May 26, 2011

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

PROFILE

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 (2009): 8,364,000.
Annual population growth rate (2009): 0.4%.
Ethnic groups: Germans, Turks, Serbs, Croats, Slovenes, and Bosnians; other recognized minorities include Hungarians, Czechs, Slovaks, and Roma.
Religions (2001 census): 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 (2009): Infant mortality rate--3.6 deaths/1,000. Life expectancy--men 77.4 years, women 82.9 years.
Work force (2009, 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 Bundeslaender (federal states).
Defense (2010): 0.75% of GDP.

Economy
GDP (2010): $376.1 billion.
Real GDP growth rate (2010): 2.1%.
Per capita income (2010): $44,830.
Natural resources: Iron ore, crude oil, natural gas, timber, tungsten, magnesite, lignite, cement.
Agriculture (1.5% of 2010 GDP): Products--livestock, forest products, grains, wine, sugarbeets, potatoes.
Industry (29.2% of 2010 GDP): Types--iron and steel, chemicals, capital equipment, consumer goods.
Services: 69.3% of 2010 GDP.
Trade (2010): Exports--$144.8 billion: iron and steel products, timber, paper, electrotechnical machinery, chemical products, foodstuffs. Imports--$150.4 billion: machinery, vehicles, chemicals, iron and steel, metal goods, fuels, raw materials, foodstuffs. Principal trade partners--European Union, Switzerland, China, and the United States.

PEOPLE
Austrians are relatively homogeneous; about 90% speak German as their everyday language. However, there has been a significant amount of immigration, particularly from former Yugoslavia and Turkey, over the past 2 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). Slovene and Croat minority rights are protected under Austria’s 1955 State Treaty and in related national law. In the 2001 census, 74% of Austrians identified themselves as Roman Catholic. According to the Catholic Church, this proportion was expected to drop by the 2011 census. The church abstains from political activity. Immigration has increased the proportion of Muslims and Orthodox in Austria. Small Lutheran minorities are located mainly in Vienna, Carinthia, and Burgenland. There are some Islamic communities, concentrated in Vienna and Vorarlberg.

HISTORY
Austrian history 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 from many 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 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. The controversial debate about the long-hidden wartime past of former UN Secretary General Kurt Waldheim, who was elected Austrian President in 1986, painfully forced Austrians to confront the country’s role before and during World War II. 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. Payments are made through the National Fund for Victims of National Socialism (established in 1995), which provides lump-sum payments to victims of Nazi persecution and their heirs, and the General Settlement Fund (established in 2001), which addresses gaps and deficiencies in postwar restitution programs. The Reconciliation Fund (established in 2000 and disbanded in 2005) provided one-time payments to Nazi-era forced and slave laborers. Its successor organization, the Future Fund (established 2006) supports projects with an emphasis on Holocaust and tolerance education.

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 4 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 Bundeslaender (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--Werner Faymann
Vice Chancellor--Michael Spindelegger
Foreign Minister--Michael Spindelegger
Ambassador to the United States--Christian Prosl
Ambassador to the United Nations--Thomas Mayr-Harting

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, Cape Coral, Charlotte, Columbus, Denver, Detroit, Fort Myers, Honolulu, Houston, Kansas City, Las Vegas, Miami, New Orleans, Orlando, Philadelphia (temporarily closed), Pittsburgh, Portland, Richmond, Scottsdale (Phoenix), 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. did not join the sanctions formally, but together with Israel, as well as various other countries, also reduced contacts with the Austrian Government. After a 6-month 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 out 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 were held on September 28, 2008, and resulted in the formation of another “grand coalition” between the SPO and OVP.

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 2008 national elections, it garnered 29.7% 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. Following the 2008 financial crisis, the SPO began advocating a tax on global financial transactions and a solidarity tax from Austrian banks that had been bailed out by the government during the crisis.

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 2008, it received 25.6% of the vote. The Greens won 9.8% of the vote in 2008, losing ground to become the smallest party in parliament.

Austria’s rightist Freedom Party (FPO) has seen its popularity grow in a series of national and state elections since 2006. In the 2008 elections, the FPO earned 18% of the vote, up from 11% in 2006. The late Joerg Haider, the former leader of the FPO, split from the party in 2005 to form the Alliance-Future-Austria (BZO). While the BZO barely managed to enter parliament in 2006 with 4.1% of the vote, Haider led his new party to a surprising 10.7% in national elections in 2008. Shortly afterwards Haider died in a car crash, and the BZO subsequently saw some of its deputies return to the FPO as the party’s political fortunes declined again.

Federal President Heinz Fischer was reelected for a second term on April 25, 2010.

ECONOMY
Austria has a well-developed social market economy with a high standard of living and close ties to other EU economies, especially Germany's.

