Armenia - REFERENCE

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After the signing of the State Treaty, Austria's foreign policy concerns focused on three issues: South Tirol, European economic integration, and the meaning of neutrality. The status of the ethnically German province of South Tirol had been an Austrian concern ever since the province's transfer to Italy after World War I. Austria hoped that Italy's participation on the losing side of World War II might open the door to the Allied powers awarding the disputed territory to Austria. But the strategic interests of the Western Allies after the war forced Austria to settle for a 1946 agreement in which Italy promised South Tirol autonomous rights.

In 1948, however, Italy undercut the autonomy of the South Tiroleans by expanding the autonomous region to include the entire province of Trentino, the total population of which was two-thirds ethnically Italian. The South Tiroleans appealed to Austria for assistance. The General Assembly of the United Nations (UN) adopted a resolution in 1960 instructing Italy and Austria to enter into negotiations on the issue. Austria's right to intervene on behalf of the South Tiroleans was thus affirmed but brought no results until 1969. In the intervening years, South Tirolean activists undertook a terrorist bombing campaign, which, Italy alleged, Austria facilitated through lax border controls. The 1969 agreement affirmed South Tirol's autonomous rights, including the use of German as the official language. The International Court of Justice at The Hague was given the right to judge disputes over implementation of the pact, and Austria waived its rights to intervene.

Although the OEEC continued to function as a coordinating body for European economic integration after the end of the Marshall Plan in 1952, six of its members sought closer economic integration. In 1957 they formed the European Economic Community. Because Austria's main trading partners, the Federal Republic of Germany (West Germany) and Italy, belonged to the EEC, Austria would have liked to join that organization. But provisions in the EEC agreement imposed obligations in time of war, which were viewed as inconsistent with Austrian neutrality. Further, EEC membership also raised questions regarding unification with Germany, which was forbidden by the State Treaty. Austria thus joined six other countries in a looser, strictly economic association, the European Free Trade Association, established in 1960. This was not an entirely satisfactory solution, and in 1961 Austria sought limited, associated membership in the EEC.

The Soviet Union objected to Austria's association with the EEC as a violation of Austria's neutrality. Austria responded that because its neutrality was a matter of Austrian law, Austria alone had the right to judge what were or were not violations. Nonetheless, Austria proceeded cautiously to avoid needlessly provoking the Soviet Union. EEC members also questioned Austria's membership. Italy blocked Austria's application to the EEC in 1967 because of the dispute over South Tirol. French president Charles de Gaulle was cool toward Austrian membership, both because of his desire to maintain relations with the Soviet Union and because of his concern that it might strengthen West Germany's position to the detriment of that of France. Austria's persistence, the resolution of South Tirol's status, and de Gaulle's retirement, however, paved the way for an agreement between Austria and the EEC in 1972.

When Austria adopted a policy of neutrality in 1955, its leaders made it clear that political neutrality did not mean moral neutrality. Austrian sympathies clearly lay with the Western democracies, an attitude that was reinforced by its opposition to the Soviet invasion of Hungary in 1956 and of Czechoslovakia in 1968. Nonetheless, Austria attempted to cultivate good relations with the Soviet bloc countries, which accounted for about one-sixth of Austrian exports in the mid-1960s. Austria thus benefited when d�tente eased relations between East and West in the late 1960s and early 1970s. Austria's efforts to make itself a bridge between East and West-- an idea the Austrians had proposed as early as 1945--however, remained a largely unfulfilled ambition.

Austria - Elections and Parties

The outcome of the four parliamentary elections between 1955 and 1970 hinged on relatively small changes in the division of the votes. The �VP consistently held the largest number of seats in the Nationalrat and thus leadership of the �VP-SP� coalition, the so-called grand coalition, even though in the 1959 election it polled fewer votes than the SP�. Prior to the 1966 election, the share of the vote received by the �VP fluctuated between 44 and 46 percent. By achieving an increase to 48 percent in 1966, the party was able to win eighty-five parliamentary seats, an absolute majority. Julius Raab served as chancellor between 1953 and 1961, when he was replaced by Alphons Gorbach. Gorbach brought some younger politicians into the party's leadership, where they began to press for reforms. One of these younger men, Josef Klaus, replaced Gorbach as chancellor in 1964 and headed the �VP government between 1966 and 1970. His rise, coming about the same time as the deaths of Raab and Figl, marked the passing of party leadership to a younger generation that had not experienced the trauma of the 1930s.

The SP� saw its share of the vote fluctuate between 42 and 45 percent over the course of the four elections. Although the SP� held the position of junior partner in the coalition, the electorate consistently gave the presidency of the republic to the SP� following reinstitution of direct elections for that post in 1951. Theodor K�rner, who had succeeded Renner in 1951, died in office prior to the 1957 presidential election. Sch�rf, who had been chairman of the SP� since 1945, handily won the 1957 election and was reelected in 1963. When he died in 1965, he was succeeded by the Socialist mayor of Vienna, Franz Jonas.

The VdU was reorganized in 1956 as the Freedom Party of Austria (Freiheitliche Partei �sterreichs--FP�). Its share of the vote ranged from about 5 percent to 8 percent. The party drew on a diverse base of voters that included liberals, anticlerical conservatives, monarchists, and former Nazis.

The KP� was hurt by its association with the Soviet Union and by events in Eastern Europe, particularly the Soviet invasion of Hungary. The party's already small share of the vote continued to decline, from about 4.5 percent in 1956 to just over 3 percent in 1962. After 1959 the KP� held no seats in the Nationalrat.

Austria - Domestic Tranquillity under the Grand Coalition

The pattern of political cooperation established during the occupation years and the economic reconstruction that took place through the Marshall Plan laid the foundation for eleven years of political tranquillity and economic prosperity. In 1957 the government informally established the Parity Commission for Prices and Wages. This commission soon far exceeded its intended function of setting prices and wages and effectively established the country's basic economic policy. By bringing together the representatives of the major economic interest groups--the social partners--and requiring unanimous decisions, the commission became a powerful stabilizing force in Austrian society.

The effort of the SP� to broaden its electoral base helped resolve long-standing questions about the status and role of the Roman Catholic Church. The party realized that its inheritance of liberal anticlericalism and Marxist hostility toward religion stood in the way of attracting supporters who were devout Roman Catholics. As the SP� moved away from Marxist rhetoric, party leaders began to bridge the gulf between the SP� and Roman Catholics. In this eased atmosphere, the coalition partners were able to put the divisive issue of the 1934 concordat behind them. A new agreement with the Vatican was signed in 1960.

The overall effect of the �VP-SP� grand coalition and the social partnership represented by the Parity Commission, which brought together major economic groups, was to limit parliament's power. Most major economic and social decisions were made outside parliamentary channels and simply ratified by the Nationalrat, usually unanimously. Because no major policy differences were at stake, elections mainly served to determine the proportion of the patronage positions that would be accorded to the coalition partners. As the country progressed from the trauma of World War II and the occupation, members of both major parties began to express dissatisfaction with the coalition and the toleration of mismanagement and abuse of public office that the system appeared to condone. In the 1966 electoral campaign, �VP leader Klaus called for an end to the grand coalition. After winning an absolute majority, however, the �VP proposed terms for continuing the coalition, which Kreisky and other SP� leaders unsuccessfully urged their party to accept. Despite the breakup of the coalition, the Klaus government introduced no significant breaks with past policy. The �VP's four years in office were thus a coda to the grand coalition before the long period of SP� domination under Kreisky began in 1970.

Austria - THE KREISKY YEARS, 1970-83

As the Austrian economy developed in the 1950s and 1960s, the nature of the electorate slowly shifted. The declining economic importance of agriculture and forestry undermined the rural base of the �VP. Further, economic growth was occurring primarily in the service sector, not in heavy industry or manufacturing, the traditional base of the SP�. By 1970 service-sector employees constituted just under 40 percent of the working population, and both parties sought to position themselves in the middle of the political spectrum in order to attract these voters. Under the leadership of Bruno Kreisky, the SP� proved more adept at redefining itself in this new era.

Kreisky's personal popularity played a large part in the success of the SP�, and the party capitalized on this by campaigning on slogans like "Kreisky--who else?" and "Austria needs Kreisky." Although Kreisky came from a wealthy Viennese Jewish family, he declared himself an agnostic. Kreisky had been imprisoned in the mid- and late 1930s for political activity, but the Nazi regime eventually allowed him to emigrate to Sweden, where he became acquainted with Swedish socialism and met Willy Brandt, the future leader of the German Social Democrats. Kreisky returned to Austria after the war and by the early 1950s was working in the Ministry for Foreign Affairs and becoming active in party politics.

Kreisky was deeply involved in efforts to broaden SP� appeal in the 1950s. As chancellor, he continued to move the party toward the political center, reaching out toward swing voters and Roman Catholic and rural constituencies. Indicative of SP� reconciliation with the mainstream of Austrian culture and history was campaign literature in 1979 that featured Kreisky sitting beneath a portrait of Emperor Franz Joseph. As the differences between the two major political parties lessened, the �VP found it difficult to enunciate a distinct political identity because Kreisky so successfully occupied the middle ground.

In the election of 1970, the SP� emerged as the largest party but lacked a parliamentary majority. An attempt to revive the grand coalition failed. And Kreisky could not lure the FP� into a coalition. But the FP� did agree to cooperate in passing the SP� budget in exchange for electoral reform. Kreisky thus formed a minority government in 1970, and another election was held under a new electoral law in October 1971.

The electoral reform raised the number of seats in the Nationalrat from 165 to 183 and increased the degree of proportionality between a party's percentage of the popular vote and its parliamentary seats, thus boosting the fortunes of small parties. The SP� emerged from the election with an absolute majority, winning a bare 50 percent of the vote and ninety-three seats in the enlarged Nationalrat. The VP� won only eighty seats and 43 percent of the vote. The FP� won 5.5 percent of the vote, the same as in 1970, and held ten seats.

The election of 1975 repeated the 1971 results. But in 1979, the SP� increased its share of the vote to 51 percent and won ninety-five seats. The �VP declined to just below 42 percent and won only seventy-seven seats. The FP� improved its performance slightly, getting 6 percent of the vote and taking eleven seats.

While the electorate had opted for a Socialist chancellor, it also continued to elect a Socialist or Socialist-backed presidential candidate throughout the Kreisky era. Six months before the 1970 parliamentary election, Jonas won reelection, defeating Kurt Waldheim. Jonas died in 1974 and was succeeded by Kreisky's foreign minister, Rudolf Kirchschl�ger. Although he was not a member of the SP�, Kirchschl�ger, a practicing Catholic and a political independent, was a Kreisky associate, having been brought into Kreisky's cabinet in 1970. His reelection bid was unopposed in 1980.

Austria - Domestic Issues

Kreisky's style and tone struck a chord with the Austrian electorate, and his personal popularity was enhanced by the country's economic prosperity in the 1970s. His legislative and economic program was built on the existing political consensus and ratified by the social partners. Many measures continued to pass unanimously in the Nationalrat. Employee benefits were expanded, the workweek was cut to forty hours, and legislation providing for equality for women was passed. The period of mandatory military service was cut from nine months to six months. Three issues, however, divided the country: abortion, nuclear power and environmental damage, and ethnic minority rights.

In 1973 the SP� passed a law over the opposition of the �VP and the FP� that legalized abortion on demand during the first trimester. Popular opposition backed by the Roman Catholic Church manifested itself in a petition drive that helped bring the issue before parliament again in the spring of 1976. The law, however, was upheld.

In the early 1970s, the international energy crisis triggered by the Organization of the Petroleum Exporting Countries (OPEC) oil cartel and the Arab oil embargo exposed Austria's vulnerability to imported energy supplies. To reduce this vulnerability, Kreisky continued the construction of a nuclear power plant at Zwentendorf, sixty kilometers from Vienna, and planned the construction of three other plants. As the Zwentendorf facility neared completion in the late 1970s, however, the public expressed growing concern about the safety of nuclear power. The SP� did not want to alienate the environmental movement and its bloc of voters, but it also needed to satisfy its trade union constituency, which favored the project. The issue was settled by means of a national referendum on November 5, 1978. Despite Kreisky's vigorous campaign for the plant, the electorate narrowly rejected opening the plant.

Seeking to implement provisions in the 1955 State Treaty regarding the rights of the country's Croat and Slovene minority communities, parliament enacted a law in 1972 to erect duallanguage signs wherever the minority population of a locality was at least 20 percent. Such signs were placed in some 200 of the 2,900 towns and villages in Carinthia. With the support of local officials and police, however, the German-speaking population reacted violently and ripped the signs down, reflecting lingering hostility provoked by Yugoslav efforts to annex the province after World War II. In an effort to resolve the matter, the government took a census in 1976 to determine Carinthia's ethnic make-up. Because the Slovene population had declined greatly since 1914, when it accounted for 25 percent of the total populace, Slovene leaders called for a boycott of the census, and the results were not considered reliable. Dual-language signs were erected in 1977 where the local minority population was believed to be over 25 percent.

Austria - Foreign Policy

Under Kreisky's leadership, Austria sought to play an active role in international politics in the 1970s, particularly through the UN. Reflecting the acceptance of Austrian neutrality, Waldheim, the unsuccessful conservative presidential candidate in 1970, was elected UN secretary general in 1971 and reelected to that post in 1976. Austria continued to cast itself as a bridge between East and West, and Vienna was the site for some early rounds of the Strategic Arms Limitation Talks (SALT) between the United States and the Soviet Union. Kreisky became personally involved in issues relating to the Arab-Israeli conflict. Despite general support for maintenance of Israeli security, he criticized Israel for its treatment of the Palestinians. In 1980 Austria gave de facto recognition to the Palestine Liberation Organization (PLO) by accepting an accredited agent of the PLO in Vienna. Throughout the 1970s, however, Austria was also a transit point for Jews leaving the Soviet Union for destinations in Israel and the West.

Austria established a more favorable trading relationship with the EEC in 1972, but the EEC continued to move toward still fuller economic and political integration in Western Europe. Although Kreisky pointed to the possibility of Austria's adopting legislation on its own in coordination with these developments, he stressed that Austria's neutrality would continue to prevent full membership in the EEC unless it were expanded to include all of Europe.

Austria - End of the Kreisky Era

During Kreisky's tenure as chancellor, Austria enjoyed unprecedented prosperity, but by the time the April 1983 election approached, the SP� had few fresh ideas with which to attract critical swing voters. Its image also suffered from various political and financial scandals. Its proposal for a tax hike aimed at upper-income Austrians to finance job creation was countered by the �VP with promises of no new taxes and more careful use of existing government tax revenues. Although the �VP failed to unseat the SP� as the largest party in the Nationalrat, the �VP benefited from a significant shift in voter sentiment, and the SP� lost its majority, winning ninety seats, which was five seats fewer than in 1979. The �VP gained four seats for a total of eighty-one. The FP� won an additional seat, for a total of twelve, despite a decline in its share of the vote. Two "green" parties, the United Greens of Austria (Vereinigte Gr�ne �sterreichs--VG�) and the Alternative List of Austria (Alternative Liste �sterreichs--AL�), sought to rally voters on environmental issues. Together they took about 3.3 percent of the vote but won no parliamentary seats.

Kreisky had campaigned strongly for an absolute majority and resigned rather than lead a coalition government. His minister of education, Fred Sinowatz, became chancellor in 1983, heading an SP�-FP� coalition. Kreisky's departure marked a major turning point in Austria's postwar history, and the Sinowatz government was to be a transitional phase into the contemporary era.

Given the scope of Austrian history and Austria's complex relationships with the other countries of Central Europe, English-language histories of Austria generally focus on particular segments of Austrian history rather than on an attempt to give equal attention to all centuries. Alexander Wigram Allen Leeper's A History of Medieval Austria is a key source for medieval history prior to the Habsburgs. The Habsburg Empire, 1790-1918 by Carlile Aylmer Macartney is an excellent and inclusive treatment of the late history of the Habsburg Empire, although its level of detail and thoroughness may be more than the casual reader desires. Robert A. Kann's A History of the Habsburg Empire, 1526-1918 is a more accessible text, focusing on broader themes rather than on the minutiae of history. Robert John Weston Evans's The Making of the Habsburg Monarchy, 1550-1700 also takes a thematic approach but covers only a portion of the Habsburg centuries. However, it provides a useful examination of the intellectual underpinnings of the Habsburg state.

Barbara Jelavich has written two excellent books covering the post-1815 era: The Habsburg Empire in European Affairs, 1814-1918 and Modern Austria: Empire and Republic, 1815-1986. Their relative brevity and conciseness make them excellent overviews.

The selection of books covering specific topics is growing steadily. Of particular interest and merit are Samuel R. Williamson, Jr.'s Austria-Hungary and the Origins of the First World War; Radomir Luza's two books, Austro-German Relations in the Anschluss Era and The Resistance in Austria, 1938-1945; and Alfred D. Low's The Anschluss Movement, 1918-1938.

For those interested in more current history, Melanie A. Sully's A Contemporary History of Austria focuses on the post-Kreisky era.

Austria - The Society and Its Environment

AUSTRIA'S SECURITY AND PROSPERITY during the second half of the twentieth century are a striking contrast to the instability and poverty of the first half of the century. Between 1914 and 1950, Austrians had five different forms of government and four different currencies. After enduring much hardship during World War I, they experienced the collapse of Austria-Hungary (also seen as the Austro-Hungarian Empire) and the proclamation of the Republic of Austria. In the early 1920s, they endured hyperinflation and in the 1930s the Great Depression. The end of Austria's fledgling democracy and the establishment of an authoritarian regime in 1934 were followed by the demise of Austria altogether when Nazi Germany occupied the country in 1938. The proclamation of the Second Republic in 1945 began a long period of peace and prosperity. However, the republic's first years were a difficult time of economic and social reconstruction that occurred while Austria was occupied by the Four Powers (Britain, France, the Soviet Union, and the United States). War, inflation, unemployment, poverty, authoritarian and totalitarian rule, and foreign occupation formed the average Austrian's experience during the first half of the twentieth century.

The new state of Austria that emerged out of the chaos of World War I faced such serious structural problems that many of its citizens doubted it could survive. Social and economic relationships that had evolved over centuries either ended or were greatly altered. Moreover, the regions of this small Germanspeaking "rump state" did not join together well to form a new nation. Austria's rural areas, populated predominantly by peasant-farmers, were underdeveloped, most notably in the Alpine regions of western and central Austria. They did not mesh well with the large urban and industrial centers in eastern Austria, especially Vienna, which had evolved to meet the markets and needs of an entire empire, not a small state. The virtual absence of an Austrian national identity merely aggravated concerns about the state's viability.

The events of the late 1930s and 1940s proved these concerns justified, but by 1955 Austria had regained its independence, laid the foundations for decades of sustained economic growth, and established a system of cooperation among rival political parties, interest groups, and government bodies that brought the country an unprecedented degree of stability. Stability did not bar change, however, and Austrian society changed greatly as a thriving, continuously modernizing economy altered the way Austrians earned their living and the way they lived.

The number of Austrians engaged in agriculture and forestry fell from more than 60 percent at the end of World War II to 7 percent by the beginning of the 1990s. More and more Austrians came to live in urban areas, and over two-thirds of the country's population was concentrated in the valleys and lowlands of eastern Austria. The initial industrial growth was followed by a pronounced shift to the service sector, and peasant-farmers or blue-collar workers, who had frequently lived and worked under abject conditions, increasingly were replaced by white-collar, service-sector employees. By the early 1990s, this sector employed more than 50 percent of the labor force in a society that was predominantly middle class.

The country's population reflects the political and economic traumas that occurred between 1914 and 1945. Austria has been by turns a land of immigration and emigration. After the two world wars and during the Cold War, it was a haven for many refugees from Eastern Europe. Before and during World War II, however, many Austrians fled for racial or political reasons. During the 1960s and later, an increasing number of foreigners from southeastern and Eastern Europe settled in Austria. Their presence offset to some degree the negative growth rate of the country's indigenous population.

The Austrian family has also changed, both in size and in structure. During the last generation, it has became smaller. Traditional family values and life-styles are in a state of rapid transition, as evidenced by the increasing number of people living alone, childless marriages, and steadily increasing rates of divorce and illegitimacy. Although Austria is a predominantly Roman Catholic country, these changes show that religion no longer plays as important a role as in the past.

Social change has led to a much more open, democratic, socially mobile, and prosperous society in which there are few rigid class distinctions. Traditionally, disadvantaged groups have had greater access to secondary and university education. Furthermore, Austria has a highly developed welfare state that provides a broad spectrum of social security and health care benefits. As a result, in the early 1990s the quality of life in Austria was rated the world's ninth best by Washington's Population Crisis Committee.

Austrians have also developed a new and unprecedented national consciousness. For the first time, they have come to see themselves as a distinct people separate from their German neighbors. They have also found a new European role as a neutral state between the East and the West. However, the anticipated and unanticipated dynamics of West European and East European development--European economic and political integration and the opening of Eastern Europe--have changed the hopes and expectations Austrians have entertained, as well as the nature of their fears and anxieties.

Austria - GEOGRAPHY

Austria is a small, predominantly mountainous country located in south-central Europe. It has a total area of 83,859 square kilometers, about twice the size of Switzerland and slightly smaller than the state of Maine. The landlocked country shares national borders with Switzerland and the tiny principality of Liechtenstein to the west (200 kilometers together), Germany (784 kilometers) and the Czech Republic and Slovakia (568 kilometers together) to the north, Hungary to the east (346 kilometers), and Slovenia (311 kilometers) and Italy (430 kilometers) to the south.

The westernmost third of the somewhat pear-shaped country consists of a narrow corridor between Germany and Italy that is between thirty-two and sixty kilometers wide. The rest of Austria lies to the east and has a maximum north-south width of 280 kilometers. The country measures almost 600 kilometers in length, extending from Lake Constance on the Austrian-Swiss border in the west to the Neusiedler See on the Austrian-Hungarian border in the east. The contrast between these two lakes--one in the Alps and the other a typical steppe lake on the westernmost fringe of the Hungarian Plain--illustrates the diversity of Austria's landscape.

Seven of Austria's nine provinces have long historical traditions predating the establishment of the Republic of Austria in 1918: Upper Austria, Lower Austria, Styria, Carinthia, Salzburg, Tirol, and Vorarlberg. The provinces of Burgenland and Vienna were established after World War I. Most of Burgenland had been part of the Kingdom of Hungary, but it had a predominantly German-speaking population and hence became Austrian. Administrative and ideological reasons played a role in the establishment of Vienna as an independent province. Vienna, historically the capital of Lower Austria, was a socialist stronghold, whereas Lower Austria was conservative, and both socialists and conservatives wanted to consolidate their influence in their respective provinces. Each province has a provincial capital with the exception of Vienna, which is a province in its own right in addition to being the federal capital. In Vienna, the City Council and the mayor function as a provincial parliament and provincial governor, respectively.

The two best-known features of the Austrian landscape are the Alps and the Danube River. The Danube has its source in southwestern Germany and flows through Austria before emptying into the Black Sea. It is the only major European river that flows eastward, and its importance as an inland waterway has been enhanced by the completion in 1992 of the Rhine-Main-Danube Canal in Bavaria, which connects the Rhine and Main rivers with the Danube and makes possible barge traffic from the North Sea to the Black Sea.

The major rivers north of the watershed of the Austrian Alps (the Inn in Tirol, the Salzach in Salzburg, and the Enns in Styria and Upper Austria) are direct tributaries of the Danube and flow north into the Danube Valley, whereas the rivers south of the watershed in central and eastern Austria (the Gail and Drau rivers in Carinthia and the M�rz and Mur rivers in Styria) flow south into the drainage system of the Drau, which eventually empties into the Danube in Serbia. Consequently, central and eastern Austria are geographically oriented away from the watershed of the Alps: the provinces of Upper Austria and Lower Austria toward the Danube and the provinces of Carinthia and Styria toward the Drau.

The Alps cover 62 percent of the country's total area. Three major Alpine ranges--the Northern Alps, Central Alps, and Southern Alps--run west to east through Austria. The Central Alps, which consist largely of a granite base, are the largest and highest ranges in Austria. The Central Alps run from Tirol to approximately the Styria-Lower Austria border and include areas that are permanently glaciated in the �tzal Alps on the TiroleanItalian border and the High Tauern in eastern Tirol and Carinthia. The Northern Alps, which run from Vorarlberg through Tirol into Salzburg along the German border and through Upper Austria and Lower Austria toward Vienna, and the Southern Alps, on the Carinthia-Slovenia border, are predominantly limestone and dolomite. At 3,797 meters, Grossglockner in Carinthia is the highest mountain in Austria. As a general rule, the farther east the Northern Alps and Central Alps run, the lower they become. The altitude of the mountains also drops north and south of the central ranges.

As a geographic feature, the Alps literally overshadow other landform regions. Just over 28 percent of Austria is moderately hilly or flat: the Northern Alpine Foreland, which includes the Danube Valley; the lowlands and hilly regions in northeastern and eastern Austria, which include the Danube Basin; and the rolling hills and lowlands of the Southeastern Alpine Foreland. The parts of Austria that are most suitable for settlement--that is, arable and climatically favorable--run north of the Alps through the provinces of Upper Austria and Lower Austria in the Danube Valley and then curve east and south of the Alps through Lower Austria, Vienna, Burgenland, and Styria. Austria's least mountainous landscape is southeast of the low Leitha Range, which forms the southern lip of the Viennese Basin, where the steppe of the Hungarian Plain begins. The Bohemian Granite Massif, a low mountain range with bare and windswept plateaus and a harsh climate, is located north of the Danube Valley and covers the remaining 10 percent of Austria's area.

Austria - Human Geography

Land-use patterns in Austria change from Alpine to non-Alpine regions. Approximately one-tenth of Austria is barren or unproductive, that is, extremely Alpine or above the tree line. Just over two-fifths of Austria is covered by forests, the majority of which are in Alpine regions. Less than one-fifth of Austria is arable and suitable for conventional agriculture. The percentage of arable land in Austria increases in the east as the country becomes less Alpine. More than one-fifth of Austria is pastures and meadows located at varying altitudes. Almost onehalf of this grassland consists of high-lying Alpine pastures.

Historically, high Alpine pastures have been used during the summer for grazing dairy cattle, thus making space available at lower altitudes for cultivating and harvesting fodder for winter. Many of the high pastures are at altitudes of more than 1,000 meters.

Although agriculture in mountainous areas was at one time economically viable, in recent decades it has survived only with the help of extensive subsidies. A concern of farmers in these mountainous regions is that membership in the European Union might entail a curtailment of these subsidies and the end of Alpine agriculture. If this occurs, many areas will be reclaimed by nature after centuries of cultivation.

Although the Alps are beautiful, they make many areas of Austria uninhabitable. Austria's so-called areas of permanent settlement--regions that are cultivated, continuously inhabited, and used for transportation, but do not include forests, Alpine pastures, or barren land--cover only four-tenths or 35,000 square kilometers of the country. The great majority of the area of permanent settlement is in the Danube Valley and the lowlands or hilly regions north, east, and south of the Alps, where approximately two-thirds of the population live.

The Alps serve as a watershed for Europe's three major kinds of weather systems that influence Austrian weather. The Atlantic maritime climate from the northwest is characterized by lowpressure fronts, mild air from the Gulf Stream, and precipitation. It has the greatest influence on the northern slopes of the Alps, the Northern Alpine Foreland, and the Danube Valley. The continental climate is characterized by low-pressure fronts with precipitation in summer and high-pressure systems with cold and dry air in winter. It affects mainly eastern Austria. Mediterranean high-pressure systems from the south are characterized by few clouds and warm air, and they influence the weather of the southern slopes of the Alps and that of the Southeastern Alpine Foreland, making them the most temperate part of Austria.

One peculiarity of the Mediterranean weather systems is the f�hn, a warm air mass that originates in the African Sahara and moves north rapidly, periodically raising temperatures up to 10�C in a short period of time. Many people respond to this rapid weather change with headaches, irritability, and circulatory problems. During the winter, the rapid warming that accompanies a f�hn can thaw the snow cover in the Alps to such an extent that avalanches occur.

Given the importance of Alpine skiing for the Austrian tourist industry, December is the month during which the weather is watched with the greatest anticipation. As a rule, Atlantic maritime weather systems bring snow, and continental weather systems help keep it. However, a predominance of cold, dry continental systems or warm Mediterranean ones inevitably postpone the beginning of the ski season. In the summer, Mediterranean high-pressure systems bring warm, sunny weather.

