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Austria (03/02)


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

PROFILE

OFFICIAL NAME:
Republic of Austria

Geography
Area: 83,857 sq. km. (32,377 sq. mi.); slightly smaller than Maine.
Cities: Capital--Vienna (1998 pop. 1.6 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 (1998): 8,078,449.
Annual growth rate (1998): 0.07%.
Ethnic groups: Germans 98%, Croats, Slovenes; other recognized minorities include Hungarians, Czechs, Slovaks, and Roma.
Religions: Roman Catholic 78%, Protestant 5%, Muslim and other 17%.
Language: German 92%.
Education: Years compulsory--9. Attendance--99%. Literacy--98%.
Health (1998): Infant mortality rate--4.9 deaths/1,000. Life expectancy--men 74.7 years , women 80.9 years.
Work force (1999, 3.7 million): Services--67.2%; agriculture and forestry--0.8%.

Government
Type: 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, Liberal Forum.
Suffrage: Universal over 19.
Administrative subdivisions: Nine Laender (federal provinces).
Defense (2000): 0.8% of GDP.

Flag: flag of austria

Economy
GDP (1999): $207.9 billion.
Real GDP growth rate (1999): 2.2%.
Per capita income (1999): $25,655.
Natural resources: Iron ore, crude oil, natural gas, timber, tungsten, magnesite, lignite, cement.
Agriculture (2.4% of 1999 GDP): Products--livestock, forest products, grains, sugarbeets, potatoes.
Industry (30.0% of 1999 GDP): Types--iron and steel, chemicals, capital equipment, consumer goods.
Services: 67.6% of 1999 GDP.
Trade (1999): Exports--$63.5 billion: iron and steel products, timber, paper, textiles, electrotechnical machinery, chemical products. Imports--$68.8 billion: machinery, vehicles, chemicals, iron and steel, metal goods, fuels, raw materials, foodstuffs. Principal trade partners--European Union, U.S., Hungary, and Switzerland.

PEOPLE
Austrians are a homogeneous people; 92% are native German speakers. Only two numerically significant minority groups exist--30,000 Slovenes in Carinthia (south central Austria) and about 60,000 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. The present boundaries of Austria, once the center of the Habsburg Empire that constituted the second-largest state in Europe, were established in accordance with the Treaty of St. Germain in 1919. Some Austrians, particularly near Vienna, still have relatives in the Czech Republic, Slovakia, and Hungary. About 78% of all Austrians are Roman Catholic. The church abstains from political activity; however, lay Catholic organizations are aligned with the conservative People's Party. The Social Democratic Party long ago shed its anticlerical stance. Small Lutheran minorities are located mainly in Vienna, Carinthia, and Burgenland.

The Austro-Hungarian Empire played a decisive role in central European history. It occupied strategic territory containing the southeastern routes to western Europe and the north-south routes between Germany and Italy. Although present-day Austria is only a tiny remnant of the old empire, it retains this unique position.

Soon after the Republic of Austria was created at the end of World War I, it faced the strains of catastrophic inflation and of redesigning a government meant to rule a great empire into one that would govern only 6 million citizens. In the early 1930s, worldwide depression and unemployment added to these strains and shattered traditional Austrian society. Resultant economic and political conditions led in 1933 to a dictatorship under Engelbert Dollfuss. In February 1934, civil war broke out, and the Socialist Party was outlawed. In July, a coup d'etat by the National Socialists failed, but Dollfuss was assassinated by Nazis. In March 1938, Austria was incorporated into the German Reich, a development commonly known as the "Anschluss" (annexation).

At the Moscow conference in 1943, the Allies declared their intention to liberate Austria and reconstitute it as a free and independent state. In April 1945, both Eastern- and Western-front Allied forces liberated the country. Subsequently, Austria was divided into zones of occupation similar to those in Germany. 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 were withdrawn by October 25, 1955. Austria became free and independent for the first time since 1938.

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. No one can become a member of the government without the approval of the president.

The Federal Assembly (Parliament) is composed of two houses--the National Council (Nationalrat), or lower house, and the Federal Council (Bundesrat), or upper house. Legislative authority is concentrated in the National Council. Its 183 members are elected for a maximum 4-year term in a three-tiered system, based on proportional representation. The National Council may dissolve itself by a simple majority vote or it may be dissolved by the president on the recommendation of the Chancellor. The 64 members of the Federal Council are elected by the legislatures of the nine provinces for 4- 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. Cases in the Administrative and Supreme Courts concerning constitutional issues can be appealed to the Constitutional Court. Justices of the three courts are appointed by the president for specific terms.

The governors of Austria's nine Laender (provinces) are elected by the provincial legislatures. Although most authority, including that of the police, rests with the federal government, the provinces have considerable responsibility for welfare matters and local administration. Strong provincial and local loyalties are based on tradition and history.

Principal Government Officials
Federal President--Thomas Klestil
Federal Chancellor--Wolfgang Schuessel
Vice Chancelor--Susanne Riess-Passer
Foreign Minister--Benita Ferrero-Waldner
Ambassador to the United States--Peter Moser
Ambassador to the United Nations--Gerhard Pflanzelter

Austria maintains an embassy in the United States at 3524 International Court, NW, Washington, DC 20008 (te1. 202-895-6700). Consulates general are located in New York, Chicago, and Los Angeles, with honorary consulates in Atlanta, Boston, Buffalo, Cleveland, Denver, Honolulu, Houston, Miami, New Orleans, Newark, Philadelphia, St. Paul, San Francisco, San Juan, and Seattle.

