The Austro-Hungarian Empire played a decisive role in central European
history. It occupied strategic territory containing the southeastern routes
to western Europe and the north-south routes between Germany and Italy.
Present-day Austria retains this unique position.
Soon after the Republic of Austria was created at the end of World War
I, it faced the strains of catastrophic inflation and of adapting a large
government structure to the needs of a new, smaller republic. In the early
1930s, worldwide depression and unemployment added to these strains and
shattered traditional Austrian society. In 1933, Engelbert Dollfuss formed
a conservative autocracy. In February 1934, civil war broke out, and the
Socialist Party was outlawed. In July, a coup d'etat by the National Socialists
failed, but Nazis assassinated Dollfuss. In March 1938, Germany occupied
Austria and incorporated it into the German Reich. This development is
commonly known as the "Anschluss" (annexation).
At the Moscow conference in 1943, the Allies declared their intention
to liberate and reconstitute Austria. In April 1945, both Eastern- and
Western-front Allied forces liberated the country. Subsequently, the victorious
allies divided Austria into zones of occupation similar to those in Germany
with a four-power administration of Vienna. Under the 1945 Potsdam agreements,
the Soviets took control of German assets in their zone of occupation.
These included 7% of Austria's manufacturing plants, 95% of its oil resources,
and about 80% of its refinery capacity. The properties returned to Austria
under the Austrian State Treaty. This treaty, signed in Vienna on May 15,
1955, came into effect on July 27, and, under its provisions, all occupation
forces departed by October 25, 1955. Austria became free and independent
for the first time since 1938.
Since World War II, Austria has enjoyed political stability. A Socialist
elder statesman, Dr. Karl Renner, organized an Austrian administration
in the aftermath of the war, and the country held general elections in
November 1945. All three major parties the conservative Peoples Party
(OVP), the Socialists (later Social Democratic party or SPO), and Communists
governed until 1947, when the Communists left the government. The OVP
then led a governing coalition with the SPO that governed until 1966.
Between 1970 and 1999, the SPO governed the country either alone or
with junior coalition partners. In 1999, the OVP formed a coalition with
the right wing, populist Freedom Party (FPO). The SPO, which was the strongest
party in the 1999 elections, and the Greens formed the opposition. The
FPO had gained support because of populist tactics, and many feared it
would represent right wing extremism. As a result, the European Union (EU)
imposed a series of sanctions on Austria. The U.S. and Israel, as well
as various other countries, also reduced contacts with the Austrian Government.
After a period of close observation, the EU lifted sanctions, and the U.S.
revised its contacts policy. Following 2002 elections, the OVP in February
2003 renewed its coalition with the FPO.