Austria - Ecological Concerns

Austrians face a number of ecological problems in the 1990s. One of the most pressing is the pollution caused by the staggering increase of traffic through the country. Traffic on the superhighway going through the Brenner Pass has, for example, increased from 600,000 vehicles per year in the early 1970s to over 10 million per year in the early 1990s. One-quarter of the traffic crossing Austria consists of semitrailers used for heavy transport. The opening of Eastern Europe has only exacerbated the problem of transit traffic.

The Alpine valleys through which much of this traffic passes are unusually vulnerable to ecological damage. Narrow valleys are not conducive to dissipation of noise or pollutants caused by motor vehicles. Inversions--cold layers of air that trap warm layers of air or warm layers of air that trap cold layers in the valleys and lowlands--also seasonally contribute to the magnitude of the pollution problem.

The absence of an Austrian national identity was one of the problems confronted when Austria became a country in November 1918. Before 1918 there had been no tradition among German-speaking Austrians of striving for national independence as a small German-speaking state separated from Austria-Hungary or separated from Germany. Within the context of the multiethnic and multilinguistic empire, the great majority of the inhabitants of what was to become Austria considered themselves "Germans" insofar as they spoke German and identified with German culture.

Strong provincial identities that stemmed from the provinces' histories as distinct political and administrative entities with their own traditions existed for this reason. Tiroleans, for example, identified more with their province than with the new nation-state. As a result, the idea of an "Austrian nation" as a cultural and political entity greater than the sum total of provinces, yet smaller than the pan-German idea of the unification of all German speakers into one state, virtually did not exist in 1918. The Austrian historian Friedrich Heer described the confusion surrounding Austrians' national identity in the following manner: "Who were these Austrians after 1918? Were they Germans in rump Austria, German-Austrians, AustrianGermans , Germans in a `second German state,' or an Austrian nation?"

Furthermore, Austrians had serious doubts about the economic and political viability of a small German-speaking state. Two alternatives were envisioned for Austria: either membership in a confederation of the states formed out of Austria-Hungary or unification with Germany as a legitimate expression of Austrian national self-determination. Neither alternative was realized. Efforts to form a "Danube Confederation" failed, and the Allies prohibited Austria's unification with Germany in the treaties signed after World War I. As a compromise between these alternatives, Austria was a "state which no one wanted."

After 1918 many Austrians identified themselves as being members of a "German nation" based on shared linguistic, cultural, and ethnic characteristics. Since unification with Germany was forbidden, most Austrians regarded their new country as a "second" German state arbitrarily created by the victorious powers. During the troubled interwar period, unification with a democratic Germany was seen by many, not only by those on the political right but across the entire political spectrum, as a solution for Austria's many problems.

Nazi Germany's annexation (Anschluss) of Austria into the Third Reich in March 1938 proved to be an impetus for the development of Austrian national consciousness. Austrians increasingly focused on the historical and cultural differences between Austrian and German traditions--or the uniqueness and singularity of an "Austrian nation"--and on the idea of an independent Austrian state. It is one of those quirks of history that the experience of being "German" in the Third Reich was instrumental in awakening feelings of Austrian nationalism for many Austrians, who, by the end of World War II, wholeheartedly endorsed the idea of Austrian independence from Germany. This idea involved rejecting the concept of one "German linguistic and cultural nation" for the sake of two German-speaking nations: one German and the other Austrian.

The reestablishment of Austrian independence in 1945 set the conditions for the development of a new Austrian national identity. Allied policy, which formulated the reestablishment of an independent Austrian state as a war objective and distinguished between the treatment of Austrians and Germans and the Allied occupation of Austria from 1945 until 1955 contributed to promoting attitudes of national cohesiveness and a desire for independence. After the State Treaty of 1955 arranged for the end of the Allied occupation and a subsequent proclamation of Austria's permanent neutrality, Austrians increasingly identified themselves with their country and saw it as a state with traditions and a history distinct from those of Germany. Although a persistent right-wing minority in Austria continued to insist on "Germanness" as being one of the attributes of being Austrian, ever more Austrians came to identify with the Austrian nation in the decades after World War II. Seventy-nine percent did so by 1990, compared with 47 percent in 1966. In this respect, Austria is a "young nation."

Austria - Population

The demographic history of Austria corresponds to the general changes that have taken place in other industrial nations, but with a number of regional and historical differences. An increasing life expectancy, a declining fertility rate (or a lower birth rate), and a greater concentration of population in urban areas are trends Austria shares with other advanced industrial nations. The cataclysmic events of World War I and World War II, the substantial population movements--both forced and voluntary--during the interwar period and after World War II, the influx of foreign workers starting in the 1960s, and the opening of Eastern Europe beginning in the late 1980s all affected the size and structure of Austria's population.

Between 1900 and 1991, the country's population grew from 6,004,000 to 7,795,800. War deaths and birth deficits during each of the world wars and the consequences of the Great Depression profoundly influenced the development of Austria's population. Approximately 190,000 men were killed in action in World War I. Increased mortality among the civilian population as a result of the hardships of war and the immediate postwar period and extremely low birth rates resulted in a population decrease of 100,000 between the censuses of 1910 and 1923. Postwar immigration of German-speaking and Jewish populations from the successor states of Austria-Hungary to the Republic of Austria and emigration from Austria after the war basically offset each other. Economic and political crises in the 1930s caused 72,000 Austrians to emigrate to non-European countries. The largest contingent of emigrants, 37,000, were from the province of Burgenland and went primarily to the United States, mainly for economic reasons.

After Austria was annexed by Nazi Germany in March 1938, an estimated 130,000 Austrians, the great majority of whom had Jewish origins, emigrated from Austria. More than 65,000 Austrian Jews died in the concentration camps and prisons of the Third Reich; 35,000 non-Jewish Austrians shared a similar fate or were executed after trials. An estimated 250,000 Austrians were killed in action during World War II; 25,000 civilians were killed as a result of bombing or military action in Austria. Some of these losses were offset by Nazi population policies that promoted motherhood and large families for racial reasons.

After the war, Austria became a destination for ethnic Germans, who fled from or were driven out of their homes in Czechoslovakia, Romania, and Yugoslavia. Other refugees and "displaced persons," who were either uprooted by hostilities or victims of the expulsions sanctioned by the Allies and carried out by East European governments immediately after the war, also came to Austria. Between 1945 and 1950, about 400,000 immigrants- -ethnic Germans from Eastern Europe and other non-German speaking refugees--settled in Austria and eventually became Austrian citizens.

The increase of birth rates in Austria during the 1950s corresponded with the trends in most other West European countries. Between 1950 and 1992, the infant mortality rate in Austria dropped from over 61.3 per 1,000 live births to 7.5 per 1,000, an indication of improvements Austrian health authorities had made in prenatal and postnatal care. During the 1960s, Austria experienced an unprecedented population growth related to an increase of births over deaths and a large influx of foreign workers. After the mid-1960s, however, there was a substantial and continuous drop in the fertility and birth rates in Austria, generally referred to as the "pill drop-off." In 1974 this trend was further influenced by the legalization of abortion during the first trimester of pregnancy. Since the mid-1970s, Austria--after Italy and the Federal Republic of Germany (West Germany)--has had the third lowest fertility rate in the world: 1.44 children per woman in 1990, a rate substantially lower than the replacement rate of 2.09.

In the early 1980s, some demographers predicted that the population of Austria would decline from 7.5 million to its 1965 level of 7.25 million by 2010. This scenario was substantially revised when in the mid-1980s Austria's population experienced a spurt of dramatic growth. Projections in 1990 anticipated a net growth of Austria's population by 500,000 to 8 million by 2010. An increase in immigration and the higher fertility rate of foreign workers accounted for the greatest part of Austria's net population growth in the early 1990s.

Within Austria there are substantial variations in regional patterns of population growth among the indigenous population, in contrast to the immigrant or foreign population. After World War II, Austria's eastern provinces--Lower Austria, Vienna, and Burgenland--had lower rates of fertility than the other provinces in the country. Throughout the 1960s and the 1970s, there was a clear "east-west watershed" in population growth. The west had higher rates of fertility, while the east's lower rates of fertility led to a stagnating or declining population. The economic and social reasons for these patterns of development were complex and included the Soviet occupation of eastern Austria from 1945 to 1955 and the depopulation of regions along the Iron Curtain, the traditionally weak economic infrastructure of predominantly rural areas in eastern and southeastern Austria, and the conservatism and deeply rooted Roman Catholicism of western Austria.

In 1970 the average life expectancy was seventy years (sixty for males and seventy-three for females). By 1990 the average life expectancy was almost seventy-six years (seventy-two for males and seventy-nine for females). The increasing life expectancy and the fall in the number of births have meant that Austria's population is aging. One of the major concerns under these circumstances is the burden placed on the Austrian social security system: to what extent will a constant, or shrinking, labor force be able to maintain an increasing number of pensioners?

The overall decline of fertility among Austria's indigenous population is similar to developments in other advanced industrial nations in Europe. The decline is caused by a complex set of factors, including the increased use of contraception and abortion, and the increased employment of women outside the home, and changing values and attitudes toward marriage, family, and childbearing.

Austria's position in Central Europe after World War II--by 1948 about 1,225 kilometers, or 46 percent, of its frontiers were with communist states--and the proclamation of Austrian neutrality in October 1955 made Austria Europe's most important country of east-west transit, transmigration, and the claiming of refugee status. Between 1945 and 1990, approximately 2.6 million people came to Austria as immigrants, transmigrants or refugees. The great majority of them stayed in Austria only for short periods, and some 550,000 used Austria exclusively as a land of transit. Approximately 1.4 million people were transmigrants who lived in Austria before emigrating to other countries or returning to their countries of origin. About 650,000 people, over half of whom were not ethnic Germans or native German speakers, settled permanently in Austria, the great majority of whom became citizens.

Although Austrians traditionally viewed their country as a neutral land of transit and political asylum, they did not see Austria as a land of immigration like the United States, Canada, or Australia. This perception, however, does not correspond to the fact that more than 10 percent of the country's citizens in 1990 had not been born in Austria and that in the early 1990s more than 500,000 legal foreigners, predominantly guest workers, lived in the country.

Waves of immigration were caused by political events in neighboring countries. After the Hungarian Revolution of 1956, for example, over 250,000 Hungarians fled to Austria, 180,000 of whom eventually applied for asylum. In August 1968, after the Warsaw Pact invasion of Czechoslovakia ended the "Prague Spring," 162,000 Czechs and Slovaks fled to Austria. Although the majority of them eventually returned to Czechoslovakia, 12,000 applied for asylum. In Poland the banning of the Solidarity Movement in December 1981 caused between 120,000 and 150,000 Poles to go to Austria, and 33,000 of them applied for asylum. The opening of Hungary's borders during the summer of 1989 breached the Iron Curtain, and 40,000 East Germans used Austria as a land of transit to emigrate to West Germany.

In addition to European immigrants, since 1972 Austria has accepted contingents of asylum seekers from a number of countries--Chile, Argentina, Uganda, Iran, and Afghanistan--under the auspices of international agreements. Austria was also the main land of transit for 250,000 Jewish emigrants from the Soviet Union beginning in 1976 until the advent of direct Soviet immigration to Israel in 1990.

The number of individuals seeking political asylum in Austria rose from fewer than 5,000 in 1982 to more than 27,000 in 1991. Before the Iron Curtain fell at the end of 1989, the granting of political asylum in Austria to refugees was relatively liberal. Once democratic governments were established in the former communist states of Eastern Europe and borders were opened, however, Austria began to pursue a more restrictive asylum policy. A distinction came to be made between political refugees and so-called economic refugees, who sought more lucrative employment or better living conditions. As a result, the number of those seeking asylum fell to 16,200 in 1992.

The number of people seeking to immigrate to Austria had increased so greatly by the early 1990s that the nation's army, the Bundesheer (Federal Army), was called in to assist customs and border authorities in patrolling the country's borders. After the fall of communism, these borders were virtually open for a time. By 1992 as many as 100,000 illegal immigrants were in Austria. In addition, for humanitarian reasons, Austria had accepted well over 50,000 refugees from the former Yugoslavia, who had either fled or were expelled from their homes in the course of hostilities that began in 1991. Most of these refugees were Bosnians.

The presence of a large number of foreign workers in Austria also affected population trends. The size of this group fluctuated according to the state of the country's economy. From the mid-1960s through the early 1970s, a period of rapid domestic economic growth, Austria's domestic labor force was not large enough to satisfy the demands of its growing economy, and foreign workers were brought in to meet the labor shortage. Most were unskilled Yugoslavs and Turks who assumed menial jobs with low salaries. As a result of this influx, the number of foreign workers in Austria increased from fewer than 50,000 in 1965 to some 220,000 in 1974. The recession of the second half of the 1970s and early 1980s had reduced their number to 140,000 by 1984. Periods of growth later in the decade raised it to 264,000 by 1991.

Despite these fluctuations, guest workers and their dependents had become a permanent feature of Austria's population and accounted for 80 percent of the 550,000 legally registered foreign inhabitants in Austria in 1991. The remaining 20 percent consisted of asylum seekers and refugees who had fled from the conflict in the former Yugoslavia.

A shrinking population caused by lower birth rates was Austria's greatest demographic concern in the 1970s and early 1980s. Although the low birth rate among Austria's indigenous German-speaking population continues to be an issue, many Austrians are also concerned about the growing number of foreigners in Austria. To offset the low birth rate, Austria needs a projected net annual growth of approximately 25,000 people per year in order to maintain population at a stable level. Most of this growth will come from foreigners living in Austria or from immigrants.

In the early 1990s, the number of Austrians living and working abroad--approximately 430,000--was somewhat lower than the number of foreigners in Austria. Since the 1950s, West Germany had been the most frequent destination, and in 1990 about 181,000 Austrians resided there, attracted by prospects of better wages and greater career opportunities. In the same year, 29,000 Austrians lived in Switzerland and 10,000 in Italy. The great majority of the remainder lived outside Europe, predominantly in North America and South America. In contrast to foreign workers in Austria, Austrians working abroad frequently were highly skilled and well educated.

The ethnic or national backgrounds of many Austrians reflect the multinational heritage of the Habsburg Empire. During the late nineteenth and early twentieth centuries, a substantial amount of migration occurred within Austria-Hungary to the German-speaking provinces of Austria. Austria's western and Alpine provinces were affected much less by migration because their low levels of industrialization and urbanization offered few employment opportunities. Before 1918 Czech and Jewish migration influenced the composition of Austria's population to the greatest extent, although all the empire's peoples participated in it. The migrants to Austria from other parts of the empire were usually assimilated into German-speaking Austrian society in a generation or two. However, traditional religious prejudices and racist doctrines of the late nineteenth century prevented a full acceptance of Jewish migrants.

The post-World War I peace conferences that established the borders of the Republic of Austria created a relatively homogeneous German-speaking state (95.3 percent of the populace) but left German-speaking minorities in Czechoslovakia and Italy. Although the 3 million German-speaking inhabitants of the borderlands of Bohemia and Moravia had been subjects of the Habsburgs for centuries, their national orientation was German, and it would be not be accurate to see them as an Austrian minority outside of Austria.

The establishment of the Austrian-Italian frontier at the Brenner Pass involved the dismemberment of the province of Tirol and created an Austrian--or, more specifically, German-speaking Tirolean--minority of 200,000 persons in South Tirol that was incorporated into the Italian region of Trentino-Alto Adige. While Italy was controlled by the Fascists (1922-45), Germanspeaking South Tiroleans were subjected to Italinization campaigns, and during World War II they were given the "option" of Italinization or emigration as "settlers" to areas occupied by Nazi Germany.

After World War II, a popular movement in South Tirol agitated for the region to be incorporated into Austria, but the Allies did not support these aspirations. An agreement in 1947 between Italy and Austria provided South Tiroleans with a special autonomous status. The realization of this status became a continuing point of contention that sometimes erupted into violence between South Tiroleans and Italians and caused friction between Vienna and Rome. However, in 1992 political representatives of the German-speaking South Tiroleans and the Italian authorities in Rome succeeded in drafting legislation that is likely to satisfy South Tirolean claims for autonomy as an Italian region.

Within Austria a distinction is made between "official ethnic groups"--Slovenes, Croats, Hungarians, and Czechs and Slovaks-- who are legally defined and recognized as minorities, and other social groups, such as Roma and Sinti (commonly known as Gypsies), Jews, and foreign workers. These other groups do not have a special legal status as "Austrian ethnic groups" but are de facto minorities.

Although Austria was the most homogeneous of the successor states carved out of Austria-Hungary, it had a number of indigenous ethnic and linguistic minorities in the southern and eastern rural borderlands: Slovenes in Carinthia; Croats, Slovaks, and Hungarians in Burgenland. An urban minority of Czechs and Slovaks were also concentrated predominantly in Vienna. These groups accounted for 4.7 percent of Austria's population after World War I.

The Croats represented the largest single official minority in Austria. The Croat enclaves in Burgenland were the result of the Habsburgs' wars with the Ottoman Empire in the sixteenth and seventeenth centuries. The Croats fled north to avoid Turkish subjugation, and after the Habsburgs defeated the Turks, Croats were settled in Burgenland to compensate for the depopulation the wars had caused.

The drafting of the post-World War I frontiers of Burgenland also created Austria's smallest minority. Areas east of the Leitha River historically had been part of the Kingdom of Hungary, although they were predominantly inhabited by German speakers by 1918. Negotiations of the national frontiers between Austria and Hungary led to Burgenland's becoming a province within Austria. Thus, the province's Hungarian population became an Austrian minority.

The Slovenes of southern Carinthia, Austria's second largest ethnic group, were the descendants of the ancient Slavic population that initially inhabited the southern slopes of the Alps and the Drau River Basin. Beginning in the early Middle Ages, these Slavs were displaced by German speakers. After both World War I and World War II, the newly formed state of Yugoslavia had aspirations of incorporating into it the areas of southern Carinthia inhabited by Slovenes. A Yugoslav invasion of Carinthia in 1918 was followed by a plebiscite in the areas in question in 1920 that resolved territorial claims with a clear vote for Austria. Tensions between the Slovene minority and the German-speaking majority in Carinthia increased during World War II because of Nazi racial policies and the military actions in southern Carinthia of Slovene partisans operating under the directions of Marshal Josip Broz Tito's National Liberation Army.

After World War II, neither the Allies nor the Austrian authorities were willing to meet renewed Yugoslav demands to redraw the Austrian-Yugoslav border. A partial response to Yugoslav demands was Article 8 of the State Treaty of 1955, which granted official minority status to the Slovenes in Carinthia and the Croats in Burgenland. Relations between the Slovenes and the German speakers of Carinthia remained strained in the following decades, more than was the case anywhere else in Austria. One reason for this hostility was the persistence of right-wing and German nationalist attitudes among sections of the Germanspeaking population.

The Croats and Hungarians of Burgenland and the Slovenes of Carinthia were usually peasant-farmers located in peripheral regions. The Czechs and Slovaks who still spoke their native languages as first languages, presented a stark contrast to these groups. This minority descended mainly from migrants who left predominantly rural areas of southern Bohemia, Moravia, and Slovakia in the late nineteenth and early twentieth centuries to settle in industrial centers such as Vienna, Graz, Linz, and Steyr, and in areas in northern Styria. There were so many Czech migrants in Vienna that the imperial capital was said to be the "second largest Czech city" after Prague. In these urban and industrial settings, immigrants were soon assimilated.

Austrian censuses use the criterion "language of everyday communication" to determine who belongs to one of the official ethnic groups. The Ethnic Groups Law of 1976 sought to protect and promote the distinct identities of officially recognized minorities and arranged for bilingual education in their languages. Despite such measures, however, all of Austria's officially recognized minority groups have declined markedly in size. Between 1910 and 1980, the number of Croats and Hungarians who declared themselves as members of their respective ethnic groups dropped by 50 percent, the number of Slovenes by 75 percent, and the number of Czechs and Slovaks by 95 percent.

The decline of indigenous minority groups in Austria stemmed from a variety of causes. Part of the decline resulted from pressure to assimilate to German-speaking Austrian culture before and after World War II, as well as from Nazi racial policies in Austria, which distinguished between "superior" and "inferior" races. Assimilation, however, was also caused by the modernization of Austria after World War II through an increase in economic and social mobility that drew younger generations away from traditional ethnic and linguistic enclaves, lifestyles , and identities.

Austria - Other Minorities

Austria contains other minority groups that are not defined as such by law but are perceived as minorities by the general population: Gypsies, Jews, and foreign workers. Gypsies and Jews have been in Austria for centuries, although a sizable number of Jews came to Vienna during the nineteenth century from other parts of the Habsburg Empire. The presence of a large number of foreign workers dates from the 1960s.

Gypsies

Roma and Sinti, or Gypsies as they are generally called, arrived in Austria in the fourteenth century. An eastern, nomadic people, originally from India, they wore colorful clothes, had their own language and customs, and exchanged goods for survival. Men usually either made pots and other brass objects or were musicians, while women told fortunes or sold handmade goods and fruits from their wagons.

A Gypsy's life centered on the family and the larger group, with individual achievement playing an insignificant role. Marriage with a non-Gypsy typically meant exclusion by the community. Disapproval or punishment by the community was a much more serious reprimand to a Gypsy than any legal action by the state.

The attitude of Gypsies toward work and saving differed from that of the majority group in that they generally aimed at earning enough to meet "the needs of the day." When food or money were needed, the Gypsy code permitted as a last resort stealing from wealthier people. Preferring to feel free and unhindered, Gypsies attached little importance to the accumulation of property, choosing instead a life of wandering and bartering. Only later during their time in Austria did they build semipermanent dwellings. Even so, Gypsies preferred to live among themselves on the outskirts of towns and cities.

Because of these habits and attitudes, Gypsies were mistrusted by the Austrian population. Gypsies were seen as lazy, disorderly, and dirty, and regarded as thieves, criminals, and prostitutes. In the eighteenth century, laws were enacted that banned their migrant way of life and established "colonies" for them.

By the late 1930s, an estimated 11,000 Gypsies lived in Austria, predominantly in the province of Burgenland. Because of Nazi racial doctrines, more than half of them were deported to concentration camps during World War II. By the war's end, only an estimated 4,500 Austrian Gypsies survived.

At the beginning of the 1990s, as many as 40,000 Gypsies lived in Austria, mostly centered in the provinces of Vienna and Burgenland. Although they more often speak German than the traditional Romany or Sinti languages, they are by no means assimilated into the larger society. Many Gypsies attend Austrian schools, but their academic performance is below average, and they see schooling as a hindrance to freedom. Young men who have completed apprenticeships are described by their employers as hard-working and honest. They generally do not become long-term employees, however, particularly if they are living away from their families. Young women usually work in factories or as kitchen help.

Austria - Jews

Jews have also lived in Austria for centuries, at times enduring hostility and repression. At other times, the Jewish community has flourished and enjoyed a high degree of tolerance. Joseph II (r. 1780-90) lifted restrictions that had barred them from particular trades and education, and despite widespread prejudice against them, Jews achieved positions of eminence in business, the professions, and the arts in the nineteenth and early twentieth centuries. The Jewish community in Austria expanded greatly in the second half of the nineteenth century when Jews from other parts of the empire came to settle there, mostly in Vienna. Most of these so-called Eastern Jews came from the province of Galicia, an area located in southern present-day Poland and in western present-day Ukraine. The province contained about two-thirds of the Habsburg Empire's Jewish population.

After the Anschluss, the Nazis systematically applied their racial policies to the country's Jews. Approximately 100,000 Austrian Jews managed to emigrate from Austria before World War II began, but more than 65,000 Jews died in concentration camps and prisons of the Third Reich. As a result, Austrian Jewry was virtually annihilated. After World War II, few surviving members of Austria's Jewish community returned to Austria, and Austrian authorities made no concerted official efforts to repatriate them.

As of 1990, only a little more than 7,000 Jews were registered with the Jewish Orthodox Religious Community in Vienna. This figure included recent Jewish immigrants from the Soviet Union and Eastern Europe but excluded Jews who did not declare their religious affiliation. Because the only statistical information on the number of Jews in Austria is available on a confessional basis, accurate figures on the number of Austrians with Jewish backgrounds is not available. It is generally assumed that this group is larger than the officially registered one.

Austria - Foreign Workers

Foreign workers represent the largest de facto minority in Austria, although they frequently are not perceived as such because they are "foreigners" and "guest workers." Their cultural and linguistic characteristics set them off from the indigenous population, however, and make them a distinct minority. Present in substantial numbers since the 1960s, foreign workers have become a permanent feature of Austrian society.

Initially, many guest workers came to Austria without their families and eventually returned to their countries of origin after having saved some money. In this respect, they were similar to "seasonal" laborers. However, the "rotation" of foreign workers--the return of some to their countries of origin offset by the influx of others to take their jobs--was gradually replaced by the permanent settlement of foreign workers and their families.

Foreign workers who had the required residence visa and work permit were entitled to reside permanently in Austria; their documents were generally renewed. In addition, once foreigners had worked and lived continuously in the country for ten years, they could apply for Austrian citizenship. (Under other conditions, such as political asylum, the waiting period for application could be reduced to four years.) Between 1970 and 1990, over 133,000 foreigners became naturalized Austrian citizens, the majority of whom were long-term foreign workers.

The Employment of Foreigners Law passed in 1991 limited the number of foreign workers who could be employed in Austria to 10 percent of the domestic labor force. The Resident Alien Law of 1993 reduced the number of foreign workers, that is, workers from outside the EU and the European Free Trade Association still further--to 9 percent of the total work force of about 3.5 million. As a result of these laws, approximately 300,000 foreigners can work in Austria. Because many of these workers have dependents, Austrian officials assume foreigners could come to constitute approximately 10 percent of the total population.

Citizens from the former Yugoslavia, predominantly Serbs, accounted for approximately 50 percent of the foreign workers in Austria. Turks were the second largest group, making up approximately 20 percent of the foreign work force, followed by Germans at 5 percent. Poles, Czechs, Slovaks, Hungarians, and Romanians made up between 3.5 and 4.0 percent each.

Foreigners usually live in urban and industrial centers, most notably Vienna. Although foreigners accounted for just over 6 percent of the total population in 1990, the foreign population of Vienna increased from 7.4 percent in 1981 to 13.2 percent in 1990. Because of the large number of foreigners living in the capital and the low birth rates of indigenous Austrians, at the beginning of the 1990s one-fourth of the children born in Vienna were foreigners.

Despite their essential contribution to the economy and the fact that they are more law-abiding than the indigenous population, foreign workers are generally not held in high esteem. This prejudice is caused by the low pay and social status of their jobs, their lower level of education, and an often limited ability to speak German. Tensions also arise because of their foreign appearance and customs. Some resentment also stems from the social costs their presence entails. For example, the children of these workers are an additional burden for schools, and there are concerns about how well these children are being educated. Determining the national identities of these children is often difficult because they are not familiar with their parents' homeland yet have the status of "foreigners" in Austria.

The degree or quality of assimilation into the larger society is the most serious problem presented by long-term foreign workers. It is not known whether they will remain a minority or gradually come to be seen as Austrian. Generally speaking, workers from the former Yugoslavia show a greater facility for integration or willingness to assimilate--especially in the second generation--than Turks, whose Islamic beliefs tend to make integration more difficult.

Although the arrival of these foreign workers has promoted the upward mobility of Austria's indigenous lower classes by filling the jobs having the lowest pay and social prestige, a new ethnic lower class has been created. The future social mobility and integration of foreign workers will determine to what extent Austria will have an "imported" racial problem in the future.

Austria - Attitudes Toward Minorities

Although Austria had a negligible Jewish population by the early 1990s, anti-Semitism remains a prejudice among some segments of the population. Social scientists disagree about the reliability of surveys taken during the 1980s, but the consensus among specialists is that between 7 and 12 percent of the population of Austria holds consistently anti-Semitic attitudes and can be considered "hard-core" anti-Semites. Around 25 percent of the populace is mildly anti-Semitic, and approximately 60 percent is neutral or philo-Semitic. Surveys also reveal that anti-Semitic sentiments are more pronounced among older Austrians than younger ones, increase as one moves from the left to the right of the political spectrum, and tend to be more pronounced in rural areas.

