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Austria (07/08)


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For the most current version of this Note, see Background Notes A-Z.

 Flag of Austria is three equal horizontal bands of red (top), white, and red.

PROFILE

OFFICIAL NAME:
Republic of Austria

Geography
Area: 83,857 sq. km. (32,377 sq. mi.); slightly smaller than Maine.
Cities: Capital--Vienna (2007 pop. 1.68 million). Other cities--Graz, Linz, Salzburg, Innsbruck, Klagenfurt.
Terrain: Alpine (64%), northern highlands that form part of the Bohemian Massif (10%), lowlands to the east (26%).
Climate: Continental temperate.

People
Nationality: Noun and adjective--Austrian(s).
Population (2007): 8,332,000.
Annual growth rate (2007): 0.4%.
Ethnic groups: Germans, Turks, Serbs, Croats, Slovenes, and Bosniasns; other recognized minorities include Hungarians, Czechs, Slovaks, and Roma.
Religions: Roman Catholic 73.6%, Lutheran 4.7%, Muslim 4.2%, other 5.5%, no confession 12.0%.
Language: German about 90%.
Education: Years compulsory--9. Attendance--99%. Literacy--98%.
Health (2007): Infant mortality rate--3.6 deaths/1,000. Life expectancy--men 77.4 years, women 82.9 years.
Work force (2007, 4.2 million): Services--67%; agriculture and forestry--5%, industry--28%.

Government
Type: Federal parliamentary democracy.
Constitution: 1920; revised 1929 (reinstated May 1, 1945).
Branches: Executive--federal president (chief of state), chancellor (head of government), cabinet. Legislative--bicameral Federal Assembly (Parliament). Judicial--Constitutional Court, Administrative Court, Supreme Court.
Political parties: Social Democratic Party, People's Party, Freedom Party, Greens, Alliance--Future-Austria.
Suffrage: Universal over 16 (reduced from 18 in 2007). Administrative subdivisions: Nine Bundeslander (federal states).
Defense (2007): 0.8% of GDP.

Economy
GDP (2007): $373.6 billion.
Real GDP growth rate (2007): 3.4%.
Per capita income (2007): $44,890.
Natural resources: Iron ore, crude oil, natural gas, timber, tungsten, magnesite, lignite, cement.
Agriculture (1.9% of 2007 GDP): Products--livestock, forest products, grains, sugarbeets, potatoes.
Industry (31.2% of 2007 GDP): Types--iron and steel, chemicals, capital equipment, consumer goods.
Services: 66.9% of 2007 GDP.
Trade (2007): Exports--$156.4 billion: iron and steel products, timber, paper, textiles, electrotechnical machinery, chemical products, foodstuffs. Imports--$155.9 billion: machinery, vehicles, chemicals, iron and steel, metal goods, fuels, raw materials, foodstuffs. Principal trade partners--European Union, Switzerland, U.S., and China.

PEOPLE
Austrians are a homogeneous people; about 90% speak German as everyday language. However, there has been a significant amount of immigrants, particularly from former Yugoslavia and Turkey, over the last two decades. Only two numerically significant autochthonous minority groups exist--18,000 Slovenes in Carinthia (south central Austria) and about 19,400 Croats in Burgenland (on the Hungarian border). The Slovenes form a closely-knit community. Their rights as well as those of the Croats are protected by law and generally respected in practice. Some Austrians, particularly near Vienna, still have relatives in the Czech Republic, Slovakia, and Hungary. About 74% of all Austrians are Roman Catholic. The church abstains from political activity. Small Lutheran minorities are located mainly in Vienna, Carinthia, and Burgenland. There are some Islamic communities, concentrated in Vienna and Vorarlberg.

HISTORY
Austrian history as such dates back to 976, when Leopold von Babenberg became the ruler of much of present-day Austria. In 1276 Rudolf I became the first Habsburg to ascend to the throne.

The Habsburg Empire
Although never unchallenged, the Habsburgs ruled Austria for nearly 750 years. Through political marriages, the Habsburgs were able to accumulate vast land wealth encompassing most of Central Europe and stretching even as far as the Iberian Peninsula. After repulsing challenges from the Ottoman Empire in the 16th and 17th centuries, Austrian territory became increasingly consolidated in the central European part of the Danube basin.

