Austrian coalition talks led by far right near collapse, blame game begins

By Francois Murphy

VIENNA (Reuters) - Talks led by Austria's far-right Freedom Party (FPO) on forming a governing coalition appeared close to collapse on Wednesday as the FPO and conservative People's Party (OVP) rejected each other's positions and traded blame for the impasse.

The eurosceptic, Russia-friendly FPO is seeking to lead a government for the first time since it was founded in the 1950s under a leader who had been a prominent Nazi.

The FPO came first in September's parliamentary election with around 29% but was only tasked with forming a government last month once a centrist attempt to do so without it failed. The OVP is its only potential coalition partner.

The FPO initially planned to reach a deal quickly since it overlaps with the OVP on many issues, particularly taking a hard line on immigration. But the mood soured as it became clear the FPO was making many demands that were always going to be difficult or unacceptable for the OVP.

"This shows that we are not power hungry. It is more than fair, unless the OVP wants to govern alone," the FPO said in a statement on Wednesday outlining a proposed division of ministries between it and the OVP.

The FPO's insistence that it control both the finance and interior ministries has been a major obstacle in the talks, as has a laundry list of demands such as exceptions to sanctions against Russia or challenging the primacy of European Union court rulings.

The OVP published its own suggestion on ministries that the FPO quickly rejected. It also said the FPO had not addressed its demand that fundamental matters be guaranteed, such as the rule of law, the absence of Russian influence, and Austria being a "reliable partner to the European Union".

The FPO replied that those principles included points the parties' leaders needed to discuss but "the OVP refused to have this discussion because it wanted to have the issue of ministries conclusively resolved first".

Such finger-pointing is exceptional since the parties had agreed not to unilaterally make details of their talks public. It suggests they are no longer able to hold such discussions behind closed doors, or that they may be more concerned with public perception as their talks falter, analysts said.

Should the talks collapse, either a centrist attempt to form a government will be revived or the Alpine republic will head towards a snap election with polls suggesting the FPO's lead over other parties would grow.

(Reporting by Francois Murphy; editing by Mark Heinrich)