Austrian conservatives enter new coalition government with far right

VIENNA, Feb 28 (AFP) - Austrian President Thomas Klestil swore in on Friday a new ruling coalition including the far-right Freedom Party, three years after its first entry into government provoked international outrage and European Union sanctions.

The ceremony came just hours after Chancellor Wolfgang Schuessel set the seal on a new coalition agreement between his conservative People's Party and the controversial Freedom Party.

Chancellor Schuessel's new government is a renewal of the coalition that collapsed last September, when a split within the Freedom Party forced the resignation of its ministers.

The coalition broke up 31 months after its formation, when the Freedom Party became the first far-right party to govern an EU country, triggering six months of diplomatic sanctions imposed by the bloc.

Joerg Haider, the Freedom Party's still-influential former leader, has repeatedly caused international outrage by praising German war-time leader Adolf Hitler's SS troops and making other pro-Nazi comments.

President Klestil, reluctant to see a return to government by the extreme right, had twice called on the conservatives to negotiate a new "grand coalition" with the Social Democrats, Austria's other major party.

During the ceremony, Klestil wished the new government "every success, in the interests of the Austrian republic".

The Freedom Party has six ministers in the new coalition, including the vice-chancellorship, taken by party leader Herbert Haupt -- who will combine the post with the social affairs portfolio.

Dieter Boehmdorfer is also staying on as justice minister for the party, with Reinhart Waneck remaining as its junior health minister.

Joerg Haider's sister, Ursula Haubner, is also to hold an as-yet unspecified portfolio in the new government.

The People's Party holds 11 ministries, including the chancellorship.

Conservative Benita Ferrero-Waldner stays on as foreign minister, as does Karl-Heinz Grasser, a former Freedom Party member turned independent, in the finance ministry.

Schuessel's decision to begin negotiations on a second coalition with the Freedom Party on February 20 followed a last-ditch bid to court the support of the Greens, after exploratory talks with the Social Democrats collapsed last month.

The formation of a new government comes more than three months after the general election won by the People's Party with 42.3 percent of the vote -- the largest share, but not the absolute majority needed to govern alone.

In the same election, the Freedom Party saw its share of the vote slump to 10 percent from the 30 percent it won in 1999.

Nevertheless, its 18 parliamentary seats will allow a coalition led by the People's Party, with 79 seats of its own, to command a combined 97 votes -- a slim absolute majority in the 183-member house.

Haider, now governor of the southern Austrian province of Carinthia, is an outspoken populist who transformed the Freedom Party from a fringe faction into one of Europe's most powerful far-right groupings -- and is still widely believed to control the party from the wings.

Haider still knows how to make headlines, most recently by offering to mediate in the Iraq crisis and making trips to Baghdad to meet President Saddam Hussein.

The son of a former Nazi party official, Haider is best known abroad for controversial remarks that appear to signal pro-Nazi sympathies. He apologised for one apparent eulogy of Hitler, only to follow it up with further pro-Nazi comments causing outrage.

His party has fed off populist resentment in Austria directed at the European Union, immigrants and the liberal media.