I have no reason to cast doubt on Mr Muzicant's honour and commit myself to desist from such a comment in the future

Joerg Haider

In a speech in February last year, Mr Haider made a punning reference to Mr Muzicant's first name and an international brand of washing powder: "I don't understand how someone whose name is Ariel can have so much dirt sticking to him."

The expression in German can imply a dishonest past and recalls phrases used by the Nazis.

Mr Haider made a number of allegations against Mr Muzicant in the speech, saying that he:

• stabbed Austria in the back during negotiations to compensate Holocaust victims;
  
• used his political connections to help his own business, and
  
• did not belong "in the spectrum of democratic forces".

A statement issued on Thursday and approved by lawyers for both sides said: "Dr Haider has withdrawn all legally incriminating allegations against Dr Muzicant in separate formal declarations with an expression of regret and apology."

Mr Haider, who is known internationally for remarks about Austria's Nazi past for which he has also apologised, had recognised the dangerous nature of some of his remarks, it added.

Mr Haider labelled Jacques Chirac a "pocket-sized Napoleon"

"I have no reason to cast doubt on Mr Muzicant's honour and commit myself to desist from such a comment in the future," the statement said.

A previous court ruling had already ordered Mr Haider, the governor of Carinthia province, to stop spreading the "defamatory, untrue, credit-damaging assertion" or similar statements, pending a final decision whether his comments were anti-Semitic.

Sanctions

Mr Haider still dominates the anti-immigrant Freedom Party, although he resigned as its leader in 2000 after taking it into coalition government with Chancellor Wolfgang Schuessel's conservatives in February 2000.

He has also heaped abuse on other European leaders, once describing French President Jacques Chirac as a "pocket-sized Napoleon".

Austria's EU partners, who have questioned the Freedom Party's democratic credentials, imposed political sanctions on the new government after it was sworn in.

But the sanctions were lifted in September 2000 after an EU-appointed panel of "wise men" gave the country a clean bill of health for its human rights record.