House of Kurz

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Sebastian Kurz, a political wunderkind who became Austria’s leader at just 31, rose to power by cultivating a youthful, do-gooder image that endeared him to young and old alike.

And then he went rogue.

A cache of private text messages between the center-right chancellor and his deputies and other correspondence uncovered by Austrian authorities as part of a sweeping investigation into political corruption portrays Kurz not as the well-mannered “favorite son-in-law of the nation” who captured the heart of his compatriots and much of the EU, but rather as a shrewd behind-the-scenes operator willing to do whatever it takes to push through his agenda, whether dealing with the Catholic Church, doling out political favors or taking on rivals.

While the exchanges offer a rare, unfiltered glimpse at how politicians operate behind the scenes, what they also reveal (aside from Kurz’s penchant for heart emojis and exclamation marks) is what veteran Austrian political commentator Peter Filzmaier described as the “unbelievable banality of the people who lead our republic.”

“Don’t worry! You’re family,” Finance Minister Gernot Blümel, one of Kurz’s closest deputies, texted a fellow loyalist in an effort to reassure the man that he would be taken care of with a plum job.

Such tactics, even if they evoke a bad mafia film, are hardly surprising in political circles. But Kurz, who refashioned Austria’s staid conservative party root and branch after taking it over in 2017, changing everything from its name to its color (from black to turquoise), was supposed to be different. He didn’t just promise to revolutionize the country’s politics: He convinced Austrians he was serious. And they bought it.

Kurz, who leads the Austrian People’s Party, is not a direct subject of the corruption investigations, which encompass allegations of everything from bribery to violating official secrecy laws, but they have touched his inner circle. Perhaps even more damaging to Kurz in the long term, however, is that the text exchanges have all but destroyed the public persona he built as a fresh-faced millennial politician who would put an end to the clubby machine-style politics that dominated Austria’s postwar history.

Far from drawing a line under that era, Kurz has erected what critics have dubbed the “House of Kurz,” a close-knit network of the chancellor’s loyalists in the government, private sector and media who quietly collaborate to their mutual benefit.

Instead of the “new style” Kurz promised, commentator Ruth Wodak wrote this week, Austrians are learning that “anything goes.”

Kurz’s metamorphosis might sound like a familiar coming-of-age political tale, but at a time when much of Central Europe has slipped into a form of soft authoritarianism, Kurz’s transformation and the larger corruption scandal engulfing Austria’s political class suggest that the erosion of democratic norms in the region threatens to spread into Western Europe.

That would mark a substantial setback for the European Union, which is already struggling to handle recalcitrant governments in Hungary and Poland over steps they’ve taken to undermine both the independent judiciary and the media. Like the leaders of those countries, Kurz has not shied away from attacking the EU to deflect from his domestic woes. Just last week, he led an unsuccessful attempt, joined by the Czech Republic and Slovenia, to win a larger allotment of vaccines from the EU, a quixotic effort widely dismissed as a political stunt.

It wasn’t long ago that many in Brussels saw Kurz not as a threat, but as conservative Europe’s future. Europe’s center-right, the dominant political bloc in the European parliament, was enamored by the brash young Austrian, whose tough stance on migration many viewed as a model for conservative parties across the Continent. He was particularly popular in Germany, where Kurz wooed the media, in particular the influential Bild tabloid. Some even saw in Kurz the standard bearer for the post-Merkel era.

No more.

The corruption probes that uncovered the private text traffic were triggered by the so-called Ibiza Affair, a scandal that exploded in 2019 after the release of a video showing the far-right leader who became Kurz’s coalition partner offering to trade political favors for cash during a boozy session with a woman he believed to be the daughter of a Russian oligarch. Kurz survived the immediate scandal unscathed, though it felled his coalition partner, forcing a new election that resulted in his current coalition with Austria’s Greens. In the meantime, the authorities’ original Ibiza investigation has led them to the chancellor’s inner circle.

Casino royale

At the center of the corruption investigation is the relationship between Austrian casino operators and public officials. Former Vice Chancellor Heinz-Christian Strache, the man featured in the infamous Ibiza footage, claimed on the tape that one of the companies, Novomatic, “pays everyone.” In other words, he alleged that the company funnels money to all of the country’s political parties in return for favors, an accusation the company and the political parties strenuously deny.

In the course of investigating that claim, however, investigators stumbled on a text sent in 2017 by the former head of Novomatic to Kurz ally Blümel, the current finance minister. The Novomatic executive, Harald Neumann, told Blümel he needed a meeting with Kurz, then still Austria’s foreign minister, to discuss “for one, a donation and for another a problem we have in Italy.”

Blümel and Kurz say the meeting never took place and no donation was ever made. (The Italy reference was in connection with a tax dispute Novomatic faced there.)