In 1848 Franz Josef I ascended to the throne and remained in power until his death in 1916. Franz Josef saw many milestones in Austrian history. The Compromise of 1867 gave greater political rights to Hungary within the Empire, creating what became known as the Dual Monarchy. Political unity deteriorated further in the beginning of the 20th century, culminating, under the stress of World War I, in the collapse of the Empire and proclamation of an Austrian Republic on territory roughly identical to modern day Austria. In 1919, the Treaty of St. Germain officially ended Habsburg rule and established the Republic of Austria.

Political Turmoil During the Inter-War Years Leads to Anschluss
From 1918 to 1934, Austria experienced sharpening political strife. In the late 1920s and early 1930s, paramilitary political organizations were engaged in strikes and violent conflicts. Unemployment rose to an estimated 25%. In 1934, a corporatist and authoritarian government came into power in Austria. Austrian National Socialists (NS) launched an unsuccessful coup d'etat in July 1934. Though the government sought to preserve Austrian independence, in February 1938, under renewed threats of military intervention from Germany, Chancellor Kurt Schuschnigg was forced to accept Austrian National Socialists (Nazis) in his government. On March 12, Germany sent its military forces into Austria and annexed the country ("Anschluss"), an action that received enthusiastic support among most Austrians.

The Holocaust in Austria
From March 1938 to April 1945, most of the Jewish population of the country was murdered or forced into exile. Other minorities, including the Sinti and Roma, homosexuals, and many political opponents of the Nazis also received similar treatment. Prior to 1938, Austria's Jewish population constituted 200,000 persons, or about 3% to 4% of the total population. Most Jews lived in Vienna, where they comprised about 9% of the population. Following Anschluss, the Germans rapidly applied their anti-Jewish laws in Austria. Jews were forced out of many professions and lost access to their assets. In November 1938, the Nazis launched the Kristallnacht pogrom in Austria as well as in Germany. Jewish businesses were vandalized and ransacked. Thousands of Jews were arrested and deported to concentration camps. Jewish emigration increased dramatically. Between 1938 and 1940, over half of Austria's Jewish population fled the country. Some 35,000 Jews were deported to the Ghettos in Eastern Europe. Some 67,000 Austrian Jews (or one-third of the total 200,000 Jews residing in Austria) were sent to concentration camps. Those in such camps were murdered or forced into dangerous or severe hard labor that accelerated their death. Only 2,000 of those in the death camps survived until the end of the war.

Austria Post-World War II
After liberation in April 1945, the victorious allies divided Austria into zones of occupation similar to those in Germany with a four-power administration of Vienna. Under the 1945 Potsdam agreements, the Soviets took control of German assets in their zone of occupation. These included 7% of Austria's manufacturing plants, 95% of its oil resources, and about 80% of its refinery capacity. The properties were returned to Austria under the Austrian State Treaty. This treaty, signed in Vienna on May 15, 1955, came into effect on July 27, and, under its provisions, all occupation forces departed by October 25, 1955. Austria became free and independent for the first time since 1938.

Austrian Compensation Programs and Acknowledgement of its Nazi Role
During the immediate postwar period, Austrian authorities introduced certain restitution and compensation measures for Nazi victims, but many of these initial measures were later seen as inadequate and containing flaws and injustices. There is no official estimate of the amount of compensation made under these programs. More disturbing for many was the continuation of the view that prevailed since 1943 that Austria was the "first free country to fall a victim" to Nazi aggression. This "first victim" view was in fact fostered by the Allied Powers themselves in the Moscow Declaration of 1943, in which the Allies declared as null and void the Anschluss and called for the restoration of the country's independence. The Allied Powers did not ignore Austria's responsibility for the war, but nothing was said explicitly about Austria's responsibility for Nazi crimes on its territory. With the collapse of the Soviet Union in 1991, greater attention was given in many countries to unresolved issues from World War II, including Austria. On November 15, 1994, Austrian President Thomas Klestil addressed the Israeli Knesset, noting that Austrian leaders "... spoke far too rarely of the fact that some of the worst henchmen of the NS dictatorship were in fact Austrians. .... In the name of the Republic of Austria, I bow my head before the victims of that time." Since 1994, Austria has committed to providing victims and heirs some $1 billion in total compensation.

