The fate of Graz's Diagonale Festival of Austrian Cinema took another turn last week, with the festival's new management agreeing to accept a series of demands made by the Association of Austrian Film Producers (AAFP).

The Diagonale is at the centre of a major row within the Austrian industry about moves to reposition it with a CineMart-style co-production market for films from South East Europe and Austria.

Artistic director Miroljub Vuckovic and business affairs director Tillmann Fuchs met with the AAFP last week and agreed to reduce the festival's duration from nine to six days.

They also guaranteed a clear separation between the Austrian and South East European programmes, said they would provide total transparency of the festival's concept and financing, and would substantially reduce the level of prize-money being awarded.

In total, there will be Euros 135,000 prize-money instead of the original Euros 285,000 announced at the Diagonale press conference in Vienna in September (Screen Daily, September 2003).

In addition, Austrian main film professional associations have all been invited to become voting members of the Diagonale's general assembly when it convenes in Vienna next week to choose a presidium.

Speaking to from Belgrade, Vuckovic described the agreement with the producers as "very positive" and "a realistic consequence of the state of things."

Vuckovic added: "We want to reach the widest possible co-operation with the filmmakers because then we can offer the best possible platform for Austrian cinema." He also stressed that there would be a 70:30 split in the programming between Austrian and South-East European films in the festival's programme.

However, the agreement has already been rejected out of hand by the Austrian Directors' Association and the Association of Austrian Film Directors. They said in a press statement that "none of the central points of the directors' associations' demands have been met by the 'agreement with the film producers' published today. The directors' associations will also not make themselves available to legitimise a series of wrong decisions in retrospect by participating in a Diagonale committee ."

The Association of Austrian Film Directors made its position clear on the Diagonale to Secretary of State for the Arts Franz Morak in an hour-long meeting last month. It called on him to reverse all of the decisions which had been made without the involvement of the Austrian film community and demanded the resignation of Vuckovic and Fuchs.

"The selection of the Diagonale directorate which is entrusted with managing the festival must be undertaken by an appointments committee which is independent of politics and should be manned exclusively - as previously - by representatives of the film industry.", the directors argued.

In spite of the concessions made by the Diagonale management to the AAFP, the directors' associations reiterated that they would still be supporting "the real Festival of Austrian Cinema which will be organised in Graz in March 2004 by the filmmakers themselves under the motto "We are the Diagonale".