AUSTRIA

Scandals May Hurt SPÖ Most

The political climate has been disturbed for several months by a series of corruption scandals involving high-ranking members of both the SPÖ and the ÖVP, which form the current government, as well as the two right-leaning opposition parties, the FPÖ and the BZÖ. With most of the main parties tainted by allegations of corruption, the scandals are not likely to have much of an effect on the relative balance of popular support among the SPÖ, the ÖVP, and FPÖ.

However, as one of the targets of investigation, Chancellor Werner Faymann will find it difficult to boost the SPÖ’s standing ahead of an election required by September 2013. If the SPÖ fails to put a little distance between itself and its rivals over the next 18 months, Faymann’s party is likely to be pushed into opposition following the next elections.

Neither of the government parties will benefit politically from the performance of the economy, which is forecast to contract slightly in 2012, but is at risk of a deeper downturn in the event of setbacks in efforts to resolve the euro-zone debt crisis.

EL SALVADOR

Funes’ Options Narrowed

Legislative and municipal elections were held on March 11, and the result was a disappointing defeat for the leftist FMLN. The hard-left leadership of the governing party has made no secret of its displeasure with the moderate course pursued by Mauricio Funes, its candidate in the 2009 presidential election, and was counting on a strong showing at this year’s elections to lay the ground for the victory of a more traditionally Marxist nominee in 2014.

In the event, the FMLN lost four seats, reducing its total to just 31, while Gana, a party formed by a dissident faction of the main opposition Arena, won just 11 seats. As a result, the combined strength of the FMLN and Gana, which had previously lent crucial support to Funes’ government, has been reduced to just 42 seats, one short of a majority. Arena’s strong showing diminishes the likelihood of further defections to Gana that might alter the arithmetic.

It is debatable whether Funes will be able to rely on the support of the FMLN, which will undoubtedly want to burnish its leftist credentials as a preparatory step for choosing a hard-liner as its presidential candidate for 2014. Should the FMLN abandon Funes, it is doubtful that he would be able to cobble together a majority center-right coalition.

IRAN

Clerics Tighten Control as Tensions Rise

Almost completely obscured amid a worrisome bout of saber-rattling over Iran’s nuclear ambitions early in the year was the fact that Iran held parliamentary elections in early March. To be sure, the result was pretty much preordained, but the vote was not insignificant. Supporters of President Mahmoud Ahmadinejad were routed, as factions loyal to the country’s supreme religious leader, Ayatollah Ali Khamenei, won about 75% of the seats in the 290-member Majlis.

The result effectively reduces Ahmadinejad to figurehead status. There is speculation that Khamenei might now push to eliminate the office of president completely, replacing the current system with a parliamentary model under which executive powers would be held by a prime minister. In the meantime, he is consolidating his political control with the aim of ensuring that a president election, if held, will result in a victory for his preferred candidate.

On the international front, fears that Israel might be preparing a military strike against Iran have eased amid a softening of rhetoric and the restarting of talks between representatives of Iran and the so-called P5+1 bloc. A meeting held in Istanbul in late April produced no substantive result other than an agreement to hold another round of negotiations in Baghdad in late May. Given the fact that the two sides had not met for a year prior to the April gathering, that can be seen as progress.

SWEDEN

Business-friendly Agenda Stalled

The minority status of the center-right Alliance for Sweden government headed by Prime Minister Fredrik Reinfeldt has proven to be an obstacle to securing approval of the more contentious items on the policy agenda, including privatization and tax cuts. The main opposition SAP has shown signs of renewed vigor following the election of former union head Stefan Lofven as the party’s leader in January, and recent polls indicate that the SAP-led Red-Green coalition would win a majority of seats in the event of an early election.

Lofven has dropped his predecessor’s calls for the reversal of economic deregulation, a position that along with his support for the increased use of nuclear power in Sweden puts him at odds with much of the SAP’s rank and file. At the same time, he has advocated increased funding for education and an active role for the government in labor relations, both of which are consistent with the party’s traditionally left-leaning stance.

In practical terms, the SAP’s revival dims the prospects for the aggressive pursuit of a pro-business agenda as a strategy for dealing with the economic fallout from the euro-zone debt crisis. Lofven may be content to focus his energies on shoring up his position as party leader and consolidating the SAP’s recent gains in the polls, rather than maneuvering to force an early election. Even so, with political and economic winds blowing in the opposition’s favor, a move to topple the minority government cannot be ruled out.

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