Surveys also reveal that there was a decline of explicitly anti-Semitic sentiments among some sections of the Austrian population during the 1980s. The decline could derive from the worldwide controversy surrounding the nomination and election of Kurt Waldheim as Austrian president in 1986 and the public discussions of the fiftieth anniversary of the Nazi Anschluss in 1988. Both events caused a critical reevaluation of the role of Austrians in the Third Reich, as well as an open debate about Austrian anti-Semitism.

The opening of Eastern Europe beginning in 1989 and increased immigration to Austria were events that also influenced the structure of Austrian attitudes, anxieties, and prejudices. The special status Austria enjoyed as a neutral state between the two power blocs gave Austrians a sense of security that disappeared after 1989. It was replaced by the widespread concern in the early 1990s that Austria would be overwhelmed by foreigners as a result of open borders. For example, a survey in 1992 found that 38 percent of those polled believed that the greatest threat facing Austria was its being overrun by eastern refugees. The weakest social groups in Austria, the elderly and the retired, and low-income groups--who had the impression that they were competing with foreign workers--tended to feel most threatened by the changes that accompanied Austria's new position in Europe.

The role of immigration became a very sensitive political issue because of the erroneous but common perception that legal immigrants and foreign workers are a burden instead of a demographic and economic benefit. The influx of illegal or "economic refugees" from the former communist states of Eastern Europe exacerbated the situation. An increase in crime stemming from illegal refugees who entered Austria as "tourists" led to increasingly hostile attitudes toward all foreigners from Eastern Europe, the Balkan Peninsula, and Turkey and the propagation of negative stereotypes. The results of a Gallup poll taken in the fall of 1991 showed strong xenophobic sentiments toward Gypsies, Serbs, Turks, Poles, and Romanians that considerably surpassed anti-Semitic attitudes in Austria. The manner in which Austrians learn to cope with immigration and integration will likely play an important role in domestic politics in the future.

Austria - SOCIAL STRUCTURE

Austrian society was traditionally stratified and had a low degree of social mobility. As a result, social distinctions were clear. Social relations between aristocrats and commoners, masters and servants, large landowners and peasant-farmers, and employers and employees were hierarchical and well defined, and the use of titles as a reflection of rank or social status was important. Austrians born into specific social groups or classes had few opportunities to improve their social and economic standing and identified themselves strongly with their inherited social positions, which were reinforced by education (or the lack thereof), attitudes toward religion, and political convictions.

At the beginning of the nineteenth century, the three predominant social classes in Austria were aristocrats; "citizens" or burghers in towns and cities, who had special charters of rights and privileges; and peasants-farmer--"free farmers" in western Austria who owned and tilled their own land and peasant-serfs in eastern Austria. Reforms had been introduced during the last decades of the eighteenth century to bring about a greater degree of social equality, but legal equality was not established in the Austrian half of Austria-Hungary until the constitution of 1867 was promulgated. Even at the beginning of the twentieth century, society still consisted of a very small upper class composed of an old aristocracy of "blue bloods" and a recently ennobled and new aristocracy of wealth, a small middle and entrepreneurial class (approximately 15 percent), a growing working class (approximately 25 percent), and a class of peasantfarmers (approximately 55 to 60 percent).

During the troubled interwar period, a time of political unrest and economic hardship for most Austrians, the country's main social groups remained rigidly segregated and there was a high degree of identification of specific classes with corresponding political ideologies and worldviews. The resulting "Lager," or "camp," mentality was seen in the embrace of the urban working class of social democracy while the rest of the country became proponents of conservative Roman Catholic Christian politics or, to a much lesser degree, European-style liberalism.

After World War II, however, the structure of Austrian society changed substantially. The white-collar middle class expanded greatly during four decades of unprecedented prosperity. The number of farmers and workers declined as they or their children were able to benefit from the postwar era's social mobility and find better employment. Many low-status jobs were taken by foreign workers from southeastern Europe. An increasingly white-collar service economy reduced the previous social inequalities and blurred traditional class distinctions. Education became the most important vehicle of upward social mobility, and a more open education system made it more available than ever before. Attitudinal barriers to social mobility did not disappear to a corresponding extent, however. Coming from an "established" or older family still played an important role in the social position Austrians were able to assume in society.

The long period of prosperity and social mobility weakened the Lager mentality that had characterized the interwar period. Beginning in the 1980s, electoral patterns indicated that the traditional political allegiances of specific classes to corresponding political parties and ideologies had deteriorated. This relaxation of political ties permitted the formation of new political parties that profited from a growing pool of "floating votes."

Austria - FAMILY LIFE

In the late nineteenth century, large sections of the Austrian population were effectively excluded from the institutions of marriage and family because they lacked the property and income necessary to participate in them. In Alpine and rural communities, for example, property ownership was a traditional prerequisite for marriage that neither day-laborers nor household servants of landowning farmers could meet. Among urban and industrial working classes, poverty was so widespread that it made the establishment of independent households and families difficult.

During the course of the twentieth century, however, marriage and family have become increasingly common, especially after World War II, when the "economic miracle" brought prosperity to nearly everyone. For the first time in Austrian history, there was almost uniform access to these basic social institutions. Because of this, the postwar period up through the 1960s represented a "golden age" of the family in Austria. More than 90 percent of the women born between 1935 and 1945 have married--a percentage higher than any generation before or since. The "twochild family" was considered an ideal.

Beginning in the 1970s, a number of trends appeared that represented a dramatic change in attitudes toward the ideals of marriage and family. There was a sharp drop in the birth rate and a decrease in family size, accompanied by a greater prevalence of people who never married, people who divorce, single-parent families, cohabitating couples, and marriages without children.

In the early 1990s, fewer Austrian women were bearing children--an estimated 20 to 30 percent will never have a child-- and those who have children are bearing fewer. After the end of the "baby boom" of the early 1960s, the Austrian fertility rate dropped steadily from 2.82 to an all-time low of 1.44 in 1989 (then increased marginally to 1.50 by 1991). Family size has shrunk correspondingly. Marriage without children was twice as common in 1990 (32.9 percent) as in the previous generation, and the number of families having three or more children dropped by more than half (to 10.7 percent). Families having one or two children accounted for roughly one-third and one-fourth of families, respectively, in the early 1990s. Large families are most common among farmers, who have a historical and economic tradition of having many children, and among working-class women having little education.

Between 1970 and 1990, the number of single-parent families increased almost five times faster than the traditional twoparent families. In 1990 there were 235,000 single-parent families in Austria, about 15 percent of all families. Nearly 90 percent of single parents were women. Some of these single-parent households resulted from women's conscious choice to bear children without marrying. More often, however, divorce was the cause; more than one-half of single parents were divorced. About one-third of the single parents were unmarried, and about onetenth were widows or widowers.

One of the consequences of these trends was that the average size of an Austrian household dropped from 2.9 in 1971 to 2.6 persons in 1990 and is expected to drop further. Almost 60 percent of the population lived equally divided between one- and two-person households in 1990. A large number of single-person households result from women's long life expectancy, which causes them to outlive their spouses.

The frequency of marriage has also declined since the 1960s. Of the women born in the late 1930s, only 8 percent remained single, compared with an estimated 25 percent of women born in the 1960s. One reason for the rise in the unmarried population is the increasing number of educated women who have professional and economic alternatives to traditional wife-mother roles. Another reason for the smaller number of marriages is that cohabitation without marriage has become more frequent and socially acceptable.

Austrians are also marrying later. In 1991 the mean age of marriage was 25.6 years for women and 28.0 years for men, an increase over earlier decades. In 1981 about 59 percent of women and 82 percent of men were single between the ages of twenty and twenty-five, compared with 70 percent and almost 90 percent, respectively, at the end of the decade. For those between twentyfive and thirty years of age, the figures showed a similar rise in the numbers of the unmarried--33 percent of women and over 50 percent of men were still single at the end of the decade, compared with 25 percent and 40 percent, respectively, in 1981.

The declining number of marriages is accompanied by an increased frequency of divorce. The divorce rate in Austria increased from 15 percent in the early 1960s to more than 33 percent in the early 1990s. Divorce granted on the basis of "no fault" or mutual consent became legal in Austria in the early 1980s. The divorce rate was highest in Vienna and lowest in Tirol, an indication that traditional and religious values are least binding in urban areas and more persistent in a traditional Alpine setting. Women who are employed outside of the home and have their own sources of income demonstrate a greater readiness to divorce than "traditional wives."

More than one-third of all divorces in Austria occur within the first five years of marriage; thereafter, the frequency of divorce decreases with the length of marriage. In a survey in the early 1990s, more than one-half of people polled identified extramarital sex, selfishness, and inflexibility as the primary causes of divorce.

Illegitimacy has also become more frequent. Beginning in the 1960s, the percentage of illegitimate births increased steadily, from 11.5 percent in 1965 to 25 percent in 1991. For first-born children, the rate was over 33 percent. These figures reflect tolerant attitudes toward illegitimacy in many regions in the Alps where illegitimate children were a traditional aspect of the Alpine agrarian way of life. Wage-laborers and servants within the households of landowning farmers frequently were unable to marry, but their offspring enjoyed a high degree of social acceptance because illegitimacy was common and provided the landowners with the next generation of laborers. Although the traditional agrarian structure of these regions has changed considerably, the tolerance of illegitimacy remains. In other parts of Austria not having comparable traditions, illegitimate birth is not stigmatized to the same extent as it was earlier. More than half of the illegitimate births in Austria are legalized by marriage, and the great majority of second- and third-born children are legitimate. The fact that the social welfare system provides more extensive benefits for single mothers than for married ones also can be interpreted as a financial incentive for initial illegitimacy in some cases.

These changes in Austrian life-style patterns are viewed by some Austrians with great apprehension, and they interpret the increasing rate of illegitimacy, cohabitating, single-parenting, divorcing, and decreasing birth rate as a reflection of a crisis for the traditional religious and social values on which the family is based. However, the diversification of life-styles also can be interpreted as an inevitable consequence of the modernization of a traditional society, as well as part of the development of a more pluralistic society within which no particular life-style enjoys a position of predominance.

Austria - Status of Women

A patriarchal family structure based on a traditional genderspecific division of labor characterizes attitudes toward marriage and family. By the early 1990s, however, a greater emphasis on marriage as a partnership had become more common among the younger generation, especially among the urban middle class. A 1976 law establishes the principle of equal rights and duties for married men and women, as well as equal rights and responsibilities for caring for children.

The Equal Treatment Law of 1979 makes various forms of discrimination against women illegal. Amended a number of times since it was first passed, the law seeks to establish equal rights for women, especially in the workplace. It posits, for example, the principle of equal pay for equal qualifications and sets up commissions for the arbitration of complaints and violations related to pay, promotion, and sexual discrimination and harassment. The Women's Omnibus Law, which went into effect in 1993, is a further measure to reduce discrimination against women. One of the its goals is increasing the employment of women in government agencies in which they make up less than 40 percent of the staff. The law also directs that women who have been denied promotions because of their gender or have suffered sexual harassment receive compensation.

The Austrian concept of "equal treatment" differs substantially from the United States idea of "equal rights." Austrian legislation not only aims at establishing equality in realms where there is discrimination against women, but it also attempts to provide women with additional benefits related to the inequities inherent in the gender-specific division of labor. Thus, it tries to establish benefits to compensate for "unpaid work" in the household, the dual burden of employment and childrearing many women bear, and single parenting. In other words, "equal treatment" involves interpreting equality literally in some spheres and attempting to compensate for the gender-specific inequality of burdens in others.

Despite the improvement of the legal position of women in Austria since the mid-1970s, traditional role models prevail. Whether women are employed outside the home or not, many Austrian men consider the great majority of housework and child-rearing tasks to be "women's work." For example, 80 percent of the married women surveyed at the end of the 1980s were solely responsible for laundry, 66 percent for cooking, and 51 percent for cleaning. Almost 20 percent of Austrian men do no household tasks. However, 75 percent of married men assume responsibility for shopping and other activities outside the home, a reflection of the division of labor in the traditional family between work inside and outside the home.

Although education is the primary determinant of income in Austria, a person's gender also plays a role. At the end of the 1980s, the average monthly net income for an employed woman was S12,858, or S11,161 for a blue-collar worker and S14,790 for a white-collar employee. The average monthly net income for an employed man was S19,175, or S17,522 for a blue-collar worker and S24,734 for a whitecollar employee. The pay differentials between men and women are lowest for those employed as civil servants (8 percent), compared with the private sector, where a range of 20 to 40 percent for blue-collar workers and white-collar employees prevails. Although sex discrimination is responsible for some of the male-female salary differentials, men traditionally are better trained than women. More women in the labor force are unskilled workers than are men: 38 percent of women versus; 25 percent for men. Additional vocational training is much more common among men than among women: 50 percent for men versus 28 percent for women.

Highly educated women are more likely to be employed than those with less education. Around 84 percent of women between the ages of thirty and fifty-five having university degrees are employed, compared with only 53 percent of women who have been in school for only the required nine years. The number of men and women in the labor force who have completed secondary or university educations is approximately the same: 10 and 7 percent, respectively. Nevertheless, equal qualifications among men and women are not a guarantee of equal advancement in professions. For example, at the end of the 1980s only 16 percent of women having university or advanced degrees held leading positions as salaried employees or civil servants. Thus, despite the improvement of the legal status of women, the income differential between men and women has not decreased considerably since the early 1980s, and the implementation of equal rights legislation has proved difficult in practice.

Austria - RELIGION

During the Roman Catholic Counter-Reformation of the sixteenth and seventeenth centuries, the Habsburgs were the leading political representatives of Roman Catholicism in its conflict with the Protestantism of the Protestant Reformation in Central Europe, and ever since then, Austria has been a predominantly Roman Catholic country. Because of its multinational heritage, however, the Habsburg Empire was religiously heterodox and included the ancestors of many of Austria's contemporary smaller denominational groups. The empire's tradition of religious tolerance derived from the enlightened absolutism of the late eighteenth century. Religious freedom was later anchored in Austria-Hungary's constitution of 1867. After the eighteenth century, twelve religious communities came to be officially recognized by the state in Austria: Roman Catholic; Protestant (Lutheran and Calvin); Greek, Serbian, Romanian, Russian, and Bulgarian Orthodox; Jewish; Muslim; Old Catholic; and, more recently, Methodist and Mormon.

The presence of other communities within the empire did not prevent the relationship between the Austrian imperial state and the Roman Catholic Church--or the "throne and the altar"--from being particularly close before 1918. Because of this closeness, the representatives of secular ideologies--liberals and socialists--sought to reduce the influence of the Roman Catholic Church in such public areas as education.

A relatively complicated series of treaties (or concordats) between the Republic of Austria and the Vatican defined the role and status of the Roman Catholic Church. After 1918 the Roman Catholic Church maintained considerable influence in public life. For example, many members of the church hierarchy explicitly supported the Christian Social Party (Christlichsoziale Partei-- CSP). Members of the Social Democratic Workers' Party (Sozialdemokratische Arbeiterpartei--SDAP) responded to this partisanship in the interwar period by being explicitly anticlerical. Some Roman Catholics were committed to a form of "political Catholicism," which was anti-Liberal and anti-SDAP. Because of these sympathies, they supported the authoritarian regime that erected a one-party "Christian Corporate State" in 1934.

After the Anschluss in 1938, the Roman Catholic Church initially pursued a policy of accommodation with the National Socialist German Workers' Party (National-Sozialistische Deutsche Arbeiterpartei--NSDAP, or Nazi Party), but by 1939 it began to assume an oppositional stance. In the decades after World War II, the Roman Catholic Church abstained from publicly and actively supporting any one political party. An exception to this restraint was the church's involvement in the controversy surrounding the legalization of abortion in Austria in the early 1970s. For its part, the Socialist Party of Austria (Sozialistische Partei �sterreichs--SP�) developed more accommodating attitudes toward the Roman Catholic Church than were common before World War II.

According to the 1991 census, a majority of Austrians (77.9 percent) belonged to the Roman Catholic Church. This is a decline from the 1971 figure of 87.2 percent. The number of Protestants also declined in the same period. The number of Lutherans, or members of the Augsburg Confession, declined from 5.7 percent in 1971 to 4.8 percent in 1991 according to the census, and Calvinists, or members of the Helvetic Confession, declined from 0.3 percent to 0.2 percent in the same years.

In 1938 the Jewish population of Austria numbered more than 200,000, most of whom lived in Vienna. After the Anschluss, the community was almost wiped out by emigration and the Holocaust. By 1990 the community amounted to about 7,000 and consisted largely of postwar immigrants instead of Austrian-born Jews.

Owing to the influx of foreign workers from Turkey and the former Yugoslavia, the Islamic and Serbian Orthodox communities experienced considerable growth in Austria in the 1970s and the 1980s. However, many of these foreign workers do not officially register with their respective religious organizations, and accurate information about the size of these communities is not available.

The influence of the Roman Catholic Church, although still formidable because of its historical position in Austrian society and network of lay organizations, receded in the postwar period. The form of nominal Roman Catholicism many Austrians practice is called "baptismal certificate Catholicism." In other words, most Roman Catholics observe traditional religious holidays, such as Christmas and Easter, and rely on the church to celebrate rites of passage, such as baptisms, confirmations, weddings, and funerals, but do not participate actively in parish life or follow the teachings of the Roman Catholic Church on central issues. This trend can be seen in the low rate of regular church attendance (less than one-third of Catholics) and the high rates of divorce and abortion in the 1980s and early 1990s.

Within Austria there are regional patterns of religious conviction. Generally, provinces with strong conservative and agricultural traditions, such as Tirol and Vorarlberg, followed by Lower Austria and Burgenland, have higher percentages of Roman Catholics than the national average, and parish churches still fulfill a social function in many smaller communities. Religious affiliation is lower in urban centers, however, and Vienna has the lowest percentage of any Austrian province.

The decline in the number of Austrians professing religious affiliation and the increase in the number who have no religious affiliation--4.3 percent in 1971 and 8.6 percent in 1991--may be interpreted as an increase in the secularization of Austrian society. Renouncing church membership and being without religious affiliation was one of the anticlerical, historical traditions of the SP�. In general, Austrians without religious affiliation tend to be associated with the SP�, whereas "active" Catholics tend to be connected to conservative parties and hold conservative political views.

The increase in the number of Austrians without religious affiliation should not be interpreted as an exclusively political gesture, however. Recognized religious organizations in Austria finance themselves by "taxing" their members directly with a socalled church tax, which amounts to approximately 1 percent of their income. Austrians who do not actively participate in their religious communities frequently officially withdraw from them in order to avoid paying this tax.

Austria - EDUCATION

Austria has a free and public school system, and nine years of education are mandatory. Schools offer a series of vocational- technical and university preparatory tracks involving one to three additional years of education beyond the minimum mandatory level. The legal basis for primary and secondary education in Austria is the School Law of 1962. The federal Ministry for Education is responsible for funding and supervising primary and secondary education, which is administered on the provincial level by the authorities of the respective provinces.

The country's university system is also free. The General Law for University Education of 1966 and the University Organization Law of 1975 provide the legal framework for tertiary education, and the federal Ministry for Science and Research funds and oversees education at the university level. Twelve universities and six academies of music and art enjoy a high degree of autonomy and offer a full spectrum of degree programs. Established in 1365, the University of Vienna is Austria's oldest and largest university.

Federal legislation played a prominent role in the education system, and laws dealing with education effectively have a constitutional status because they can be passed or amended only by a two-thirds majority in parliament. For this reason, agreement between the �VP and the SP� is needed to pass or amend legislation relating to education.

Private schools that provide primary and secondary education and some teacher training are run mainly by the Roman Catholic Church and account for approximately 10 percent of the 6,800 schools and 120,000 teachers. Roman Catholic schools have a reputation for more discipline and rigor than public institutions, and some are considered elite institutions. Because there is no tradition of private university education in Austria, the state has a virtual monopoly on higher education.

The history of the Austrian education system since World War II may be characterized as an attempt to transform higher education from a traditional entitlement of the upper social classes to an equal opportunity for all social classes. Before the School Law of 1962, Austria had a "two-track" education system. After four years of compulsory primary education from the ages of six to ten in the elementary school, or Volksschule (pl., Volksschulen), children and their parents had to choose between the compulsory secondary level for eleven- to fourteen-year-olds called the middle school, or Hauptschule (pl., Hauptschulen), or the first four years of an eight-year university preparatory track at higher schools of general education (Allgemeinbildende H�here Schulen-- AHS). AHS is an umbrella term used to describe institutions providing different fields of specialization that grant the diploma (Reifepr�fung or Matura) needed to enter university.

Before the 1962 reform, the great majority of children--more than 90 percent--attended the compulsory Hauptschule, where they were divided according to their performance in elementary school into two groups: an "A group," which was directed toward two- to four-year vocational-technical training schools after graduation from the Hauptschule; and a "B group," which was required to complete one additional year of compulsory education before entrance into apprenticeship programs or the work force. The remaining elementary-school graduates-- less than 10 percent--enrolled in the AHS at age eleven. Children attending these university-track schools also had to choose a specific course of study.

The rigidity of the two-track system required that the most important educational decision in a child's life--with all of he implications it had for the future--be made at the age of ten. The decision depended to a great extent on the parents' background, income, and social status. Children from agricultural backgrounds or of urban working-class parents generally attended the Volkschule and the Hauptschule and then entered the work force. Children having lower-middle-class backgrounds frequently received vocational-technical training after the Hauptschule, while children from the upper-middle and upper classes, boys in particular, attended the AHS, which gave them access to university-level education.

The early selection process meant that children of the largest segment of the population, farmers and workers, were grossly underrepresented at higher schools and universities, whereas the children of a relatively small segment of the population, those who had attended higher schools or the universities, were overrepresented. Consequently, the education system tended to reproduce or to reinforce traditional social structures instead of being a vehicle of opportunity or social mobility.

The School Law of 1962 and subsequent amendments require that all state-funded schools be open to children regardless of birth, gender, race, status, class, language, or religion. The law also attempts to introduce more flexibility into the traditional two- track system and to provide students with a greater degree of latitude within it so that educational (and hence career) decisions can be made at an older age. Although the primary and secondary school system continues to be fundamentally based on the two-track idea, after a series of reforms in the 1970s and 1980s, ten- to fourteen-year-olds are no longer streamed into A and B groups in the Hauptschule. Graduates of this kind of school also have the opportunity to cross over into certain branches of the AHS track at the age of fourteen or to attend a series of different "higher vocational-technical schools" (Berufsbildende H�here Schulen and H�here Technische Lehranstalten), which have five-year programs of specialization.

Shifts in enrollment patterns reflect these changes in the school system. In the mid-1960s, less than 10 percent of all students finished the university preparatory AHS track, and more than 66 percent of them were male. By the early 1990s, more than 30 percent of all students finished the AHS track and just above 50 percent of them were female. Furthermore, a second educational path was developed that permitted some students without a diploma from the university-track AHS to enroll in a university.

As a general rule, the quality of Hauptschule education is high especially in rural areas and small communities where the schools have maintained their traditional social importance and where attendance at an AHS involves commuting considerable distances, or, for the inhabitants of more remote areas, boarding. In urban centers with a full spectrum of educational opportunities, the Hauptschule has become less popular, and parents who earlier would not have enrolled their children in an AHS have begun doing so. The increased enrollments have overburdened the AHS and created a shortage of students at the Hauptschulen and at vocational-technical schools.

In some areas, this trend has been strengthened by the number of children of foreign workers in the compulsory schools. In 1991, for example, almost 30 percent of school-age children in Vienna were the children of foreign workers. In some districts of the city, these children exceeded 70 percent. Although the children of long-term foreign workers frequently speak German well, the numbers of classes in which students with inadequate mastery of German are overrepresented has overburdened the Hauptschule system and made it a less desirable alternative than in the past. Therefore, special remedial and intercultural programs are being developed so that the compulsory school system in Austria can continue to fulfill its educational and social roles.

The SP� has continued to press for further reforms of the school system. It argued for an abolition of the two-track system for ten- to fourteen-year-olds and for combining the Hauptschule and the first four years of the AHS into a new comprehensive middle school. As of 1993, however, because of the resistance of other political parties, this alternative has been limited to a number of experimental schools.

As a result of the reforms since the 1960s, the university system has changed from one serving the elite to one serving the masses. The increasing number of students at Austrian universities reflects the liberalization of educational policy at secondary and higher levels. Between the 1955-56 and 1991-92 academic years, the number of students enrolled in institutions of higher education increased from about 19,000 to more than 200,000. The number of students beginning university-level education after having completed the AHS program also increased and amounted to 85 percent in 1990, compared with 60 percent in the mid-1960s.

The reforms have also meant that university education ceased to be a male privilege. Between the 1960-61 and 1991-92 academic years, the number of female students enrolling in universities rose from 23 to 44 percent. Yet, although women account for almost half of the students at university level, only 2 percent of the professors at institutions of higher learning were women in 1990.

Despite the increase in the numbers of university students and the greater presence of women, universities remain primarily the domain of middle- and higher-income groups. The number of students with working-class backgrounds has doubled from 7 to 14 percent, and the number of these with agricultural backgrounds increased from less than 2 percent to more than 4 percent between 1960 and 1990. But children of white-collar workers, civil servants, and the self-employed accounted for more than 80 percent of enrollments at Austrian institutions of higher education in the early 1990s.

Increased accessibility to university-level education has a number of consequences. The dramatic expansion in the number of students led to overcrowding at many institutions. Some critics maintain that the increasing number of students diminishes the overall quality of university-level education despite increases in federal investment. One obvious problem was that more than 50 percent of students enrolled at the universities in the 1980s did not successfully complete a degree program. Complex reasons account for this high drop-out rate. Some students enroll simply to acquire student benefits. Others study for the sake of personal enrichment without intending to get a degree. Some are unable to complete their studies for financial reasons. Although a university degree provides students with a substantial amount of social status and better income opportunities, there has been an increase in "academic unemployment," especially among degree- holders in the humanities and social sciences.

Debates about educational policy in Austria frequently are the result of different perspectives related to the strengths and weaknesses of the traditional education system. Proponents of the two-track secondary system, for example, defend it as performance oriented and criticize the leveling of achievement or lowering of standards the introduction of one compulsory middle school would involve. Conversely, opponents of the two-track system criticize its rigidity and inherent absence of equal opportunity. Consequently, such bipolar terms as performance and leveling, elite and mass education, and achievement and equal opportunity prevail in educational debates. In some respects, Austrians of different political and educational policy persuasions may expect too many different things from one university system. They expect it to provide general education, as do state university systems in the United States, and "Ivy League" performance at the same time.

Austria - SOCIAL SECURITY

The origins of the contemporary Austrian social security system date back to the end of the nineteenth century, when rudimentary forms of social security were introduced for specific occupational groups. Workers, employees, civil servants, farmers, and the self-employed each paid into a different social security plan. Workers and employees in Vienna, for example, paid into a different social security fund than did civil servants in Vienna or farmers in Tirol. The main thrust in the development of the country's social security system in the twentieth century has been the creation of a unified social insurance policy for all occupational groups.

The organization of the social security system is complex. The General Social Insurance Act of 1955, which has been repeatedly amended, sets social security policy and makes decisions on deciding such matters as the level of social security payments and the kind and extent of benefits. However, tax revenues are collected and benefits are dispersed by individual insurance agencies or "carriers" for specific occupational groups. In this respect, the social security system is a national plan in terms of federal legislation but is not centrally funded or administered.

The extent of social security coverage and the number of benefits increased in Austria steadily from the end of World War II until the early 1980s. As a result, Austria was among the most highly developed welfare states in the world and had a complicated system of direct taxes on employers and employees and indirect taxes that financed a broad spectrum of benefits.

After the early 1980s, social policy entered a phase of consolidation characterized by difficulties related to funding extensive social security programs, growing levels of unemployment, stagnating economic growth, increasing budget deficits, and demographics of an aging population. However, as of 1993, Austria had managed to maintain its high level of social security without major reductions in benefits.

As of the early 1990s, the standard work week in Austria was forty hours, although some occupational groups have negotiated a thirty-eight and one-half hour week. Minimum wages and salaries are negotiated by trade unions and the representative bodies of employers, and individual professional groups negotiate increases in wages, salaries, or benefits on the basis of collective bargaining. Salaries are paid fourteen times a year, and two special payments, usually on June 1 and December 1, are taxed at lower rates than regular salaries. In addition, Austrians are entitled to five weeks of paid vacation annually.

