The Austrian government is poised to include the far-right Freedom Party, despite protests from some citizens and threats of isolation from some allies. Following a background report, Austrian and Portuguese diplomats discuss the situation. Portugal currently holds the rotating presidency of the European Union.

MARGARET WARNER: For more, we turn to Peter Moser, Austria's ambassador to the United States; and Joao Rocha Paris, Portugal's ambassador to the United States. Portugal currently holds the rotating presidency of the European Union.

Ambassador Moser, despite all these warnings from your European partners not to go down this path, Austria has done so. Why?

PETER MOSER, Ambassador, Austria: It's a complicated situation in Vienna and in Austria. Since the third of October we are struggling hard to find a new government, in spite of the fact that we are well off compared to other countries. Inflation is low and unemployment, and steady growth. We have a lot of reforms ahead of us. The outcome of this third of October election for the first time in our history made three parties almost equally strong. That is the problem: For the first time they have to come to grips and to fight things out.

MARGARET WARNER: And there was no alternative?

PETER MOSER: The alternative could have been, of course, equal partners and form a coalition government with the other two: the traditional right Social Democrats and the black conservative Christian Party. They had ruled the country more or less in the last 50 years and have formed the last coalition lasting, I mean, altogether since '86, but the differences in their programs, because of the nature of difficult projects and the reforms, had been shown insurmountable. The Social Democrats from the very beginning have said they would never form a government with the Freedom Party so the only option left now for a coalition government have been the black and the blue.

MARGARET WARNER: So Ambassador Paris, why is this development so threatening to the 14 other EU members?

JOAO ROCHA PARIS, Ambassador, Portugal: Well, I think that the story you have just told us on previous film contains the answer, but essentially in the European Union we have a set of basic principles that has to be shared by everybody and put into practice. And our concern is that in Austria, following the situation, which Peter has just described, the government has a political party, which seems not to abide by those principles and values.

And so that's why the 14 member countries have decided in a kind of preemptive action to call the attention of the Austrians and also the other countries that problem may be serious -- and your story tells us about what happened in Europe recently. Our collective memories still remembers the time of the second World War and of course we remember very well the suffering of so many people with the Holocaust and everything. And we just don't want those situations to be able to repeat again.

MARGARET WARNER: Ambassador Moser, other Europeans have used even tougher language than your diplomatic partner here. For instance the German foreign minister said it's the first time an anti-European xenophobic party with a very dubious relationship toward the Nazi past has come into the government of a member state. How do Austrians feel when they hear this kind of criticism from the Europe that you're a member of, and the European Union?

PETER MOSER: It's very sad. Many of the Austrians feel sorry but one has to clarify to the strength of the Haider party is not because of what we have seen in the films here. Many of the voters of Haider today -- 27 percent as you have mentioned in your caption -- disappointed voters who first have voted for Social Democrats and also the black for the Christian Democrats because of Austria now being exposed to the internationalization, globalization, and Europeanization as well -- we are a member since '95 -- this group feels disappointed and forsaken -- and therefore they have no other option than to opt for a third party. There's not a party left for Haider. Haider in his campaign did not emphasize this or this horrible atrocities and so on; he emphasized more or less what is the common concern of these people.

MARGARET WARNER: And by common concern, what do you mean exactly?

PETER MOSER: They are afraid of opening up the eastern frontiers -- the southeastern geographic --

MARGARET WARNER: Very close to the rest of eastern Europe.

PETER MOSER: There are many refugees. We have the highest percentage of foreigners living in Austria. Nevertheless this is, as I say, no excuse; these are not insurmountable problems. But here you have the voters. And some of them are losers of globalization and internalization. And Haider addressed them and their problems; he did not lure them with all these slogans. The slogans are slip of tongues and regrettable; I mean, you cannot forgive them. He apologized many times, I understand the nations and our neighbors are concerned and they're tired of endless apologies. In a certain aspect we think that these concerns are legitimate.

