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Austria Modern History

Ten years after the end of the Second World War, the Allies agreed to cancel the occupation of Austria. Until 1966, the country was ruled by a coalition between the bourgeois People's Party (VP) and the Socialist Party (SP). In the new election in 1986, support for the right-wing populist FP almost doubled, with Jrg Haider as leader. Then the government switched between VP, SP and FP. In 1995 Austria became a member of the EU.

On May 15, 1955, the so-called State Treaty between Austria and the victorious powers of World War II were signed in Vienna, France, the United Kingdom, the Soviet Union and the United States. Austria pledged not to join Germany and accepted a number of defense restrictions, including the ban on the manufacture and possession of weapons of mass destruction.

The treaty restored Austria's sovereignty and in October 1955 the last occupation troops left the country. Then a law was passed that made Austria a neutral country. The time after the state treaty is counted as the "second republic".

  • ABBREVIATIONFINDER: List of most commonly used acronyms containing Austria. Also includes historical, economical and political aspects of the country.

From 1947 to 1966, Austria was ruled by a "big coalition" between the two dominant parties, the bourgeois People's Party (VP) and the Socialist Party (SP). Government cooperation gradually developed into a so-called Proporz system, which meant that the political and administrative positions were distributed proportionally between the two parties. The system eventually came to penetrate deep into Austrian society. In parallel, the social partnership was established (see Political system).

After the 1966 election, a pure OVP government took office, which nevertheless pursued a policy in line with that of the former coalition.

Contemporary History of AustriaThe economy is growing

The economy expanded sharply during the 1960s until the early 1970s. Important factors behind the development were the labor peace that characterized the labor market as well as the Austrian shilling's connection to the German soil, which contributed to the shilling remaining stable despite worries in the foreign exchange markets.

After the 1970 elections, the Socialists formed a minority government with Bruno Kreisky as Chancellor. In 1971, a new election was held based on a new electoral law and SP then got its own majority in parliament. Kreisky, who spent the war years in exile in Sweden, in many respects pursued a policy of Swedish social democracy as an example. A number of social reforms were implemented.

In the 1983 election, SP lost its own majority. After the retreat, Bruno Kreisky resigned and was succeeded by party mate Fred Sinowatz. He formed a coalition government together with the Freedom Party (FP), which had previously been kept out of all government cooperation since it was considered to represent Nazi and German nationalist movements.

The debate in and about Austria came to be characterized by events related to the Nazi era, which showed how little the Austrians had done with their past. Prior to the 1986 presidential election, it was revealed that the UPP-backed candidate Kurt Waldheim, the former UN secretary general, had detailed details of his past during the war. He was then an officer of a German alliance that sent many Jews, partisans and allied soldiers to death. Despite the resurrection, Waldheim won the election. The result of the election resulted in Fred Sinowatz resigning as Chancellor and being replaced by Finance Minister Franz Vranitzky, also he socialist. Waldheim was portrayed in many countries, including the United States.

The new government appointed an international commission to investigate whether Waldheim committed a crime during the Second World War. The Commission concluded that he had not personally committed any war crimes, but Waldheim was nevertheless declared to have a moral guilt because he had known of the atrocities that had taken place. In the 1992 presidential election, Waldheim did not run for re-election. New federation president became VP's candidate Thomas Klestil.

Support is increasing for FP

In the 1980s, economic policy with large government spending began to have negative effects. The budget deficit increased while industrial competitiveness decreased, exports stagnated and growth slowed. The coalition between SP and FP broke down in 1986 when right-wing nationalist Jrg Haider was appointed new leader of FP. In the new election that year, support for FP nearly doubled to almost 10 percent, while the Greens for the first time joined the National Council. Both SP and VP suffered electoral losses but after the election formed a new large coalition.

The government initiated financial tightening and a restructuring of the state industrial sector. At the same time, the upheavals in Eastern Europe, which led to the fall of the communist regimes, gave Austria more room for maneuver to be closer to the western countries. In 1989, Austria submitted an application for membership of the then EC (today's EU).

In the 1990 election, VP made its worst result so far, but the party still remained in the government together with SP.

During the 1990s, attempts were again made to settle with Austria's Nazi past. When Chancellor Franz Vranitzky announced in 1991 that many Austrians had a co-responsibility for what had happened during the Hitler era, this was the first official position taken on this issue. In 1992, it became punishable to deny the Nazi genocide during the Second World War and a few years later an Austrian President, Thomas Klestil, visited Israel for the first time. The following year Parliament established a fund for financial compensation for the 30,000 who survived the concentration camps or managed to escape Nazism.

Negotiations with the EU began in 1993 and in June 1994, 67 percent of voters voted in a referendum to join the Union. Austria became an EU member on 1 January 1995 (at the same time as Sweden and Finland).

