of the conservative People's Party, recently criticized the proposed EU budget in polemic terms, calling it a "horror-budget."

What leadership Austria has shown in Europe has come in the form of negativity. Vienna made a prominent effort earlier this decade to block Turkey's EU accession process. Recently, the Financial Times Deutschland called Austria a "Griechenland-Scharfrichter" (Greece's executioner) because of the Austrian government's remarkably harsh pronouncements on the Greek economy.

To be sure, Austria will not return to monarchism. But the opulent display of Habsburg imagery surrounding the funeral in Vienna betrays more than a historical interest in bygone days. It is, instead, an indication of a country mournfully obsessed with the symbolism of the past, the better to avoid the politically pressing questions of the present.

Dispatch

Rumor and Recriminations in Rome

The Shakespearean saga of Berlusconi and Tremonti makes for good theater. But if the play ends badly, Europe's in big trouble.

Governments and financial markets are supposed to be run by hardheaded men and a few women who deal with facts, like Dickens's Mr. Gradgrind -- public servants who evaluate the data and don't let emotions get in the way of their pursuit of power and profit. In truth, however, the markets yo-yo at every half-truth, so successful politicians must control the image before concerning themselves with reality. The character of Rumour, in Shakespeare's Henry IV, is perhaps the more fitting character for contemporary politicians to keep in mind:

I, from the orient to the drooping west,

Making the wind my post-horse, still unfold

The acts commenced on this ball of earth.

Upon my tongues continual slanders ride,

The which in every language I pronounce,

Stuffing the ears of men with false reports.

Shakespeare's references to reports in many languages flying from east to west on the wind ring especially true in a Europe of perpetual financial doom.

Italy's current crisis is nowhere near as dramatic as Henry IV's nor as bloody, but like the Wars of the Roses, it has some striking actors. Like Rumour, Italy's crisis is fueled by reports in Greek, Portuguese, Spanish, and English. Italy's Gradgrind "facts" are bad, but hardly worse today than they were a year or two or three ago. Italy's ability to repay its debts is no less either. But if everyone (read: the markets) thinks that it is weaker, then it is. And if the government is unable to lead, then the crisis becomes real. Here the rivalry between prime minister and the finance minister is crucial, a rivalry that is personal and policy-driven.

Center stage at the moment and enjoying every minute is Giulio Tremonti, minister of the economy and finance, and, this week at least, savior of the Italian economy and possibly the euro, too. There has been almost a year of grumbling in the center-right coalition: Tremonti has been calling for spending cuts, while Prime Minister Silvio Berlusconi and the rest of the government want to spend their way back into better approval ratings.

On Thursday, July 14, Tremonti presented his budget to the Senate. The prime minister's seat next to his was conspicuously empty. Tremonti was happy in the limelight: His speech was full of trademark sarcasm and I'm-cleverer-than-you remarks, ending with the warning that "If we don't act now, then we will be like the Titanic, and even the first-class passengers suffered." Curiously he pronounced the word "Titanich" as if it were a Yugoslav partisan. Maybe he needs that kind of ruthlessness. In any case, the simile was apt: On that ill-fated sinking ship, many more first-class passengers survived than second-class or steerage. Likewise, his budget hits the middle and poorer classes hard. Corriere della Sera, hardly a die-hard anti-Berlusconi rag, reckoned that families would be paying €1,000 more in the coming year.

Health service charges have gone up; tax deductions are down. Government payments to cities and regions (the equivalent of U.S. states) are cut, which means that their social services will be reduced or local taxes will be increased. Taxes on fuel prices went up 6 cents a liter last week: Gasoline is now €1.60 per liter, diesel €1.50.

But there was no obstruction from the opposition; the bill passed without debate in both houses with each party simply declaring how it would vote and why. The opposition found itself in a corner. If it had tried to stop the measure, then the speculators would have continued, the spread between Italian and German government bonds would have continued to widen, and the crisis would have moved into catastrophe mode. And the opposition would have been blamed. Instead, it accepted President Giorgio Napolitano's counsel and allowed the budget through in two days.

Tremonti recognized their support in what was a genuine expression of gratitude. He concluded, though, in his more normal supercilious vein with a clear stab at Berlusconi. He quoted Livy: "Hic manebimus optime," literally translated as "We will stay here very nicely." Which meant, of course: "Don't think you can fire me, because I have the support of President Napolitano and if you try, then the rating agencies, the European Central Bank, the European Union, and above all the speculators will shaft Italy." It was another salvo in the long-running war between Berlusconi and Tremonti.

A month ago, Tremonti put forward his plans for a serious austerity budget only to have Berlusconi tell the world that "Tremonti does not run the show. Cabinet decisions are taken collectively." The proposal that appeared last week was a pale copy of the original; €47 billion in savings, but only €2 billion this year and €5 billion the next. Twenty-billion euros will wait for 2013 (after the elections) and another €20 billion for 2014. It also included a clause that would have delayed payments of damages in civil cases; it just so happens that a verdict was expected in a case in which the defendant was Berlusconi's Fininvest. This was a blatantly pro-Berlusconi measure; Tremonti denied any hand in it. In any case, Napolitano made his disapproval very clear, and the clause was removed. But Berlusconi took it as an opportunity to vent his personal animus toward his finance minister, declaring an interview that Tremonti was not "a team player."

Tremonti is not the only one under attack from his boss. One of his close advisors in the Finance Ministry, Marco Milanese, is under investigation for corruption. He is alleged to have taken payments in return for positions and contracts from the ministry as well as having a highly extravagant lifestyle. He apparently turned down the offer of an Aston Martin because it was "secondhand" and took a Ferrari instead. Worst of all for Tremonti, Milanese paid €8,500 a month for an apartment that Tremonti occupied for the last year, echoing another Berlusconi minister who was forced to resign when it was discovered that his house was paid for by someone else "without the minister's knowledge."

Milanese is also alleged to have been carrying out Tremonti's duties without any official delegation of authority and to have been rather too close to the minister. The mudslinging has only just begun.

On the prime minister's side, there is plenty of mud that has already been slung and plenty more waiting in his various trials. But apart from the personal scandals, he is politically weaker than ever. Local elections and referenda in May dealt him serious blows: His approval ratings are below 25 percent. Last week he made no public appearances, avoided the Senate debate, and arrived late for the Chamber of Deputies vote, which he attended without speaking.

The hero of the hour is Napolitano. The Italian president is a largely symbolic figure, not unlike Queen Elizabeth, but he has residual authority that he uses when the normal executive is lacking. It was his mediation that took the budget through Parliament. Berlusconi felt left out (and he was).

Paradoxically, the weakness of both Berlusconi and Tremonti means that neither can trump the other, at least in the short term. If they tried, then the sharks from the financial markets would rush in and the results would be disastrous -- not just for Italy but the whole of Europe. For the moment, they are the odd couple who just have to put up with each other.

Remarkably, the budget that passed had no immediate measure to cut the costs of politics. Italian parliamentarians are the highest paid in Europe, with very generous pensions after their retirements. This Monday, July 18, Italians will be paying more for their health service, and pension increases will be stopped for many; yet parliamentarians were spared any significant cuts.

Italians' unhappiness about such greed from their politicians is growing; it hasn't reached the point where violence of the sort we've seen in Greece is likely, but as the cuts sink in, there is bound to be some reaction.

It's a drama of big players in Italy. It makes for good theater, but the country's discontent is very real and needs no Rumour to propagate it.