GOVERNMENT
The Austrian president convenes and concludes parliamentary sessions and under certain conditions can dissolve Parliament. However, no Austrian president has dissolved Parliament in the Second Republic. The custom is for Parliament to call for new elections if needed. The president requests a party leader, usually the leader of the strongest party, to form a government. Upon the recommendation of the Federal Chancellor, the president also appoints cabinet ministers.

The Federal Assembly (Parliament) consists of two houses--the National Council (Nationalrat), or lower house, and the Federal Council (Bundesrat), or upper house. Legislative authority resides in the National Council. Its 183 members serve for a maximum term of four years in a three-tiered system, on the basis of proportional representation. The National Council may dissolve itself by a simple majority vote or the president may dissolve it on the recommendation of the Chancellor. The nine state legislatures elect the 62 members of the Federal Council for 5- to 6-year terms. The Federal Council only reviews legislation passed by the National Council and can delay but not veto its enactment.

The highest courts of Austria's independent judiciary are the Constitutional Court; the Administrative Court, which handles bureaucratic disputes; and the Supreme Court, for civil and criminal cases. While the Supreme Court is the court of highest instance for the judiciary, the Administrative Court acts as the supervisory body over government administrative acts of the executive branch, and the Constitutional Court presides over constitutional issues. The Federal President appoints the justices of the three courts for specific terms.

The legislatures of Austria's nine Bundeslander (states) elect the governors. Although most authority, including that of the police, rests with the federal government, the states have considerable responsibility for welfare matters and local administration. Strong state and local loyalties have roots in tradition and history.

Principal Government Officials
Federal President--Heinz Fischer
Federal Chancellor--Alfred Gusenbauer
Vice Chancellor--Wilhelm Molterer
Foreign Minister--Ursula Plassnik
Ambassador to the United States--Eva Nowotny
Ambassador to the United Nations--Gerhard Pfanzelter

Austria maintains an Embassy in the United States at 3524 International Court, NW, Washington, DC 20008 (tel. 202-895-6700). Consulates General are in New York, Chicago, and Los Angeles, and honorary consulates are in Anchorage, Atlanta, Boston, Buffalo, Charlotte, Columbus, Denver, Detroit, Honolulu, Houston, Kansas City, Las Vegas, Miami, New Orleans, Orlando, Philadelphia (temporarily closed), Pittsburgh, Portland, Richmond, Rochester, Scottsdale, St. Louis, St. Paul, St. Thomas, Salt Lake City, San Francisco, San Juan, and Seattle.

POLITICAL CONDITIONS
Since 1955, Austria has enjoyed political stability. A Socialist elder statesman, Dr. Karl Renner, organized an Austrian administration in the aftermath of the war, and the country held general elections in November 1945. All three major parties--the conservative People's Party (OVP), the Socialists (later Social Democratic Party or SPO), and Communists--governed until 1947, when the Communists left the government. The OVP then led a governing coalition with the SPO that governed until 1966.

Between 1970 and 1999, the SPO governed the country either alone or with junior coalition partners. In 1999, the OVP formed a coalition with the right wing, populist Freedom Party (FPO). The SPO, which was the strongest party in the 1999 elections, and the Greens formed the opposition. The FPO had gained support because of populist tactics, and many feared it would represent right wing extremism. As a result, the European Union (EU) imposed a series of sanctions on Austria. The U.S. and Israel, as well as various other countries, also reduced contacts with the Austrian Government. After a period of close observation, the EU lifted sanctions, and the U.S. revised its contacts policy. In the 2002 elections, the OVP became the largest party, and the FPO's strength declined by more than half. Nevertheless, the OVP renewed its coalition with the FPO in February 2003. In national elections in October 2006, the SPO became the largest party, edging the OVP. On January 11, 2007, an SPO-led Grand Coalition took office, with the OVP as junior partner. In July 2008, following months of dispute between the ruling parties, the coalition collapsed when Vice Chancellor Wilhelm Molterer (OVP) called for early elections. New elections are scheduled for September 28, 2008.