All people gainfully employed, employees as well as the selfemployed , are subject to compulsory insurance, which includes unemployment, disability, retirement, and provisions for surviving dependents. The right to draw unemployment is contingent on having worked for at least one year. Unemployment benefits range from 50 to 70 percent of the recipient's previous net pay and are limited to a period of seven months. After this period expires, the unemployed can qualify for a series of different support programs depending on need.

As of the early 1990s, the legal retirement age was sixtyfive years for men and sixty years for women. However, only 10 percent of men and 50 percent of women actually work until those ages because they may qualify for disability pensions or take advantage of provisions that allow contributors to retire after paying into a pension fund for thirty-five years. Retirement pensions are generally calculated on the basis of the level of income during the last ten years of payment and the overall length of the period of contribution. For example, if a person's "full working life" is forty-five years, he or she receives a pension equivalent to about 80 percent of his or her previous net income, which is adjusted on a regular basis to compensate for subsequent increases in the cost of living. A widow receives 60 percent of her late husband's pension.

More than two-thirds of the expenditures for pensions are directly covered by payments of employers and employees into pension funds, and the balance is funded by the federal budget. However, given Austria's liberal early retirement practices and demographic trends, the ratio between the active work force and retired persons in Austria is deteriorating and could reach 1:1 by the year 2020. Because of this trend, experts recognize that a reform of the pension system is inevitable, and the financing of social security benefits, which were introduced under fortuitous conditions of economic and demographic growth in the 1960s and 1970s, is becoming an increasingly pressing issue. A reduction of the level of benefits or the introduction of a "flat-rate" pension, which does not take previous salary and contribution differentials into account, are two possible alternatives.

Austria - Health and Health Insurance

In the late 1980s and early 1990s, the most common causes of death were cardiovascular diseases, followed by cancer. Accidents were the next most common causes of deaths in males. Respiratory diseases and liver problems were also significant causes of deaths.

The traditional Austrian diet is high in fats, carbohydrates, and sugar. Smoking is common--20 percent of women and 40 percent of men smoke. Most adults regularly consume alcohol, in particular beer and wine. An estimated 250,000 Austrians are alcoholics, and the incidence of alcoholism is twice as high among men as it is among women. As a result of these unhealthy habits, the incidences of cardiovascular diseases and cirrhosis of the liver are among the highest in Western Europe.

Beginning in the mid-1980s, Austrian health authorities attempted to make the general public more aware of the dangers of cholesterol, smoking, and alcohol. The government introduced a program of preventive check-ups under the auspices of various health insurance plans. As of 1990, however, only negligible inroads had been made into traditional patterns of consumption, which were more pronounced among men than women and contributed to the higher incidence of fatal disease and the lower life expectancy of men in Austria.

Austria ranks behind Hungary and Finland as a country with one of the highest suicide rates in Europe. Although some psychologists attribute the high rate to the national psyche-- such as an inability to openly carry out conflicts or the tendency to direct aggression toward oneself--there is no generally accepted explanation for this phenomenon. As elsewhere, men in Austria are almost three times more prone than women to commit suicide.

Public health authorities have had to deal with the spread of acquired immune deficiency syndrome (AIDS) since 1983, when the first cases were noted. As of mid-1993, slightly more than 600 Austrians had died of AIDS. The number of those infected with the human immunodeficiency virus (HIV) was not known at that time, but estimates range between 8,000 and 14,000.

By 1990 state-required health insurance covered 99 percent of the population in Austria. Austrians also are required to pay into compulsory health insurance plans, which are similar to pension plans and are funded by employer and employee groups organized by professions. Foreign workers also are covered by these programs. Active employees and the self-employed, their dependents, the retired, and the socially disadvantaged qualify for medical coverage that includes out-patient treatment, medication, some dental work, surgery, and hospitalization in the so-called general class (general wards as opposed to private rooms). With the exception of minimal flat-rate charges for filling prescriptions and 10 percent of the overall charge for the hospitalization of dependents, out-patient and in-patient treatment is free for individuals covered by the health insurance plans.

Out-patient treatment is almost exclusively handled by physicians who have contracts with specific insurance agencies, and patients are free to seek the physician of their choice provided the physician has a contract with the patients' respective insurance agency. Although many physicians are in private practice, the great majority of them rely on these contracts--which regulate fees for services rendered--to generate the income they need to maintain their practices. This arrangement means that Austrian medicine is not "socialized" in the sense that physicians are employees of the state. However, the system is similar to a national health plan insofar as fees are regulated, and there is an exceptionally high degree of coverage for the population at large. A drawback to this system is that because physicians are free to establish their practices wherever they choose, medical coverage is poorer in rural areas than in urban centers.

Austria - Family Benefits

Austria maintains an extensive support scheme for families. For example, it is illegal for pregnant women to work eight weeks before their due date and eight weeks after their delivery, and they receive their full net pay during this period. Parents of newborns can take two years of maternity or paternity leave or split the leave time between both parents. They receive a monthly support payment of S5,100 (S7,500 for single mothers or lowincome couples) during that time. Employers also are required to rehire them in positions of equal pay and status after the leave period is over. Special payments totaling S15,000 are made for all children between birth and their fourth birthday. In addition, all mothers receive a monthly child-maintenance allowance of S1,400 for children up to age ten, at which time the allowance is increased to S1,650 for children up to age twentyone if the child is living at home, in school, or unemployed. These payments increase to S1,950 and are made for children up to age twenty-seven if the child is attending vocational training or enrolled in a university program.

Special provisions exist for single-parent and large lowincome families. Single mothers and low-income families having more than two children are most likely to be confronted with severe economic hardship, and benefits for many members of these groups need to be improved to prevent them from slipping below the poverty level. However, the policy of providing higher benefits for unwed mothers is controversial. Because unwed mothers who cohabit with their partners receive the same benefits as single mothers, the higher benefits for single mothers create a financial incentive that can encourage illegitimacy. Married couples with children are eligible for fewer benefits and view themselves as disadvantaged in comparison with unwed, cohabiting parents.

Austria - HOUSING

After World War II, Austria's standard of housing was low, a reflection of the historically low quality of urban and rural housing, the poor economic development of Austria in the interwar period, and the destruction during World War II. Overcrowding was widespread, especially in urban centers and among the working classes, and many living units did not have such modern conveniences as running water, toilets, bathing facilities, or central heating. In 1951, for example, only one-third of the country's living units had running water; less than 31 percent had a toilet on the premises; and only 11 percent had bathing facilities. Stoves using coal, oil, or wood as fuel were the most common forms of heating.

Since then, however, Austrian housing has improved considerably. The number of living units has increased by 53 percent, although the population grew by just over 10 percent, and almost all of the living units built since 1945 have all modern conveniences. Furthermore, improvements have been made in many of the living units built before World War II, although there remains a clear gap between the overall standards of old and new buildings. Seriously substandard housing--living units with running water, but without toilets or bathing facilities on the premises--has been reduced to less than 10 percent of the total. Most of this housing is found in cities. Low-income groups, such as the elderly, unskilled workers, and foreign workers, are the most frequent inhabitants of substandard housing.

As of the early 1990s, just over 55 percent of all Austrians owned their own homes or apartments, either as private individuals or under the auspices of ownership cooperatives. The rate of home ownership is higher in rural areas than in urban areas and higher in western and central Austria than in the east. In urban areas, apartment houses are much more common than single-family dwellings. Renting is more common in cities and in eastern Austria. Renters have considerable legal rights that make the termination of leases difficult and that provide for the regulation of rents. The building and ownership of apartment buildings by the municipal government is common in cities, such as Vienna, which traditionally have social democratic municipal governments.

By 1990 almost 10 percent of Austrians had a "second residence," used predominantly for recreational purposes. These second homes range from garden plots with huts (Schrebergarten), located on the outskirts of the cities, to old houses in rural communities and newly built one-family houses in the country.

At the beginning of the 1990s, around 25 percent of an average Austrian household's expenditures were for housing (mortgage or rent and utilities). Another 25 percent went for food (including alcohol and tobacco), and a further 16 percent was spent on transportation (including automobile payments). About 9 percent was spent on furnishings, 11 percent for clothing, education, or recreation, and the remainder for miscellaneous activities.

No scholarly work in English treats Austrian society as a whole. John Fitzmaurice's Austrian Politics and Society Today examines the development and roles of Austria's most important sociopolitical organizations. Although they are somewhat dated, a number of chapters from Modern Austria, edited by Kurt Steiner, are good historical and in-depth introductions to various aspects of Austrian society. Specific chapters in Austria: A Study in Modern Achievement, edited by Jim Sweeney and Josef Weidenholzer, offer a less detailed but more current analysis of many facets of Austrian society. Lonnie Johnson's Introducing Austria provides readers with some general insights into the dynamics of the development of Austrian society as a whole.

The Austrian government is responsible for a range of informative publications. The Federal Press Service's small book Austria: Facts and Figures is a good overview of the country's society, economy, and politics. The service also publishes a series of brochures in English and German that deal with specific aspects of Austrian society such as immigration, religion, education, and social security. These publications are available from Austrian embassies, consulates, and cultural institutes around the world. The annually revised Survey of the Austrian Economy from the government's Austrian Museum for Economic and Social Affairs in Vienna contains some social data. Scholarly publications in German from the �sterreichisches Statistisches Zentralamt contain much information about Austrian society. Particularly valuable are Sozialstatistische Daten and Statistisches Jahrbuch f�r die Republik �sterreich, both of which appear on a regular basis.

Austria - The Economy

THE AUSTRIAN ECONOMY MIGHT best be characterized by the old German phrase klein aber fein, or--in the loose English equivalent--"small but beautiful." Austria is a small European country in terms of gross domestic product, area, and population. Yet, since the end of World War II, it has achieved a remarkable record of growth, even when international conditions have not been at their most favorable. Austria has done this by concentrating on manufacturing the products of the second industrial revolution--such as high-quality machine tools, chemicals, and other producer goods--and exporting them largely to the countries of Western Europe, especially Germany.

Austria has achieved considerable autonomy in many important economic areas. It is almost self-sufficient in food production, largely through careful development and husbanding of resources and through an extensive program of subsidies. Judiciously planned exploitation of the hydroelectric power-generating capacity of the Alps has lessened the country's dependence on imported fossile fuels. Austria has also been able to train an efficient and dedicated work force, although it has come to rely on foreign workers for some essential tasks.

Austria nonetheless remains fully engaged in the European and global economic environment. It must import fuels--especially oil, coal, and gas--and certain industrial raw materials and as a result has a consistent trade deficit. But, because the country is one of the most attractive states in Europe to foreign tourists, Austria is generally able to keep its current account in balance.

The Austrian government has long recognized that the country and the economy cannot function without trade and without access to other markets and sources. Therefore, Austria has always wanted to join customs unions and free-trade areas. It was a founding member of the European Free Trade Association (EFTA). Because it could not join the European Community (EC) owing to its pledge of political neutrality, it helped form the European Economic Area, out of the EC and the EFTA, in late 1992. In 1989 it had applied to join the EC and is regarded as a prime candidate for admission into the organization, known since late 1993 as the European Union (EU), in 1995.

Austria saw many opportunities opening to the East as the Iron Curtain fell and as the former communist economies turned to the West for trade and guidance. As a result, Austria ranks among the top Western nations in opening joint ventures with East European states and has made a variety of trade agreements with those states as well as with the states that had declared their independence from what was Yugoslavia. Some of the links that Austria established and reestablished antedated World War I and thus offer a potential for the re-creation of historical financial and commercial links.

Since the end of World War II, the Austrian economy has functioned in a comfortable niche among the smaller West European states. It has been sheltered from intense international competition because it is only a small market, although the of many Austrian goods is higher than international prices. The Austrian system of economic and social consensus, characterized by the term social partnership, has functioned effectively to permit a high standard of living for its citizens and especially for its labor force. The chambers of commerce, and agriculture, and labor, together with the trade unions, have joined and supported a considerable framework of institutions and regulations that make Austria a model for relations between public and private institutions.

Despite its carefully designed and effectively functioning system, the economy has not been immune to external realities. It was severely buffeted by the "oil shocks" of the 1970s and by the sharp global recession at the beginning of the 1980s. The accumulation of public-sector deficits imposed a heavy burden of debt service on the economy. Austria's recovery from that recession did not fully begin until the mid-1980s, although the recovery advanced smoothly after that and accelerated during the late 1980s before the economy suffered another recession beginning in 1990.

With the end of the Cold War and the consolidation of Europe, the economy faces the problems of greater exposure to outside influences and potential outside competition. As this opening occurs, the Austrian economy also must cope with the potential buffeting arising from the EU adoption of the Maastricht Treaty as well as with other pressures resulting from developments since the ending of the division of Europe. The Maastricht Treaty's provision for a common European currency could compel West European countries and central banks to pursue more cautions fiscal policies and more restrictive monetary policies than in the past. Although the Austrian government and the central bank have long pursued such restrictive policies in order to keep the country's currency, the schilling, on a par with the German deutsche mark, the pressures on other currencies could intensify while the deutsche mark establishes itself as the dominant currency of Europe. This could jeopardize Austrian markets in the EU.

Austria's membership in the EU could also open Austrian markets more directly to the competition of large West European companies that not only enjoy economies of scale but also are more able than Austrian companies to withstand the rigors of long-term competition. And, the fall of the Iron Curtain has opened Austria to greater competition from Central and Eastern European states having lower production costs. Conversely, Austrian exporters also have a wider playing field on which to show their wares. Thus, Austrian planners have both many opportunities and many problems to contemplate as they try to maintain and extend the prosperity and economic success that their country has enjoyed in the postwar period.

Austria - ECONOMIC GROWTH AND GOVERNMENT POLICY

After World War I and the breakup of Austria-Hungary (also seen as the Austro-Hungarian Empire), Austria faced serious problems of economic and social adjustment in finding a means of livelihood for its 6.5 million people, one-third of whom lived in Vienna. Without an adequate agricultural and mineral base in the territory left to it and with the old trading relations of the relatively self-sufficient empire and customs union broken, Austria found itself without adequate food supplies for its population and without sufficient coal for its industry. At the same time, its industrial capacity was excessive for the reduced home market. Relief credits grudgingly given by the Allies kept the country from complete chaos for a time, but devastating inflation in the early 1920s brought it close to economic collapse. Finally, in 1922, a League of Nations commission agreed on a program of international financial support that brought currency stabilization and a balanced budget.

Under the austerity program that ensued, considerable progress was made toward economic reconstruction. Because of the austerity, however, it was also a period of high unemployment and political and social unrest. When the worldwide depression that began in 1929 put an end to this brief period of economic progress, Austria was ripe for the disorders of the 1930s and for the annexation (Anschluss) by Germany in 1938. This takeover brought an unanticipated measure of economic recovery to Austria as a result of the German buildup of war potential. In order to serve Nazi goals of conquest, most of the existing Austrian industries were expanded and modernized, and several new industrial complexes were established.

Austria emerged from World War II with its economy shattered. The loss of life and the damage to industry and transportation had decreased production to only one-third of its prewar level. Reestablishment of the economy was both hampered and helped by the division of Austria into four Allied occupation zones after the war and by the ensuing ten-year period of foreign occupation. The presence of foreign troops encouraged the Austrian people into a more cooperative attitude toward each other and toward their leaders than that which had prevailed in the interwar period. As a result, the uncompromising divisiveness that had dominated Austrian economic, social, and political life between the wars gave way to a spirit of cooperation that extended well after the occupation ended.

During the occupation, the primary objective of the Soviet Union seemed to have been the exploitation of the Austrian economy. Although the Western Allies had successfully prevented the exaction of outright reparations from Austria, they agreed to give the Soviet Union "full and unqualified title" to all German assets in eastern Austria, that is, the part of Austria under Soviet occupation. Soviet leaders put the broadest possible interpretation on the term German assets and dismantled and removed to the Soviet Union much of the movable industrial equipment. Fixed installations were formally confiscated and put into production to serve Soviet interests. When the occupation ended with the signing of the State Treaty in May 1955, the Soviet Union had under its control some 450 firms with 50,000 employees--some 10 percent of the Austrian industrial labor force. Under the terms of the treaty, Austria agreed to make reparation payments to the Soviet Union in oil, other goods, and cash to compensate for the return of these Soviet-controlled assets. The payments, which were completed in 1963, totaled S7.1 billion.

The Western Allies, in contrast, invested considerable effort, money, and material under United States leadership in reconstructing the Austrian economy. The initial effort consisted primarily of relief goods channeled through the United Nations Relief and Rehabilitation Administration (UNRRA). This program, involving over US$300 million from the United States alone, was replaced in 1948 by the European Recovery Program (commonly known as the Marshall Plan). Under the plan, the United States provided US$962 million in aid in the form of consumer goods, raw materials, and capital equipment. The total amount of foreign aid received by Austria between 1945 and early 1955 was US$1.6 billion.

The contrasting policies of the Soviet Union in the eastern zone and those of the Western Allies in the rest of Austria had significant implications for the future of the Austrian economy. In the first place, most United States aid went for economic reconstruction in the Allied occupation zones, rather than in the Soviet areas, to prevent its suffering the fate of capital assets already in Soviet hands. This meant, in turn, the creation of employment opportunities in western Austria that, together with the more relaxed living conditions and political freedoms, stimulated a steady movement of the population westward from Soviet-occupied eastern Austria. Thus, the industrialization of the Austrian hinterland, which had started for military purposes during the Nazi occupation, was further advanced. Finally, the more constructive behavior of the Western Allies encouraged cooperation with Austria's coalition government and created an atmosphere of continuing cooperation, virtually guaranteeing a Western orientation for Austria's economic policies after the occupation.

Within the limited scope of economic matters left for Austrian determination during the occupation, two major developments carried over into the postoccupation period and had significant influence on the future course of the economy. The first was the nationalization of a large segment of Austria's heavy industry. The second was the establishment of a mechanism for coping with inflationary pressures through joint agreements on wages and prices reached by the representatives of business, agriculture, and labor.

The nationalization acts of July 26, 1946, and March 26, 1947, were designed to effect the systematic reconstruction of the basic materials industries after the heavy damages suffered during the war, to channel their output and services toward the reconstruction of other elements of the Austrian economy under impartial government direction, and to maintain some degree of Austrian control over these assets during the occupation. Although the Soviet Union objected to the nationalization laws insofar as they applied to former German properties, the other Allies were able to override Soviet efforts to block these laws. The Soviet Union did prevent their application in the Soviet Zone. As a result, about half the enterprises there, including the entire petroleum industry, were kept from Austrian control until after the occupation ended.

About seventy industrial enterprises and plants were selected for nationalization. The enterprises and plants included the most important lignite mines, the largest iron and steel works, the nonferrous metals mining and smelting works, the most important petroleum extraction and processing installations; a number of firms involved in steel construction and in mechanical engineering, a major chemical concern, and a major shipping company. Outside the manufacturing sector, the three largest credit institutions and the most important electrical energy installations were also nationalized.

The problem of compensation to the former owners, which had been left undetermined by the original legislation, was covered by laws passed in 1954 and 1959. Under this legislation, compensation was largely covered by issuing federal bonds to the former owners. These bonds, together with the small cash sums paid out, amounted to about S515 million.

The second economic event of fundamental importance was establishing mechanisms to settle wage-price disputes. The initial wage-price agreements were stimulated by unusual inflationary pressures in 1947, which had increased prices nearly threefold since the end of the war. Possibly with the specter of the inflationary period of the early 1920s in mind, four key interest groups--the chambers of commerce, agriculture, and labor and the Austrian Trade Union Federation (�sterreichischer Gewerkschaftsbund--�GB)--joined forces. They established the Economic Commission, negotiated a schedule of fixed prices for essential goods and services, and adjusted wages and pensions to that schedule. Although the Economic Commission had no legal standing and compliance was voluntary, the first of these agreements, covering the period from August through October 1947, was sufficiently successful to lead to a series of renewals over the next four years. These agreements slowed, but did not stop, the rate of inflation, which averaged 35 percent annually until 1951. Additional stabilization measures were necessary that year, including credit restrictions, an increase in the bank rate, and such fiscal measures as cuts in government spending and increases in taxes. Most important, however, these measures were accompanied by voluntary price reductions and a postponement of wage demands arrived at through the wage-price agreement procedure. This brought a degree of price stability, in marked contrast to the inflationary explosion of the comparable period after World War I.

At the time of the signing of the State Treaty in May 1955, the economy had largely recovered from the effects World War II. The gross domestic product, in constant prices, had more than doubled since 1946, the first full year of peace, and was 47 percent above that of 1937, the last full year of Austrian independence. Although industrial facilities in the Soviet Zone that had been returned to Austrian control were in poor condition--particularly the oil fields--most of the industrial structure in the Allied occupation zones had been revived and modernized, largely through the application of Marshall Plan funds. Relative price stability had been achieved, and the 1955 unemployment rate of 5.8 percent, although high by subsequent standards, was at least an improvement over the 1953 rate of 8.8 percent and was tending downward. Finally, Austrian independence arrived at a time of growing European prosperity as the full effects of the Marshall Plan were being felt. Thus, Austria was able to take its place in the economy of Western Europe and to share in the prosperity that characterized the postwar period.

After a relatively smooth course throughout the 1960s, Austria was deeply affected by several international developments during the early 1970s. Like the Federal Republic of Germany (West Germany), it revalued its currency upward by 5 percent, but this proved insufficient in light of the weakness of the United States dollar.

In August 1971, when the Bretton Woods system collapsed and the price of gold was no longer maintained at US$35 per troy ounce, the Austrian government reaffirmed its decision to maintain the stability of the schilling even if it meant a potentially deteriorating competitive position with the dollar. Thus, the schilling remained closely linked to the deutsche mark through the interest rate policies of the Nationalbank (the Austrian central bank).

The Austrian economy could not help being affected, however, by the subsequent turmoil in international trade and finance, the "oil shocks," inflation, and the downturn at the end of the 1970s. By 1975 growth had slowed and inflation had risen because of higher fuel prices. Unemployment had begun to increase and would have risen faster if government-owned industries had not made an effort to maintain employment. The current account, which had remained in balance for most of the postwar period, deteriorated significantly. In addition, the budget deficit rose.

In 1979 and 1980, the Austrian economy began to improve somewhat. Growth resumed and unemployment fell. But exports did not rise as hoped, the budget deficit remained high, and the boom was short-lived. Another downturn appeared, to be overcome only at the expense of considerable fiscal stimulus in 1983 and 1984 when the government budget deficit rose from 4 to 5.5 percent of GDP. After several years of high deficits, the cost of servicing the national debt began to serve as a brake on further expansionary fiscal policies. Although unemployment remained low by the standards of other industrialized states and although the Austrian economy came through the various crises better than most economies, these developments provided little consolation for most Austrians. The only good news was that exports were rising, although the current account remained negative as the strength of the dollar drove energy import costs sharply upward.

It was only in 1985, well after global interest rates had declined from their post-1980 highs, that the economy began moving forward again at an acceptable pace. Even then, growth came more slowly and unevenly than in the 1950s and 1960s, in part because the expense of servicing the accumulated public deficit (which by then had risen to almost one-half of GDP) remained a brake on the economy as a whole. When rapid growth resumed in 1988, it took many observers by surprise. At that point, the rising trend of unemployment experienced since 1981 began to decline, and the volume of investment and exports grew sharply.

Austria - The New Policies

In 1987 the government had decided that the Austrian economy needed certain structural reforms if it were to remain competitive in Europe and in the world. The new coalition government, formed by the Socialist Party of Austria (Sozialistische Partei �sterreichs--SP�) and the People's Party of Austria (�sterreichische Volkspartei--�VP), was spurred to take action as a result of two significant factors: the passage by the EC of the Single European Act, designed to lead to a much closer economic union of EC member states; and Austria's poor growth rate, which lagged behind that of the European members of the Organisation for Economic Co-operation and Development. Those reforms were aimed principally at fiscal and financial stability for the government sector and at greater efficiency for the private sector. The government later reinforced these measures in order to meet the requirements for establishing the European Economic Area.

The measures included steps aimed at reducing the fiscal deficit as a share of GDP. The budget deficit began to be brought down to the target level of 2.5 percent of GDP, although somewhat more slowly than the planners had hoped. The government also announced a comprehensive restructuring of the state-owned Austrian Industries, the giant national company that had taken over most of the heavy industry left to Austria by the retreat of the Germans after World War II.

The restructuring efforts moved apace for several years after the government decision of 1987. The single most important area from the standpoint of the government was the reduction of the ever-growing federal share of the economy. A series of measures were implemented to cut the federal share of GDP from 23 to 21 percent and to reduce the provincial and municipal governments' share of GPD from 17.4 to 16.8 percent between 1986 and 1990.

One of the principal objects of reducing the size of the federal government was to control the interest burden of the government sector, a burden that had risen rapidly during the early 1980s. Another was to reduce the government sector's gross indebtedness. The first of these measures had little effect because the interest burden had risen from 18.0 percent of total government tax revenues to 23.5 percent by 1991. The second measure was more successful because the ratio of the new deficit to GDP stabilized at about 2.5 percent, but the government sector's gross indebtedness nonetheless continued to rise, reaching the level of 56.5 percent of GDP by 1991. For a government that contemplated joining the European Community and the European Monetary Union, that level was dangerously high. It was almost as high as the limit of 60 percent that the EC had set in December 1991 as the maximum level acceptable for states that wished to join the EMU.

One reason the government had difficulty managing its own budget was that more than 85 percent of the central government budget expenditures were committed to nondiscretionary items such as civil service salaries and social security benefits. The government consistently found itself severely constrained in trying to reduce or even to control the remaining discretionary elements.

As for Austrian Industries, some reduction in personnel was accomplished as part of the reform, but the slump in global steel and chemical markets left considerable uncertainty as to whether more restructuring might not be needed. Privatization also made some headway with the sale of the mint to the Nationalbank in 1989 and a reduction in the government's share in Austrian Airlines and several major financial institutions.

While efforts to amend and strengthen the cartel law to increase domestic competition moved slowly at first, certain steps were taken. Among them was the decision to adapt the public monopoly regulation to the standards of the EEA. In November 1991, the last foreign-exchange controls were lifted, thus opening the economy further to foreign competition in financial services and liberalizing cross-border financial transactions. The new Stock Exchange Act of 1989 was designed to increase openness and flexibility.

The most difficult objective of structural reform was reducing government subsidies. Some success was achieved between 1987 and 1990, when federal subsidies as a percentage of GDP fell from 2.2 percent to 1.9 percent and when general government subsidies dropped from 2.9 percent to 2.4 percent. But questions arose as to whether progress of this kind could be continued.

Nonetheless, the government was able to enact a major reform in the tax system in 1989. The reform entailed gross tax reductions of about S45 billion. It lowered personal income tax schedules, reducing the top rate from 62 to 50 percent and the lower rate from 21 to 10 percent, while widening the tax base. The reform also abolished the progressive corporate tax schedule and adopted the earlier 30 percent bottom rate as the standard corporate tax rate (compared with the earlier top rate of 55 percent). The tax reform raised incentives and spurred growth.

European integration played a central role in the drive toward structural reform of the Austrian economy. The EEA treaty's provisions on regulation and liberalization forced farreaching changes in the form of increased economic opportunities and competition. It also forced the removal of many barriers that had sheltered important sectors from international competition, especially nontariff barriers.

Importantly, unit labor costs--which had almost doubled during the 1970s--held steady throughout much of the 1980s, peaking in 1987 when the new reforms were announced. By the end of the 1980s, lower labor costs had improved the competitive position of Austrian exporters to a level they had not enjoyed for some time. Wages and salaries per unit of output, which had risen steadily from a scale of 100.0 in 1970 to a scale of 205.9 by 1982, rose only gradually to 216.3 in 1987 and then declined to 208.2 in 1990.

Austria's economic environment changed dramatically during the late 1980s and early 1990s with the opening of the Iron Curtain. Many of the trade agreements that Austria had made with formerly communist states behind the Iron Curtain suddenly became null and void, opening new opportunities but also requiring Austrian resources to help invest in those states as well as to offer credit in order to finance exports. In addition, Austria lost some export markets because the German economy registered a sharp decline in the early 1990s as the cost of German unification had to be financed largely by debt and as the German central bank (the Bundesbank) began raising interest rates to reduce the risk of inflation.

