VIENNA — In a significant political setback, talks to form a new three-party government in Austria collapsed on Friday when the smallest coalition partner, the Neos party, decided to withdraw from the negotiations. This twist follows months of discussions initiated when President Alexander Van der Bellen tasked conservative Chancellor Karl Nehammer with forming a government after the recent elections.

The talks had been ongoing since October, particularly since Nehammer's Austrian People's Party, together with the center-left Social Democrats, sought to incorporate the liberal Neos to bolster their slim majority in parliament. Although they previously governed together, both parties hold just 92 out of 183 seats, which is deemed insufficient for stable governance.

Neos leader Beate Meinl-Reisinger pointed to the strain of a "budget hole" left by the preceding administration as a severe obstacle, noting that negotiations seemed to regress. Speaking to the media in Vienna, she lamented the lack of consensus on necessary reforms. "There was a repeated ‘no’ to fundamental reforms this week," she stated, underscoring the desire for change reflected in the elections.

Chancellor Nehammer expressed regret over the Neos decision on social media, maintaining his party's readiness to engage in reforms particularly focused on boosting economic competitiveness and establishing clearer policies on asylum and migration. "The constructive forces of the political center are called upon to come along on this path with us now," he emphasized.

The political landscape is further complicated as Nehammer's previous coalition with the environmentalist Greens has lost its parliamentary majority, yet it continues to function in a caretaker role. Observers believe the two leading parties might attempt to form a government alone or possibly seek collaboration with the Greens as a new partner.

Adding to the challenges is the Freedom Party, which won a national election in September with 29.2% of the vote and has since seen its support rise to between 35% and 37% in current opinion polls. Its general secretary criticized Nehammer for not accepting his party's electoral success, calling for the Chancellor's resignation and warning against the formation of a coalition reminiscent of the unpopular government in neighboring Germany.

The situation in Austria is precarious, as the next government will have to address an estimated budget shortfall of between 18 to 24 billion euros, amid a declining economy and rising unemployment. The recent collapse of coalition talks has left many uncertain about the political future of the country.

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