FP was strengthened again in the 1994 parliamentary elections, but SP and VP could still form a large coalition. Already the following year, however, new elections were held as the government parties could not agree on the budget. After the new election, they succeeded in agreeing on an economic austerity plan and government cooperation could continue. The cuts helped to reduce the government debt and the budget deficit, which was required for Austria to be a member of the EU's Economic and Monetary Union (EMU) from the beginning.

FP and VP form a government

In the 1999 parliamentary elections, the FP continued its advancement and passed the VP as the country's second largest party, albeit with a minimal margin. SP retained first place but made its worst choice since World War II. Now the attempts to reach a large coalition failed and in February 2000 instead formed the FP and VP government, with the VP's Wolfgang Schssel as Chancellor. This happened since the FP gave up the opposition to the EU's enlargement to the east. The government program contained no anti-immigrant elements and Haider demanded no ministerial post but remained as governor of Carinthia.

Before President Klestil approved the new government, he pushed for the party leaders to sign a special foreword in which they, among other things, professed democratic values.

In the outside world, it was a great astonishment when it became clear that FP would join the government. Israel called home its ambassador and the EU countries severed all diplomatic contacts at a higher level with Austria. Shortly after the government took office, Haider surprisingly resigned as party leader for FP. His hope was that criticism would then subside. The post of party leader was taken over by Susanne Riess-Passer, Deputy Chancellor of the Government. In September 2000, the other EU countries interrupted Austria's isolation.

Internal disputes and public disputes within FP led to a decline in voter support for the party. Through populist campaigns, often in violation of government policy, Jrg Haider sought to regain popularity.

After severe floods in the summer of 2002, a dispute arose between Haider and several FP ministers on how to finance the reconstruction. Finally, Riess-Passer and two other FP ministers chose to resign, and Riess-Passer also left the party leader post. The crisis caused the government to collapse.

When the new elections were held in November 2002, VP went strong and became the largest party for the first time in more than 30 years, with 42 percent of the vote. The big loser of the election became FP, which lost two-thirds of its voters. The two traditionally dominant parties were - temporarily as it turned out - back on nearly 80 percent voter support. But Chancellor Schssel nevertheless formed a new government with the FP. Haider continued to act in conflict with the government's policy, among other things he protested against the government's planned pension reform (see Labor market and Social conditions).

In the April 2004 presidential election, Heinz Fischer won over the VP candidate and became Austria's first Social Democratic head of state in 18 years.

The enlargement of the EU with ten new Member States in May 2004 was a hot political issue. Not least, the EU-skeptical FP warned, among other things, of increased immigration, greater competition in the labor market and higher unemployment. The government sought to address the unrest, among other things, by restricting workers from the new Eastern and Central European EU members when it came to the possibility of getting Austrian jobs.

In April 2005, Jrg Haider announced that he had left the FP and formed a new party, the Federation for the Future of Austria (BZ). With him he had the FP's three ministers and most of the FP's MPs. The new BZ could thus easily take over FP's role in the government and continue in coalition with VP. FP continued as a party with Heinz-Christian Strache as party leader.

A "big coalition" gains power

Prior to the parliamentary elections in October 2006, BZ and FP competed for how much asylum policy would be tightened, while VP took on the honor for the economic development praised by the outside world. The Social Democrats suffered from adversity following a scandal involving the union-owned bank Bawag. The bank had speculated away € 1.6 billion and there were suspicions that some of the money had gone to SP. Later, people in the bank's management were sentenced to prison sentences.

Despite the banking scandal, SP retained its place as the largest party, while VP lost support compared to the previous elections. FP strengthened its position slightly while the new BZ with a small margin managed the four percent block. The result was a return to the traditional order: a large coalition. The VP leader Wolfgang Schssel set tough conditions for co-government. Only in early 2007 did a coalition government join with Social Democrats leader Alfred Gusenbauer as the Chancellor.

Gusenbauer faced criticism early in the SP rally for having made too much concessions to the government partner. In 2007, the SP leadership broke the election promise to tear up a controversial decision taken by the previous government to buy 18 Eurofighter fighter aircraft. The Minister of Defense announced that the number of aircraft had been reduced to 15 and that the price had been reduced by EUR 400 million, but that the purchase would nevertheless be lost.

The SP voters' dissatisfaction with Gusenbauer was illustrated by poor results in various state elections. In June 2008, Gusenbauer chose to hand over the party leader post to Minister of Infrastructure Werner Faymann.

The contradictions between the government parties deepened when the SP promised that all EU treaties would henceforth be approved by the people in referendums. SP thus completely changed its line - just a few months earlier, the party had participated when Parliament approved the EU's Lisbon Treaty. The criticism was seen by critics as a populist attempt to win votes among EU-negative Austrians. Government cooperation cracked in the joints and in July it definitely collapsed.