The loss of export markets affected Austria adversely, as did the spillover effect of high German interest rates on Austria's own interest rates. GDP growth fell from 4.6 percent in 1990 to a level of only 2.0 percent in 1992 and was expected to decline further. Unemployment rose, especially among foreign workers. Although it appears likely that the recession will not be as long as that of the early 1980s, the slump again shows that Austria remains tied to developments in neighboring countries and cannot rely entirely on its own resources and policies in an uncertain global environment.

Austria - The Magic Pentagon

The Austrian government and Austrian economic institutes and analysts have long evaluated the country's economic policies and general economic situation on the basis of five standards, which are termed the magic pentagon: keeping the GDP growth rate as high as possible; maintaining the current account balance as high as possible; keeping employment as high as possible; holding down the inflation rate as much as possible; and keeping the government deficit as low as possible. The objective of government policies is to keep some of those measures as high as possible and some as low as possible. Austrian statistics sometimes show the five different objectives as five arrows emanating from a central core, with lines connecting the current statistics on each of those arrows so that they form a pentagon. The purpose of government policy is to make the pentagon as large as possible, recognizing that there might at times be some required trade-offs among the different objectives.

One of the most important elements in the policy mix is a determination to combat inflation--not an easy task, especially given the significant fiscal deficits during parts of the 1970s and 1980s. To fight inflation and keep the schilling strong and stable, the government relies heavily on attaching the schilling to the deutsche mark and following the policies of the German Bundesbank. These practices, on the whole, have kept inflation at acceptable levels. Low inflation has tended to reduce the demands for higher wages. Consumer price increases held steady around the late 1980s but crept up in the early 1990s to 3.3 percent. Producer prices increased at a slower rate, but wages rose even faster. As a result of the government's policy, Austria has had one of the lowest inflation rates in Europe, and the schilling has consistently been one of Europe's strongest currencies.

Austria - The Subsidy Policy

One of the constant factors on the Austrian manufacturing scene since the 1960s has been the employment of foreign workers. Some of them were refugees from Eastern Europe who chose to remain in Austria and were permitted to do so. Others were from Turkey or farther away. In 1973 the number of foreign workers had reached about 227,000, or about 8.7 percent of the work force. After that, as Austria's own boom began to slow after the first "oil shock" and the global slowdown during the mid-1970s, the Austrian government began reducing the number of foreign workers to protect the positions of Austrian workers. In 1978 the number of foreign workers had been reduced had about to 177,000. In the 1980s, the number had dropped to approximately 140,000 to 150,000, or about 5 to 6 percent of the labor force. As in other West European countries, foreign workers in Austria performed and continue to perform many tasks not wanted by Austrian workers.

The number of foreign workers began rising rapidly in 1989, as the borders with Eastern Europe became more porous, and almost doubled by 1990. The number of foreign workers actually peaked during the middle of 1991 at about 280,000, or more than 8 percent of the work force. The Austrian government began taking vigorous border-control and administrative measures in order to prevent further entry of these workers into the labor force. The number began dropping during the last several months of 1991, as it had during the 1970s when the government intervened, but there was no certainty that the government would be as successful during the 1990s as it had been during the 1970s because of the more open borders between Eastern and Western Europe. What was more probable was that the rise in Austrian unemployment during the early 1990s, as a result of the Austrian recession, would reduce the number of foreign workers. The unemployment rate among those workers is higher than among native Austrians. Although certain elements of the Austrian economy, especially hotels and restaurants, cannot function without foreign workers, many Austrians resent the employment of foreigners when many Austrians are without work.

Austria - PRINCIPAL ECONOMIC INTEREST GROUPS

The major participants in the Austrian economy are represented in national economic policy determination by a number of official and voluntary organizations. The most important of these are the chambers of commerce, agriculture, and labor. These are public corporations legally responsible for the representation of the interests of their constituent groups. Because of their legal and official status, membership in the chambers is compulsory for all enterprises, farmers, and wage and salary earners. There are also specialized chambers in various professional fields and in some provinces for agricultural workers, although these chambers are not as important in the operation of the economy.

The chambers function as semipublic bodies with broad responsibilities. For example, before the government can present any draft legislation to parliament, the bill must be sent for appraisal by the chambers. The chambers are organized so that they fully represent each of the appropriate professional and other groups involved in their particular sector of the economy. Because of Austria's relatively small size, the chambers constitute instruments for contact and exchange of information at every level of the economy. Therefore, they not only function as pressure groups from the outer reaches of the economy toward the center but also as communication belts that relay the decisions from the center to the regions.

Several other important voluntary organizations also play significant roles in economic policy decisions. These include the Austrian Trade Union Federation (�sterreichischer Gewerkschaftsbund--�GB), an umbrella organization representing labor; the works councils that represents labor in enterprises; and the Federation of Austrian Industrialists (Vereinigung �sterreichischer Industrieller--V�I), representing management.

After World War II, the government, as well as industry and the trade unions, realized that the country could not afford to repeat the continuous social, political, and economic conflict that marked the 1920s and 1930s, when the country moved from one crisis to another until Adolf Hitler's Anschluss in 1938. They wanted to avoid ruinous social and industrial conflict, strikes, lock-outs, and the kind of persistent social battles that had contributed to the paralysis of the Austrian economy and its body politic during the interwar years.

To find a solution, the government and its political and economic institutions reached back to earlier concepts that also had an influence on Austrian thinking and Austrian history. One was the papal encyclical Rerum Novarum of 1891, which had envisaged a working class that would be gradually absorbed into a property-owning class, not through social conflict but through constructive social cooperation. Another was the Austrian tradition of the Labor Advisory Council (Arbeitsbeirat), which had functioned as a section of the Ministry of Commerce from 1898 to the outbreak World War I and which offered a model for the pragmatic participation of the labor movement in the functions of the state and the general direction of the economy.

After World War II, these concepts coincided with the practical exigencies of the moment to force representatives of social groups to work together to cope with the combination of unemployment, inflation, and widespread poverty and misery. The �GB and the reestablished business organizations of the three main economic chambers played central roles in working out a series of wage-price agreements between 1947 and 1951. Those agreements, and the negotiations that led to them, were based on a mutual recognition that no social group could benefit if it imposed its demands at the expense of the collapse of the state and its economy--a collapse that often seemed all too near in the immediate postwar years.

The social partnership system works on the basis of a mutual recognition of three principles. The first is that the three main economic groups--industry, agriculture, and labor--will be properly represented through four mutually recognized organizations--the chambers of commerce, agriculture, and labor, and the �GB--that represent their interests and that can take the responsibility for decisions. The second is that economic decisions can be legitimately made outside the ideologically competitive political atmosphere of parliament, thus in effect depoliticizing crucial matters related to the Austrian standard of living. Third, the principle of consensus will function in such a manner that no social group is ignored, and no social group will prolong the struggle once an agreement has been reached.

The core consultative instrument of the social partnership is the Parity Commission. The commission consists of seven members of the government--the chancellor, three ministers, and three state secretaries--and two representatives each from the Federal Chamber of the Economy, the Presidential Conference of the Austrian Chambers of Agriculture, the Council of the Austrian Chambers of Labor, and the �GB. This distribution of seats on the commission gives the interest organizations a majority. Experts in various areas attend the meetings in an advisory capacity. The Party Commission's decisions must be unanimous, because the commission is not based on law, and participation is completely voluntary.

The Parity Commission began its work in 1957 on the basis of an exchange of letters between the president of the Federal Chamber of the Economy and the president of the �GB. Its original purpose was to slow down a troubling wage-price spiral, but it later expanded into much broader discussions on the general trends of the European and Austrian economies and what would be the best response to these trends. The commission has subcommittees on wages and prices. In addition, the commission includes the Advisory Committee for Economic and Social Questions, which was established in 1963 to provide the basis for an objective approach to economic policy and to conduct studies required by the Parity Commission.

The Parity Commission, however, only deals with the central questions of the economy. It establishes the general principles for solving economic problems and disagreements. Below it, at the industry level, the interest-group associations of the various chambers or the trade unions negotiate the separate and legally binding agreements governing employers or employees. The agreements are reached on the basis of the broad principles and criteria set by the Parity Commission.

Some forms of social partnership involve little or no participation of government organs. The so-called selfadministration associations require the cooperation of interest associations in such structures as social insurance institutions, agricultural boards, labor-market bodies and tribunals, and in other institutions where agreements between potentially conflicting interest groups must be reached. Those institutions more often deal with social than with economic questions, but the participants in the negotiations usually evaluate the broad economic situation and the policies agreed on in the Parity Commission as they negotiate.

Beyond the mechanics of the Parity Commission and the bitter memories of futile class conflict, however, other elements also work to produce an atmosphere of cooperative consciousness. One of these elements is the virtually universal recognition by all Austrians that theirs is a small state and a small economy in a world full of larger and potentially more competitive actors. Austria cannot afford self-indulgence because it would immediately risk its survival.

Another cause for cooperation rather than unbridled competition is the large public and foreign ownership of Austrian firms. At the beginning of the 1990s, state-owned firms constituted a total of 32.8 percent of all Austrian companies, and foreign-owned firms constituted an additional 25.1 percent, leaving only about 35 percent in private hands, with an additional 7 percent in scattered holdings.

The Austrian trade union movement is forced to moderate its demands for wage increases because of the close affiliation between the Austrian schilling and the German deutsche mark. The stability policy of the German Bundesbank thus also has an effect in Austria. Given this fact, the trade unions cannot usually argue that runaway inflation threatens the standard of living of the Austrian worker.

The social partnership has been successful in maintaining a cooperative spirit and in avoiding industrial strife. After World War II, for example, Austria had fewer strike-minutes lost per worker than any major economy. In many years, there were no strikes at all. However, there has been debate about whether the social partnership and the work of the Parity Commission and other bodies have impeded progress and if stability could become stagnation. The danger exists that new production and communications systems, as well as progressive organizational structures, will not be introduced quickly and that the social partners will find it convenient to protect established jobs and processes rather than to revise or even revolutionize them.

Austria - STRUCTURE OF THE ECONOMY

Like other industrial societies, Austria found its agricultural and industrial sectors declining as the services sector expanded. The change in the relative importance of the sectors was most pronounced during the 1970s. Changes in the 1980s continued earlier trends. Whereas services and industry had nearly equal shares of GDP in 1970, by 1990 industry's share was less than half that of services. Agriculture's share has declined steadily, so that by 1990 it was no longer significant economically but still had social importance.

Employment trends have followed shifts in the relative importance of the three sectors. Agriculture's share of employment fell by more than half between 1970 and 1990. Industry employed about 47 percent of the work force in the late 1960s and 37 percent in the late 1980s. The service sector employed roughly the same portion of the work force as industry in the late 1960s but by the late 1980s employed nearly 60 percent of the work force.

Despite the increasingly powerful role played by the services sector, however, most of the major firms remain in industrial production. Services, like agriculture, are usually performed locally and by medium- or small-sized firms. Thus, a listing of Austria's twenty largest firms in 1991 showed mainly industrial companies, with the exception of such state-owned firms as railroad and postal agencies and several large retail organizations.

Most Austrian firms are small. An analysis of nonagricultural concerns in 1988 showed that well over half the nonfarm labor force was employed by firms with fewer than 100 employees. About 500,000 Austrians worked in medium-sized firms having between 100 and 499 employees, and only 140 firms had more than 1,000 employees.

The largest single enterprise in Austria is Austrian Industries, a holding company created in 1987 to take over and manage the assets that had been nationalized by the Austrian state after World War II. An enterprise of about 75,000 employees, in 1993 it was divided into four branches that respectively managed the steel, metal, petroleum, and diversified operations of the company. The latter includes mining and the manufacture of various kinds of machinery, as well as other less easily classifiable activities of the holding company. As intended, it has moved vigorously to become a competitive enterprise despite its nationalized origins, discarding some unprofitable activities and investing abroad or in Austria in other areas of activity.

The ten largest Austrian enterprises in the early 1990s, based on turnover, were Austrian Industries, �sterreichische Post/Telegrafenverwaltung (national postal service), V�EST-Alpine Stahl (steel), �sterreichische Mineral�lverwaltung (�MV) (petroleum and other mineral resources), Konsum �sterreich (K�) (retail trade), �sterreichische Bundesbahnen (Austrian Federal Railroad), Porsche Holding (vehicles), AL Technologies (diversified), Billa (trade), and Austria Tabakwerke (national tobacco monopoly). Of these enterprises, three are subsidiaries of Austrian Industries, two are state public-service monopolies, and the remainder are owned either by foreigners or by small share holder-members (such as the retail trade firm K�). None of these businesses except Austrian Industries has played a significant international role.

With the exception of Austrian Industries, even Austria's largest companies are small on an international scale. Only four Austrian companies were listed in the Financial Times "European 500" for 1992. Two were banks, the CreditanstaltBankverein (number 215 on the list) and Bank Austria (275). The third was �MV (288), the mineral and oil exploration and exploitation arm of Austrian Industries. The fourth was a construction company, Wienerberger Baustoffindustrie (318). Austrian Industries was not listed because it was not a private company. If it had been listed, it would probably have been among the top fifty.

Austria has never had a great entrepreneur-capitalist tradition. Many firms function within the Austrian market or within regions. In part because of the bitter experiences of inflation and the depression between the world wars, most Austrians do not attempt risky ventures but instead concentrate on geographic areas or on specific products where success is fairly certain. One of the challenges facing Austrian enterprises as they move into the European Economic Area (EEA) and into the European Union Single Market will be competing effectively against the giant firms that operate throughout Europe and have many more resources than virtually any Austrian firm could hope to command.

Although agriculture's share of the economy declined steadily after World War II, agriculture continues to represent an important element of the economy because of its social and political significance. The Chamber of Agriculture remains on an equal level with the chambers of commerce and labor, although its members produce only a fraction of the GDP that industrial and commercial workers produce.

The Government Role

In Austria, as in most other Western countries, the government has played an important role in agriculture since the end of War World II. The government has concentrated on mitigating social, regional, economic, and even environmental consequences of the sector's decline, as well as delaying the decline itself.

Agricultural policy has been carried out with different objectives and with different laws and policies depending on the times. In the early postwar years, the most important objectives were survival and self-sufficiency. As a poor country, Austria needed to be able to feed itself if its population was to survive.

Despite the government's efforts to sustain agriculture, by 1991 not one province had as much as 10 percent of the population involved in agriculture and forestry. At the beginning of the 1970s, all but two provinces (Vienna and Vorarlberg) had more than 10 percent of their populations involved in farming. This contrasted markedly to the situation in 1934, when all but those same two provinces had more than 30 percent of their populations working in agriculture. Over this period of two generations, the decline in the Austrian farm population was as fast as any in the Western world.

Of Austria's total area of almost 84,000 square kilometers, about 67,000 square kilometers are used for farming and forestry. Roughly half of that area is forest, and the remainder is arable land and pasture.

Agriculture and forestry accounted for about 280,000 enterprises in 1986, with the average holding being about twentythree hectares. There were about 4,500 corporate farms. Beyond those farms, however, only a third of all farmers were full-time farmers or farming companies. Over half the farming enterprises were smaller than ten hectares; nearly 40 percent were smaller than five hectares. Just as the number of farmers has long been in decline, so also has been the number of farms.

Family labor predominates, especially in mountainous areas and on smaller farms. Only a third of all farm and forestry enterprises were classified as full-time occupations in 1986. A full half of these enterprises are spare-time, that is, less than half of household labor is devoted to farming or forestry. The remainder are part-time. Farms up to ten hectares are more often tended by part-time and spare-time farmers rather than by fulltime farmers. For most farm owners and workers, nonfarm income is as important, if not more important, than farm income.

Despite the decline in the number of farmers and agriculture's share of GDP since 1960, agricultural output has risen. As of the early 1990s, Austria was self-sufficient in all cereals and milk products as well as in red meat. This gain was achieved because of the considerable gains in agricultural labor productivity.

The value of agricultural and forestry output is heavily concentrated in field crops, meat, and dairy products, with most of it coming from animal husbandry. Because large parts of Austria are mountainous, only the lowland areas of eastern Austria and some smaller flat portions of western and northern Austria are suitable for crop production and more intensive forms of animal husbandry. The remainder of the land is used for forestry and less intensive animal husbandry, most of which takes advantage of mountain pasturage.

Austria - The Industrial Sector

Industry in Austria is diverse but consists mainly of traditional industries of the second industrial revolution. It is concentrated in various processing industries, each of which has long specialized in its particular sector and had often gained a global reputation for high standards of production and service.

Industry exists throughout the country. Textile production represents the principal industrial activity of the mountainous west, whereas machinery production occurs principally in the east, as does production of glass, electrical goods, and chemicals. Heavy industry tends to be located around Vienna and in several central river corridors. Iron and steel production is concentrated around Linz and Leoben.

Although industrial production is an important component of GDP, most companies are small and privately owned. Almost half employ fewer than five workers. The larger companies are often state-owned, either directly or through Austrian Industries.

The metals industries, both production and related manufacturing, accounted for 43.1 percent of industrial value added in 1991. Chemicals were the second most important segment with 12.6 percent, followed by foods and beverages with 11.8 percent, forest products and paper with 11.6 percent, textiles, leather, and clothing with 7.7 percent, glass, pottery, and quarrying with 5.3 percent, mining with 4.7 percent, and petrochemicals with 3.2 percent.

Iron and steel are largely produced by Vereinigte �sterreichische Eisen- und Stahlwerke (United Austrian Iron and Steel Works), commonly known as V�EST-Alpine, one of the major components of Austrian Industries. The company pioneered a worldwide steel production method named the LD process (after the Austrian cities of Linz and Donawitz, where it was developed). Iron and steel production in turn formed the basis for other industries, such as mechanical engineering, machine tools, vehicle production, powder metallurgy, factory engineering and construction, and automobile components.

Chemicals and petrochemicals constitute another major industry, producing such items as synthetic textile fibers, pesticides, pharmaceuticals, plastics, and a wide range of fuels. Electrical engineering is another important component of Austria's industry and specializes in the production of precision and optical equipment and generators. Food also constitutes an important industry, ranging from milk produced in the mountains of western Austria to Viennese pastries.

Like many other countries that had concentrated on industrial production and where industrial value added constituted an important element of national production as well as of national exports, Austria had to reevaluate its performance during the 1980s. The government commissioned a special report on the need for structural adjustment, and a number of steps were taken to make Austria more competitive worldwide.

Steps to increase competitiveness include privatization, greater incentives for research, and greater readiness to make decisions about curtailing subsidies where they are not warranted (especially for nationalized industries) and could drain resources from other potentially more competitive industries. Although industrial subsidies are harder to calculate than agricultural subsidies because of their greater range (from direct payments to accelerated depreciation allowances and the like), the government during the 1980s made special efforts to reduce those subsidies and encourage competitiveness. Some of these measures appear to have been at least in part effective, although they were not always carried out as fast as originally planned.

Austria has unusually diverse mineral resources for a small country. It is the world's largest producer of magnesite. There are also significant deposits of lignite and iron ore and smaller deposits of wolfram, antimony, gypsum, graphite (lower grade), dolomite, talcum, kaolin, quartz, and salt. Minerals are found throughout the country, but most significant deposits are in Styria or in northeastern Austria.

Mineral production accounted for only about 2 percent of GDP in 1990, having declined steadily in economic importance since World War II. However, it remains a significant source of income and employment in certain mountainous areas and in 1991 consisted of 109 firms employing about 6,700 persons. The principal mineral products in 1990 were lignite (2.4 million tons), iron and manganese (2.3 million tons), magnesite (2.0 million tons), gypsum (753,000 tons), and kaolin (474,000 tons).

Austria is highly dependent on foreign sources for energy. In the early 1990s, it imported more than four-fifths of the petroleum and petroleum products it needed, four-fifths of the natural gas, and two-thirds of the coal, coke, and briquettes. About two-thirds of Austria's electricity is produced domestically from hydroelectric power plants, but most of the remainder is generated from imported fossil fuels. Despite extensive efforts to reduce power consumption after the first oil shock of 1973, Austrian reliance on foreign sources of power rose from 61 percent in 1970 to 70 percent in 1991. Nearly all imported natural gas comes from Eastern Europe, as does most imported coal.

Policies adopted during the 1970s and 1980s to conserve energy and to use it more efficiently were to some degree successful. Before 1973, for example, Austria's energy consumption exceeded the growth of its economy. In the 1973-90 period, however, the annual increase in energy consumption averaged only 0.8 percent while economic growth averaged about 2.4 percent a year.

Energy policies also aimed at decreasing the country's reliance on oil and coal and at moving more toward renewable and/or cleaner sources. Whereas petroleum, petroleum products, and coal had supplied 73 percent of Austria's energy sources in 1970, by 1990 their share had fallen to 57 percent, while the combined contribution of natural gas and hydroelectric power rose from 23 to 34 percent.

Although real consumption of petroleum and petroleum products has declined, Austria still relies heavily on fossil fuels for energy. In 1991, of the energy consumed, 42 percent came from petroleum and petroleum products, 20 percent from natural gas, and 16 percent from coal. Electricity supplied only 13 percent of the country's power, while wood, scrap, and other sources supplied the remaining 9 percent.

Austria has limited domestic reserves of oil and natural gas. Specialists believe that the entire region north of the Alps may be oil bearing. As of the early 1990s, however, proven deposits of oil and gas were found in Lower Austria, between Vienna and the northeastern border, and in Upper Austria between the Enns and Salzach rivers. Proven and probable oil reserves were estimated in 1992 at 15.0 million tons, while certain and probable gas reserves were put at 17.5 billion cubic meters. Certain and probable coal reserves were estimated at 69.9 million tons.

In 1991 wholesale and retail trade accounted for about 12 percent of GDP and provided employment for 435,000 persons, or 14.5 percent of the work force. Even in the early 1990s, retail trade was dominated by small shops, largely because of the many small towns and communities outside Vienna. In all, there were about 17,000 wholesale concerns throughout Austria and about 33,000 retail concerns.

Despite the very large number of small firms in the sector, several retail and wholesale firms are among the twenty largest Austrian companies. Two of these are the grocery store chains Billa and Spar �sterreich. Another is Metro SB-Grosshandel, a wholesaler.

The country's largest retailer is the cooperative Konsum �sterreich (K�), formed in 1978 from a number of smaller cooperative retailers. The company is the latest stage in the Austrian cooperative movement that dates from the mid-1800s. In addition to having hundreds of stores throughout Austria, some of them quite large and selling many varieties of goods, K� is involved in manufacturing some of the products it sells. By the late 1980s, the company employed about 20,000 persons, and more than 800,000 families were K� members. They received dividends each year and voted on K�'s overall policies. In addition to K�, there are many other cooperatives involved in wholesale trade and in purchasing and marketing. In all, Austrians can shop at more than 1,000 cooperative retail stores.

Tourism is an important part of Austria's services sector. In 1991 foreign tourists accounted for earnings of S192.4 billion, almost offsetting the negative trade balance and deficits in services or other accounts. Tourism is a principal industry and source of foreign exchange. In fact, Austria's per capita tourist revenue is the highest in the world. Foreign overnight stays in Austria have risen consistently since World War II, from 50 million in 1950, to 59 million in 1970, and to 95 million in 1990. With 20 million visitors in 1990, Austria was fifth in the world in tourist revenues, surpassed only by the United States, France, Italy, and Spain. Most tourists come from European countries. Almost two-thirds come from Germany, followed by the Netherlands (10 percent) and Britain (5 percent).

Austria's largest tourist attraction has long been the Alps-- for skiing in the winter and for hiking and camping in the summer. For this reason, the mountainous provinces of Tirol, Carinthia, and Vorarlberg produce the greatest tourist revenues. Salzburg is an important tourist attraction in the summer. Vienna remains a tourist center all year but does not generate as much tourist revenue as the mountain areas.

Austria has 20,000 hotels and pensions, as well as an additional 50,000 private rooms available to house tourists. In addition, there are thousands of simpler accommodations, such as youth hostels, mountain huts, and campsites.

Austria has also made significant progress in becoming an international conference center. The so-called United Nations City, located outside Vienna, contains the headquarters of a number of major United Nations (UN) organizations. Vienna also has an international conference center. Taking advantage of Austria's neutral status, Vienna has hosted numerous East-West negotiations and is the permanent seat not only of such longestablished organizations as the International Atomic Energy Agency but also of the newer Conference on Security and Cooperation in Europe. The opening of Eastern Europe is likely to make Vienna an even more important center for East-West travel.

The Austrian banking system is under the broad direction of the Nationalbank, the Austrian central bank, in coordination with the Austrian government. The bank is centralized, unlike the United States Federal Reserve System. It is the bank of issue and enjoys substantial autonomy, while consulting with the Austrian government.

Austria's currency, the schilling, is strong and stable. There was an attempt to float it in 1973, when various global currencies floated after the collapse of the Bretton Woods system, but in July 1976 the schilling was formally pegged to West Germany's currency, the deutsche mark. This policy was abandoned in December 1977, but the schilling remained stable in relation to the deutsche mark through management of short-term interest rates and through careful efforts to control the Austrian monetary supply. In practice, the policy meant that Austria was an informal member of the European Monetary System (EMS) and its exchange rate mechanism ERM since their establishment in 1979, and the country was expected to join the European Monetary Union (EMU) under whatever arrangement and timing might finally be agreed.

The principal banks are full-service banks, of which there were about fifty-five with approximately 850 branches at the end of 1991. They transact all kinds of business and also channel credit for all purposes. Many of them function only regionally, but the two largest--the Creditanstalt-Bankverein and the �sterreichische Landesbank--operate throughout Austria. The state owns majority shares in both those banks. A 1991 merger between the �sterreichische Landesbank and the Zentralsparkasse created Austria's largest bank, Bank Austria, and other mergers could follow to make Austrian banking more competitive within the larger European framework.

The banking system consists of a number of other kinds of institutions as well. These include the ten provincial mortgage banks (Hypobanken), with 124 branches in 1989; the savings banks (Sparkassen), of which there were about 126 with 1,278 branches in 1988 that function as regular local banks despite their name; the people's bank (Volksbanken), of which there were 103 with 323 branches in 1989 that serve small business as commercial credit cooperatives; the agricultural credit cooperatives (Raffeisenkassen), of which there were 863 in 1989 with over 1,600 branches; and a small number of private banks and specialized institutions.

The system is locally and regionally based, with savings and credit channeled at the district level; full-service banks serve large companies. The post office system, with over 2,000 branch offices throughout Austria, also plays an important role in household savings. Austria has one of the highest savings rates in the OECD, and most of the funds saved are deposited in the banking system.

Banks play the central role in the Austrian financial system, especially in corporate finance. They carry out not only regular deposit and lending activities but also such other functions as portfolio management and investment advice. Because most savings are deposited in banks, banks are the principal source of funds for business. Austrian banks tend to maintain close relations with industry, especially with the firms to which they have extended credit. Banks are often represented on supervisory boards or, at the very least, play prominent roles in advising firms with respect to business and investment decisions. Austrian financial markets reflect this situation. There is an important bond market, largely for government and bank issues and for utilities, about eight times as large as the equity market. The debt-to-equity ratio for corporate financing is high, more like the German model than the British or United States model. In the early 1990s, the Vienna stock exchange was a very limited market, although it will probably become more important as the privatization of nationalized companies continues. The money market is also dominated by banks.

Austria - Government and Politics

AUSTRIA'S POLITICAL SYSTEM has been a model of stability since democracy was restored in 1945. In contrast to the interwar period, when domestic political rivalries and foreign intervention brought the system of government set out by the constitution of 1920 to a standstill, after World War II this reestablished parliamentary democracy functioned smoothly in what came to be termed the Second Republic.

For most of the postwar period, Austrian politics appeared unique in many respects to outside observers. Between 1945 and 1966, the country was ruled by the so-called grand coalition of the two major parties, the Austrian People's Party (�sterreichische Volkspartei--�VP) and the Socialist Party of Austria (Sozialistische Partei �sterreichs--SP�). (In 1991 the name of the latter party was changed to the Social Democratic Party of Austria [Sozialdemokratische Partei �sterreichs--SP�].) This arrangement appealed to Austria's politicians and people mainly because it symbolized the reconciliation between social groups that had fought a brief civil war before the absorption (Anschluss) of Austria by Nazi Germany in 1938. The coregency of the �VP and SP� led to the systematic dividing of political offices and civil service posts, known in Austria as Proporz. Also benefiting from this arrangement were key economic and professional organizations that were aligned with the two major parties.

