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Austria |
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Last reviewed: 12 December 2008 |
Country information
AUSTRIA TODAY
Country Facts
Area: 83,871 sq km (32,382 sq miles)
Population: 8.3 million
Capital City: Vienna (1.6million)
Languages: German (98.5%)
Ethnic Groups: : Croats, Slovenes, Hungarians, Czechs, Slovaks, Roma and Sinti (officially recognised)
Religion(s): Roman Catholic (73.6%), Muslim (4.2%), Protestant (4.7%), Other (3.5%) Non-denominational (-12%)
Currency: euro
Major political parties: Social Democratic Party (SPÖ); People's Party (ÖVP); Greens; Freedom Party (FPÖ); Alliance for the Future of Austria (BZÖ)
Government: Federal Republic, Parliamentary Democracy.
Head of State: President Heinz Fischer (elected 2004)
Federal Chancellor: Werner Faymann (SPÖ) (since 2 December 2008)
Foreign Minister: Michael Spindelegger (ÖVP) (since 2 December 2008)
Membership of international groupings/organisations: In 1995 Austria joined the European Union (EU). Austria is also a member of the United Nations, the Council of Europe (CoE) and the Organisation for Security and Co-operation in Europe (OSCE). From January 2009 until the end of 2010, Austria will be a non-permanent member of the UN Security Council.
ECONOMY
Basic Economic Facts
GDP: €282,2 bn (2008)
GDP per capita: €31,300 (2007)
GDP growth: 2% (2008)
Inflation: 3.4% (2008)
Major Industries: food, luxury commodities, mechanical engineering, steel construction, chemicals, vehicle manufacturing and service industries.
Major trading partners: Over 70% of Austrian exports are destined for the EU (2008). Germany and Italy are Austria’s traditional and most important trading partners, but there are also significant trading links to Scandinavia, Britain and Ireland. With the EU’s eastward expansion, Austria has also established important trading links to the new EU Member States, in particular Hungary and the Czech Republic, Poland and Slovenia. Vienna, due to its favourable geographical location and strong historical ties, has become an important hub for multinationals operating in the region.
Unemployment was, in 2008, amongthe lowest in the EU at 3.2%. While still comparatively low, this is climbing, andis predicted to rise to 4.2% in 2009 and 4.8% in 2010, with job losses inindustry, especially automotive. Somemajor employers have started putting workers on reduced hours. Unemploymentwas 5.2% in September 2006 and 4.4% in 2007. Youth unemployment was at 6.3% inAugust 2008 (EU average 14.9%), the second lowest in the EU. The Finance Minister’s stated budgetpriority for 2009/2010 is to tackle unemployment to avoid the economic crisisturning into a social crisis.
Austrian inflationreached a 15-year record high of 3.9% in June 2008, although the average annualfigure for 2008 was 3.4% . The annual rate was 1.7% in 2006 and 2.2% in 2007.Inflation is forecast to drop to 0.5% in 2009.
Austria ’sbudget deficit was 0.4% of GDP in2008, reflecting a higher tax intake during several boom years. The figure for 2007 was 0.7% and 2006 1.4% Projectionsfurther ahead vary widely: the government plan is for 2.2% and 2.9% in 2009/10,with OECD estimates as high as 3.5%. The government’s latest (April 09) Maastricht budget deficit forecast is 3.5% for 2009 and 4.7% for 2010-12 with a slightimprovement to 3.9% for 2013. As a result, publicsector debt is expected to rise steadily from 61% of GDP in 2008, to 62.5%in 2009 and then up to 78.5% by 2013(€247.3bn).