The Social Democratic Party traditionally draws its constituency from blue- and white-collar workers. Accordingly, much of its strength lies in urban and industrialized areas. In the 2006 national elections, it garnered 35.3% of the vote. In the past, the SPO advocated state involvement in Austria's key industries, the extension of social security benefits, and a full-employment policy. Beginning in the mid-1980s, it shifted its focus to free market-oriented economic policies, balancing the federal budget, and European Union membership.

The People's Party advocates conservative financial policies and privatization of much of Austria's nationalized industry. It finds support from farmers, large and small business owners, and some lay Catholic groups, mostly in the rural regions of Austria. In 2006, it received 34.3% of the vote. The Greens won 11.1% of the vote in 2006, becoming the third-largest party in parliament. The rightist Freedom Party traditionally had a base in classic European liberalism. However, after losing much of its support in the 2002 elections and suffering a split, the FPO won slightly more of the vote in 2006--11%--than it did in 2002, due to a populist, anti-immigration theme. The Alliance-Future-Austria (BZO) split from the FPO in 2005. All the FPO's Federal Ministers and most of its parliamentarians joined the BZO, and that party formally became the junior partner in the governing coalition. The BZO was unable to draw significant popular support away from the FPO, but managed to enter parliament in 2006 with 4.1% of the vote.

ECONOMY
Austria has a well-developed social market economy with a high standard of living. Until the late 1980s, the government and its state-owned industries conglomerate played a very important role in the Austrian economy. However, starting in the early 1990s, the group broke apart, state-owned firms started to operate largely as private businesses, and the government wholly or partially privatized many of these firms. Although the government's privatization work in past years has been very successful, it still operates some firms, state monopolies, utilities, and services. The Schussel government's privatization program further reduced government participation in the economy. The Gusenbauer government did not reverse privatizations, and did not undertake any further privatizations. Austria enjoys well-developed industry, banking, transportation, services, and commercial facilities. Most industrial and commercial enterprises in Austria are relatively small on an international scale.

Austria has a strong labor movement. The Austrian Trade Union Federation (OGB) comprises constituent unions with a total membership of about 1.3 million--about 39% of the country's wage and salary earners. The OGB has always pursued a moderate, consensus-oriented wage policy, cooperating with industry, agriculture, and the government on a broad range of social and economic issues in what is known as Austria's "social partnership." Because of a scandal involving a bank the OGB owned, the OGB lost much of its political influence and is still trying to recover.

Austrian farms, like those of other west European mountainous countries, are small and fragmented, and production is relatively expensive. Since Austria became a member of the EU in 1995, the Austrian agricultural sector has been undergoing substantial reform under the EU's common agricultural policy (CAP). Although Austrian farmers provide about 80% of domestic food requirements, the agricultural contribution to gross domestic product (GDP) has declined since 1950 to less than 2%.

Austria has achieved sustained economic growth and belongs to the richest countries in the EU (4th after Luxembourg, Ireland, and the Netherlands). After a period of low growth of only around 1.0% annually during 2001-2003, Austria's economy recovered again in 2004 and 2005 and grew 2.5% and 2.9%, respectively, driven by booming exports in response to strong world economic growth. Primarily due to higher growth in Europe, particularly Central and Eastern Europe, and continued export growth, Austrian real GDP grew 3.3% in 2006 and 3.4% in 2007. The strong economic growth helped reduce Austria's unemployment rate to 4.4% in 2007. Predictions are for the economy to grow 2.2%-2.3% in 2008 and 1.4%-1.9% in 2009; however, these projections include a high risk of downward revision.

Austria became a member of the EU on January 1, 1995. Membership brought economic benefits and challenges and has drawn an influx of foreign investors. Austria also has made progress in generally increasing its international competitiveness. As a member of the Economic and Monetary Union (EMU), Austria has integrated its economy with those of other EU member countries, especially with Germany's. On January 1, 1999, Austria introduced the new Euro currency for accounting purposes.

In January 2002, Austria introduced Euro notes and coins in place of the Austrian schilling. Economists agree that the economic effects in Austria of using a common currency with the rest of the members of the Euro-zone have been positive.

Trade with other EU-27 countries accounts for about 73% of Austrian imports and exports. Expanding trade and investment in the new EU members of central and eastern Europe that joined the EU in May 2004 and January 2007 represent a major element of Austrian economic activity. Austrian firms have sizable investments in and continue to move labor-intensive, low-tech production to these countries. About one-half of Austria's foreign direct investment is concentrated in the countries of central, eastern, and southeastern Europe. Austria still has the potential to attract EU firms seeking convenient access to developing markets in central and eastern Europe and the Balkan countries.

