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Austria (09/07)


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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 (2005 pop. 1.63 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 (2006): 8,281,948.
Annual growth rate (2006): 0.4%.
Ethnic groups: Germans 91%, 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 92%.
Education: Years compulsory--9. Attendance--99%. Literacy--98%.
Health (2006): Infant mortality rate--3.6 deaths/1,000. Life expectancy--men 77.1 years, women 82.7 years.
Work force (2006, 4.12 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 18.
Administrative subdivisions: Nine Bundesl�nder (federal states).
Defense (2007): 0.8% of GDP.

Economy
GDP (2006): $322.4 billion
Real GDP growth rate (2006): 3.3%.
Per capita income (2006): $38,925.
Natural resources: Iron ore, crude oil, natural gas, timber, tungsten, magnesite, lignite, cement.
Agriculture (1.7% of 2006 GDP): Products--livestock, forest products, grains, sugarbeets, potatoes.
Industry (30.7% of 2006 GDP): Types--iron and steel, chemicals, capital equipment, consumer goods.
Services: 67.6% of 2006 GDP.
Trade (2006): Exports--$129.7 billion: iron and steel products, timber, paper, textiles, electrotechnical machinery, chemical products, foodstuffs. Imports--$130.3 billion: machinery, vehicles, chemicals, iron and steel, metal goods, fuels, raw materials, foodstuffs. Principal trade partners--European Union, Switzerland, U.S., and China.

PEOPLE AND HISTORY
Austrians are a homogeneous people; 91% are native German speakers. 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. Small Islamic (immigrant) communities have arisen in Vienna and Vorarlberg.

Austrian history dates back nearly 2,000 years, when Vindobona (Vienna) was an important Roman military garrison along the Danube. The city grew through the Middle Ages and in 788, the territory that is present-day Austria was conquered by Charlemagne, who encouraged the adoption of Christianity. In 976, Leopold von Babenberg became the first in his family to rule the territory; the Babenberg line of succession lasted until the death of Frederick II in 1246. There was a brief interregnum when the territory was ruled by Otakar II of Bohemia, but in 1276 Rudolf I defeated Otakar II at D�rnkrut and 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. During the 16th Century, the Ottoman Empire gained strength and in 1529, the Ottoman army surrounded Vienna. The Habsburgs held their ground and the Ottomans retreated, to return again in 1683. This time, Vienna was successfully defended by Polish King Jan Sobieski III. To this day Austrians are still proud of defending their territory from the invading Ottomans.

Habsburg rule in Europe was particularly unsettled in the 18th and 19th Centuries, when various wars were fought over their landholdings. Emperor Charles VI (1711-1740) and his daughter Maria Theresa (1740-1780) ruled the Empire during these tumultuous times. Maria Theresa was only able to take the throne as a result of the Pragmatic Sanction, which allowed a female to ascend when there was no male heir. She became a great reformer within the Empire, advocating many changes, most notably in the educational system. Maria Theresa's son Josef II (1780-1790) continued many of her reforms and he himself has been described as an enlightened absolutist.

In 1848 Franz Josef I ascended to the throne and remained in power until his death in 1916. With a reign spanning from the Revolutions of 1848 to World War I, Franz Josef saw many milestones in Austrian history. The Compromise of 1867 allowed some minor sovereignty to the territory of Hungary and created what became known as the Dual Monarchy. Under the new system, Franz Josef remained the head of state (Emperor of Austria/King of Hungary), but the Hungarians were now permitted to have a parliament and legislate on their own.

