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Privatisations at issue in Austria talks

Vienna - Austrian conservatives are pushing to sell more state-owned shares in big companies such as OMV , Telekom Austria or Austrian Post as coalition talks heat up with the Social Democrats.

The two big parties that have dominated post-war politics have laboured to strike a deal that could keep them governing together after September elections that weakened them both and bolstered the euro sceptic right wing.

Differences over how much belt-tightening Austria needs to shore up state finances and pensions have held up an accord.

But talks gained pace after marathon weekend wrangling, keeping alive the centre-left Social Democrats' (SPO) goal to have a government in place by Christmas holidays on December 24/25.

"With good will, the timetable to reach an agreement by Christmas is fully intact," Chancellor Werner Faymann told reporters after he and People's Party (OVP) leader Michael Spindelegger briefed provincial governors on Monday.

The nine provinces are supposed to contribute €5bn to an overall €24bn ($33bn) programme to close a gap between projected revenue and spending over the next five years, including €5.8nn earmarked as aid for struggling banks, primarily Hypo Alpe Adria.

The OVP, junior partner in the coalition that has governed since 2006, wants to cut state stakes in OMV, Telekom and Post to a blocking minority of 25% plus one share, party heavyweight Erwin Proell, governor of Lower Austria province, said in weekend media interviews.

That could free up funds for investment even as the state seeks to eliminate its structural budget deficit by 2016.

Asked about media reports that the parties had found common ground on privatisation plus raising taxes on tobacco and sparkling wines, Faymann said nothing was agreed until an entire package came together.

OVP chief Spindelegger said big items such as pensions were still open. While he and Faymann remained in daily contact, "it is not as if everything is worked out," he told journalists.

Entrenched opposition to further privatisation among many SPO leaders and labour unions makes the issue a touchy one.

Social Affairs Minister Rudolf Hundstorfer of the SPO said the talks were not about privatisation, but rather on giving the OeIAG state holding company more power to propose buying or selling stakes in companies of strategic importance.

OeIAG has a 31.5% stake in energy group OMV and reducing it could be complicated by an agreement with Abu Dhabi's state investment fund IPIC - which has 24.9% - to coordinate any changes in holdings.

Austria owns 28.4% of Telekom Austria via OeIAG. It may need to stump up more money if it wants to keep that stake steady, should the company raise capital, a step that major shareholder Carlos Slim's America Movil has called "very likely".

Austria owns a 52.9% stake in Post.



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