New Austrian Leader Plans Shake-Up

VIENNA -- Austrian Viktor Klima, the chancellor designate, plans a government shake-up, but he will wait until next week before announcing his new cabinet, officials of the ruling Social Democratic Party said Monday.

Klima, 49, whose appointment has been welcomed by investors, political analysts and the Austrian press, has kept out of sight since Franz Vranitzky named him Saturday as his successor as chancellor and leader of the Social Democrats.

Party officials said Klima, who is still finance minister, was working on policy and a cabinet shuffle.

"There will be changes," a senior Finance Ministry source said. "He [Klima] will not speak before next Monday when he is planning to present his government program along with his cabinet."

Klima briefly broke his silence Monday but said only that he would not make any comment until he had been sworn in as Austria's eighth chancellor since 1945.

"I will only speak once I am officially chancellor," Klima told Austrian news agency APA after playing a weekend game of hide-and-seek with the media.

President Thomas Klestil asked Vranitzky to stay on as acting chancellor until the swearing in.

Michael Ausserwinkler, Social Democrat leader in the southern province of Carinthia, said Klima would reshuffle posts among Social Democrat ministers.

No changes were expected among ministers of the junior coalition partner, the conservative People's Party.

The first casualty of the change-over at the chancellory appeared to be Social Affairs Minister Franz Hums, who offered his resignation to Klima on Monday, APA reported.

Klima received an endorsement Monday from the Social Democrat mayor of Vienna, Michael Haeupl, who fell out with Vranitzky over party policy and blamed him for a slump in the party vote in Vienna and European elections last October.

Austrian markets raced ahead Monday as investors welcomed Klima's appointment, but analysts said the vacancy at the treasury may prove more difficult to fill. "Klima has the expert knowledge. He can do the job," said Roland Neuwirth, an analyst at Deutsche Morgan Grenfell.

"The change in the political leadership should contribute to greater political stability and remove the uncertainty of recent months. Austrian shares are clearly on an upward path," Raiffeisen Zentralbank said in an analysis.

Austrian newspapers were generally optimistic about the new chancellor but cautioned that he faced a tough task to solve the key issues of the country's neutrality and the rise of the far right led by populist Joerg Haider.

"The new strongman of Austria -- especially in these times of weakened coalition -- will have to give a sign very soon of his strength of character," the daily Der Standard said.

Reaction over the balance sheet at the end of Vranitzky's time was mixed. Der Standard said his rule was inextricably linked to the rapid rise of Haider's Freedom Party, which came within 60,000 votes of the Social Democrats in elections for the European Union's parliament in October.

Vranitzky, who leaves office after 11 years in power, said his party had underestimated the far right, adding that if he had his time again he would have handled Haider differently.

One of Austria's all-time popular politicians, Vranitzky rated his tenure's greatest achievement as guiding an initially reluctant nation into the EU, ending half a century of Cold War isolation.