VIENNA, Austria (AP) _ Austria's far-right populist leader dismissed the international furor against his party's inclusion in a new Austrian government, saying he would seek to prove his critics wrong.

Joerg Haider, whose Freedom Party is in ongoing talks with the center-right People's Party to form a coalition, said Friday that international leaders were interfering in his small country's democracy.

The European Union warned Austria on Friday against including Haider's party in a government, while Belgium called for EU action if such a coalition materialized.

The EU's umbrella Christian Democrat European People's Party also said Friday it was considering disciplinary action against Austria's People's Party if it joined forces with Haider's group.

Nevertheless, negotiators on both sides said they were making substantial headway toward forming the joint government, and reported agreement Friday on several planned social policies, such as improved financial benefits for young mothers or fathers.

Haider is known for once praising Adolf Hitler's ``orderly employment policy,'' and for later lauding veterans of the Waffen SS as ``decent people of good character.'' He has apologized since, but his party's campaign in fall elections played on immigration fears and EU expansion worries.

``It cannot be decided abroad what is to happen in Austria,'' Haider told state television while in Klagenfurt, capital of Carinthia province where he is governor.

Haider said he was not surprised by the ``moderate'' foreign pressure being exerted against Freedom Party, which he insisted is ``a very constructive force.''

``Our chance is simply in making all those feel ashamed who confront us with (their) prejudices,'' he said.

After 30 years of Socialist-dominated government in Austria, it was ``logical'' that Europe's political establishment gets ``a little nervous, but they will get used to us,'' he said.

The head of the People's Party, Foreign Minister Wolfgang Schuessel, said he accepted that foreigners felt jittery about the Freedom Party. But ultimately, ``we won't allow (outsiders) to interfere,'' he said, quoted Friday in the Kurier newspaper.

Prime Minister Antonio Guterres of Portugal, which holds the EU presidency, expressed ``deep concern'' Friday over ``the possible political evolution in Austria,'' saying the 15 member states were part of ``a Union based on set values and rules and on a common civilization.''

In Israel, Prime Minister Ehud Barak on Thursday phoned the leaders of France, Germany and Spain to emphasize the severity with which he views Haider's party joining the coalition.

Haider said Friday he was planning to go to Israel, where he would talk to ``old Austrians,'' referring to former Austrian Jews. He also suggested he might visit Barak if possible.

Outgoing Social Democratic Chancellor Viktor Klima urged Austria on Friday to take the concerns voiced abroad seriously, but he also reiterated on television that ``Austria is a stable democracy.''

The plan to create the center-right coalition was crafted after Austria's Social Democrats failed to renew their 13-year coalition with the People's Party.