The Austrian general election of 1 October 2006 has resulted in one loser and several winners. The loser is obvious: the moderate right, represented by the conservative Österreichische Volkspartei (Austrian People's Party / ÖVP ) and its leader, incumbent federal chancellor Wolfgang Schüssel. The provisional results declared a fall in the ÖVP's vote from 42.3% in 2002 to 34.2%.

The winners are on both sides of the political spectrum. The left-of centre Die Grûnen (Green) party had the best result in its history: rising from 9.5% in 2002 to 10.3%. The Sozialdemokratische Partei Österreichs (Social Democratic Party / SPÖ) received 35.7%, a slight decline from 36.5% - but as it regained from the ÖVP its status as Austria's number-one party, the SPÖ's jubilation is understandable.

Anton Pelinka is professor of political science and nationalism studies at the Central European University, Budapest, and director of the Institute of Conflict Research, Vienna. Among his books are (co-edited with Ruth Wodak) The Haider Phenomenon in Austria (Transaction, 2002) and Democracy Indian Style: Subhas Chandra Bose and the Creation of India's Political Culture (Transaction, 2003)

The most significant winner, however, is the extreme right- represented both by the Freiheitliche Partei Österreichs (Austrian Freedom Party / FPÖ) with 11.2% and the Bündnis Zukunft Österreich (Alliance for Austria's Future / BZÖ - a splinter from the FPÖ) with 4.2%. This combined total is a big improvement on the 10% achieved by the still-united "old" FPÖ in 2002.

Austria's system of proportional representation, with a 4% threshold required for parties to translate votes into seats in parliament, means that the final outcome of the election remains ambiguous. A new government can only emerge from the process of building a majority in the national council (parliament). The outcome of elections of 1999 and 2002 was a rightist coalition: the ÖVP and the FPÖ were able to form a cabinet, while the SPÖ and the Greens stayed in opposition.

The situation is different now. The split within the FPÖ was about whether the party should stay in government with the ÖVP. The pro-ÖVP wing founded the BZÖ in 2005. The remaining FPÖ behaved more and more like an opposition, criticising the Wolfgang Schüssel government from the far-right. The BZÖ is not strong enough to give the weakened ÖVP a majority. But the combined left - SPÖ and Greens - doesn't have a majority either.

The provisional results (without absentee or postal votes) gives the SPÖ sixty-eight seats, the ÖVP sixty-six, the FPÖ twenty-one, the Greens twenty and the BZÖ eight. That means that there is a potential majority to the right of centre. But this would include the FPÖ. And such an inclusion has been ruled out by the ÖVP - at least for the moment.

The absentee votes, not yet counted, may bring minor changes. But as long as the BZÖ does not fall below the 4% minimum (possible, but improbable), the formation of a cabinet requires either the inclusion of the FPÖ or a grand coalition.

A grand coalition?

It is an unwritten rule of Austrian politics that the federal president (in this case Heinz Fischer) entrusts the leader of the largest party (in this case the SPÖ's leader, Alfred Gusenbauer) with the formation of a cabinet. During the campaign, Gusenbauer had consistently expressed his intention to form a coalition either with the Greens or the ÖVP. As the first possibility (at least for the moment) is not feasible due to his lack of a majority, Gusenbauer is bound to start negotiations with the ÖVP - the party he has opposed for more than six years.

Austria has a long tradition of grand coalitions. The country was governed by a coalition between SPÖ and ÖVP on post-war occasions: from 1945-66 and from 1987-2000. In each case, the coalition was seen as necessary to stabilise democracy, the economy and Austria's international standing; it was perceived as a kind of national government.

This perception started to change after the task of such a government was fulfilled. Towards the end of its life, the grand coalition seemed to exist primarily because of a lack of alternatives; or, to be more precise where the 1987-2000 government was concerned, to keep Jörg Haider's far-right FPÖ out of power. Haider and his populist message of anti-elitism, anti-immigration and anti-European Union, mixed with a downplaying of the Nazi crimes, became the defining "other" of the grand coalition in the 1990s.

The grand coalition's strategic dilemma of the 1990s was reflected by the FPÖ's rise and the major parties' decline. At the end, the ÖVP left the grand coalition to side with Haider.

There was a lot of talk that Schüssel successfully domesticated Haider. But in 2006, FPÖ-plus-BZÖ has emerged as an even more a decisive factor in Austrian politics. Haider himself may no longer be a figure on the national scene, the result of the BZÖ's disastrous showing outside his home province of Carinthia. But if Haider is out, Haiderism is very much in.

In many respects, the situation of 2006 is reminiscent of that before 2000. In such circumstances, a grand coalition would not be the result of agreement on a common agenda but rather the least of all evils. In order to keep the FPÖ out, the two major parties would build a negative coalition. And there is a high probability that the FPÖ would profit once more.

The right's secret

Austria's democracy, then, has been taken hostage by the extreme right. But why, amid a period of generally good economic performance, have angry sentiments of xenophobia and more general, embittered social protest gained political currency?

Electoral research gives some answers. It is the lesser-educated male voter who - over-proportionally - votes for the FPÖ. It is the modernisation loser who is tempted to follow the FPÖ's battle-cry against "them": against the political class, against the European Union, against foreigners in general and Muslims in particular.

The existence of a social segment afraid of the future in an increasingly globalised economy is not a special Austrian phenomenon. But there are some specifically Austrian preconditions facilitating the success of rightwing populism: in particular, the existence of a traditional structure and a traditional social milieu that provides resentment with an articulated leadership.

The FPÖ is an old party. Its roots lie in the pan-German movement of the beginning of the 1900s, whose Georg Ritter von Schönerer (1842-1921) is one of Haider's ideological forebears. And this tradition also includes the Austrian Nazi Party. After 1945, when this party was outlawed, the hard core of former Nazis created their new platform - the FPÖ. In contrast to Germany, the mainstream Austrian parties did not shy away from making deals with such a party. What was not respectable in Germany was respectable in Austria. There was no cordon sanitaire forbidding the centre from bringing the far right into the political game.

The centre is challenged once more. If the two major parties are unable to write a convincing enough common platform, a grand coalition will again prove the nourishing ground for the far-right.