At times, Austria's political system seemed impervious to change, but by the middle of the 1980s, it had become clear that far-reaching social and economic trends were beginning to affect the country's politics. The dominance of the �VP and SP� was challenged by the reemergence of the Freedom Party of Austria (Freiheitliche Partei �sterreichs--FP�), led by J�rg Haider, a young right-wing populist who appealed to German nationalist sentiment. After the FP�'s short-lived coalition with the SP� between 1983 and 1986, it continued to attract increasing numbers of voters. In the national election of 1990, the FP� won 16.6 percent of the vote, establishing itself as a new power in the Nationalrat. In early 1993, however, some members of the FP� withdrew from it and formed their own party, The Liberal Forum (Das Liberale Forum), a potential threat to Haider's political future. Concern over environmental issues has also affected the Austrian political process, as evidenced by the entry of Green political parties into parliament in 1986. Previous patterns of government, which revolved almost exclusively around reaching agreement between the �VP and the SP�, were replaced by a more contentious, freewheeling atmosphere where more voices are heard.

While the political process underwent gradual but distinct changes, a variety of scandals during the 1980s brought Austria to the world's attention. The best-known involved Kurt Waldheim, elected president in 1986. Shortly after his election, a sharp international controversy erupted over whether he had been involved in Nazi atrocities in Yugoslavia during World War II. Although a thorough investigation found no evidence that Waldheim had participated in any atrocities, his method of handling the affair disappointed many Austrians and foreign observers. The strong emotions unleashed inside Austria by this matter showed that the older generation is still reluctant to discuss the country's role in the Nazi era.

Major changes in Austria's political landscape opened prospects of a new basis for its foreign policy. The bedrock of Austrian diplomacy in the postwar period has been its commitment to permanent neutrality. In order to achieve the removal of Soviet occupying forces, the Austrian government in 1955 pledged never to join a military alliance or to permit the stationing of foreign troops on its soil. Thereafter, Austria pursued a policy of active neutrality, which included participation in numerous United Nations peacekeeping operations. During the Cold War period, Austria was a consistent advocate of d�tente between the United States and the Soviet Union.

By the late 1980s, a growing number of politicians had concluded that the country should examine closely the question of whether or not to join the European Community. After a prolonged debate over the merits of membership, the Austrian government submitted a formal entry application in the summer of 1989. As of late 1993, a substantial number of Austrian citizens still had serious reservations about joining the organization, which as of November 1993 came to be known as the European Union. Membership would have to be approved in a popular referendum. Whatever the outcome of the vote, the disintegration of communism in Eastern Europe and the dissolution of the Soviet Union have raised the question of whether neutrality should--or could--remain the guiding principle of Austrian foreign policy.

Austria is a parliamentary democracy of the kind that exists in most of Western Europe. The legal basis for the Austrian system of government is the constitution of 1920, which was amended in 1929 and several times thereafter. The constitution of 1920 provided a transition from Austria-Hungary (also seen as the Austro-Hungarian Empire) to a democratic federal republic in which the law emanates from the people. The constitution was suspended from 1934 to 1938 during the authoritarian administrations of Engelbert Dollfuss and Kurt von Schuschnigg and again during the Anschluss that was forced on Austria by Adolf Hitler from 1938 to 1945. Since 1945, when the Second Republic was proclaimed, Austria has been governed by the 1920 constitution as amended.

Executive, legislative, and judicial branches of government were established by the 1920 constitution, with the executive branch subordinate to the legislative branch. The federal presidency as established by the 1920 constitution was a weak political office whose incumbent was elected by a joint session of the bicameral legislature, the Bundesversammlung (Federal Assembly). The constitutional amendments of 1929 increased the president's political role by granting him the formal power to appoint or dismiss the chancellor and, on the chancellor's recommendation, the cabinet. The 1929 amendments also provided that the right of electing the president be taken away from the legislature and given to the people.

The Austrian system provides for a president who is popularly elected. The president functions as head of state and has little authority over the actions of the government. Political power is in the hand of Austria's head of government, the chancellor (prime minister), who, as in parliamentary systems elsewhere, is usually the leader of the party with the most seat in the lower house of the country's bicameral parliament, the Nationalrat (National Council). The chancellor and his cabinet have extensive executive powers and also are the authors of most legislation. Yet, however great the powers of the executive are, it is politically responsible to the Nationalrat and can only govern with its approval. The upper chamber of parliament, the Bundesrat (Federal Council), represents the interests of Austria's nine provinces. Its limited powers reflect the underdeveloped nature of Austrian federalism. The chancellor and the cabinet, together with their party's representatives in the Nationalrat, are the main center of government activity and power.

A 1929 amendment to the 1920 constitution introduced the concept of a popularly elected president. Because of the suspension of the constitution in 1934, however, the first popular election of a president did not take place until 1951. The president serves a six-year term and is limited to two consecutive terms. Candidates must be at least thirty-five years of age and eligible to vote in Nationalrat elections.

Political parties nominate presidential candidates, but it is customary, given the limited powers of the position, for the president to serve in a nonpartisan manner. To win an election, a candidate must receive more than 50 percent of the votes. If no candidate succeeds on the first ballot, a runoff election is held between the two candidates receiving the highest number of votes. The president serves as head of state. Presidential duties include convoking, adjourning, and, in rare cases, dissolving the Nationalrat. The president signs treaties, verifies that legal procedures for legislation have been carried out, and grants reprieves and pardons. Although he cannot veto legislation, the president is empowered to reject a cabinet proposal or delay enactment of a bill. Unless the constitution states otherwise, official acts of the president require the countersignature of the chancellor or the relevant minister.

The president plays an important, though largely formal, role in the political process of forming and dissolving governments. In the aftermath of a parliamentary election, the president invites the leader of the strongest party in the Nationalrat to form a government. This duty reflects the fact that both the government and parliament are responsible to the president in the sense that he can dismiss individual members of the government, including the chancellor, as well as dissolve the Nationalrat. The president, on the recommendation of the chancellor, also appoints individuals to cabinet positions and other important government positions, including that of vice chancellor. The president also can dismiss individual cabinet officials, but only on the recommendation of the chancellor. During the Second Republic (that is, since 1945), the president has dissolved the Nationalrat only twice, in 1971 and 1986, in both cases because the incumbent chancellor and his party wished to have a new election.

The president has emergency authority that gives him significant powers. Should an emergency arise when the Nationalrat is not in session, the cabinet can request that the president act on the basis of "provisional law-amending ordinances," as provided for in the constitution. Such ordinances require the countersignature of the cabinet. Emergency decrees must be sent to the Nationalrat. If it is not in session, the president must convoke a special session. The Nationalrat has four weeks either to enact a law to replace the decree or to void the decree.

Two procedures are outlined in the constitution for pressing charges against the president: one entails a referendum; the other entails a vote by a joint session of parliament, the Bundesversammlung (Federal Assembly). To set a referendum in motion, one-half of the Nationalrat deputies must be present and vote by a two-thirds majority to ask the chancellor to convoke the Bundesversammlung, which then must vote by a simple majority for a referendum. The referendum is carried if a simple majority of voters vote in favor of it. If the referendum is defeated, then the president is regarded as reelected, the Nationalrat is dissolved, and new elections are scheduled. Under no circumstances, however, shall a president serve more than twelve years in office.

The second procedure for bringing charges against the president results from his being responsible to the Bundesversammlung, which is authorized to vote on his actions. Either house of parliament can ask the chancellor to convoke the Bundesversammlung for such a purpose. One-half of the members of each house must be present, and the Bundesversammlung must cast a two-thirds vote to press charges against the president.

If the president dies or if the office is vacated for any other reason, a new election is held. In the interim, the chancellor carries out necessary presidential duties.

Austria - Chancellor and Cabinet

The chancellor (prime minister) is the head of government as well as chairman of the cabinet. Executive political power formally rests in the hands of the cabinet. The chancellor, the cabinet, and their working majority in the Nationalrat are the real focal point of executive power in the political system. The chancellor is appointed by the president and can also be dismissed by him. The chancellor is usually the leader of the party that has won the most seats in the latest parliamentary election. At the very least, he or she is the choice of a majority of the new deputies. The chancellor must be eligible to serve in the Nationalrat but need not be a member of it. The chancellor also serves as head of the Federal Chancellery, which is staffed with civil servants.

In most respects, the chancellor functions as first among equals in the cabinet. He coordinates the work of the cabinet but is not entitled to give orders to individual ministers. However, the chancellor's power varies depending on political circumstances and his own political gifts. In a coalition government, the chancellor shares coordinating duties with the vice chancellor, who is the leader of the junior party in the coalition. If the chancellor heads a one-party government, his or her leeway to make decisions is increased. During the long period of rule under Chancellor Bruno Kreisky (1970-83), the public visibility of the chancellor was enhanced through the increased use of television. From the standpoint of the public, the chancellor had become the dominant figure of government.

On recommendation by the chancellor, the president appoints individuals to the various cabinet positions. Cabinet members do not have to be members of the Nationalrat, but they must be eligible to be elected to it. Persons chosen as cabinet ministers are usually leading members of a political party or interest group. Occasionally, however, a person has entered the cabinet from a high-level civil service position.

The number of ministries varies; in 1993 there were fourteen ministries. In a coalition government, the apportionment of the cabinet posts is roughly proportional to the parties' respective strengths in the Nationalrat. The awarding of particular posts is based on a coalition agreement reached between the two parties.

In keeping with the traditional Austrian principle of Proporz (the dividing of political offices according to the respective strengths and interests of the parties), parties name individuals to posts of particular concern to them. For example, if the SP� is a member of the coalition, at a minimum it names the minister for labor and social affairs, in keeping with the strong support it enjoys from the trade unions. By the same token, if the �VP is part of the coalition, it names the minister for agriculture and forestry because farmers are one of its main interest groups. The chancellor and vice chancellor do not have total control over the selection process for filling cabinet positions. For example, the SP� faction in the Austrian Trade Union Federation (�sterreichischer Gewerkschaftsbund--�GB) usually chooses the minister for labor and social affairs, and the �VP is careful to allow its various auxiliary associations and provincial parties to make certain selections. Beginning in 1987, the �VP and SP� have followed a practice of selecting an independent to head the Ministry for Justice.

The cabinet is subject to dismissal by the president and the Nationalrat. The president can dismiss the entire cabinet without the concurrence of the chancellor, but removal of individual members requires the recommendation of the chancellor. If the Nationalrat passes a vote of no confidence--which requires that one-half of the deputies be present--concerning the entire cabinet or a minister, the cabinet or minister is removed from office.

State secretaries are appointed and leave office in the same manner as ministers, but each government ministry does not have a state secretary. State secretaries aid ministers in parliamentary business and are bound by their ministers' instructions. They are nonvoting participants in cabinet sessions. A state secretary is not necessarily a member of the same party as the minister he serves.

Austria - Nationalrat

The Nationalrat (National Council), the lower house of parliament, exercises all of the powers usually associated with a national legislature. It has the power to remove the entire cabinet or individual members of it by a vote of no confidence. All legislation and treaties must be approved by the Nationalrat. Before a vote can take place, at least one-third of the Nationalrat's members must be present. A simple majority suffices for the passage of legislation. Sessions are public unless the deputies determine otherwise.

Deputies elect a president and second and third presidents from among their members to serve during the four-year legislative term. Party leaders who are members of their party's executive and of a parliamentary faction that serves as a liaison between parliament and a political party are most likely to be presidential candidates. The president and the third president belong to the same party, usually the party holding the most seats in the Nationalrat. The second president belongs to the other major party. Presidential duties include nominating employees of the Federal Chancellery, whose staff serves the three presidents. The three presidents preside over plenary sessions in two-hour shifts. They also join with the chairmen of the parliamentary factions to form the Presidial Conference, which directs the Nationalrat's activities and decides the time and agenda of plenary sessions and, to a lesser extent, the time and agenda of the committees. The Presidial Conference is one of the rare groups not affected by the custom of proportional representation. All parties holding seats in the Nationalrat are represented on the conference.

In 1993 the Nationalrat contained roughly fifteen committees in which legislative proposals are both prepared and examined and the results of parliamentary investigations considered. Each committee has various numbers of subcommittees assigned to deal with specific kinds of legislation. In addition to the committees, there are also the Main Committee and the Permanent Subcommittee, the members of which are elected at the start of each new legislative period. The Main Committee has responsibility for overseeing aspects of the state-run industries and for dispatching Austrian troops on international peacekeeping missions. It also participates in deciding the date for Nationalrat elections and setting rates for postal and telephone services. The president of the Nationalrat serves as chairman of the Main Committee. The Permanent Subcommittee plays a limited role because its main function is to fulfill the duties of the Main Committee in the case of the dissolution of the Nationalrat by the president.

Equally as important as the committees are the Klubs (factions), which all parties in the Nationalrat maintain. The factions usually have a leader and an executive committee, and they provide deputies with a behind-the-scenes setting to discuss political strategy with like-minded colleagues. Individuals elected as deputies to the Nationalrat automatically become members of their party's faction. Faction leaders assign deputies to committees and decide on the questions that are to be asked during debates and the priority for legislative initiatives.

In addition to the work of the committees, another important function of the Nationalrat is to question the government regularly on its activities and legislative proposals. One device frequently employed is an "interpellation," which summons for questioning before the Nationalrat a particular cabinet minister or government official. A minimum of twenty deputies is required to set an interpellation in motion. Questioning a government official is the prelude to a parliamentary debate on the issue.

A 1970 amendment to the election laws increased the number of Nationalrat seats from 165 to 183. Seats in the Nationalrat are divided among the country's nine provinces according to population. Deputies serve a four-year term and are elected according to constitutional and other federal laws. Candidates must be at least twenty years old on January 1 of the election year and must also be eligible to vote.

The Nationalrat has only one session per year, beginning no earlier than September 15 and ending no later than July 15. An extraordinary session of the Nationalrat can be convoked either by order of the federal president, by request of the cabinet, or by request of one-third of the deputies. Once a request has been made, the extraordinary session must commence within two weeks. After a parliamentary election, the newly elected Nationalrat must be convened within thirty days.

The Nationalrat can be dissolved either by presidential action or by itself. The president can dissolve the Nationalrat at the chancellor's request, but he is limited to dismissing it only once for the same reason. New elections must be held soon enough to enable the new parliament to convene within 100 days of the dissolution. The Nationalrat is empowered to dissolve itself by a simple majority vote.

During the Second Republic, membership of the Nationalrat has been heavily weighted toward men who come from white-collar professions. Changes in the sociological profile of the deputies have occurred slowly. The Nationalrat elected in November 1990 contained a record 22 percent of female deputies. Prior to this election, female deputies had never accounted for more than 15 percent of the total number of deputies. The average age of the deputies elected in 1990 was forty-six. Almost 40 percent of the deputies elected in 1990 were university graduates, and 25 percent were employees of political parties, politically oriented interest groups, or social welfare organizations.

The majority of legislative proposals originate in the executive. Legislation occasionally starts in the Nationalrat, but the close cooperation between the executive and the majority party in parliament makes such initiation unnecessary most of the time. During the Second Republic, governmental legislative proposals have outnumbered Nationalrat initiatives by three to one. Parliament's role in the legislative process is focused more on bringing to public attention the background of the government's legislative proposals and exposing any mistakes the government may have made. Opposition parties have the right to force the government to answer any questions about pending legislation.

Before a bill is introduced in parliament, it has already passed through an intensive process of examination. The government solicits comments from the various interest groups affected by the bill, especially the chambers of agriculture, commerce, and labor. During this stage, a bill frequently is modified to meet the objections of key interest groups and opposition parties in parliament. Changes to legislative proposals may also be made after a bill has been introduced in the Nationalrat, but the majority of changes are made before the bill is introduced officially. Bills are amended significantly by the parliament only 10 to 15 percent of the time.

By West European standards, the percentage of bills passed unanimously by the Austrian parliament is high. Unanimity prevailed anywhere between 38 and 49 percent of the time during the parliaments of the 1970s and 1980s. In the late 1980s and early 1990s, with the advent of the Greens in parliament and the increased power of the FP�, unanimity was on the decline.

As the complexity of the issues facing government has increased, so too has the importance of committees to the parliament's work. After a bill reaches the Nationalrat, it is assigned to a committee and frequently also to a subcommittee. Deputies typically spend twice as much time in committee hearings as in plenary sessions. The subcommittees hold even more hours of hearings than the full committees. Because of the unwieldy nature of plenary sessions, 80 percent of changes to government legislation occur in committee.

In 1975 the Nationalrat amended its procedures to give the opposition and smaller parties a greater role in the legislative process. Under the 1975 amendments, one-third of the deputies can request the Constitutional Court to review a law for constitutionality. Further, one-third of the deputies can request the government's accounting agency to conduct an audit of a government agency. These changes reflect the intensification of political competition that occurred in the Nationalrat after the long period of grand coalition governments between the two major parties ended in 1966. The �VP, as the major opposition party during the era of SP� rule (1970-83), led the drive for greater rights for minority parties.

Austria - Bundesrat

The interests of Austria's nine provinces are represented at the federal level in the Bundesrat (Federal Council), the upper house of parliament. The Bundesrat has sixty-three seats, which are apportioned among the provinces on the basis of population. Each province is guaranteed at least three seats. As of late 1993, the breakdown of seats was as follows: Vienna and Lower Austria had twelve each; Styria and Upper Austria, ten each; Tirol, five; Carinthia and Salzburg, four each; and Burgenland and Vorarlberg, three each. The members of the Bundesrat are elected by the provincial legislatures on the basis of proportional representation. At least one seat must be given to the party having the second largest number of seats in the provincial legislature. If several parties have the same number of seats, the party that won the second largest number of votes in the last provincial election is awarded a seat in the Bundesrat.

The main purpose of the Bundesrat is to protect provincial interests, but its powers are restricted because the government is not answerable to it. All laws passed by the Nationalrat must be presented to the Bundesrat for review. However, the Bundesrat can at most delay the passage of laws by means of a suspensive veto. In such a case, the bill is sent back to the Nationalrat, which can override the Bundesrat's veto by reapproving the bill. Once this is done, the bill becomes law. In 1984 the body's powers were increased by a constitutional amendment that required approval by two-thirds of the Bundesrat to any proposed constitutional change in the distribution of competencies between the federal government and the provinces. Despite this change, the Bundesrat remains a weak institution.

Austria - Bundesversammlung

The two houses of parliament meet jointly as the Bundesversammlung (Federal Assembly) to witness the swearing in of the president, to bring charges against him, or to declare war. Usually, the Bundesversammlung is convoked by the president. If charges are brought against the president, the chancellor convokes the Bundesversammlung. Meetings are chaired alternately by the president of the Nationalrat and the chairman of the Bundesrat. If the Bundesversammlung passes a resolution, its validity must be attested to by the chairman. The chancellor then countersigns and publishes the resolution.

Austria - Judicial System

The judicial system is independent of the executive and legislative branches. The constitution establishes that judges are independent when acting in their judicial function. They cannot be bound by instructions from a higher court (except in cases of appeal) or by another agency. In administrative matters, judges are subordinate to the Ministry for Justice. A judge can be transferred or dismissed only for specific reasons established by law and only after formal court action has been taken. The Austrian judiciary functions only at the federal level, and thus there is no separate court system at the provincial level.

Austria - The Constitutional Court

The Constitutional Court decides the legality of treaties and the constitutionality of laws and decrees passed at the federal, provincial, and local levels. Cases involving courts and administrative agencies or the Administrative Court and the Constitutional Court are heard in the Constitutional Court. Individuals can present cases to the court if they believe a decision of an administrative agency has violated their constitutional rights. Monetary claims against the state, provinces, administrative districts, or local communities that cannot be settled by a regular court or an administrative agency are brought to the Constitutional Court, as are claims regarding disputed elections. The court also decides questions of impeachment and hears cases charging the president with breaking a constitutional law or cases charging members of federal or provincial governments with breaking a law.

The court is composed of a president, vice president, twelve judges, and six alternates. The federal president, on recommendations from the cabinet, appoints the court's president, vice president, six judges, and three alternates. The federal president appoints six additional judges and three more alternates based on nominations from the Nationalrat (for three judges and two alternates) and the Bundesrat (for three judges and one alternate). The constitution requires that three judges and two alternates of the court, which sits in Vienna, live outside the city. The president of the court chairs its meetings and decides on the assignment of cases to individual judges. He does not have voting rights, however. Cases are heard by five, nine, or all thirteen of the judges and are decided by majority vote.

The selection of judges for the Constitutional Court has been controlled by the �VP and the SP�. The two parties have applied the principle of Proporz to filling vacancies on the court. Between 1945 and 1970, the �VP was the larger of the two parties in terms of parliamentary strength, and it controlled seven of the judgeships with voting rights; the SP� controlled six of the judgeships. Beginning in 1970, the ratio was reversed when the SP� gained more seats in the parliament than the �VP.

Austria - The Administrative Court

The Administrative Court, located in Vienna, is the court of final appeal for cases involving administrative agencies. The court's specific purpose is to determine whether an individual's rights have been violated by an administrative action or omission. Individuals can also appeal to this court if an administrative agency fails to grant a decision in a case. The Administrative Court may not rule on matters that come under the competence of the Constitutional Court.

The Administrative Court is presided over by a court president who is assisted by a vice president and several other court officers. Appointments to the court are made by the federal president on the recommendation of the cabinet. Prerequisites for appointment are completion of law and political science studies and ten years of experience in a related field. At least onethird of the court's members must be qualified judges, and at least one-fourth must come from the provinces, preferably from civil service positions. Panels of three, five, or nine judges sit in court at any one time, depending on the importance of the case.

Austria - Ordinary Courts

The system of ordinary courts is headed by the Supreme Court in Vienna. This court is the court of final instance for most civil and criminal cases. It can also hear cases involving commercial, labor, or patent decisions, but constitutional or administrative decisions are outside its purview. Justices hear cases in five-person panels.

Cases outside the jurisdiction of these courts are heard in special courts. For example, labor courts decide civil cases concerning employment. Employers and employees are represented in labor court hearings. Cases involving the Stock and Commodity Exchange and the Exchange for Agricultural Products are decided by the Court of Arbitration, which is composed of members of the exchanges. Social insurance cases are heard by the provincial commissions for social insurance. The Patent Court decides appeals of patent cases.

The People's Attorney

The Office of the People's Attorney, which was created in 1977 and granted constitutional recognition in 1981, functions in a manner similar to an ombudsman's office. It is designed to assist citizens who believe that they have been improperly treated by government administration. The office can also initiate its own investigations if it suspects that particular government offices are engaged in corruption or fraud. After concluding its investigations, the office has the authority to issue binding recommendations to government offices to rectify abuses.

Legal Training

Attaining the title of attorney-at-law requires eleven years of training. Four years of this period consist of prescribed studies in law and political science at a university. On completion of a doctoral program, the candidate undergoes a seven-year apprenticeship, during which one year must be spent in a civil or criminal court and three years in an attorney's office. Finally, it is necessary to pass the bar examination.

Austria - Civil Service

Civil servants have held a position of respect in Austrian society since the formation of the civil service in the eighteenth century, when it was considered to be "carrying out a mission for the state." The civil service is highly regulated. Public servants take an oath of office, promise obedience to their superiors, and pledge to keep official matters secret. A civil servant may neither join an association nor be employed in another job that could be interpreted as unworthy of his or her position.

Besides the high esteem in which the civil service is held, job security is also an attractive feature. Periodic raises are automatic, and promotions are scheduled at regular intervals. The retirement pension is adequate. A civil servant may be dismissed only for serious misconduct.

During the grand coalition of 1945-66, the �VP and SP� introduced the system of Proporz into the civil service. Prior to the founding of the Second Republic, the civil service had been dominated by �VP members, and thus after 1945 special steps were taken to recruit persons with ties to the SP�. The two parties came to exercise almost complete control of the personnel of the ministries that they controlled in the cabinet. During the period of single-party rule (1966-83), the importance of political allegiance came to play a lesser role in the selection process of the civil service. Chancellor Kreisky made sure that a large number of persons without party affiliation were appointed to high-level positions in the civil service.

Reforms also were introduced in this period to make the civil service better able to attract highly qualified people. In 1975 a civil service training academy was established, and after 1980 some top positions were changed to fixed-term appointments. Further changes were made to give equal opportunity for career advancement to all members of the civil service, regardless of their specialty. Traditionally, people with legal training had a decided advantage in rising to the top of the system. As of 1993, the government was working on a comprehensive reform of the civil service system.

Austria - Provincial Government

Each of the nine provinces has its own constitution, which prescribes its governmental organization. Common to each province is an elected Landtag (provincial legislature), which is popularly elected on the basis of proportional representation. According to the federal constitution, the number of deputies can range from thirty-six to sixty-five, depending on the population of the province. Vienna, which is simultaneously a province and a city, is in a special category--its legislature has 100 deputies. A Landtag is subject to dissolution by the federal president at the cabinet's request. This process requires the consent of the Bundesrat. One-half of the Bundesrat's deputies must be present and cast a two-thirds vote in favor of the action.

The Landtag elects an executive composed of a governor and councilors. A deputy is elected to serve in the absence of the governor. Candidates for these positions must meet eligibility requirements of the Landtag, although they need not belong to it. Elections to the Landtag occur every five years, except in Upper Austria, where they are held every six years. Legislative periods can be shortened and elections held if the Landtag votes to dissolve itself.

Provincial constitutions can be amended, provided that changes do not conflict with the federal constitution. Passage of a constitutional amendment requires the presence of at least onehalf of the Landtag's members and a two-thirds majority vote. Regulations for passage of other provincial laws vary, but generally the procedure requires a vote by the Landtag, verification that the proper procedure has been followed, the countersignature of the prescribed official, and publication in the provincial law gazette. Before a law is published, the federal minister whose jurisdiction covers the area of the proposed law has to be informed of the province's action. The cabinet then has eight weeks to notify the province if the bill interferes with federal interests. The Landtag can override the federal government's objections by voting again in favor of the bill with at least one-half of its members present. The federal government would probably appeal to the Constitutional Court if it strenuously objected to a provincial law.

The provinces have a restricted ability to raise taxes. They may not tax items already subject to federal taxation. Every four to six years, the federal government, the provinces, and the municipalities negotiate a Finance Equalization Law that determines how tax revenues raised at the federal and provincial levels are to be divided. This system ensures that the provinces are fully compensated for the many federal programs that they implement.

Article 15 (1) of the federal constitution states that matters not expressly reserved to the federal government come under the jurisdiction of the provinces. Matters in which the provinces have primary jurisdiction include local police, primary education, housing, health, and protection of the environment. If a provincial government believes that some federal action is infringing on its jurisdiction, it can appeal to the Constitutional Court for a ruling.

Provisions exist for interprovincial coordination of policies by means of compacts and treaties. Such coordination, however, is feasible only if the matters at hand are among the autonomous rights of the provinces. This manner of cooperation has rarely occurred. Instead, conferences of provincial officials are held to plan less formal methods of cooperation. The federal government must be notified of interprovincial action.

Austria - Local Government

Provinces are divided into districts and local communities. The primary function of district governments is to administer federal programs. They do not have the power of taxation. A district is headed by a district commissioner, usually a career civil servant, who is appointed by the provincial governor. Local communities are self-governing, having a popularly elected community council that is chosen by proportional representation on the basis of political party strength. The number of representatives ranges from seven to 100, depending on the population. Members serve a five- or six-year term as determined by provincial regulations. Community council meetings are presided over by a mayor, elected by and responsible to the community council.

The federal government or a province may delegate some functions to a local government. Otherwise, local communities deal with matters of local concern, such as safety, traffic, police, settlement of disputes that are not dealt with by the courts, public utilities, cultural institutions, public housing, and health care services.

Local actions, whether autonomous or delegated, are in the long run usually subject to provincial or federal supervision or controls. Administrative and legal regulations on the provincial and federal levels are so pervasive that even decisions that are considered the sole responsibility of local communities are actually limited. Local communities, however, have recourse to the Administrative Court and the Constitutional Court if they believe that their rights are being infringed.