POLITICAL CONDITIONS
Since World War II, Austria has enjoyed political stability. A Socialist elder statesman, Dr. Karl Renner, organized an Austrian administration in the aftermath of the war, and general elections were held in November 1945. In that election, the conservative People's Party (OVP) obtained 50% of the vote (85 seats) in the National Council (lower house of Parliament), the Socialists won 45% (76 seats), and the communists won 5% (4 seats). The ensuing three-party government ruled until 1947, when the communists left the government and the OVP led a governing coalition with the socialists (now called the Social Democratic Party or SPO) that governed until 1966. Between 1970 and 1999, the SPO has ruled the country either alone or in conjunction with the OVP, except from 1983-86, when it governed in coalition with the Freedom Party. 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 now form the opposition. As a result of the inclusion of the FPO on the government, the 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.

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 1995 national elections, it garnered 38% of the vote. The SPO in the past advocated heavy 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 (EU) membership.

The People's Party advocates conservative financial policies and privatization of much of Austria's nationalized industry and finds support from farmers, large and small business owners, and lay Catholic groups, mostly in the rural regions of Austria. In 1995, it received 28% of the vote. The rightist Freedom Party attracts protest votes and those who desire no association with the other major parties. The party's mixture of populism and anti-establishment themes propagated by its aggressive leader Joerg Haider steadily gained support over the past years. It attracted about 27% of the vote in the 1999 elections. The Liberal Forum, founded on libertarian ideals, split from the Freedom Movement in February 1993. It received 5.5% of the vote in the 1999 election and, thus, failed to re-enter the national legislature. The Greens, a left-of-center party focusing on environmental issues, received 4.4% of the vote in 1999.

ECONOMY
Austria has a well-developed social market economy with a high standard of living in which the government has played an important role. Many of the country's largest firms were nationalized in the early post-war period to protect them from Soviet takeover as war reparations. For many years, 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 was broken apart, state-owned firms started to operate largely as private businesses, and a great number of these firms were wholly or partially privatized. Although the government's privatization work in past years has been very successful, it still operates some firms, state monopolies, utilities, and services. The new government has presented an ambitious privatization program, which, if implemented, will considerably reduce government participation in the economy. Austria enjoys well-developed industry, banking, transportation, services, and commercial facilities.

Although some industries, such as several iron and steel works and chemical plants, are large industrial enterprises employing thousands of people, 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 1.5 million--more than half the country's wage and salary earners. Since 1945, the OGB has 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." The OGB has announced tough opposition against the new government's program for budget consolidation, social reform, and improving the business climate, and indications are rising that Austria's peaceful social climate could become more confrontational.

Austrian farms, like those of other west European mountainous countries, are small and fragmented, and production is relatively expensive. Since Austria's becoming 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 3%.

Austria has achieved sustained economic growth. During the 1950s, the average annual growth rate was more than 5% in real terms and averaged about 4.5% through most of the 1960s. Following moderate real GDP growth of 1.7%, 2.0% and 1.2%, respectively, in 1995, 1996, and 1997, the economy rebounded and with real GDP expansion of 2.9% in 1998 and 2.2% in 1999.

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 attracted by Austria's access to the single European market. Austria also has made progress in generally increasing its international competitiveness. As a member of the Economic and Monetary Union (EMU), Austria's economy is closely integrated with other EU member countries, especially with Germany. On January 1, 1999, Austria introduced the new Euro currency for accounting purposes.

Starting January 2002, Euro notes and coins will be introduced and substitute for the Austrian schilling. Economists agree that the economic effects in Austria of using a common currency have been positive.

Trade with other EU countries accounts for almost 66% of Austrian imports and exports. Expanding trade and investment in the emerging markets of central and eastern Europe is a major element of Austrian economic activity. Trade with these countries accounts for almost 14% of Austrian imports and exports, and Austrian firms have sizable investments in and continue to move labor-intensive, low-tech production to these countries. Although the big investment boom has waned, Austria still has the potential to attract EU firms seeking convenient access to these developing markets.

Total trade with the United States in 1999 reached $6.6 billion. Imports from the United States amounted to $3.7 billion, constituting a U.S. market share in Austria of 5.4%. Austrian exports to the United States in 1999 were $2.9 billion or 4.6% of total Austrian exports.

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." Since 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, and subsequently participated in peacekeeping missions in Bosnia. Discussion of possible Austrian NATO membership intensified during 1996. OVP and FPO aim at moving closer to NATO or a European defense arrangement. The SPO, in turn, believes continued neutrality is the cornerstone of Austria's foreign policy, and a majority of the population generally supports this stance.

Austrian leaders emphasize the unique role the country plays as 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).

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 based in Vienna include the Organization of Petroleum Exporting Countries and the International Institute for Applied Systems Analysis. Recently, Vienna added the Comprehensive Test Ban Treaty Organization and the Wassenaar Arrangement (a technology-transfer control agency) to the list of international organizations it hosts.

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 the countries of central and eastern Europe. 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 played by U.S. economic assistance through the Marshall Plan in the reconstruction of their country after World War II, and by the U.S. in promoting the conclusion of the Austrian State Treaty. It is in the interest of the U.S. that the present friendly relations be maintained and strengthened and that Austria's political and economic stability be maintained.

Principal U.S. Officials
Ambassador--Lyons Brown, Jr.
Deputy Chief of Mission--A. Daniel Weygandt
Counselor for Economic and Political Affairs--Lee Brudvig
Counselor for Public Affairs (USIS)--John A. Quintus
Counselor for Commercial Affairs--Joseph B. Kaesshaefer, Jr.
Counselor for Administrative Affairs--Timothy E. Roddy
Counselor for Agricultural Affairs--Robert C. Curtis
Consul General--James Pettit
Defense and Army Attache--Col. Bruce Boevers
Consular Agent in Salzburg--Jeanie Mayer

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). The U.S. Consular Agency in Salzburg is located at Alte Markt 1, 5020 Salzburg, tel. (43) (662) 848-776.



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