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Second emigration (1907–1914)

While en route to exile in Obdorsk, Siberia, in January 1907, Trotsky escaped at Berezov and once again made his way to London. He attended the 5th Congress of the RSDLP. In October, he moved to Vienna, Austria-Hungary. For the next seven years, he often took part in the activities of the Austrian Social Democratic Party and, occasionally, of the German Social Democratic Party.

In Vienna, Trotsky became close to Adolph Joffe, his friend for the next 20 years, who introduced him to psychoanalysis.

In October 1908 he was asked to join the editorial staff of Pravda ("Truth"), a bi-weekly, Russian-language social democratic paper for Russian workers, which he co-edited with Adolph Joffe and Matvey Skobelev. It was smuggled into Russia. The paper appeared very irregularly; only five issues were published in its first year.

Avoiding factional politics, the paper proved popular with Russian industrial workers. Both the Bolsheviks and the Mensheviks split multiple times after the failure of the 1905–1907 revolution. Money was very scarce for the publication of Pravda. Trotsky approached the Russian Central Committee to seek financial backing for the newspaper throughout 1909.

A majority of Bolsheviks controlled the Central Committee in 1910. Lenin agreed to the financing of "Pravda", but required a Bolshevik to be appointed as co-editor of the paper. When various Bolshevik and Menshevik factions tried to re-unite at the January 1910 RSDLP Central Committee meeting in Paris over Lenin's objections, Trotsky's Pravda was made a party-financed 'central organ'. Lev Kamenev, Trotsky's brother-in-law, was added to the editorial board from the Bolsheviks, but the unification attempts failed in August 1910. Kamenev resigned from the board amid mutual recriminations. Trotsky continued publishing Pravda for another two years until it finally folded in April 1912.

The Bolsheviks started a new workers-oriented newspaper in Saint Petersburg on 22 April 1912 and also called it Pravda. Trotsky was so upset by what he saw as a usurpation of his newspaper's name that in April 1913, he wrote a letter to Nikolay Chkheidze, a Menshevik leader, bitterly denouncing Lenin and the Bolsheviks. Though he quickly got over the disagreement, the message was intercepted by the Russian secret police, and a copy was put into their archives. Shortly after Lenin's death in 1924, the letter was found and publicized by Trotsky's opponents within the Communist Party to portray him as Lenin's enemy.

The 1910s were a period of heightened tension within the RSDLP, leading to numerous frictions between Trotsky, the Bolsheviks and the Mensheviks. The most serious disagreement that Trotsky and the Mensheviks had with Lenin at the time was over the issue of "expropriations", i.e., armed robbery of banks and other companies by Bolshevik groups to procure money for the Party. These actions had been banned by the 5th Congress, but were continued by the Bolsheviks.

In January 1912, the majority of the Bolshevik faction, led by Lenin, as well as a few defecting Mensheviks, held a conference in Prague and decided to break away from the Russian Social Democratic Labour Party, and formed a new party, the Russian Social Democratic Labour Party (Bolsheviks). In response, Trotsky organized a "unification" conference of social democratic factions in Vienna in August 1912 (a.k.a. "The August Bloc") and tried to re-unite the Bolsheviks and Mensheviks into one party. The attempt was generally unsuccessful.

In Vienna, Trotsky continuously published articles in radical Russian and Ukrainian newspapers, such as Kievskaya Mysl, under a variety of pseudonyms, often using "Antid Oto", a name chosen at random from an Italian dictionary, with Trotsky joking that "wanted to inject the Marxist antidote into the legitimate newspapers". In September 1912, Kievskaya Mysl sent him to the Balkans as its war correspondent, where he covered the two Balkan Wars for the next year. While there, Trotsky chronicled the ethnic cleansing carried out by the Serbian army against the Albanian civilian population. He became a close friend of Christian Rakovsky, later a leading Soviet politician and Trotsky's ally in the Soviet Communist Party. On 3 August 1914, at the outbreak of World War I, in which Austria-Hungary fought against the Russian Empire, Trotsky was forced to flee Vienna for neutral Switzerland to avoid arrest as a Russian émigré.