By Francois Murphy
VIENNA (Reuters) - Austria's president warned conservative election victor Sebastian Kurz that European values must underpin the next government and he would scrutinize developments as Kurz considers bringing the far right back into power.
Kurz's People's Party (OVP) won Sunday's parliamentary election with a hard line on immigration that left little daylight between it and the far-right Freedom Party, two years after Austria was swept up in Europe's migration crisis.
The OVP secured about 31.5 percent of the vote, well short of a majority. A coalition with the FPO is far from certain but appears the most likely outcome after Kurz called an end to the OVP's previous coalition with the Social Democrats.
Kurz, 31, has given little away about what he plans to do.
The FPO was founded by ex-Nazis in the 1950s and first became a major political force in the 1990s under the charismatic Joerg Haider, who praised Hitler's employment policies. Haider led the party to a record parliamentary election score in 1999 that it came close to matching on Sunday.
The FPO says it has put its Nazi past behind it and purged its ranks of anti-Semitism, but still frequently has to expel members for anti-Semitic comments. It has, however, stopped calling for Austria to leave the European Union.
"I will ensure that the fundamental European values inscribed in our constitution remain the compass for Austria's future," President Alexander Van der Bellen said on Tuesday as he received the outgoing coalition government, which will stay on in a caretaker role until a successor is formed.
Austria's president holds a largely ceremonial post but has the power to appoint and dismiss governments, and can be an influential figure in forming coalitions.
"I will check policy objectives but also staffing proposals very closely," Van der Bellen added.
What that means for a potential tie-up between Kurz and the FPO is unclear but Van der Bellen, a former leader of the leftist Greens, is known to have reservations about the far-right party.
Van der Bellen narrowly beat an FPO candidate in a presidential election run-off last year, campaigning on a pro-European platform.
During his campaign he said that as president he would seek to prevent FPO leader Heinz-Christian Strache from becoming chancellor if the FPO won an election, but since taking office he has said only that the next government must be pro-European.
The FPO cheered Britain's 2016 vote to leave the EU and even sketched out a case in which Austria might hold its own "Oexit" referendum on leaving the bloc. But the anti-immigrant party has since backed away from that position given that a clear majority of Austrians support EU membership.
It now describes itself as "pro-European" but still criticizes the EU, calling for Brussels to hand back more powers to member states. That stance overlaps with Kurz's, since the OVP has called for a streamlined EU that focuses on "core competencies" like internal trade and securing external borders.
Kurz has also said that any coalition partner must be pro-European, although whether he and Van der Bellen agree on what that means is unclear.
(Additional reporting by Alexandra Schwarz-Goerlich; editing by Mark Heinrich)