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Austria (10/04)


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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. 2004. 

PROFILE

OFFICIAL NAME:
Republic of Austria

Geography
Area: 83,857 sq. km. (32,377 sq. mi.); slightly smaller than Maine.
Cities: Capital--Vienna (2003 pop. 1.5 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 (2003): 8,032,926.
Annual growth rate (2002): 0.22%.
Ethnic groups: Germans 98%, Croats, Slovenes; 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 92%.
Education: Years compulsory--9. Attendance--99%. Literacy--98%.
Health (2003): Infant mortality rate--4.2 deaths/1,000. Life expectancy--men 75.9 years, women 81.7 years.
Work force (2002, 3.8 million): Services--67%; agriculture and forestry--4%, industry--29%.

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 18.
Administrative subdivisions: Nine Laender (federal states).
Defense (2002): 0.8% of GDP.

Economy
GDP (2003): $250 billion.
Real GDP growth rate (2003): 0.7%.
Per capita income (2002): $25,320.
Natural resources: Iron ore, crude oil, natural gas, timber, tungsten, magnesite, lignite, cement.
Agriculture (2% of 2002 GDP): Products--livestock, forest products, grains, sugarbeets, potatoes.
Industry (29% of 2002 GDP): Types--iron and steel, chemicals, capital equipment, consumer goods.
Services: 69% of 2002 GDP.
Trade (2002): Exports--$77 billion: iron and steel products, timber, paper, textiles, electrotechnical machinery, chemical products. Imports--$77 billion: machinery, vehicles, chemicals, iron and steel, metal goods, fuels, raw materials, foodstuffs. Principal trade partners--European Union, U.S., Switzerland, and Hungary.

PEOPLE AND HISTORY
Austrians are a homogeneous people; 92% are native German speakers. Only two numerically significant minority groups exist—15,000 Slovenes in Carinthia (south central Austria) and about 17,000 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 74% of all Austrians are Roman Catholic. The church abstains from political activity. 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. Present-day Austria 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 adapting a large government structure to the needs of a new, smaller republic. In the early 1930s, worldwide depression and unemployment added to these strains and shattered traditional Austrian society. In 1933, Engelbert Dollfuss formed a conservative autocracy. 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 Nazis assassinated Dollfuss. In March 1938, Germany occupied Austria and incorporated it into the German Reich. This development is commonly known as the "Anschluss" (annexation).

At the Moscow conference in 1943, the Allies declared their intention to liberate and reconstitute Austria. In April 1945, both Eastern- and Western-front Allied forces liberated the country. Subsequently, 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 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.

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 upon elections. Its 183 members serve 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 the president may dissolve it on the recommendation of the Chancellor. The 62 members of the Federal Council are elected by the legislatures of the nine states 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. Justices of the three courts are appointed by the president for specific terms.

The legislatures of Austria's nine Laender (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--Wolfgang Schuessel
Vice Chancelor--Hubert Gorbach
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, Indianapolis, Kansas City, Miami, Milwaukee, New Orleans, Philadelphia, Pittsburgh, Portland, Richmond, St. Paul, St. Louis, St. Thomas, Salt Lake City, 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 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. Following 2002 elections, the OVP in February 2003 renewed its coalition with the FPO.

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 2002 national elections, it garnered 36.5% 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 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 2002, it received 42.3% of the vote. The rightist Freedom Party traditionally had a base in classic European liberalism. However, a mixture of populism and anti-establishment themes steadily gained support in recent years. It attracted about 27% of the vote in the 1999 elections, but only 10% of the vote in 2002. The Liberal Forum, founded on libertarian ideals, split from the Freedom Movement in February 1993. It received 3.7% of the vote in the 1999 election and thus failed to enter the national legislature. The Greens, a left-of-center party focusing on environmental issues, received 9.5% of the national vote in 2002.

ECONOMY
Austria has a well-developed social market economy with a high standard of living in which the government has played an important role. The government nationalized many of the country's largest firms 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 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 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.

Some industries, such as several iron and steel works and chemical plants, are large industrial enterprises employing thousands of people. However, 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 opposition to 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 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 about 2%.

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. In the second half of the 1970s, the annual average growth rate was 3% in real terms, though it averaged only about 1.5% through the first half of the 1980s before rebounding to an average of 3.2% in the second half of the 1980s. At 2%, growth was weaker again in the first half of the 1990s, but averaged 2.5% again in the period 1997 to 2001. After real GDP growth of 1.4% in 2002, predictions are for the economy to grow 0.7% in 2003 and 1.4-2.1% in 2004.

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 countries accounts for about 63% 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 2002 reached $7.2 billion. Imports from the United States amounted to $3.5 billion, constituting a U.S. market share in Austria of 4.8%. Austrian exports to the United States in 2002 were $3.8 billion, or 5.2% 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." 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).

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--Lyons Brown, Jr.
Deputy Chief of Mission--Carol van Voorst
Counselor for Economic and Political Affairs--Gregory E. Phillips
Counselor for Public Affairs (USIS)--William H. Wanlund
Counselor for Commercial Affairs--Catherine Houghton
Counselor for Management Affairs--W. Douglas Frank
Counselor for Agricultural Affairs--Quintin Gray
Consul General--Charisse Phillips
Defense and Army Attache--Col. Scott Salyers
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.

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



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