The trend toward the dissolution of the two-party system was confirmed by the outcomes in four provincial elections held in 1991. The FPÖ increased its share of the vote in all four elections, and in Styria and Upper Austria it tripled its vote to 15.4 and 17.7 percent, respectively. In Vienna the FPÖ diÍÍÍÍsplaced the ÖVP as the second most powerful party in the provincial legislature, a particularly embarrassing result for the ÖVP. The ÖVP lost ground in all four elections, while the SPÖ lost seats in three elections. With its showing in Vienna, the FPÖ became the second strongest party in two of Austria's nine provinces, having achieved the same status in Carinthia in 1989, also displacing the ÖVP.

In June 1991, President Kurt Waldheim announced that he would not seek reelection in 1992. ÖVP leaders were relieved that Waldheim had decided to retire from politics because they feared the eruption of another bitter controversy over his wartime record if he had chosen to run. Waldheim became the first incumbent Austrian president not to seek reelection. Initially, the ÖVP and SPÖ looked into the possibility of nominating a joint candidate for the 1992 election. However, the two parties were unable to agree on a candidate, and in November 1991 they and the FPÖ each announced separate candidates. The ÖVP selected Thomas Klestil, a career diplomat and former ambassador to the United States. The SPÖ candidate was Rudolf Streicher, head of the Ministry for National Industry and Transportation. The FPÖ candidate was Heide Schmidt, who was also third president of the Nationalrat. The Green candidate was the scientist Robert Jungk.

No candidate was able to win an absolute majority in the first balloting on April 26, 1992. Streicher polled 41 percent, compared with Klestil's 37 percent, but far ahead of Schmidt's 16 percent and Jungk's 6 percent. In the run-off elections four weeks later, when only the top two candidates were on the ballots, Klestil scored an easy victory over Streicher with 57 percent of the total vote. Controversy about his opponent's war record, a series of scandals connected to the SPÖ, and Klestil's skill in dealing with the media contributed to his easy victory in the second round of voting. Perhaps most important, however, was his career as a diplomat abroad that had kept him out of politics (although he was an ÖVP member) and made him seem well suited for leading the country into the post-Cold War era.

The collapse of the Soviet empire and the former Yugoslavia increased the number of foreigners coming to Austria. The influx of asylum seekers and illegal immigrants posed a challenge to Austrian authorities. In 1992 and 1993, new laws went into effect that sought to reduce the number of those coming to the country for asylum and to more strictly control the large foreign community already present in Austria. The laws resulted both from serious practical problems of caring for foreigners in need of food and fears of many Austrians that their country was in danger of Überfremdung, that is, being submerged by everincreasing waves of foreign immigrants. a94Some pololiticians, most notably Haider, sought to profit politically from these fears.

In early 1993, a referendum sponsored by Haider was held to determine popular support for further tightening the laws regulating foreigners. More than 400,000 signatures were collected, half of what Haider had sought but still a significant response. Large counterdemonstrations were held to protest Haider's suggested policies, but it was clear that Haider had tapped into widespread fears and resentments. Haider's extremism resulted in some FPÖ members leaving the party and forming their own party, The Liberal Forum (Das Liberale Forum). Led by Heide Schmidt, the FPÖ presidential candidate in 1992, the group won three seats in the May 1993 Landtag election in Upper Austria. Additional successes for the new party were its being recognized both by the Nationalrat as a political party and by Liberal International.

Apprehension about joining--or not joining--the European Union (EU--see Glossary) was another force driving Austrian politics. As the economy slumped and headed to an overall negative growth rate for 1993, Haider modified his previous endorsement of EU membership, sensing a chance to profit from fears about what Austria's participation in a larger Europe might bring. The ÖVP and SPÖ remained strongly in favor. After much delay, Austria will join the European Economic Area (EEA--see Glossary) on January 1, 1994. The EEA will then consist of EU and European Free Trade Association (EFTA--see Glossary) countries, with the exception of Switzerland, and will form a free-market economy of sixteen nations and 380 million inhabitants.

Data as of December 1993