When the new elections were held in September 2008, both parties backed down. The election was a success for the two right-wing populist parties, which received a total of 28 percent of the vote, slightly more than the FP achieved in the 1999 election.

Just two weeks after the election, BZ leader Jrg Haider was killed when he drove off the road in a traffic accident in Carinthia, where he was governor.

Socialist leader Faymann excluded cooperation with the two populist parties. Negotiations for a new government were drawn and only in December could Faymann take over as Chancellor of the new coalition with the VP. This time, government cooperation came to run more smoothly.

Despite this, the government parties had few successes in the state elections. All in all, it went best for FP, which in many places doubled its voter support. For the competitor on the right side BZ, things went much worse after Haider's death. The local BZ department in his home state therefore decided in 2009 to rename himself to the Freedom in Carinthia (FPK) and form a pact with FP. FPK later joined FP.

In the 2010 presidential election, Heinz Fischer was re-elected with 79 percent of the vote. However, since VP did not stand with any candidate and the turnout was unusually low, it was not seen as a strength message for SP. In second place came FP's Barbara Rosenkranz who, before the election, aroused strong emotions when she criticized the law that bans Nazi organizations and denial of the Holocaust.

Corruption scandals are discovered

The growing debt crisis in Europe became a hot domestic political issue that contributed to growing EU dissatisfaction. Many Austrians objected to EU countries taking emergency measures to distressed euro countries such as Greece. FP, which was negative to the currency cooperation in itself, won increased support through its resistance to the efforts. At the same time, the Social Democrats had been forced to give up the demand that all EU treaties should be accepted by referendums because otherwise the OVP threatened to dissolve the coalition.

Government parties' support among voters also failed as economic growth chopped and unemployment rose. The government was perceived as weak in action and did not come to terms with reforms, including administration and education, which have long been discussed.

In addition, there were a number of corruption scandals that erupted in 2011. They mainly concerned transactions under the bourgeois VP-FP government in 2000–2007. Suspicions of fraud, bribery and anti-dumping deals for millions amounted not least to the partly state-owned Telekom Austria, as well as the sale of apartments from the state-owned real estate company Buwog. A number of former ministers and high-ranking business representatives became the subject of legal investigations.

Accusations were also made against the incumbent government when the Social Democratic Chancellor Faymann was suspected of using taxpayers' money to effect positive media reporting during his time as Minister of Transport.

The scandals prompted the former Chancellor of the Interior, Schssel, to leave his seat in Parliament and politics, despite himself not being suspected of corruption. He said he wanted to facilitate the judicial investigations.

More scandals surrounded FP / BZ in the state of Carinthia. Among other things, shoddy money figured in a bank account in Liechtenstein, as well as information that Jrg Haider used funds from the regional bank Hypo Alpe Adrias for political projects and for financing both his own party and the coalition partner VP. Jrg Haider, who had died, could not be held responsible, but a high-ranking party representative was sentenced to prison and the VP leader in Carinthia resigned.

In the fall of 2011, a parliamentary committee was appointed to investigate the links of high-ranking politicians to the scandal. The chairman was appointed a party member from the Greens, the only party that had no connection to the scandals. The committee held several notable hearings, but was shut down after a year of the parties involved, who were hardly benefited from having their dirty laundry washed in public.

However, court proceedings continued. In 2013, former Interior Minister Ernst Strasser was sentenced to prison for receiving bribes recently as an EU parliamentarian. Several former managers of Telekom Austria also received prison sentences. In several other cases, the investigations went on over time. It was not until 2016 that news was brought against the former Finance Minister Karl-Heinz Grasser and several others for the Buwog scandal.

Against the backdrop of the corruption scandals, the public's confidence in politicians dropped to bottom levels. The government parties, with the support of the Greens, passed a law package in June 2012 that would counter corruption and tightened the rules for party and campaign financing, something that had previously been called for by EU bodies.

New big coalition after the 2013 elections

The dissatisfaction with the establishment paved the way for new party formation and it became increasingly clear that the political landscape was irrevocably changing. The traditional parties in the big coalition did manage to remain in power after the elections in September 2013. But it was with distress and scarcity. Together, the Social Democrats and the Conservative People's Party got just over 50 percent of the vote - for both, the result was the worst since World War II.

Only after lengthy negotiations on, among other things, the minimum wage, the budget and the scope of structural reform could SP and VP agree and Chancellor Werner Faymann form a new government, in December 2013.

In the battle over the right-wing populist voices, the FP liberals now seemed to have outmaneuvered the outbreak in BZ. FP received just over 20 percent of the vote, while BZ failed to get up to the 4 percent required to take a seat in the National Council.

 
 

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