The old Habsburg Empire slowly began to deteriorate in the beginning of the 20th Century. This deterioration culminated in the June 28, 1914, assassination of Archduke (and heir to the throne) Franz Ferdinand and his wife Sophia. This incident sparked the beginning of World War I and assured the end to the Habsburg domination of Central Europe. 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

In the years leading up to the Nazi period, Austria experienced sharpening political strife among the traditional parties, which since 1918 had created their own paramilitary organizations. By the late 1920s and early 1930s, these organizations were engaged in strikes and violent conflicts. Unemployment rose to an estimated 25%. In line with similar trends among other Central European countries, a corporatist and authoritarian government came into power in Austria under Engelbert Dollfuss, who abolished existing political parties and Austria's Constitutional Court. The Social Democrats, now excluded from the political process, took up arms, and a brief civil war ensued in February 1934. Austrian National Socialists (NS) launched an unsuccessful coup d'etat in July 1934 and murdered Dollfuss. The Nazi leaders were, however, arrested, tried, and received death sentences. Following this unsuccessful coup, the Austrian President asked an ultra-conservative Christian Social leader, Kurt Schuschnigg, to form a government. Like Dollfuss, Schuschnigg sought to appease his neighbors and, at the same time, obtain support from Britain and France against pressures from Hitler's Germany, but without success due to the authoritarian trends in Austria and Austria's poor image in the West. In February 1938, under renewed threats of military intervention from Germany, Schuschnigg was forced to accept Austrian National Socialists (Nazis) in his government. On March 12, Germany sent its military forces into Austria, an action that received enthusiastic support among most Austrians, and Schuschnigg was forced to resign. He and many other political leaders were arrested and imprisoned until 1945.

The Holocaust in Austria

The dissolution of the Austrian Empire and consequent loss of territory following World War I, as well as the political strife of the 1930s, set the stage on March 13, 1938, for Germany's Anschluss ("Annexation") of Austria and the beginning of the Nazi period, the darkest chapter in Austria's history, during which 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 percent of the total population. Most Jews lived in Vienna, where they comprised about 9 percent 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

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.

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 one billion dollars 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 Bundesl�nder (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, 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 �VP then led a governing coalition with the SP� 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 (FP�). The SP�, which was the strongest party in the 1999 elections, and the Greens formed the opposition. The FP� 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 FP�'s strength declined by more than half. Nevertheless, the OVP renewed its coalition with the FP� in February 2003. In national elections in October 2006, the SP� became the largest party, edging the OVP. On January 11, 2007, an SPO-led Grand Coalition took office, with the �VP as junior partner.

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 (BZ�) split from the FP� in 2005. All the FP�'s Federal Ministers and most of its parliamentarians joined the BZ�, and that party formally became the junior partner in the governing coalition. The BZO was unable to draw significant popular support away from the FP�, 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 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 Sch�ssel government's privatization program further reduced government participation in the economy. The Gusenbauer government will not reverse privatizations, but does not plan to undertake any further privatizations. 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 (�GB) comprises constituent unions with a total membership of about 1.2 million--about 31% of the country's wage and salary earners. Since 1945, the �GB 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 �GB opposed the Sch�ssel government's program for budget consolidation, social reform, and fiscal measures that favor entrepreneurs. However, because of a scandal involving a bank the �GB owned, the �GB lost much of its political influence in the SP�.

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 0.9% in 2002, the economy grew again only 1.1% in 2003, with 2001-2003 being the longest low-growth period since World War II. In 2004, Austria's economy recovered and grew 2.4%, driven by booming exports in response to strong world economic growth, but it declined to 2.0% growth in 2005.

Primarily due to higher growth in Europe and continued export growth, Austrian GDP was a higher-than-expected 3.3% in 2006. Predictions are for the economy to grow 3.1-3.2% in 2007 and 2.5-2.8% in 2008.

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. Although the big investment boom has waned, 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 2006 reached $12.0 billion. Imports from the United States amounted to $4.3 billion, constituting a U.S. market share in Austria of 3.3%. Austrian exports to the United States in 2006 were $7.6 billion, or 5.9% 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). 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 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--Susan McCaw
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). The U.S. Consular Agency in Salzburg is located at Alte Markt 1, 5020 Salzburg, tel. (43) (662) 848-776.



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