Austria - Electoral System

The electoral system is based on the principle of proportional representation. The system's basic outline was established in the constitution of 1920, although significant changes were made in 1970 and 1992. Among other changes, the amendments of 1970 raised the number of seats in the Nationalrat from 165 to 183.

The 1992 reform of the election law, which went into effect in May 1993, alters the electoral system for the Nationalrat in a number of significant ways. It divides the country into nine provincial electoral districts that correspond to the country's nine provinces. These districts contain a further forty-three regional electoral districts. The creation of the small regional electoral districts is intended to foster a greater feeling of connection between voters and those who represent them in parliament. The law also aims to personalize elections by giving voters greater power than before of electing individual candidates of the party of their choice by voting directly for them rather than for the party list of candidates as a whole. This reform may reduce the power of party leaders to impose their preselected candidates on the electorate. The law also modifies vote-counting procedures to ensure that the number of parliamentary seats won by a party will conform more closely with votes cast. Lastly, the law attempts to prevent a proliferation of small parties sitting in the Nationalrat by barring a party from that body if it has not won at least 4 percent of votes cast nationwide. However, a party can be represented in parliament by winning at least one seat in a regional electoral district.

According to the 1992 law, votes in Nationalrat elections are counted in three stages, although a voter casts only one ballot. On this ballot, the voter indicates the party of his choice, and then, if he wishes, he may choose two candidates from this party, one to be elected from the regional voting district and one from the provincial voting district. Votes going to a preferred candidate are called preferential votes. In the first stage of counting votes, the returns from regional voting districts are examined; in the second stage, those from provincial voting districts are examined. In these first two stages, the Hare system is used to determine the proportional allocation of seats. In the third stage of counting votes, candidates on the national party list are allocated seats according to the d'Hondt method.

A party must win a parliamentary seat in the first stage of vote counting in order to win seats in the second and third stages. A candidate who receives preferential votes amounting to at least one-sixth of the votes his party receives wins a parliamentary seat. This is also the case for a candidate who receives preferential votes amounting to at least one-half the electoral quota (Wahlzahl), that is, the number of valid ballots in a voting district divided by the number of parliamentary seats allotted to it. The vote tallying procedures established by the new law mean that about ninety parliamentary seats come from regional voting districts, about sixty-five from provincial voting districts, and roughly twenty-five from the federal level. All persons aged nineteen and over by January 1 of the year in which the election is held are eligible to vote. Voter participation has traditionally been very high. In national elections, it has fallen below 90 percent only once (in 1990, when it stood at 86 percent). Voting always takes place on a Sunday.

Austria - POLITICAL DYNAMICS

Between the end of World War II and the late 1980s, when some new trends became evident, Austria's political system seemed stable and unchangeable. Most political scientists considered Austria a classic case of constitutional democracy, that is, a political system in which cohesive social groups are closely identified with political parties. According to this theory, Austrian politics, business, and society in general were decisively shaped by the influence of three major social camps, or subcultures (Lager)--the socialist, the Catholicconservative , and the German-nationalist.

The most important factors in determining to which subculture a person belonged were geographic location (rural or urban), socioeconomic status, and professional occupation. The socialist camp had its basis in the urban working class of Vienna and other cities and in the intellectual class. The Catholic-conservative camp had its traditional base in the small towns and farming communities of Austria and was almost exclusively Roman Catholic. The German-nationalist camp was smaller than the other two subcultures and was founded on the enthusiasm for union with Germany that was prevalent during the years of the First Republic (1918-38). A high percentage of its members came from whitecollar professions.

Austria's subcultures provided their members with a selfcontained milieu in which to pursue their lives and a variety of occupations. In addition to the political parties aligned with the Lager, each camp featured professional and trade organizations that played an important role in party politics and in society as well.

This traditional system has continued into the 1990s. In 1993, in the socialist camp, the key organizations affiliated with the SP� were the Group of Socialist Trade Unionists (Fraktion Sozialistischer Gewerkschaftler--FSG), the Free Business Association of Austria (Freier Wirtschaftsverband �sterreichs--FWB), and the SP� Farmers (SP�-Bauern). In the Catholic-conservative camp, the chief organizations of the �VP were the League of Austrian Workers and Salaried Employees (�sterreichischer Arbeiter- und Angestelltenbund--�AAB), the League of Austrian Business (�sterreichischer Wirtschaftsbund-- �WB), and the League of Austrian Farmers (�sterreichischer Bauernbund--�BB). The German-nationalist camp, which is represented by the FP�, had only one auxiliary organization of note as of 1993, the Circle of Free Business Persons (Ring Freiheitlicher Wirtschaftstreibender--RFW).

A key source of influence for the professional and trade organizations is their control of the chambers of agriculture, commerce, and labor. In the Austrian corporatist system, the chambers are assigned responsibility for implementing certain aspects of economic laws and regulations. Moreover, membership in the chambers is obligatory for persons employed in a wide range of occupations. Thus, the professional and trade organizations and the chambers are assured a large amount of influence in the public realm. The �VP dominates the Chamber of Agriculture through the �AAB and the Chamber of Commerce through the �WB. The SP� has a controlling influence in the Chamber of Labor through the FSG.

The Social Democratic Party of Austria (Sozialdemokratische Partei �sterreichs--SP�), until 1991 known as the Socialist Party of Austria (Sozialistische Partei �sterreichs--SP�), has its roots in the original Social Democratic Workers' Party (Sozialdemokratische Arbeiterpartei--SDAP), founded in 1889 by Viktor Adler, a young doctor. The SDAP supported revisionist Marxism and the use of democratic methods to establish workingclass rule in a democratic government. The SDAP was responsible for pushing through universal voting rights for men in 1905 and for extending the same for women in 1919. From 1934 to 1945, during the regimes of Engelbert Dollfuss (1932-34) and Kurt von Schuschnigg (1934-38) and the takeover by the Nazis, the SDAP was outlawed. In 1945 it was reconstituted as the Socialist Party of Austria. In 1991 the party readopted the designation "Social Democratic."

Moderates such as Karl Renner and Adolf Sch�rf, each of whom eventually served as president of the Second Republic, led the postwar party. Their primary interests lay in increasing SP� power in the coalition government rather than in fostering Marxism. Between 1945 and 1957, the party supported democratic practices and intraparty cooperation, programs for higher wages and lower food prices, and increased government spending on social programs.

The election of Bruno Pittermann as party chairman in 1957 marked the beginning of major policy changes. The party had a strong following among industrial workers, but party officials wanted to expand SP� membership to the middle class and whitecollar workers and to soften the party's anticlerical position in order to become acceptable to Roman Catholics. These changes were expressed in a new party program adopted in 1958. The program claimed that the SP� was "the party of all those who work for a living," and it stated the party's opposition to communism and fascism.

The late 1960s brought more changes in party doctrine. A new economic program in 1967 constituted a shift from concern for the distribution of wealth to concern for economic growth, including increasing foreign investment in Austria. Cultural and social reforms were demanded, and emphasis was placed on attending to the needs of young people. In line with its appeal to youth, the party supported a plan to shorten the term of military service.

Under Bruno Kreisky, who became chairman of the SP� in 1967, the party continued its move toward the center of the ideological spectrum. Although party platforms continued to refer to the classless society as an ideal, the SP� was careful to distinguish its brand of socialism from the centralized, inefficient version of Eastern Europe and the Soviet Union. The party program of 1978 stressed the four principles of freedom, equality, justice, and solidarity. Central to the SP�'s philosophy was a guarantee for all Austrians of freedom from fear, hunger, exploitation, and unemployment. The freedom to pursue wealth had to be balanced by the government's guarantee of equal opportunity and social justice.

Under Kreisky the SP� triumphed at the polls in 1970, 1971, 1975, and 1979, and between 1971 and 1983 the party enjoyed an absolute majority in parliament. The Kreisky governments laid great emphasis on improving the social welfare system and achieving full employment. The Kreisky era also featured the flourishing of the technocrats--SP� politicians successful in business and banking whose lavish life-styles seemed incongruous in a party supposed to represent the interests of labor.

In the parliamentary election of 1983, the SP� lost its absolute majority, and Kreisky decided to retire from politics rather than preside over a coalition government. Fred Sinowatz, Kreisky's minister for education, was chosen as chancellor in a coalition government with the FP�. The Sinowatz era, from 1983 to 1986, proved to be a short interregnum and was not distinguished by any great achievements.

Franz Vranitzky, born in 1937, became chancellor in June 1986 when Sinowatz resigned after the SP� lost the presidential election to Kurt Waldheim. Vranitzky replaced Sinowatz as party chairman in May 1988, becoming the first person from a workingclass background to hold this position. Despite his working-class heritage, Vranitzky had had a successful career in banking before entering politics.

Under Vranitzky the SP� moved to restore its image among rank-and-file members by improving its methods of intraparty communication. Computers and direct mail technology were used to gauge the opinions of members in the provinces, and efforts were made to improve recruiting techniques by means of recreational groups. In the area of government policy, Vranitzky stressed that limits on state activity were necessary, although he noted that health care and education were fields where market forces had to be regulated.

Vranitzky displayed a more open attitude toward the question of privatizing government industries than Kreisky had. To a large extent, changes in this area were inevitable because of large losses in the state industrial sector that came to light in 1985. Vranitzky embraced the principle that privatization should be pursued if it would lead to greater operational efficiency. The press dubbed Vranitzky's approach "pinstripe socialism." The policy has proven to be a responsible one and has been fairly popular with Austrians.

In 1984 the SP� launched a program called Perspectives '90, designed to promote intraparty discussion on current issues. A major aim of the leadership was to show that the party was eager to listen to grass-roots concerns. A series of nationwide debates eventually led to the issuance of a draft document in 1986 that incorporated the views of party members on issues such as the environment, controls on the development of technology, and democratization of society. Events that had embarrassed the party, such as the conflict over the Hainburg power plant in 1984 and Minister for Defense Friedhelm Frischenschl�ger's reception of Walter Reder in 1985, were also discussed.

An estimated 30,000 party members participated in the Perspectives '90 meetings, which took place in 1,000 local groups. The success of this project led the SP� to stage the Congress for the Future in Vienna in the summer of 1987, where 400 of the party's top leaders and intellectual luminaries discussed the outlook for social democracy. It was agreed that the SP� needed to formulate an alternative to the neoconservatism of the 1980s that would allow for greater codetermination in the workplace but also avoid the pitfalls of too much state control. After the success of this conference, the SP� began planning another that would produce a Social Democratic Manifesto for the Year 2000.

Membership in the SP� is direct (unlike the �VP, where a person joins an organization affiliated with the party). SP�'s membership grew rapidly in the postwar period--from 360,000 members in 1946 to its peak of nearly 720,000 members in 1979. With the loosening of the grip of the Lager on Austrian society, SP�'s membership has declined slightly. In the early 1990s, it was estimated at 700,000.

Party organization remained centralized as of the early 1990s. The main link between rank-and-file members and party leaders are the activists known as Vertrauenspersonen, who personally collect annual membership dues. At the local level, the SP� is represented by almost 4,000 groups in villages and towns. Every two years, the SP� holds a federal conference that elects the party executive, which has sixty-five members. Because of the executive's unwieldy size, a smaller group, known as the presidium, is selected from it and actually conducts most party business.

Delegates to the federal conference are drawn from the various suborganizations of the party. The party has two youth organizations, the Young Generation (Junge Generation--JG) and the Socialist Youth of Austria (Sozialistische Jugend �sterreichs --SJ�). The Group of Socialist Trade Unionists (Fraktion Sozialistischer Gewerkschaftler--FSG) sends fifty-two delegates to the conference. There is also a Women's Committee, which has representatives from each province. Over the years, women have consistently made up one-third of SP�'s membership. In 1985 the federal conference passed an amendment providing for greater representation of women in the party and larger numbers of female candidates. Progress toward this goal has been slow, however, and in 1989 only eleven of the SP�'s deputies in the Nationalrat were female.

SP� candidates for parliamentary elections are determined by the Party Council, whose members come from the nine provincial party organizations. The party executive and the heads of the nine provincial parties have an input into the selection process. Roughly one-fifth of the places are reserved for high-ranking party officials, whose presence in the Nationalrat is considered imperative.

Austria - The Austrian People's Party

The Austrian People's Party (�sterreichische Volkspartei-- �VP) was created in Vienna in 1945 by leaders of the former Christian Social Party (Christlichsoziale Partei--CSP). The founders of the �VP made sure that the new party was only loosely tied to the Roman Catholic Church, unlike its predecessor. The �VP emerged as a conservative, democratic party based on Christian values that sought to include diverse interests. From 1945 to 1966, �VP politicians filled the post of chancellor in a series of grand coalition governments with the SP� (from 1945 to 1947, KP� members were also in the cabinet). From 1966 to 1970, the �VP ruled alone and thereafter entered a long period of opposition to the SP�, which ended in early 1987 when the two parties formed a new coalition government.

The �VP periodically has revised its party program. During the 1945-55 period, the party advocated low taxes, reduced government expenditures, a balanced budget, and low wage increases. The �VP favored a limited government role in the economy. After much debate, in 1965 the party adopted the Klagenfurt Manifesto, which referred to the �VP as an "open people's party" of the "new center." The manifesto laid less emphasis than previous ones on the priority of personal property in a democracy. It also stressed the importance of expanding economic welfare and educational opportunities for all social groups.

After suffering losses in the 1970 parliamentary election, the �VP entered the opposition for the first time. A wide-ranging discussion of principles took place at all levels of the party. The outcome of this process was the 1972 Salzburg Program, which described the �VP as a "progressive center party" dedicated to integrating Austria's different social groups. The program reaffirmed the party's commitment to a free and independent country, a multiparty democracy, and a social market economy combining free enterprise and some government intervention. As of 1993, the Salzburg Program had not been replaced as the basic statement of �VP ideology.

The �VP had a less centralized form of party organization than the SP� as of the early 1990s. At the top is the party presidium, composed of the party chairman, the chancellor and vice chancellor (if they are members of the �VP), the general secretary, up to six deputies to the chairman, the leader of the party's parliamentary faction, and eight additional members drawn from the provinces and interest groups affiliated with the party. The party holds a national conference at least once every three years. Roughly 600 delegates from the provinces and the party's auxiliary organizations attend the conference, which elects the party chairman, the deputies, and the general secretary.

The auxiliary organizations play important roles in the �VP's internal workings. The key organizations are the League of Austrian Workers and Salaried Employees (�sterreichischer Arbeiter- und Angestelltenbund--�AAB), the League of Austrian Business (�sterreichischer Wirtschaftsbund--�WB), and the League of Austrian Farmers (�sterreichischer Bauernbund--�BB). These organizations represent the �VP in the chambers of labor, commerce, and agriculture, respectively. Until 1980 the leaders of these three groups were automatically placed on the party presidium. However, this practice was abandoned after many party members complained about undue influence by interest groups over �VP affairs. This reform was yet another indication of the erosion in the influence of the traditional Lager over Austrian society.

The majority of �VP members acquire party membership indirectly via one of the auxiliary organizations. Because of indirect membership, it is difficult to arrive at a precise figure for total membership in the �VP. At the beginning of the 1990s, the combined membership of the three leagues was about 800,000. Adding to this figure members of the women's, youth, and senior organizations, a total membership of 1.2 million was attained. However, the �VP's actual membership was about onethird smaller than this because many individuals belonged to more than one league or subgroup.

The independence of auxiliary organizations affiliated with the �VP means that there is a fairly high degree of intraparty disagreement over policies compared with the SP� and other Austrian parties. One major cleavage exists between the �AAB, which represents the interests of working people in the �VP, and the �WB, which speaks for business interests. The farmers' group, the �BB, has clashed with the �WB over the issue of whether Austria should join the European Union. Tensions between the wings of the party remained high even in the early 1990s, despite numerous partywide discussions of ideology designed to bring about consensus. Some experts believe that the cohesion of the Catholic-conservative Lager will be endangered if the �VP does not achieve a higher degree of party unity than that prevailing in 1993.

Alois Mock, who came from Lower Austria, one of the party's strongholds, held the position of party chairman from 1979 to 1989. As the party struggled with declining vote totals, many in the �VP concluded that his uncharismatic leadership style was a hindrance to a recovery at the polls. Mock withstood pressure for his ouster after the party's poor performance in the national election of 1986, and his stature temporarily increased when he became vice chancellor and foreign minister in the coalition government formed in early 1987 with the SP�. Discontent with Mock resurfaced quickly, however, and there were also disturbing signs of party disunity. After the heavy losses incurred by the �VP in the provincial elections in the spring of 1989, Mock's opponents pressed again for his resignation. At an emergency summit in April 1989, Mock was finally convinced to step down as party chairman. He also relinquished the post of vice chancellor. His replacement in both positions was Josef Riegler, a member of the �BB from Styria.

Riegler had served as agriculture minister between 1987 and 1989 and was known as a consensus seeker who would be able to get along well with the SP�. Riegler was also interested in developing new approaches to environmental problems, and many in the party hoped this would help the �VP regain some of the voters who had deserted it for the environmental, or Green, parties.

However, the devastating results of the October 1990 national election, in which the �VP's share of the vote declined by 9 percent, proved that the party's problems went much deeper than who held the post of party chairman. In May 1991, Riegler decided not to run again for the party chairmanship. Erhard Busek, a well-known �VP politician who had headed the party's Vienna branch between 1976 and 1989, won the election to succeed Riegler. At the same time, the party conference voted to reduce the number of the chairman's deputies from six to two, a sign that party members wanted to curb the influence of the interest groups.

Austria - The Freedom Party of Austria

The Freedom Party of Austria (Freiheitliche Partei �sterreichs--FP�) was founded in 1956 by Anton Reinthaller, who had served in the Seyss-Inquart national socialist government formed in collaboration with Hitler after the Anschluss in 1938. Anticlerical and pro-German, the FP� was the party of persons who were uncomfortable with the domination of Austrian politics by the "red-black" (socialist-clerical) coalition governments of the SP� and �VP. The party had liberal and nationalist wings, which frequently disagreed over strategy. Although the FP� was not an extremist party, it attracted many former Nazis with its philosophy that Austrians should think of themselves as belonging to a greater German cultural community.

The FP�'s stress on nationalism made it an atypical liberal party. Nevertheless, in 1979 the FP� was admitted to Liberal International, the worldwide group of liberal parties. The FP�'s ideology emphasized the preservation of individual liberties in the face of the growth of the state's power. The party enthusiastically endorsed free enterprise and individual initiative and opposed a larger role for the state in the ownership of enterprises. The FP� was also against the socialist idea of striving for greater equality between socioeconomic groups.

After Reinthaller's death in 1958, Friedrich Peter became the head of the FP�. Under his leadership, the liberal wing increased its influence, and ties to the SP� were developed. However, the FP� remained a minor party with a limited opposition role in the parliament. Between 1956 and 1983, the FP�'s share of the vote stagnated between 5.0 and 7.7 percent. After the election of 1970, the FP� struck a deal with the SP�, which promised electoral reform in exchange for the FP�'s support of Kreisky's minority government. The ensuing changes in the electoral laws helped the FP� increase its representation in parliament in subsequent elections, despite the fact that its vote totals did not rise at the same time. Peter's hope that he could make the FP� attractive to the SP� as a coalition partner was dashed by Kreisky's success in obtaining absolute majorities in the elections of 1971, 1975, and 1979. It was only in 1983, when the SP� lost its majority, that it turned to the FP� to form a government. The FP�'s brief three-year experience in power in the SP�-FP� coalition of 1983-86 was mostly frustrating, as the government stumbled from one crisis to the next.

Norbert Steger was FP� party chairman between 1980 and 1986. A member of the party's liberal wing, Steger served as vice chancellor and minister for trade in the SP�-FP� coalition. He was not a charismatic politician, and, as the coalition's troubles mounted, he began to lose support among the party's rank and file. At an FP� convention in the spring of 1986, J�rg Haider, leader of the Carinthian branch of the party, launched a successful coup against Steger and became the new chairman.

Haider, born in 1950, is a handsome, dashing figure whose self-confidence strikes many observers as verging on arrogance. He comes from the nationalist wing of the party and has stirred controversy on many occasions by his remarks about Austria's proper place in the German cultural community. On one occasion in 1988, Haider referred to Austria as "an ideological deformity." Since Haider took control of the FP� in 1986, the party has achieved dramatic gains at the polls in both national and provincial elections. In the March 1989 provincial election in Carinthia, the FP� displaced the �VP as the second strongest party, and Haider was elected governor of the province with votes from the �VP. This election marked the first time that a provincial governor was not from either of the two major parties. Haider's term as governor was cut short in June 1991 by the controversy unleashed by his remark during a parliamentary debate that the Third Reich's employment policy was a positive model. The �VP and SP� joined together to pass a vote of no confidence against Haider, marking the first time in the history of the Second Republic that a governor was forced to step down. Haider did not allow this setback to create challenges to his leadership of the party. In three provincial elections in the fall of 1991, Haider led the FP� to outstanding showings, proving that Austrian voters were increasingly ready to vote for alternatives to the two major parties.

A less charitable interpretation of the FP�'s rise under Haider is that Austrian politics has taken a turn to the right. At times in his career, Haider has given his critics ample reason for accusing him of neo-Nazi tendencies. He has frequently pandered to the sentiments of the far right, but his everyday political discourse is more moderate. Haider tailors his remarks to his audiences, and he resorts to the rhetoric of right-wing populism in order to inspire the conservative nationalists in the FP�.

A major element in Haider's prescriptions for Austria is his desire to cut down drastically on the number of foreigners allowed to live in the country. Haider consistently argues that immigration is excessive and is causing serious problems for Austrian citizens in the areas of jobs and housing. Haider's campaign against foreigners was a major reason for the passage of a 1991 law that decreed that foreign workers could not make up more than 10 percent of the work force. In 1993 this ceiling was reduced to 9 percent when a new law, the Resident Alien Law, went into effect. Early in the same year, Haider sponsored a referendum to further tighten the control over the number of foreigners in Austria. Although he got only half of the 800,000 signatures he sought, the language Haider used in his campaign was extreme enough to cause large counterdemonstrations.

The tensions between Haider and the liberal wing of the party caused five FP� members of the Nationalrat to leave the party in early 1993 and form a new party, The Liberal Forum (Das Liberale Forum). Led by the FP�'s 1992 presidential candidate, Heide Schmidt, the group won seats in the Upper Austria provincial elections of May 1993. The new party was also recognized by Liberal International, which was expected to expel Haider's FP� from its ranks in 1994 because it advocated policies incompatible with traditional European liberalism.

Despite these setbacks, Haider is expected to remain a formidable force in Austrian politics. His sense for the issues that trouble many voters and his ability to enunciate views too extreme for the larger parties will likely win him a substantial following during the rest of the 1990s as the country struggles to adapt to post-Cold War conditions.

Membership in the FP� is direct (there is no tradition of joining an organization affiliated with the party, as with the SP�). The party's membership grew from 22,000 in 1959 to 40,000 in 1990. The membership-voter ratio declined as the party made dramatic gains at the polls. The FP�'s share of the vote in national elections tripled between 1983 and 1990, when it achieved 16.6 percent. The FP� has a strong base of support in the provinces of Carinthia and Salzburg. The party draws much of its support from the middle class, salaried employees, and the self-employed. More than 60 percent of its voters are under the age of forty-four, and many are well educated. The party has few auxiliary organizations, in comparison with the �VP and the SP�. In addition to an organization for people in business, it has groups for academics, students, and retired persons. The FP�'s party structure is decentralized, and provincial organizations play an important role in party affairs. The party chairman, who is elected by the party conference, chooses the party manager and general secretary. The general secretary acts as a liaison between federal leaders and provincial organizations.

Austria - The Green Parties

Another clear sign that the Austrian party system is loosening up was the emergence during the early 1980s of organized environmental, or Green, parties. A major catalyst in the birth of the Green movement in Austria was the narrow defeat of the November 5, 1978, national referendum on nuclear energy. The Kreisky government, seeking to build a nuclear power plant in Zwentendorf near Vienna, decided to let the people decide on the question of nuclear energy.

The victory of the antinuclear forces encouraged environmental activists to run in local elections, and in 1982 two national Green parties were formed. The more moderate of the two, the United Greens of Austria (Vereinigte Gr�ne �sterreichs-- VG�), had a strong commitment to working within the existing political system to change environmental policies. The Alternative List of Austria (Alternative Liste �sterreichs--AL�), founded in 1982 on the fourth anniversary of the Zwentendorf referendum, was more willing to challenge the political status quo. In addition to championing radical changes in environmental policy, the AL� also advocated a guaranteed national income, a thirty-five-hour workweek, and greater government ownership in certain areas of the economy.

The prospects of the Green parties are limited by their frequent inability to form alliances for the purpose of contesting elections. When the AL� and VG� have campaigned on a common ticket, they usually have won seats in parliament. In 1983, the first national election in which the Green parties participated, the two groups ran on separate lists, and both failed to gain representation in the Nationalrat. The Green cause received a strong boost in 1984 from the confrontation between the SP�-FP� government and environmental activists opposed to the plan to build a hydroelectric plant in a wetland forest at Hainburg in eastern Austria. The government backed down from its plan, and the incident led to an increase in support for the Green parties from disillusioned SP� voters, intellectuals, and others with strong views on the environment.

Green activist Freda Meissner-Blau ran in the May 1986 presidential election, taking a surprising 5.5 percent of the vote, which necessitated a run off between the �VP and SP� candidates. Encouraged by this showing, the AL� and VG�, after long negotiations, agreed to participate in the November 1986 national election on a single list, named the Green Alternative-- Freda Meissner-Blau List. The Green Alternative took 4.8 percent of the vote and won eight seats in parliament. This marked only the second time in the history of the Second Republic that a fourth party had entered the Nationalrat. (The KP� had been in the parliament between 1945 and 1959.) The harmony between the two groups was short-lived, however, as they clashed over how to divide the federal financing that became available to the Green movement. In the 1990 national election, the VG� put up its own list of candidates, and the AL� ran as the Green Alternative/Greens in Parliament (Gr�ne Alternative/Gr�ne in Parliament--GAL). The VG� polled only 1.9 percent of the vote and failed to win any seats. The GAL took 4.5 percent of the vote and increased the number of Green deputies to ten.

As of the early 1990s, the future of Green politics in Austria remained uncertain because of the strong differences between the GAL and VG� over political strategy. The VG� was committed to developing a centralized party structure along the lines of the �VP and SP�, while the AL� preferred to allow complete autonomy for its affiliated organizations in the provinces. There were also questions about the longevity of the Greens' appeal to voters. Studies indicated that only 50 percent of Green voters had close ties to a Green party, and roughly 35 percent of Green votes came from floating voters who had abandoned the two major parties. However, many Austrians felt a lack of confidence in the abilities of the �VP and SP� to fashion constructive policies, and as long as this doubt persists, the Green parties will have opportunities to elect deputies to parliament.

Austria - Political Developments since 1983

In 1983 a thirteen-year period of single-party rule by the SP� came to an end. The period had been dominated by Bruno Kreisky, who served as chancellor for the entire time. With Kreisky as its leader, the SP� had emerged from the election in 1970 as the strongest party. This election marked a turning point in Austrian history because never before had a socialist party been given such a mandate by the voters. The outcome was conclusive proof that most Austrians had lost their fear of the SP�'s being too leftist to govern alone.

SP�-FP� Coalition, 1983-86

In the election of 1983, the SP� lost its absolute majority in the Nationalrat, although it remained the largest party. Kreisky fulfilled his pledge to resign as chancellor if the SP� lost its undisputed position in parliament. Fred Sinowatz, a rather colorless figure who had been minister for education under Kreisky, was selected as the new chancellor. The SP� decided to form a coalition with the FP�, marking the first time ever that the FP� had joined the government. Norbert Steger, the moderate chairman of the FP�, was named vice chancellor and minister for economic affairs, and other members of his party became minister for defense and minister for justice.

The SP�-FP� coalition lasted only three years and was not very productive. It faced a series of crises that never allowed it to become firmly established. Although the coalition had made progress on environmental protection a high priority, its decision to build a hydroelectric plant at Hainburg in a wetland forest east of Vienna provoked a storm of opposition from environmental activists. In the end, the government decided to cancel the project.