Kurz portrayed the investigation, led by Austria’s financial crimes prosecutor, as deeply flawed.

“So many mistakes have been made that I think there’s an urgent need for change there,” Kurz said in February, drawing the ire of Austria’s judges and prosecutors, who accused him of making an unprecedented assault on the judiciary’s independence.

If Kurz hoped his interventions would cause prosecutors to step back, he was disappointed. If anything, they increased the pressure, exploring accusations — denied by those involved — that a senior justice official loyal to Kurz secretly funneled Blümel’s camp information about the investigation.

Prosecutors have named Blümel a suspect in their bribery investigation, sparking opposition cries for his resignation, which he has rejected. He denies any wrongdoing.

As often happens in broad investigations into politicians’ dealings, the Austrian probe has taken authorities in unexpected directions.

‘I love my chancellor’

One involves a man named Thomas Schmid, the head of a state holding company that manages Austria’s stakes in former state-owned enterprises including Telekom Austria and OMV, the oil and gas company. Together with Blümel, Schmid belongs to a close-knit group of devoted Kurz lieutenants who have worked with the chancellor since his early days in politics.

In analyzing the texts on Schmid’s phone, authorities discovered how the executive won his top position at Austria’s state holding company, ÖBAG, where he earns, depending on the portfolio’s performance, up to €600,000 per year.

Not only did Schmid — until 2018 a senior official in Austria’s finance ministry — have a hand in writing the job description for the post, he also hand-picked the board that would hire him. Schmid had never worked as a corporate executive and had no international experience, factors that might, under other circumstances, have dashed his chances of heading a holding company overseeing corporate investments totaling €26 billion. But Schmid had something else: a powerful ally named Sebastian Kurz.

After months of engineering his move, Schmid sought assurances from Kurz that his new job would carry real power and not just be ceremonial.

“You’re getting everything you want 😘😘😘,” Kurz reassured Schmid in a text message in March of 2019.

“🙂🙂🙂 I’m so happy…I love my chancellor ,” Schmid responded.

Following public outcry over the affair, Schmid said on Tuesday that he would resign from the state holding company when his contract expires next year and not exercise an option to extend it by two years.

Austria’s opposition is demanding an investigation into whether Schmid broke any laws in securing the job. Both he and Kurz, who declined to comment for this article, deny any wrongdoing.

“What we can see is that the ‘Kurz System’ was designed from the beginning to take control of state institutions and to create a state within the state,” said Kai Jan Krainer, the parliamentary leader of the opposition Social Democrats.

Church and state

It seems more likely that Kurz was simply rewarding an ally for his loyalty. Over the years, Schmid had taken on any number of off-the-books assignments for Kurz, people who have worked with the two men say. Just weeks before Schmid got the big state holding job, he helped the chancellor with a delicate matter involving the Catholic Church.

After a local civil servant was stabbed to death by a Turkish refugee in western Austria in early 2019, Kurz endorsed a tough new law to allow authorities to place asylum seekers deemed “dangerous” in preventive custody.

But Catholic leaders, led by the popular archbishop of Vienna, Cardinal Christoph Schönborn, opposed the idea, publicly comparing it to the tactics used by repressive regimes. “Every dictatorship in the world locks people up out of simple mistrust,” Schönborn wrote in a newspaper column. “Tomorrow it might be you or me.”

Kurz encouraged Schimd to “step on the gas” with a plan to exert pressure on the church. “We’re going to leave them with a considerable package,” Schmid texted him ahead of a meeting with a senior church official.

Schmid went on to explain he would inform his church counterpart that “in the context of reviewing all tax privileges across the republic, the finance ministry is going to take a very close look at the church.” Both men knew that for the church, which would have difficulty operating without preferential tax treatment, the threat was the equivalent of the nuclear option.

Kurz’s response: “Yes, super.”

A few hours later, Schmid reported back to Kurz on the meeting, writing that the church official was “a basket case” after receiving the threat. The man “turned red then pale and then started shaking,” Schmid wrote to his boss.

“Super, thank you so much!!!!,” Kurz replied.

Despite Kurz’s apparent elation, the tactic didn’t work. Schönborn, the cardinal, continued to lambaste the proposed asylum policy, calling it “inhuman.”

Just weeks after Schmid’s church visit, Kurz’s government collapsed amid the Ibiza Affair. The asylum policy never went into effect, though Kurz’s party is still pursuing it.

Beyond the scandals eating away at Kurz’s credibility, the larger question is whether he can survive as a political bad boy. Even though his approval rating has tanked in recent days, most observers are betting he will, given the weakness of the opposition.

“Since he took over the People’s Party in 2017, the question was whether this is just clever marketing or is something really going to change,” Filzmaier said.

At least Austrians now have the answer.

Nette Nöstlinger contributed reporting.

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