Total trade with the United States in 2007 reached $13.0 billion. Imports from the United States amounted to $5.1 billion, constituting a U.S. market share in Austria of 3.3%. Austrian exports to the United States in 2007 were $7.9 billion, or 5.1% of total Austrian exports. Approximately 350 U.S. firms have made investments in Austria. Investment flows indicate that U.S. foreign direct investment in Austria reached a new record total of about $12.1 billion, which represents about 10% of the total in Austria and moves the U.S. to the number two position among foreign investors in Austria.

FOREIGN RELATIONS
The 1955 Austrian State Treaty ended the four-power occupation and recognized Austria as an independent and sovereign state. In October 1955, the Federal Assembly passed a constitutional law in which "Austria declares of her own free will her perpetual neutrality." The second section of this law stated that "in all future times Austria will not join any military alliances and will not permit the establishment of any foreign military bases on her territory." The date on which this provision passed--October 26--became Austria's National Day. From then, Austria shaped its foreign policy on the basis of neutrality.

In recent years, however, Austria began to reassess its definition of neutrality, granting overflight rights for the UN-sanctioned action against Iraq in 1991, and, since 1995, contemplating participation in the EU's evolving security structure. Also in 1995, it joined the Partnership for Peace with NATO, and subsequently participated in peacekeeping missions in Bosnia.

Austrian leaders emphasize the unique role the country plays both as an East-West hub and as a moderator between industrialized and developing countries. Austria is active in the United Nations and experienced in UN peacekeeping efforts. It attaches great importance to participation in the Organization for Economic Cooperation and Development and other international economic organizations, and it has played an active role in the Organization for Security and Cooperation in Europe (OSCE). Austria has participated in the UN-mandated International Security Assistance Force (ISAF) in Afghanistan since 2002. In August 2005, Austria deployed 93 soldiers to the northern Afghan city of Kunduz to help support the parliamentary and provincial elections. Austria has a contingent of 160 peacekeepers in Chad as part of the EU mission there, aiding victims of civil unrest in Darfur. Austria has also participated in international reconstruction assistance efforts and has provided about 8.5 million Euros since 2002 to combat drugs, to strengthen women's rights, and for mine removal.

Vienna hosts the Secretariat of the OSCE and the headquarters of the International Atomic Energy Agency, the UN Industrial Development Organization, and the UN Drug Control Program. Other international organizations in Vienna include the Organization of Petroleum Exporting Countries, the International Institute for Applied Systems Analysis, the Comprehensive Test Ban Treaty Organization, and the Wassenaar Arrangement (a technology-transfer control agency).

Austria traditionally has been active in "bridge-building to the east," increasing contacts at all levels with eastern Europe and the states of the former Soviet Union. Austrians maintain a constant exchange of business representatives, political leaders, students, cultural groups, and tourists with the countries of central and eastern Europe. Austrian companies are active in investing and trading with those countries as well. In addition, the Austrian Government and various Austrian organizations provide assistance and training to support the changes underway in the region.

U.S.-AUSTRIAN RELATIONS
Austria's political leaders and people recognize and appreciate the essential role the U.S. played in the country's reconstruction and in the Austrian State Treaty. It is in the interest of the U.S. to maintain and strengthen these strong relations and to maintain Austria's political and economic stability.

Principal U.S. Officials
Ambassador--David Girard-diCarlo
Deputy Chief of Mission--Scott Kilner
Counselor for Economic and Political Affairs--Dean Yap
Counselor for Public Affairs, Acting--Robert Hugins
Counselor for Commercial Affairs--Christopher Quinlivan
Counselor for Management Affairs--Jeffry Olesen
Counselor for Agricultural Affairs--Quintin Gray
Consul General--Constance Anderson
Defense Attache--COL Stefan Aubrey
Office of Defense Cooperation--LTC Scott Dullea

The U.S. Embassy in Austria is located at Boltzmanngasse 16, Vienna 1091, tel. (43) (1) 313-39 (after office hours: (43) (1) 319-5523).



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