MARGARET WARNER: What about that argument that, one, Haider is responding or tapping into real feelings and, two, that the Austrian government is essentially following normal parliament -- normal sort of democratic practices or post-election practices in a parliamentary system where you have to put together these coalitions?

JOAO ROCHA PARIS: Of course, I think that one thing should be very, very -- put straightforward. From the beginning, we don't think that the Austrian political system is not a democratic one, and we don't think also that the last elections were not fair at all. We, on the contrary, very much agree that each country has the right to choose his own political government and whatever.

But on the other hand, as I said, it was the declarations and practice of one of the members, political party members, or a member of the government, has had a -- some kind of political speech which gives us serious concerns. Of course, we are aware about the apologies, which have been already stated. I think from my side and on a personal basis that what you have to do now is to hope that excuses will put into practice.

MARGARET WARNER: But in the meantime, is the rest of the European Union going to carry out these threats, diplomatically isolate Austria?

JOAO ROCHA PARIS: I wouldn't call them threats. Anyway, I'm afraid that from this afternoon, the three measures which have been decided on by 14 ministers will have to be put into practice.

MARGARET WARNER: And that is what? Not to receive their ambassadors?

JOAO ROCHA PARIS: Well, I can tell that exactly.

MARGARET WARNER: Briefly, yes.

JOAO ROCHA PARIS: Very briefly, the three points: First, the governments of the 14 member states will not promote or accept any bilateral or future contact at the political level with an Austrian government integrating the FPO. Second, there will be no support in favor of Austrian candidates seeking positions in international organizations. Third, Austrian ambassadors in European Union capitals will only be received at technical level.

PETER MOSER: The first one is an emotional impact because we have been very much surprised by this harsh reaction. The very fact that these 14 member states have made such a resolution in a combined effort is a positive sign, as you have already said in this caption, that we are growing more and more together. Integration has a strong result, strong effects and we have become more and more like a family.

What we are witnessing now is a family feud or a family dispute, and it gives the right of the other family members to look into our own affairs and to express their concerns. That's okay. It is a good and welcome signal that integration has reached this level. But having said this, I have to point out that we would have expected within a family that it should have been kept in the family. And this paper has been issued and has been brought to the attention of the public and particularly the news agencies. There had been some previous warnings in formal meetings, but this kind of measure came as an absolutely as a blow to Austria.

MARGARET WARNER: Now, some would say, Mr. Ambassador, that these diplomatic measures don't really inflict any real price. If you want to inflict a real price that something would happen, Austria would be suspended from the trade benefits of being in the EU. Is there any thought of that?

JOAO ROCHA PARIS: Well, I'd like to put it clear and forward. There is no, for the time being, there is not at all any situation, effectual situation, which gives grounds to implications of treaty provisions or whatever. That is not the case. This is on the one hand. On the other hand, what's at stake now is not exactly the economic or commercial parts of the European Union partnership. It's much more a matter of principles, a matter of political principles and values. I said before we have now to hope that practice of the new government, will be consistent with a declaration which they signed, it seems, saying that they will abide by the common values of the European Union.

MARGARET WARNER: Before we go, Austria isn't the only country in Europe where far-right parties are doing well in elections. Why do you think that is?

JOAO ROCHA PARIS: Well, it's not the only country in which right-wing parties belong to the government, I agree, but in my opinion, we have not had very often declarations from the government political parties belonging to the government or the type of news which the FPO has made. That's the reason why this situation occurred.

MARGARET WARNER: But do you think, ambassador, that the feelings that you described that many Austrians have about globalization are a factor throughout Europe now?

PETER MOSER: Yes I think so. But in Austria there is a slightly different situation because whatever an Austrian politician says he always should have in mind that he will be looked upon with a background of the past history in Austria. This sensitivity was missing. The same declarations you can hear from other politicians all over the world and the world will not get startled. That's the problem with this particular case of the Freedom Party.

MARGARET WARNER: All right. Thank you Ambassador Moser and Ambassador Paris.