The stability of Austrian politics in the 1970s was paralleled by an equally stable economy: besides having an elaborate system of social security and health insurance, Austrians enjoyed an unbroken prosperity with one of the lowest rates of unemployment in Europe. The Kreisky governments carried through a host of reform programs, among which the reorganization of the legal code under the minister of justice Christian Broda had truly historic dimensions. Fritz Fellner Reinhold F. Wagnleitner
In 1978 Kreisky suffered his first defeat when a majority voted against the opening of a nuclear power plant. The late 1970s also witnessed the first of a series of scandals, many of them related to the technocratic wing of the Socialist Party. This wing centred around Kreisky’s minister of finance and political heir-apparent, Hannes Androsch. In particular, the dubious link between Androsch’s tax-consulting firm and the contractors building Vienna’s new general hospital began a series of setbacks for the Socialist Party; these were aggravated by the troubles of the nationalized industries.
The scandals that plagued Austria in the 1980s overshadowed the considerable reforms enacted by the Kreisky government. Voters grew increasingly dissatisfied with a stagnant sociopolitical system in which all important decisions were made behind closed doors by the interest groups represented in the “Social Partnership” (i.e., the chambers of industry, trade, and agriculture and the labour unions). A growing environmental awareness intensified voter frustration.
After the Socialist Party lost its absolute majority in 1983, Kreisky resigned, and the Socialists, under Chancellor Fred Sinowatz, entered into a coalition with the Freedom Party. The coalition stumbled from one scandal to another until it was finally brought down by the election of Kurt Waldheim, who was alleged to have been a Nazi war criminal, as president in 1986. Although an international historians’ commission found no evidence that Waldheim had personally committed war crimes, it proved his indirect complicity. With Waldheim’s insistence that he had only done his duty, the domestic political intrigue, the not-altogether-hidden anti-Semitism of some of his supporters, and the U.S. government’s decision to place Waldheim on its watch list of undesirable aliens, the incident undermined Austria’s domestic consensus more than any other event since 1945.
After the Waldheim debacle, Sinowatz resigned as chancellor, and the Socialist Party under Franz Vranitzky called for new elections, which resulted in a grand coalition of the Socialist and Austrian People’s parties. This government introduced partially successful budgetary and tax reforms and a privatization scheme for the nationalized industries. These reforms promoted the economic growth and social stability of the late 1980s. However, more scandals (notably the Noricum affair, involving the illegal sale of arms to Iran by a state-owned company), division within the Austrian People’s Party, and the public’s continued dissatisfaction with backroom deals weakened support for the coalition, while the environmentalist Greens (in parliament since 1986) and the Freedom Party enjoyed growing appeal.
In the 1990 elections the Socialists avoided disaster only through a combination of Vranitzky’s popularity and the weakness of the Austrian People’s Party. The reshaped coalition of the Socialist Party (renamed the Social Democratic Party in 1991) and the Austrian People’s Party faced new problems that were largely due to the dramatically changed international situation: Austria’s application for membership in the EEC (which, renamed the European Community, was embedded in the European Union [EU] in 1993) renewed heated debates over domestic repercussions and over membership’s compatibility with neutrality. The latter issue was raised again in connection with the breakdown of the Warsaw Pact and the turmoil in Yugoslavia. In 1990 the Austrian government unilaterally revoked some of the provisions of the 1955 State Treaty governing Austria’s neutrality. During the Persian Gulf War in 1991, in a controversial decision the government permitted air-transit rights to Allied planes and the transportation of U.S. salvage tanks through Austrian territory.
With the end of the Cold War and the opening of Austria’s eastern borders, the country was faced with an explosive increase of refugees (particularly from the Balkans) and immigrants (especially from Turkey). Many Austrians blamed the now-suffering Austrian economy on the influx of newcomers. In the early 1990s, heavy industry struggled, national debt rose, and unemployment reached a 40-year high. Popular discontent was reflected at the polls, as the right-wing Freedom Party and smaller opposition parties made gains against the ruling coalition. Reinhold F. Wagnleitner Austria in the European Union
In a historic referendum in June 1994, Austrian voters indicated their desire to join the EU, and in January 1995 Austria became a member. The following year, Austrians commemorated 1,000 years of common history. The festivities highlighted Austria’s stature in Europe historically, while the country’s increased regional cooperation underscored its current role in newly restructured Europe.
The Austrian economy, however, was not yet ready to meet EU criteria for financial stability. Further austerity measures were launched as Austria prepared to adopt the single European currency, the euro. In 1999 the majority of EU members began to replace their national currency with the euro, and by 2002 Austria, with its economy once again among the strongest in Europe, retired the schilling.
Meanwhile, the ongoing concern about immigration paralleled fears of foreign (particularly German) ownership of Austrian businesses, especially as Austria began privatizing more state-owned operations. Reflective of these fears was the ascendancy of Freedom Party leader Jörg Haider, whose extreme brand of conservatism regularly drew international censure but whose party narrowly eclipsed the Austrian People’s Party in the parliamentary elections of 1999. By 2000 the People’s Party had deserted the weakened Social Democratic Party to form a right-of-centre coalition government with the Freedom Party. The participation of the Freedom Party in the government brought condemnation from both the Austrian left and the international community, and the EU imposed sanctions on Austria. This move backfired within the country, where the governing parties mobilized patriotic support by portraying Austria as the victim of an international conspiracy. By the end of 2000 the EU had withdrawn its sanctions.
Jörg Haider, 2008.© Muellek/Shutterstock.com
The government was buoyed by a surging economy, but the Freedom Party, inexperienced in matters of state and beset by internal turmoil, stumbled in the 2002 elections. Its losses were primarily the gains of the Austrian People’s Party, which became the largest party for the first time in 36 years. But rather than renewing its traditional partnership with the Social Democrats, it again formed a coalition with the Freedom Party in 2003.
The Freedom Party splintered in 2005 as Haider and other leaders left to form a new party, the Alliance for the Future of Austria. The split followed a period of especially acrimonious fighting between moderate members and hard-liners over the party’s direction. The Alliance for the Future of Austria replaced the Freedom Party as the junior partner in the coalition government.