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Modern Austria
The Treaty of Saint-Germain (1919) fixed the present Austrian borders and forbade (as did the Treaty of Versailles) any political or economic union (Ger. Anschluss) with Germany. This left Austria a small country with some 7 million inhabitants, one third of whom lived in a single large city (Vienna) that had been geared to be the financial and industrial hub of a large state. The Dual Monarchy had been virtually self-sufficient economically; its breakup and the consequent erection of tariff walls deprived Austria of raw materials, food, and markets. In the postwar period, starvation and influenza exacted a heavy toll, especially in Vienna. These ills were followed by currency inflation, ended only in 1924 by means of League of Nations aid, following upon chronic unemployment, financial scandals and crises, and growing political unrest.
"Red" Vienna, under the moderate socialist government of Karl Seitz, became increasingly opposed by the "Black" (i.e., clericalist) rural faction, which won the elections of 1921. The cabinet of Social Democrat Karl Renner was succeeded by Christian Socialist and Pan-German coalitions under Schober, Seipel, and others. Unrest culminated, in 1927, in violent riots in Vienna; two rival private militias : the Heimwehr of the monarchist leader E. R. von Starhemberg and the Schutzbund of the socialists : posed a threat to the authority of the state. Economic crisis loomed again in the late 1920s. National Socialism, feeding in part on anti-Semitism, gained rapidly and soon absorbed the Pan-German party.
Engelbert Dollfuss, who became chancellor in 1932, though irreconcilably opposed to Anschluss and to National Socialism, tended increasingly toward corporative fascism and relied heavily on Italian support. His stern suppression of the socialists precipitated a serious revolt (1934), which was bloodily suppressed by the army. Soon afterward a totalitarian state was set up, and all independent political parties were outlawed. In July, 1934, the National Socialists assassinated Dollfuss but failed to seize the government.
Kurt von Schuschnigg succeeded Dollfuss. German pressure on Austria increased; Schuschnigg was forced to legalize the operations of the National Socialists and to appoint members of that party to cabinet posts. Schuschnigg planned a last-minute effort to avoid Anschluss by holding a plebiscite, but Hitler forced him to resign. In Mar., 1938, Austria was occupied by German troops and became part of the Reich. Arthur Seyss-Inquart became the Nazi governor.
In 1943, the Allies agreed to reestablish an independent Austria at the end of World War II. In 1945, Austria was conquered by Soviet and American troops, and a provisional government was set up under Karl Renner. The pre-Dollfuss constitution was restored with revisions; the country was divided into separate occupation zones, each controlled by an Allied power.
Economic recovery was hindered by the decline of trade between Western and Eastern Europe and by the division into zones. Austria was formally recognized by the Western powers in 1946, but because of Soviet disagreement with the West over reparations, the occupation continued. On May 15, 1955, a formal treaty between Great Britain, France, the United States, the USSR, and Austria restored full sovereignty to the country. The treaty prohibited the possession of major offensive weapons and required Austria to pay heavy reparations to the USSR. Austria proclaimed its perpetual neutrality. In 1955 it was admitted to the United Nations.
By the 1960s unprecedented prosperity had been attained. Austria had joined the European Free Trade Association in 1959, but association with the European Economic Community (Common Market) was held back by Soviet opposition. Politically, a nearly equal balance of power between the conservative People's party and the Socialist party resulted in successive coalition cabinets until 1966, when the People's party won a clear majority. They were ousted by the Socialists in the 1970 elections, and Bruno Kreisky became chancellor. A long-standing dispute with Italy over the German-speaking population of the Trentino–Alto Adige region of Italy was dealt with in a treaty ratified in 1971.
In 1983 the Socialist government fell, and the Socialists were forced to form a coalition with the far-right Freedom party. Austria captured world attention in 1986 when former UN secretary-general Kurt Waldheim was elected president despite allegations that he had been involved in atrocities as a German army staff officer in the Balkans during World War II. Also in 1986 the Socialists (subsequently the Social Democrats) and the People's party again joined together in a "grand coalition," with Social Democrat Franz Vranitzky as chancellor; it retained control of the government through the 1990s.
Austria began a partial privatization of state-owned industries in the late 1980s and entered the European Union (EU) in 1995. Waldheim was succeeded as president in 1992 by Thomas Klestil, the candidate of the People's party. In 1997, Chancellor Vranitzky resigned and was replaced by Social Democrat Viktor Klima. In the Oct., 1999, elections, the People's party placed third, just barely behind the far-right Freedom party, whose leader, JOrg Haider, was criticized as demagogic and nativist. The electoral results complicated the formation of a stable new government, which was only achieved in Feb., 2000, when Wolfgang SchUssel of the People's party became chancellor of a People's party–Freedom party coalition. Austria was quickly ostracized by other EU nations because of the Freedom party's participation in the government, and Haider : who had not joined the government : subsequently resigned as party leader. The sanctions imposed by the EU came to be regarded as threatening by smaller EU countries, however, and on the recommendation of an EU fact-finding commission they were lifted in Sept., 2000. Feuding within the Freedom party led to the collapse of the government two years later. Elections in Nov., 2002, were a major setback for the Freedom party, which was a distant third, while the People's party won a plurality. Despite the collapse of their coalition several months before, the People's party again formed (Feb., 2003) a government with the Freedom party, with SchUssel as chancellor.
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