In the past fewyears, exports had been invariably the driving force of economic growth, withexports up from 37.9% of GDP in 1996 to 58.2% of GDP in 2007. In comparisonwith 2007, the turnover of Austrian foreign trade for 2008 indicated positiveimport as well as export growth rates. Imports increased by 4.3% to €119.13bn,exports rose by 2.3% to €117.33bn. Germany remains Austria’smost important trading partner (imports 40.5% / exports 29.7%), followed by Italy and the US as most important non-EU tradingpartner. In2008, the Eastern European countries accounted for most of the increase inexports (€2.65bn). In 2008, services exports to the 15 “old” EU Member Statesstagnated, while exports to the 12 “new Member States had jumped by 12%.Exports to Russia stood outwith an increase by as much as 50%, pushing Russia into the top ten of Austrianexport destination. However, Austrian exports have notremained untouched by the global economic crisis and are expected to be hithard by Germany’seconomic woes.
Tourism plays animportant role in the Austrian economy, contributing 16.1% to GDP in 2008 (totaltourism & leisure industry). The full effect of the economic downturn hasnot yet been felt by Austria’stourism industry, inn 2008 overnight stays had still gone up with more than 126million overnight stays (compared to 121 million in 2007). . Germany continuesto be the most important market for Austrian tourism. In 2008, the number ofGerman tourists increased by 4% to 50.08 million overnight stays after thenumber had gone down the previous summer seasons. The overall number oftourists from the new EU Members States (mainly from the Czech Republic andPoland; up 27.8% and 33.9%) continued to go up in 2008 as well as the number inovernight stays from Russian tourists (plus 40.3%).
HISTORY
Modern Austrian history begins with the defeat of the Axis Powers in the First World War, when the non-German speaking territories of the former Habsburg Empire achieved independence. The Republic of Austria was established in 1918. The inter-war period was marked by severe social conflicts arising from economic and political instability, culminating in the (fairly benign) absolutist rule of Dollfuss, his assassination in 1934, at Nazi behest, and the gradual rise of pro-Nazi Austrian groups. In 1938, Hitler incorporated Austria into the German Reich with the Anschluß ('Joining').
After the Second World War, Austria was occupied by the USSR, US, UK and France for 10 years, and did not regain its independence until May 1955. On 15 May, after long and difficult negotiations between the four powers and Austria, the State Treaty was signed. The key aspect was Austria’s commitment to “permanent” neutrality, which Austrians subsequently came to see as a basic element of the Austrian state’s identity. Austria has used its neutrality to play a mediating role, often offering Vienna as a venue for meetings of rival parties during the Cold War and since. Following East-West rapprochement and the collapse of the former Soviet Union in 1989, and Austria's accession to the European Union in 1995, the logic of neutrality is no longer so absolute. Austria has participated in NATO-led military missions, EU-led civilian missions in the former Yugoslavia and recently in the EU humanitarian mission in Chad (EUFOR) and its successor, under UN auspices, MINURCAT and the EU Rule of Law Mission in Kosovo (“EULEX”). However, there remains a strong political attachment to neutrality, and there is no early prospect of it being formally rescinded.
INTERNATIONAL RELATIONS
Austria joined the European Union in 1995. It is a member of the UN and hosts a number of UN agencies. It also hosts, in Vienna, the Secretariat of the Organisation for Security and Cooperation in Europe (OSCE) and the Organisation of the Petroleum Exporting Countries (OPEC). Since 1955, Austria has been a neutral state. NATO membership is likely to remain off the agenda, with the concept of neutrality extremely popular among the electorate, but Austria will continue to participate in NATO led initiatives such as Partnership for Peace. Austria contributes to a large number of UN peacekeeping operations. Austria also contributes to a number of EU-led civilian missions in the former Yugoslavia and recently participated in the EU and UN humanitarian mission in Chad and the EU Rule of Law Mission in Kosovo (“EULEX”).
On 17 October 2008, Austria was elected as one of two new, non-permanent UN Security Council members for the ‘Western Europe and Others Group’ (WEOG). The other new member is Turkey. Austria took up its seat in January 2009, until the end of 2010.
Because of its geographical position and history, Austria has strong links with countries in Eastern and South Eastern Europe. Stability and prosperity in the western Balkans remains a key Austrian foreign policy goal. With that in mind, Austria supports the EU’s further expansion to the western Balkans, particularly Croatia. Widespread opposition remains across most of the Austrian political spectrum to Turkish EU membership.