Until the late 1980s, the government and its state-owned industry conglomerates played a key role in the Austrian economy. However, state-owned firms began to operate largely as private businesses starting in the early 1990s--a trend which accelerated between 2000 and 2006, as the government wholly or partially privatized many of these firms. Since 2006, "grand coalition" governments have not reversed privatizations but have also not undertaken further privatization measures.

The international financial crisis and global economic downturn in 2008 led to a deep recession that persisted until the third quarter of 2009. Austrian GDP contracted by 3.9% in 2009, partially recovering in 2010 with growth of 2.1%. The unemployment rate of 4.4% in 2010 was the lowest in the EU-27 (EU-27 average: 9.6%). Crisis measures and an income tax reform pushed the budget deficit from about 0.4% of GDP before the financial crisis to 4.6% of GDP in 2010. The consolidated public sector debt rose from 62.5% of GDP in 2008 to 72.3% in 2010, due primarily to new methods of accounting for publicly-guaranteed debt. The government’s 2012-2015 medium-term budget framework stipulates legally binding spending limits to reduce the total public sector deficit from about 3.9% of GDP in 2011 to 2.0% of GDP in 2015. Organization for Economic Cooperation and Development (OECD) and International Monetary Fund (IMF) experts have called for structural reforms in areas such as sustainability of pensions, ensuring long-term care for Austria’s aging population, restructuring public sector salaries, streamlining administration, and improving the K-12 and university education systems.

Austria’s economy benefited greatly from its entry into the EU in 1995, the introduction of the Euro in 2002, and its growing commercial relations--especially in the banking and insurance sectors--in central, eastern, and southeastern Europe. However, this interdependency has made Austria vulnerable to financial instability in the region. Some of Austria's largest banks have required government support--including in two instances, nationalization--to avoid potential insolvency and wider regional contagion. Several banks have, however, applied for early repayment of the government funds. In the medium term, Austrian banks will need additional capital to meet the terms of the Basel III accord. Even with an improved economic outlook, Austria will need to continue restructuring, emphasizing knowledge-based sectors of the economy while encouraging greater labor flexibility and greater labor participation to offset such problems as structural unemployment, an aging population, and a low fertility rate.

Austria has a strong but slightly shrinking labor movement. The Austrian Trade Union Federation (OGB) comprises constituent unions with a total membership of about 1.2 million--about 35% 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." A 2006 scandal involving an OGB-owned bank caused the OGB to lose much of its political influence and it 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 joined 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 85% of domestic food requirements, the contribution of agriculture, forestry, and fisheries to gross domestic product (GDP) has consistently declined over the last decades to just 1.5% (2010).

Trade with other EU-27 countries accounts for almost 72% of Austrian imports and exports (2010). Expanding trade and investment in the new EU members of central and eastern Europe represent a major pillar of Austrian economic policy. Austrian firms have sizable investments there and continue to move labor-intensive, low-tech production to these countries. About one-half of Austria's foreign direct investment (FDI) is concentrated in the countries of central, eastern, and southeastern Europe. Many western European and international companies have located their central/eastern European headquarters in Austria.

Total trade with the United States in 2010 reached $10.9 billion. Exports from the United States to Austria amounted to $4.3 billion. U.S. imports from Austria in 2010 were $6.6 billion. The United States is Austria's sixth-largest trading partner worldwide. Approximately 330 U.S. firms hold investments in Austria. The stock of U.S. foreign direct investment in Austria is an estimated $15.4 billion (2009), which represents about 10.4% of FDI in Austria and makes the U.S. the third-largest foreign investor 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 actions against Iraq in 1991 and Libya in 2011. In 1995, it joined the Partnership for Peace with NATO, and subsequently participated in peacekeeping missions in Bosnia and Kosovo.

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, having been elected to a seat on the UN Human Rights Council in May 2011 and previously holding a non-permanent seat on the UN Security Council from 2009 to 2010. Austria has participated in UN peacekeeping missions since 1960, with particular emphasis on the Balkans. 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 currently has three military and five police personnel serving in Afghanistan, as well as customs trainers in neighboring states.

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.

Austria has identified the Black Sea region and countries along the Danube River as additional focus areas of its foreign policy.

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 relations and to maintain Austria's political and economic stability.

Principal U.S. Officials
Ambassador--William C. Eacho, III
Deputy Chief of Mission--Christopher Hoh
Counselor for Economic and Political Affairs--Shawn Crowley
Counselor for Public Affairs--Jan Krc
Counselor for Commercial Affairs--Christopher Quinlivan
Counselor for Management Affairs--Margaret Uyehara
Office of Agricultural Affairs--Paul Spencer
Consul General--Heather Guimond
Defense Attache--COL Ulises Soto
Office of Defense Cooperation--LTC Chad Lemond

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).

[This is a mobile copy of Austria (05/26/11)]