The coalition's image received another black mark in 1985 when FP� Minister for Defense Friedhelm Frischenschl�ger staged a welcoming ceremony at the airport for Walter Reder, a former Waffen SS member who had been serving a life sentence for executing civilians during World War II before being pardoned by the Italians. Some SP� members of the cabinet threatened to resign over this affair, but Frischenschl�ger was allowed to remain in his post. This incident hurt the SP�'s standing among its own members, as well as among independent voters.

Austria received further unpleasant jolts in 1985. First came the news that diethylene glycol, a chemical used in antifreeze, had been added to Austrian wines in potentially lethal amounts. The wines affected came from Burgenland, the home province of Chancellor Sinowatz. Even more damaging to the country's selfimage , however, was the crisis in the state-run industrial sector that came to light at roughly the same time. The government announced that it had uncovered a financial scandal at the United Austrian Iron and Steel Works (Vereinigte �sterreichische Eisenund Stahlwerke--V�EST; commonly known as V�EST-Alpine) in Linz. Public funds were required to cover large losses incurred through risky and unauthorized speculation in oil ventures. Moreover, the entire state industrial sector required streamlining, and jobs had to be cut.

The method of staffing these industries was a prime example of the �VP and SP�'s Proporz system, which created fiefdoms in which political affiliations were the main criteria for filling high-level management positions. The crisis in this sector of the economy revealed that the Kreisky governments had been guilty of serious mismanagement. The confidence of the SP� in particular was shaken as it faced the need for privatization and layoffs. The government abolished the Proporz system at V�EST-Alpine and appointed new management to rectify the problems.

Austria - Election of Kurt Waldheim as President

In 1986 Austrians prepared to elect a new president. The race featured two major candidates, Kurt Waldheim for the �VP and Kurt Steyrer for the SP�, plus two less well-known candidates, a Green party activist and a former member of the FP�. Waldheim was one of Austria's best known citizens by virtue of his having served two terms as secretary general of the United Nations in the 1970s. Waldheim had joined the �VP only in early 1985 when the party decided to offer him its presidential candidate's spot. He was presented to the voters as "the man the world trusts." Steyrer was the minister for health and the environment in the SP�-FP� government. His campaign stressed his role as a family man and a humanitarian.

The election of Waldheim had a large impact on Austrian domestic politics as well. After Waldheim's victory, Sinowatz, the SP� chancellor who had been perceived as ineffective, resigned, and the SP� turned to Franz Vranitzky to fill the top position. Vranitzky decided to dissolve the SP�-FP� coalition when the leadership of the junior party was usurped in September 1986 by J�rg Haider. Haider was prone to making controversial remarks about Austria's place in the greater German cultural identity, and Vranitzky had little hesitation in cutting the SP�'s ties to the FP� under its new leader. This action led to a premature parliamentary election in November 1986. Pressures for an early election also came from the financial failures in the state industrial sector that had embarrassed the SP�-FP� government.

The outcome of the election was a shock to both major parties, as the FP� attained its highest vote total since 1953, receiving 9.7 percent. The SP� lost ten seats in the Nationalrat, dropping to eighty, and the �VP lost four, declining to seventyseven . After lengthy negotiations, in early 1987 the two major parties decided to form a grand coalition for the first time since 1966. Vranitzky remained chancellor, and Alois Mock, leader of the �VP, became vice chancellor and foreign minister. The two parties agreed to split the remaining cabinet posts, with the Ministry for Justice going to a person with no party affiliation. Former Chancellor Kreisky complained loudly about Vranitzky's giving the foreign ministry portfolio to the �VP, and he resigned as honorary chairman of the SP� in protest.

The new grand coalition was not able to function in the cozy way the old grand coalition had because media scrutiny was much greater in the 1980s than it had been between 1945 and 1966. Further, one of the coalition's top priorities was to address the problems in the state industrial sector and the budget deficit in general. The government carried out job cutbacks and early retirement programs at V�EST-Alpine, the state-run iron and steel conglomerate, and also reduced subsidies to farmers. These policies hurt key interests of both parties' core constituencies, but �VP and SP� leaders saw little alternative to tackling these problems head on. Austrian politics had entered a new stage that was short on the optimism of the Kreisky era and focused on pragmatic and hard-headed solutions to economic problems.

The �VP-SP� government benefited from improving economic conditions, especially from 1988 onward. Economic growth for the years 1988-90 averaged around 4 percent annually. Other economic indicators were also positive, with unemployment averaging around 5 percent and inflation running at 2.5 percent. In the political realm, however, the coalition was plagued by numerous scandals involving primarily high-ranking officials of the SP�. In late 1988 and early 1989, two of these officials were forced to resign for large-scale tax evasion. Chancellor Vranitzky, who had replaced Sinowatz as party chairman in May 1988, initially was hesitant to fire his friend G�nther Sallaberger, who had failed to pay taxes on S1.8 million. Pressure to remove Sallaberger became intense after party members were shocked to learn that he was an example of a trend in which holders of multiple posts within the SP� were actually earning more money than the chancellor.

An even larger scandal emerged when the SP� became embroiled in an insurance scandal centering on Udo Proksch, the notorious former owner of Demel's, Vienna's most famous coffee house and meetingplace for SP� bigwigs. A ship commissioned by Proksch, the Lucona, had sunk in 1977 with the loss of six crew members. Proksch claimed that the ship had been carrying a uranium processing plant, but documents describing the ship's cargo were found to have been forged, and Proksch was accused of deliberately sinking the vessel. The investigation into the affair moved at a snail's pace. By early 1989, a parliamentary committee that had been formed to look into the case began to focus on two leading SP� officials, Minister for Interior Karl Blecha and Leopold Gratz, the first president of the Nationalrat.

The committee's investigations provided some of the most dramatic political theater ever seen in the Second Republic. After tough cross-examinations of subordinate officials, the committee and the public began to suspect that Blecha had deliberately slowed up the Lucona investigation in the early 1980s. Blecha's denials of any wrongdoing were unconvincing, and Vranitzky forced him to resign.

Gratz, who had been foreign minister at the time the forged documents relating to the Lucona's cargo had arrived in Vienna, was suspected of even greater complicity in the affair. As the committee did its work, it appeared increasingly clear that Gratz had covered up important details of the affair to protect Proksch. Gratz resigned his position when, like Blecha, he had lost all support within the SP�. In the face of a very bleak ethical situation, Vranitzky could at least claim that he had acted relatively quickly to clean house.

Austria - The Parliamentary Election of 1990

The �VP and SP� approached the parliamentary election of 1990 with trepidation. In 1989 the political landscape had been shaken by Haider's FP�, which had racked up impressive gains in provincial elections in Carinthia, Salzburg, and Tirol. Even though questions had been raised about Haider's honesty, he continued to entice voters to leave the major parties. The FP� scored a spectacular success in Carinthia, where it displaced the �VP as the second largest party, and it caused the �VP to lose its absolute majority in Salzburg.

In the October 1990 national election, the FP� again shocked the political establishment by increasing its share of the vote from 9.7 to 16.6 percent. This gain came almost completely at the expense of the �VP, whose share of the vote declined from 41.3 to 32.1 percent. The SP�'s share of the vote remained essentially the same, which surprised everyone. The party, realizing that its strong suit was the popularity of Vranitzky, employed a new electoral strategy that probably explains its ability to avoid the �VP's fate. With Vranitzky as the top candidate in all nine electoral districts, the SP� urged voters to cast preference votes for Vranitzky, which could be done without selecting the SP� box on the ballot (these votes would count toward the SP�'s total number of seats in the Nationalrat, however). A nonpartisan committee was organized to carry out this campaign, and it succeeded in attracting support from sources that otherwise might not have voted for the SP� in the regular manner. Because of disagreements between the two Green parties, they did not run on a united ticket as they had in 1986. The Green Alternative/Greens in Parliament (Gr�ne Alternative/Gr�ne in Parliament--GAL), formerly known as the Alternative List of Austria, received 4.5 percent and increased its seats in the parliament from eight to ten. The United Greens of Austria (Vereinigte Gr�ne �sterreichs--VG�) received only 1.9 percent and won no seats.

Given the antipathy that Vranitzky felt for Haider, there was no chance of a revival of an SP�-FP� coalition. After a period of negotiations, the SP� and �VP agreed to continue the grand coalition. Because economic conditions were much improved in comparison with 1986, the new coalition planned to focus on issues such as social welfare, health care, science, and research. Attention would also be given to reforming the country's electoral system and its chambers of commerce and labor. Increasing numbers of Austrians regarded the former as unrepresentative and resented the latter's requirement of compulsory membership. The coalition partners decided to upgrade the position of state secretary for women's affairs to full cabinet rank, and the new Ministry for Women's Affairs was created to oversee these matters.

Austria - Events of 1991-93

The trend toward the dissolution of the two-party system was confirmed by the outcomes in four provincial elections held in 1991. The FP� increased its share of the vote in all four elections, and in Styria and Upper Austria it tripled its vote to 15.4 and 17.7 percent, respectively. In Vienna the FP� displaced the �VP as the second most powerful party in the provincial legislature, a particularly embarrassing result for the �VP. The �VP lost ground in all four elections, while the SP� lost seats in three elections. With its showing in Vienna, the FP� became the second strongest party in two of Austria's nine provinces, having achieved the same status in Carinthia in 1989, also displacing the �VP.

In June 1991, President Kurt Waldheim announced that he would not seek reelection in 1992. �VP leaders were relieved that Waldheim had decided to retire from politics because they feared the eruption of another bitter controversy over his wartime record if he had chosen to run. Waldheim became the first incumbent Austrian president not to seek reelection. Initially, the �VP and SP� looked into the possibility of nominating a joint candidate for the 1992 election. However, the two parties were unable to agree on a candidate, and in November 1991 they and the FP� each announced separate candidates. The �VP selected Thomas Klestil, a career diplomat and former ambassador to the United States. The SP� candidate was Rudolf Streicher, head of the Ministry for National Industry and Transportation. The FP� candidate was Heide Schmidt, who was also third president of the Nationalrat. The Green candidate was the scientist Robert Jungk.

No candidate was able to win an absolute majority in the first balloting on April 26, 1992. Streicher polled 41 percent, compared with Klestil's 37 percent, but far ahead of Schmidt's 16 percent and Jungk's 6 percent. In the run-off elections four weeks later, when only the top two candidates were on the ballots, Klestil scored an easy victory over Streicher with 57 percent of the total vote. Controversy about his opponent's war record, a series of scandals connected to the SP�, and Klestil's skill in dealing with the media contributed to his easy victory in the second round of voting. Perhaps most important, however, was his career as a diplomat abroad that had kept him out of politics (although he was an �VP member) and made him seem well suited for leading the country into the post-Cold War era.

The collapse of the Soviet empire and the former Yugoslavia increased the number of foreigners coming to Austria. The influx of asylum seekers and illegal immigrants posed a challenge to Austrian authorities. In 1992 and 1993, new laws went into effect that sought to reduce the number of those coming to the country for asylum and to more strictly control the large foreign community already present in Austria. The laws resulted both from serious practical problems of caring for foreigners in need of food and fears of many Austrians that their country was in danger of �berfremdung, that is, being submerged by everincreasing waves of foreign immigrants. Some politicians, most notably Haider, sought to profit politically from these fears.

In early 1993, a referendum sponsored by Haider was held to determine popular support for further tightening the laws regulating foreigners. More than 400,000 signatures were collected, half of what Haider had sought but still a significant response. Large counterdemonstrations were held to protest Haider's suggested policies, but it was clear that Haider had tapped into widespread fears and resentments. Haider's extremism resulted in some FP� members leaving the party and forming their own party, The Liberal Forum (Das Liberale Forum). Led by Heide Schmidt, the FP� presidential candidate in 1992, the group won three seats in the May 1993 Landtag election in Upper Austria. Additional successes for the new party were its being recognized both by the Nationalrat as a political party and by Liberal International.

Apprehension about joining--or not joining--the European Union was another force driving Austrian politics. As the economy slumped and headed to an overall negative growth rate for 1993, Haider modified his previous endorsement of EU membership, sensing a chance to profit from fears about what Austria's participation in a larger Europe might bring. The �VP and SP� remained strongly in favor. After much delay, Austria will join the European Economic Area on January 1, 1994. The EEA will then consist of EU and European Free Trade Association countries, with the exception of Switzerland, and will form a free-market economy of sixteen nations and 380 million inhabitants.

Austria - MASS MEDIA

The Austrian press operates freely under the constitution of 1920, which guarantees all citizens freedom of expression in speech, writing, and print. The constitution also forbids any government censorship of the press or electronic media. Austria has a well-developed system of print and electronic media that provides its citizens with a wide variety of news sources and entertainment. Newspapers and Periodicals

The Austrian newspaper market is one of the most concentrated in Europe. Three dailies, the Neue Kronen-Zeitung, T�glich Alles, and Kurier, account for more than half of the newspapers sold in the country. By 1993 their daily circulations were 1.1 million, 500,000, and 390,000, respectively, with higher circulations on Sundays. All three specialize in tabloid-style journalism, with a tendency toward sensationalism. Better educated Austrians, especially in the larger cities, read either Die Presse or Der Standard, both high-quality newspapers published in Vienna with circulations of less than 100,000.

As of the early 1990s, a total of seventeen daily newspapers were published in Austria, and thirteen regional editions of some of these papers were published. Since the early 1970s, the importance of political party newspapers has declined precipitously. The SP� publishes one newspaper and the �VP two, all of which have circulations of less than 100,000. The SP�'s venerable newspaper, Arbeiterzeitung, established in 1895, was sold to private interests in the late 1980s when the party decided it no longer wished to cover the newspaper's massive losses.

Austria also has many periodicals and magazines. Among the weekly periodicals, Profil, with a circulation of more than 100,000 in 1993, has emerged as one of the best practitioners of investigative journalism in the country. Another weekly magazine, News, has a circulation of more than 200,000, although it was only founded in October 1992. Other periodicals of note include Wochenpresse, a weekly; Trend, a monthly journal devoted to economic news; and Wiener, a monthly.

Rising concern over financial difficulties faced by small publishers led the Austrian government to decide in 1975 that subsidies should be made available to newspapers and magazines meeting certain criteria. For a daily newspaper to receive government funds, it must have a minimum circulation of 10,000 and regional distribution. Weekly newspapers are required to have a minimum circulation of 5,000. Magazines are eligible for funds if they publish between four and forty issues a year. To be considered for funding, a newspaper or magazine must file a formal application with the government. Specific allocations are decided on a case-by-case basis, and various formulas are used to spread the funds among a large number of publications. No single newspaper can receive more than 5 percent of the total budget earmarked for support of the daily press.

In 1982 Austria brought its press laws up to date with the passage of the Federal Law on the Press and Other Journalistic Media, which clarifies the rights of individuals to sue for damages when they believe they have been slandered or defamed by the press. The law establishes maximum amounts of S50,000 for defamation of character and S100,000 for slander. The law stipulates that damages are not to be awarded if it can be shown that the public interest was served by the publication of the material or of allegations in dispute. The law also grants individuals and corporations the right to respond in print to published reports they regard as defamatory. However, a newspaper can refuse to publish a rejoinder if it can prove that the report is not factual. Individuals and corporations may respond only to factual reporting; articles containing editorial opinions and value judgments are not covered by this provision of the press law.

Other provisions of the 1982 law strengthened the rights of journalists. Journalists are guaranteed the right to refuse to collaborate in assignments they regard as incompatible with their ethical convictions. The law also affirms the right of journalists not to divulge their sources in a court of law. The law further states that the government may not place the communications facilities of an organ of the press under surveillance unless it has reason to believe that a crime carrying a sentence of at least ten years may have been committed.

As of late 1993, radio and television programming in Austria was provided exclusively by Austrian Radio and Television (�sterreichischer Rundfunk--ORF). This state monopoly is expected to end in the mid-1990s because such monopolies are no longer seen by many European jurists as compatible with the free exchange of information and ideas. ORF was formed as a public corporation in 1945 and reorganized in 1967 for greater political and financial independence. In 1974 a constitutional law was passed giving ORF complete financial autonomy from the government and guaranteeing it freedom from attempts by the government or any state body to exert influence on programming. Additional laws passed in that year required ORF to present objective reporting, a variety of opinions, and balanced programming.

As of 1993, ORF had two television channels and three radio channels. FS 1 and FS 2, the two television channels, feature a wide variety of programs, including news, entertainment, education, and music. In 1988 the nine regional ORF studios began broadcasting local programs. Various groups attempted to make the case for allowing independent television in Austria, but, as of 1993, they had not persuaded the government to lift the monopoly enjoyed by ORF. During the 1980s, cable television became available, and by 1990 roughly 15 percent of Austrian homes received cable programming. One of the major cable programs, 3 Sat, is a joint venture of ORF, the Swiss Broadcasting Corporation, and one of Germany's television networks.

ORF has four radio channels. The first channel, �sterreich 1, features culturally oriented programs devoted to music, literature, science, and news. The second channel, �sterreich Regional, carries programming produced by the nine regional ORF studios, with an emphasis on popular entertainment and local events. �sterreich 3 is an entertainment channel, which also carries hourly news broadcasts. The fourth network, Blue Danube Radio, is also an entertainment channel but differs in that it broadcasts mainly in English. Its news programs are in German, English, and French.

Austria - FOREIGN RELATIONS

Beginning in 1955, the guiding principle of Austrian foreign policy was neutrality. As part of an agreement reached that year with the Four Powers (Britain, France, the Soviet Union, and the United States), Austria passed an amendment to its constitution declaring that it would forever remain neutral. Specifically, Austria pledged that it would never join any military alliances or allow foreign troops to be stationed on its soil. The commitment to neutrality was seen by virtually all political groups as a sensible step to achieve the complete removal of occupying forces from the country.

However, Austria chose to pursue a looser model of neutrality than that followed by other states, such as Switzerland. Austria joined the United Nations (UN) in 1955, shortly after making its neutrality pledge. Austria did not take neutrality to mean that it should occupy a moral middle ground between the democratic countries of the West and the totalitarian states of the East during the Cold War period. In terms of political and social ideology, Austria was firmly within the community of democratic nations.

A second important principle of Austrian foreign policy was internationalism. Austria was active in many international organizations, such as the UN and its subsidiary agencies. The country was a long-time participant in UN peacekeeping operations. An Austrian medical team served in the Congo (present-day Zaire) between 1960 and 1963, and medical teams and soldiers have served continuously in Cyprus since 1964 and at various times in Egypt and Israel since 1968. Vienna was the home of two UN entities, the International Atomic Energy Agency and the United Nations Industrial Development Organization. During the Cold War period, Austria consistently supported all attempts at fostering d�tente between the United States and the Soviet Union. Austria's leaders pursued this policy because they realized that heightened tensions between the superpowers would make the maintenance of their country's neutrality more difficult.

Bruno Kreisky, who had served as foreign minister between 1959 and 1966, laid great emphasis on an active, internationalist foreign policy during his tenure as chancellor (1970-83). Kreisky's vision of foreign policy was based on the notion that Austria, as a neutral country, should seek to mediate conflicts between countries and stake out independent and innovative policies on various issues. He offered Vienna as a site for many series of negotiations on nuclear arms reductions and other international matters.

Among Kreisky's more controversial policies was his decision to grant informal diplomatic recognition to the Palestine Liberation Organization (PLO) in 1980. This was an outgrowth of Kreisky's conviction that Israel was stubbornly refusing to recognize the legitimate interests of the Palestinian people. The fact that Kreisky was Jewish gave him a certain credibility in becoming so involved in trying to solve the Arab-Israeli conflict. Kreisky further surprised the world by receiving Libyan leader Muammar al Qadhafi in Vienna. He also showed his independent approach with his decision that Austria should participate in the 1980 Summer Olympics in Moscow, despite the boycott of the games orchestrated by United States president Jimmy Carter in response to the Soviet invasion of Afghanistan in 1979. Austria also did not adhere to the economic boycott of Iran organized by the United States after the seizure of its embassy in Tehran in 1979.

During the 1970s, Austria collaborated extensively with other neutral and nonaligned countries in the UN. Austria developed an independent voting profile, frequently joining with other neutrals such as Sweden to press for action on issues ignored by countries belonging to military alliances. Austria also pursued this kind of diplomacy with the nonaligned countries belonging to the Conference on Security and Cooperation in Europe.

After Kreisky's departure from the political scene in 1983, Austrian foreign policy became more focused on European matters and less on global issues. This shift was caused partly by the increase in tensions between the United States and the Soviet Union, as United States diplomacy under President Ronald Reagan became more confrontational. In this climate, Austria's room to pursue a foreign policy of mediation was more constricted. Concern that the country faced exclusion from the increasing political and economic integration of Europe being pursued by the European Community (EC) was another factor that came to exert strong influence on Austrian diplomacy. The traditional concept of Austrian neutrality had held that membership in the EC was not possible or desirable, even though the EC was not a military alliance. The idea of ceding even limited areas of political and economic sovereignty to a supranational organization was seen as incompatible with neutrality.

As an alternative to the EC, Austria had joined with Britain, Denmark, Norway, Portugal, Sweden, and Switzerland to form the European Free Trade Association (EFTA) in 1960. EFTA was restricted to facilitating trade among its members and did not involve the ceding of sovereign powers. Austria also negotiated a special economic arrangement with the EC in 1972 that allowed for the duty-free exchange of industrial manufactured goods.

By the mid-1980s, the opinion of Austria's political elites had changed in favor of seriously considering the advantages and disadvantages of EC membership. Many argued that Austria could not expect to guarantee its economic future if it remained outside the EC. Two-thirds of Austria's trade was with members of the EC, with the Federal Republic of Germany (West Germany) by far its largest trading partner. There was also a fear that the country could become isolated within Europe as ideological barriers between East and West were lowered.

A long period of debate among the major parties over EC membership began in 1987, and the cabinet established a working group to examine the issue. It gradually became clear that, despite some misgivings over the expected impact of EC membership in certain areas, the two major parties, the �VP and SP�, favored applying for entry. The trade unions had some concerns about EC membership's diminishing their strong bargaining powers in the Austrian system of social partnership, but they, too, generally favored joining. There was also widespread concern that the high volume of highway traffic passing through Austria en route to West Germany and Italy was damaging the country's environment. Many Austrians believed that their country's environmental laws were stricter than those of the EC. The priority of protecting the environment led the Green deputies in parliament to oppose joining the EC.

Within the two major parties, there was little concern over the neutrality issue, and government leaders pointed out that although the EC might someday add a military dimension to its structure, for the foreseeable future it would remain primarily an economic union with aspirations of developing greater political unity. The new climate of glasnost in the Soviet Union ushered in by Mikhail Gorbachev led Austrian leaders to expect no objection from Moscow to an Austrian decision to seek EC membership, and this expectation proved true.

The government reached an internal consensus in favor of applying for membership in June 1989, and the following month, Foreign Minister Alois Mock delivered the application to the EC Commission in Brussels. Chancellor Vranitzky emphasized to his countrymen that during the upcoming negotiations with Brussels his government would seek clear understandings on the maintenance of environmental standards and the preservation of Austria's advanced social welfare system. Vranitzky also asserted that the issue of limiting the volume of motor vehicle traffic passing through Austrian territory would be handled separately from the application to join the EC. Austria's application met with a chilly reception from some quarters in Europe, especially from a few politicians who argued that the admission of a neutral country could hinder efforts at coordinating the foreign policies of the EC's members. However, the momentous events of late 1989 and 1990--the freeing of Czechoslovakia, Hungary, and Poland from Soviet domination and there unification of Germany--made it clear to all observers that Austrian neutrality would take on a new dimension and might even be jettisoned altogether. The disintegration of the communist system in the Soviet Union in late 1991 further reinforced the impression that neutrality was of little relevance in the new Europe.

In August 1991, after an examination of the Austrian application, the EC issued an initial assessment that was predominantly favorable. By late 1993, negotiations between Austria and the European Union (EU), the organization's name as of November 1993, were continuing over the terms of membership. Most observers expected that the EU and Austria would be able to reach an agreement on Austrian entry and that the country would join the EU in January 1995. The main issues involved limiting international road traffic through Alpine regions because of environmental concerns, subsidies for Alpine farming, and foreign ownership of residences in some parts of Austria. A less certain matter was whether the Austrian government could convince a majority of Austrians to support EU membership. The question of joining the EU will be voted on in a popular referendum because any governmental action that changes the constitution must pass this test. Many opinion polls taken in the early 1990s showed Austrians evenly divided over the merits of joining the EU. In order to ensure approval by the electorate, the Austrian government will have to gain significant concessions from the EU in the negotiations and mount an effective public relations campaign in favor of a yes vote.

Austria has generally enjoyed good relations with its neighbors, although there have been exceptions. The most notable exception has been its relationship with Italy, which was strained by the issue over Southern Tirol during the 1960s. This largely German-speaking region, which belonged to Austria-Hungary prior to World War I, was ceded to Italy in 1919 as a result of the peace negotiations. Until 1992 ethnic Germans in South Tirol, in the present-day region of Trentino-Alto Adige, had to struggle to maintain the measure of autonomy promised to them by the Italian government. Acts of terrorism directed against Italian targets became a serious problem in the 1960s, and Italy accused Austria of not doing enough to capture terrorists whom it claimed were using Austrian territory as a sanctuary. Austria and Italy eventually reached an agreement in 1969 on a timetable for satisfying the demands of the German-speaking South Tiroleans for cultural autonomy. Progress was slow, but in June 1992 an agreement was finally realized that granted the German speakers a greater degree of autonomy. Although not allowed the right to secede from Italy, the cultural rights of German speakers in Trentino-Alto Adige were enhanced with guarantees of education in their own language, greater representation in the civil service, and the right to go to the International Court of Justice in The Hague without permission from the government in Rome. Both Italian and Austrian authorities have declared themselves satisfied with the agreement.

Austria became concerned as the political stability of its neighbor to the south, Yugoslavia, began to unravel in 1991. As it became clear that the republics of Slovenia and Croatia were preparing to break away from the Yugoslav federation, a disagreement arose within the �VP-SP� coalition over when to grant diplomatic recognition to the new states. In September 1991, Foreign Minister Mock advocated immediate recognition, but Chancellor Vranitzky preferred that Austria wait until other European governments were ready to take the same step. In the end, Vranitzky prevailed in this debate, and recognition was delayed until January 1992, when the EC recognized the newly independent states.

On other important aspects of policy toward the breakup of Yugoslavia, greater unanimity existed between the �VP and SP�. Foreign Minister Mock was an early advocate of sending a UN peacekeeping force to prevent bloodshed as the various Yugoslav republics sought to establish their independence. In August 1991, Austria became the first UN member to bring to the attention of the Security Council the fact that large numbers of civilians in Slovenia and Croatia were being killed by Serbian forces. Despite their deep concern about the tragedy unfolding in Yugoslavia, both Mock and Vranitzky are in agreement that Austria's neutrality and its proximity to the fighting preclude the inclusion of Austrian troops in any UN peacekeeping force.

During the 1980s and early 1990s, the literature on Austrian politics in English grew considerably. Austria: A Study in Modern Achievement, edited by Jim Sweeney and Josef Weidenholzer, contains a useful collection of articles on Austria's political system and political parties. Modern Austria, edited by Kurt Steiner, covers roughly the same ground, in some cases in more detail, but is somewhat dated because it was published in 1981. Melanie A. Sully's A Contemporary History of Austria is an excellent treatment of Austrian politics during the 1980s. It is particularly good on the interaction between the parties and their internal problems. John Fitzmaurice's Austrian Politics and Society Today covers roughly the same ground as Sully's book and is a readable introduction to Austrian politics. Politics in Austria, edited by Kurt Richard Luther and Wolfgang C. M�ller, contains a collection of essays by Austrian political scientists examining the sociological changes in Austria during the postwar era and their impact on the political system. Readers with a knowledge of German should consult Handbuch des politischen Systems �sterreichs, edited by Herbert Dachs et al., which contains a wealth of articles on political parties, political institutions, trade unions, foreign policy, and many areas of government policy. Also in German is the very useful �sterreichisches Jahrbuch f�r Politik, which contains articles by noted specialists and politicians about recent political developments.

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Chapter 3

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Chapter 4

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   (Various issues of the following periodicals were also used in
the preparation of this chapter: DMS Market Intelligent
Report; Economist Intelligence Unit, Country Report:
Portugal [London]; Foreign Broadcast Information Service,
Daily Report: West Europe; Jane's Defence Weekly
[London]; New York Times; and Washington Post.)