Austrian government revamp looms over video of far-right leader

VIENNA (Reuters) - Austria’s chancellor is ruling out working with his far-right deputy, a coalition source said on Saturday, after footage apparently showed the Freedom Party leader discussing state contracts with a potential Russian backer in return for political support.

Chancellor Sebastian Kurz was due to meet Vice Chancellor Heinz-Christian Strache at 11 a.m. (0900 GMT) after a crisis meeting with senior figures in the government on Friday night, news agency APA said citing sources.

Strache will make a statement at 1000 GMT, the Freedom Party said without providing further detail.

A spokesman for Strache could not be reached by Reuters for comment on the threat to the coalition, which has blown up just a week before Austria votes in elections for the European Parliament.

Kurz, who has distanced himself from the far right to protect his image when lesser scandals have emerged, was also due to make a statement later on Saturday. The opposition called for Strache to resign.

“This is huge. This has to be the end of Heinz-Christian Strache,” political analyst Thomas Hofer said, adding that even a snap election was possible.

The Freedom Party is preparing for Transport Minister Norbert Hofer to replace Strache as vice chancellor, APA news agency said, citing party sources. The 48-old engineer ran for president in 2016 and only narrowly lost.

The Kurier newspaper, without citing its sources, said Kurz preferred to call a fresh election rather than continue to govern with a partner whose image had been tarnished by the affair.

Kurz’s party still leads opinion polls but far short of a majority. The only other party with enough seats for a majority is the Social Democrats, with which Kurz, an immigration hardliner, has difficult relations.

Strache has headed the Freedom Party since 2005, bringing it back to mainstream electoral success not seen since it was led by the charismatic Joerg Haider. It secured 26 percent of the vote in 2017’s parliamentary election.

VIDEO FOOTAGE
The video was reported on Friday by two of neighboring Germany’s leading media - weekly Der Spiegel and newspaper Sueddeutsche Zeitung - purportedly showing a meeting in Ibiza between Strache, another party official and a woman purporting to be the niece of a Russian oligarch.

Strache did not reply to a request for comment about the video. Reuters was not able to verify the authenticity of the footage independently, and the German newspapers did not say how they obtained it.

The newspaper reports said the video appeared to be a sting operation.

The Freedom Party (FPO) co-chairman, Christian Hafenecker, said on Friday the party’s lawyers were evaluating the material.

Neither Strache nor the FPO ever received or granted any benefits from the persons concerned, Hafenecker said in a statement.

“Since the video was obviously recorded illegally, we are also preparing appropriate legal steps.”

The footage, recorded in July 2017 - months before the election that brought this government to power - showed Strache talking to the woman.

In it, he appeared to offer to direct inflated construction contracts to a company in exchange for support for his party, though he also said he wanted everything to be done legally.

Vienna prosecutors said they would study the reports and decide whether there was sufficient cause to open an investigation, a spokeswoman for the prosecutors said.

“The FPO is finished,” ran the headline in the tabloid Kronen Zeitung, which featured in the video since the woman said the oligarch wanted to buy a stake.

It remains unclear who was behind the recording.