Mr Kurz’s centre-right People’s Party is in government with Mr Strache’s far-right Freedom Party. The Freedom Party leader stepped down after secret video footage emerged. The video appears to show him discussing government contracts with an alleged Russian investor.
Mr Strache blamed his actions on alcohol and acting like a “teenager”, saying his behaviour had been “stupid” and “irresponsible”, and that he was leaving to avoid further damage to the government.
“I have suggested to the president of the republic that new elections be carried out, at the earliest possible date,” Mr Kurz said.
“After yesterday’s video, I must say quite honestly: Enough is enough,” he said.
“The serious part of this
was the attitude towards abuse of power, towards dealing with taxpayers’ money, towards the media in this country,” Mr Kurz said, adding that he had been personally insulted in the footage.
Austrian President Alexander Van der Bellen said a snap election was necessary after Mr Strache stepped down.
He said he had talked about this with Mr Kurz and that they would discuss next steps on Sunday.
A crowd of thousands with placards and banners have been rallying on the square outside Mr Kurz’s office, chanting “Snap elections now!”
Mr Kurz has attempted to distance himself from past scandals surrounding the Freedom Party, mostly ones involving party officials and anti-Semitism or racism, but political opponents called for him to respond to the latest revelations.
“This is the tip of the iceberg,” Thomas Drozda, from the opposition Social Democrats, told national broadcaster ORF.
“I expect the chancellor, who evidently has known about this video for 48 hours, and that his coalition partner is drowning in a swamp of corruption, to speak and explain his position.”
Mr Kurz said that this was not the first time he had had difficulties with the party.
“Even if I didn’t express myself publicly at the time, there were many situations that I found difficult to swallow,” he said.
The Freedom Party is one of Europe’s best-established populist, nationalist parties. But while it is skilled in opposition, frequently gaining over 20% of the vote, its record is much more patchy when it comes to staying in power.
In 2002, early elections had to be called when its coalition with the conservatives fell apart. In 2005, the party split over internal disagreements.
Other European populist parties will be watching the Freedom Party’s next steps closely. This scandal, which come just a week before the EU elections, is likely to be a blow to attempts by Italy’s Matteo Salvini to forge an alliance of nationalist European parties. The Freedom Party, once seen as an example to be emulated, could now serve as a warning.
The secretly-filmed video shows Mr Strache and Johann Gudenus – also a Freedom Party politician – talking to a woman who claims to be a wealthy Russian citizen looking to invest in Austria.
The meeting reportedly took place at a villa on the Spanish island of Ibiza, in a private room with both politicians relaxing on sofas, smoking and drinking.
In the footage, the woman says she is the niece of a powerful Russian oligarch. She offers to buy a 50% stake in Austria’s Kronen-Zeitung newspaper and switch its editorial position to support the Freedom Party.
In exchange, Mr Strache said he could award her public contracts, explaining that he wanted to “build a media landscape like [Victor] Orban”, a reference to Hungary’s authoritarian prime minister.
The vice-chancellor also speculates that the Russian’s takeover of Kronen-Zeitung could boost support for the party to as much as 34%.
“If you take over the Kronen Zeitung three weeks before the election and get us into first place, then we can talk about everything,” Mr Strache said.
As part of the deal, he suggests the Russian woman “set up a company like Strabag”, the Austrian construction firm.
“All the government orders that Strabag gets now, [you] would get,” he continues.
Mr Strache also names several journalists who would have to be “pushed” from the newspaper, and five other “new people whom we will build up”.