Austria's EU Presidency
Austria held the rotating EU Presidency between 1 January and 30 June 2006 (the UK Presidency preceded the Austrian). They continued the enlargement process with Turkey and Croatia, took forward the economic reform agenda, reached agreement between Council and European Parliament on future financing, and achieved a deal on the important Services Directive. In external relations the European perspective for the neighbouring Balkans region was reaffirmed at the EU-western Balkans Foreign Ministers' meeting in March 2006
Relations with the UK
Bilateral relations with the UK are good and we maintain close working relationships at ministerial and official level on a wide range of EU policy, in particular economic reform, climate change and justice and home affairs. This was particularly so in the run-up to handing over the EU Presidency from the UK to Austria in 2005/06. Close ties also exist with Austria on key areas of foreign policy, including in promoting stability in south-east Europe.
Austrian Ministry for Foreign Affairs
Parliamentary Links
The Chairman of the British Austria All-Party Group is Sir Nicholas Winterton MP (Conservative). The Group's Secretary is Angus Robertson (SNP).
Cultural Relations with the UK
The British Council has been operating in Austria since 1946. The Vienna office acts as the regional centre for British Council operations in South East Europe. The main areas of activity are intercultural dialogue, creativity in education, arts and science, and economic reform in an expanding Europe.
The Austrian Cultural Forum promotes co-operation in the fields of culture, art, science and education.
The Anglo-Austrian Society is an educational charity, which aims to promote friendship and understanding between Austria and Great Britain through personal contact and cultural events.
Recent Bilateral Meetings
During the UK and Austrian Presidencies in 2005/2006 there were regular ministerial meetings between British and Austrian Ministers in the margins of formal and informal Councils.
Since the consecutive presidencies:
- Chair of the British Council Lord Kinnock called on President Fischer and Chancellor Gusenbauer on 16 and 17 January 2007.
- Minister of State Dr Kim Howells called on Foreign Minister Plassnik on 6 February 2007.
- Secretary of State for Culture, Media and Sports, Rt Hon James Purnell MP, called on Vienna City Councillor Mailarth-Pokorny during his visit to Austria on 28-30 September 2007.
- Lord Speaker of the House of Lords, the Rt Hon Baroness Hayman,participated in the Xth meeting of the Association of European Senates,17-19 April 2008 in Vienna.
- Austrian Social Affairs Minister Buchinger called on former UK Secretary of State for Work and Pensions Peter Hain and Parliamentary Under-Secretary of State James Plaskitt on a study visit to the UK in December 2007 to research working tax credits.
- Home Office Parliamentary Under-Secretary of State for Crime Reduction Vernon Coaker participated in the UN Global Initiative to Fight Trafficking Conference on 13 February 2008.
- Austrian State secretary for Foreign Affairs, Hans Winkler, visited London in March 2008 and called on Minister for Europe Jim Murphy, Minister for Africa, Asia and the UN, Lord Malloch Brown and Minister for Development, Gareth Thomas.
- Energy Minister, Malcolm Wicks visited Vienna from 26 to 29 September 2008.
GEOGRAPHY
Located in southern Central Europe, Austria’s territory includes the Eastern Alps (which cover two thirds of its surface area) and the Danube region. Austria’s major area of economic activity is in the Danube valley, the east and south-east, where it is less mountainous. A landlocked country, Austria borders Germany, Czech Republic, Slovakia, Hungary, Slovenia, Italy, Switzerland and Liechtenstein.
- Highest mountain: Grossglockner (3,797 metres/12,530 feet)
- Longest river: The Danube flows through Austria for 350 km (220 miles)
- Terrain: Alpine (64%) northern highlands (10%) and lowlands to the east (28%)
TRADE AND INVESTMENT
Trade and Investment with the UK
The UK is ranked 18th in Austria's import league table. In 2007, visible UK exports to Austria totalled £991 million (-25.2% on 2006). Most Austrian business people (especially the younger generation) are proficient in English.
