By Kirsti Knolle and Francois Murphy
VIENNA (Reuters) - Austria raced on Saturday toward a snap election as Chancellor Sebastian Kurz pulled the plug on his coalition with the far right after its leader was caught on video offering to fix state contracts with a woman posing as a Russian oligarch's niece.
The far-right Freedom Party's Heinz-Christian Strache resigned as vice chancellor and party leader after the video was released by two German news organizations. He acknowledged that the video was "catastrophic" but denied breaking the law.
Kurz, a conservative who formed a coalition with the Freedom Party a year and a half ago, said the apparent video sting, in which Strache discusses contracts in return for financial or political favors, was the last straw in the relationship.
"After yesterday's video I honestly have to say - enough is enough," Kurz said in a statement to the media, listing various lesser scandals that had previously strained their relations.
Kurz said he was proposing to President Alexander Van der Bellen that a snap election be held as soon as possible. Van der Bellen, who can dissolve parliament, said he backed a snap election and would discuss next steps with Kurz on Sunday.
"These are shameful images and no one should be ashamed for Austria," he said of the video. "We need in this sense to rebuild confidence anew. This rebuilding can in this case only happen with a snap election."
The downfall of the Austrian coalition comes just a week before elections to the European parliament and is a blow to one of the most successful of the anti-immigrant, nationalist parties that have surged across the continent in recent years. The Freedom Party is a major part of a new nationalist grouping that aims to score record gains in the European vote.
The head of the opposition Social Democrats told broadcaster ORF she would not oppose a snap election if a bill calling one were put to parliament.
"DIFFICULT TO SWALLOW"
As Strache announced around midday that he was stepping down, a crowd of thousands with left-wing placards and banners gathered on the square outside Kurz's office, chanting "Snap elections now!". Police estimated their number at 5,000.
Kurz had repeatedly distanced himself from his far right coalition partners over lesser scandals in the past, mostly involving party officials and anti-Semitism or racism - such as one in which the deputy mayor of Hitler's home town wrote a poem likening immigrants to rats.
"For all these successes in the past two years I had to be ready to withstand a lot and also put up with a lot, from the rat poem to the proximity to radical right-wing groups and the 'isolated incidents' that kept coming back," Kurz said.
"There were many situations in which I found it very difficult to swallow all that."
"CATASTROPHIC"
The video showed Strache meeting the woman in 2017, shortly before the election that brought him into government.
Strache, whose party has a cooperation agreement with Russia's ruling United Russia party, described the sting as a "targeted political assassination" and said it never led to any money changing hands. He insisted the only crime that took place was illegally videotaping a private dinner party.
He said he would be replaced as party leader by Transport Minister Norbert Hofer, his deputy, who narrowly lost a 2016 presidential election and is more popular than Strache.
In the footage, Strache discussed rules on party financing and how to work around them, although he also insisted on having to act legally.
"It was dumb, it was irresponsible and it was a mistake," Strache told a news conference, fighting back tears as he asked his wife and others to forgive him.
"In the cold light of day, my remarks were catastrophic and exceedingly embarrassing," he said. He also apologized for flirting with the woman. "It was typical alcohol-fuelled macho behavior in which, yes, I also wanted to impress the attractive female host and I behaved like a bragging teenager," he said.