UK Trade & Investment Country Profile: Austria
POLITICS
Austria is a Federal Republic in which executive authority is divided between nine provinces and the federal bodies in Vienna. There is a provincial assembly and government in each of the provinces. The federal parliament consists of two chambers: the “Nationalrat” and the “Bundesrat”. Members are directly elected to the Nationalrat for a five-year term. This follows electoral reform, which extended the term from four years, with effect from the last general election (28 September 2008). The reforms also lowered the voting age from 18 to 16 years. Members of the Bundesrat are elected by the provincial assemblies for a five-year term (with the exception of the province of Upper Austria, where they are elected for a six-year term).
Austria’s government is a so-called ‘Grand Coalition’, between the Social Democratic Party (Sozialdemokratische Partei Österreichs, SPÖ) and the conservative People’s Party (Österreichische Volkspartei, ÖVP). Werner Faymann (SPÖ) is the Chancellor, and Josef Pröll (ÖVP) the Vice Chancellor (and Finance Minister).
The last general election took place on 28 September 2008. The SPÖ, under new party leader Werner Faymann, received the most votes, with 29.3% (2006 election, 35.3%). The People’s Party (ÖVP) under Wilhelm Molterer came second with 26.0% (2006, 33.3%). The right-wing Freedom Party (FPÖ), led by Heinz Christian Strache, came third, securing 17.5% of the vote (2006, 11%). Jörg Haider’s Alliance for the Future of Austria (BZÖ) were fourth, with 10.7% (2006, 4.1%). The Greens came fifth, with 10.4% (2006, 11.05%). The election turnout was slightly higher than 2006 at 78.8%. On Sunday 23 November 2008, the SPÖ and the ÖVP announced the formation of a new Grand Coalition. On 2 December, the new government was sworn in by President Fischer, with Werner Faymann as Federal Chancellor.
Thus, another Grand Coalition was formed, despite the SPÖ and ÖVP having their worst election results in the post-war era. Both parties were punished by voters frustrated with the collapse of the previous Grand Coalition, which had struggled through 18 months of tensions, arguments and what many saw as broken policy promises. Significant gains for the far right parties were a reflection of the public’s dissatisfaction with the Grand Coalition, as well as support for the social populism, anti-EU and anti-immigrant rhetoric of the FPÖ and BZÖ (which received over 28% of the vote between them). ÖVP leader Molterer stepped down as leader after his party’s poor election performance, to make way for the then Environment Minister Josef Pröll (who subsequently became Vice Chancellor and Finance Minister).
The Grand Coalition entered office with a much lower majority in parliament (108 seats between them: SPÖ 57, ÖVP 51) than the previous government and they lack the two-thirds majority required to pass constitutional laws. The strengthened opposition includes a powerful far-right block, as well as the Greens. The FPÖ and BZÖ have 55 seats between them (FPÖ 34 seats, BZÖ, 21 seats) and the Greens have 20 seats.
In its first 6 months in power, the government was preoccupied with maintaining economic stability and managing the economic downturn. It introduced economic stimulus and bank ‘bail out’ packages, against a background of rapidly rising unemployment and shrinking GDP (see economy section).
The Head of State, the Federal President (a largely ceremonial office), is elected by direct popular vote for a term of six years, renewable once. The current incumbent, President Heinz Fischer, former SPÖ Speaker of Parliament, was elected president on 25 April 2004 and sworn in on 8 July 2004. He succeeded the late Thomas Klestil, who had served as president since 1992. The next presidential election is scheduled for 2010.
Austrian Federal Government (in office since 2 December 2008). (Social Democratic (SPÖ) - Conservative (ÖVP) Coalition).
| Ministerial Position | Name | Party |
| Chancellor, Head of Government | Mr. Werner FAYMANN | SPÖ |
|
Vice Chancellor and Federal Minister of Finance |
Mr. Josef PRÖLL | ÖVP |
| Federal Minister for European and International Affairs | Dr. Michael INDELEGGER | ÖVP |
| Federal Minister of the Interior | Dr. Maria FEKTER | ÖVP |
| Federal Minister of Justice | Mrs.Claudia BANDION-ORTNER | non-party |
| Federal Minister of Defence | Mr Norbert DARABOS | SPÖ |
| Federal Minister for Agriculture, Forestry, Environment and Water Management | Mr. Nikolaus BERLAKOVICH | ÖVP |
| Federal Minister of Economics and Labour | Dr. Reinhold MITTERLEHNER | ÖVP |
| Federal Minister for Social Affairs and Consumer Protection |
Mr. Rudolf HUNDSTORFER | SPÖ |
| Federal Minister for Education, Arts and Culture | Dr Claudia SCHMIED | SPÖ |
| Federal Minister for Science and Research | Dr Johannes HAHN | ÖVP |
| Federal Minister for Women and Equality | Mrs.Gabriele HEINISCH-HOSEK | SPÖ |
| Federal Minister for Transport, Innovation and Technology | Mrs. Doris BURES | SPÖ |
| Federal Minister of Health, Family and Youth | Mr. Alois STÖGER | SPÖ |
*Interim until Claudia BANDION-ORTNER (non-party) is confirmed as Minister
State Secretaries
| Name | Party | |
| Finance Ministry State Secretary | Mr. Andreas SCHIEDER | SPÖ |
| Finance Ministry State Secretary | Dr. Reinhold LOPATKA | ÖVP |
| Economics Ministry State Secretary | Mrs. Christine MAREK | ÖVP |
| Chancellery State Secretary | Dr. Josef OSTERMAYER | SPÖ |
The Far Right: history of the 1999 elections and the EU 14 Measures
So-called Grand Coalitions, formed by the two largest parties in Parliament, the Social Democrats and Conservatives, have governed Austria for over half of the last sixty years. Even when one party ruled, an informal share-out of power between the major parties, and the strong role played by the social partners in economic and social policy, meant that government tended to be by lowest common denominator. Increasingly urgent reforms were not tackled. In the 1990s, partly in reaction to the cosy share-out of jobs that went with the Grand Coalitions, the right-wing populist Freedom Party (FPÖ) attracted an increasingly large share of the votes. They came second to the SPÖ in the 1999 elections, and in February 2000 joined a Government coalition led by the (third-place) Austrian People’s Party (ÖVP), amid international concern about the FPÖ’s alleged extremism. On the same day as the new Government was formed, Austria’s 14 EU partners (EU14) agreed a series of measures to restrict bilateral contacts with Austria. These measures remained in place until September 2000 when the report of “Three Wise Men” - Ahtisaari (former President of Finland), Frowein (Director, Max Planck Institute in Heidelberg) and Oreja (former Foreign Minister of Spain) - concluded that the Austrian Government was acting in accordance with European values. From this time up to the party split in April 2005 (when all the FPÖ ministers joined Haider’s new BZÖ, leaving behind a rump nationalist FPÖ), the FPÖ consistently reduced its populist rhetoric and, with hiccups, stuck to the agreed coalition policy. The ÖVP/FPÖ coalition was re-formed after the 2002 elections, and when the party split into BZÖ and FPÖ in April 2005, the new BZÖ took over the FPÖ’s role in the governing coalition. Both parties are now in opposition, although both saw a resurgence in support at 2008 elections, capitalising on the failures of the latest Grand Coalition and public fears about the economy, immigration and the EU. The FPÖ, in particular has taken a strong ‘anti-Islamisation’ stance during recent election campaigns.
Rumours of reunification between the two parties persist. While personal animosity between FPÖ leader Strache and the BZÖ’s Haider had long dampened speculation, Haider’s death in a car accident in October 2008 re-ignited it. The FPÖ immediately offered a "new, old home" and an "outstretched hand" to any BZÖ MPs who wished to join the FPÖ. However, currently there are no suggestions that the parties are planning to reunite.
