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Country Commercial Guides FY 2000: Austria Report prepared by U.S. Embassy Vienna, released July 1999 Note*

CHAPTER III. POLITICAL ENVIRONMENT

A. Nature of Political Relationship with the U.S.

Austria's bilateral relationship with the United States is excellent. Austria's political leaders and most Austrians recognize and appreciate the essential role played by U.S. economic assistance under the Marshall Plan after World War II, and the role played by the United States in promoting the conclusion of the Austrian State Treaty in 1955. This treaty ended the four-powers occupation following World War II and established Austria as an independent and sovereign state.

Austria maintains an embassy at 3524 International Court, NW, Washington, D.C. 20008 (Tel. 202-895-6700). Consulates are located in New York, Chicago, and Los Angeles, with honorary consulates in Atlanta, Boston, Buffalo, Columbus, Denver, Detroit, Honolulu, Houston, Miami, Kansas City, New Orleans, Philadelphia, San Francisco, San Juan, Seattle, St. Louis and St. Paul.

B. Major Political Issues Affecting the Business Climate

Since 1955 Austria has shaped its foreign policy on the basis of neutrality. This neutrality has been redefined in the context of participation in the EU's evolving security architecture with a new focus on solidarity. Austria joined the Partnership for Peace in 1995, but there is growing debate about NATO membership as an option for the future of Austrian security policy.

Austrian leaders emphasize the unique role the country plays as a link between East and West, and as a moderator between industrialized and developing countries. Austria is active in the United Nations and in UN peacekeeping efforts including SFOR and KFOR. It attaches great importance to participation in the Organization for Economic Co-operation and Development (OECD) and other international economic organizations, and has played an important role in the Organization for Security and Co-operation in Europe (OSCE). It is expected to continue this high profile role within the OSCE as it takes over the chair in the year 2000.

Vienna is the headquarters of the International Atomic Energy Agency (IAEA) and the UN Industrial Development Organization (UNIDO). Other international organizations based in Vienna include the Organization for Petroleum Exporting Countries (OPEC) and its Fund for International Development, and the International Institute for Applied Systems Analysis (IIASA).

Austria maintains a constant exchange of business representatives, political leaders, students, cultural groups, and tourists with the countries of Central and Eastern Europe. The Austrian government and various Austrian organizations, including business and labor, provide assistance and training to support constructive changes underway in the region.

Politics may sometimes intrude in business decisions. Larger Austrian firms are often associated with one of the major political parties, and purchasing by government entities and state-owned companies can be highly political. Some claim to have noticed a general favoritism towards European partners, although this is not official policy.

C. Synopsis of Political System, Schedule for Elections and Orientation of Major Political Parties

Austria is a parliamentary democracy. The Chancellor is the Head of Government and the President is the Head of State. The Federal Assembly (Parliament) is composed of two houses -- the National Council (Nationalrat) or the lower house, and the Federal Council (Bundesrat) or upper house. Virtually all legislative authority is concentrated in the National Council whose 183 members are elected according to a complicated system of proportional representation. Elections must be held at least every four years. The next are scheduled for October 3, 1999. The National Council may dissolve itself before the end of four years by a simple majority vote, or the Federal President may dissolve it on the recommendation of the Chancellor. The Federal Council consists of 64 members elected by the legislatures of the nine provinces for four- or six-year terms. Seats are allocated on the basis of population, with each province guaranteed at least three representatives. The Federal Council is restricted to reviewing legislation passed by the National Council and can only delay, not veto legislation.

The highest courts of Austria's independent judiciary are the Constitutional Court, which has jurisdiction over constitutional matters, the Administrative Court, which handles bureaucratic disputes, and the Supreme Court, for civil and criminal cases. Cases initiated in the Administrative and Supreme Courts can be appealed to the Constitutional Court. Justices of all three courts are appointed by the president for specific terms.

Austria's nine Laender (provinces) are headed by governors elected by the provincial legislatures. Although most authority, including police, rests with the federal government, the provinces have considerable responsibility for welfare matters and the supervision of local administrations.

Principal officials:

Federal President: Thomas Klestil
Federal Chancellor: Viktor Klima
Vice Chancellor/Foreign Minister: Wolfgang Schuessel
Ambassador to the United States: Peter Moser
Ambassador to the United Nations: Gerhard Pfanzelter

Austria has enjoyed political stability since World War II. Until the 1980s, the two major parties, the Social Democrats (SPO) and the People's Party (OVP) had the support of the majority of the electorate. The populist right-of-center Freedom Movement (FPO) has since established itself as a mid-sized party and the major opposition force. The Liberal Forum and the Greens each poll about 5% of the vote.

The SPO, which garnered 38% in the 1995 national elections, traditionally draws its constituency and much of its strength from urban and industrial areas. The party has shed its conviction in state-run, interventionist economic policies since the mid-1980s in favor of a market-oriented approach and balancing the federal budget. It retains its support for a well-developed social benefits system, but has acknowledged the need for more means-tested programs instead of additional benefits.

The OVP's traditional constituency has been among farmers, large and small businesses, and lay Catholic groups. Its center of strength is rural Austria. In economic matters, the party advocates conservative financial policies and privatization of much of Austria's nationalized industry. The OVP received 28% in the 1995 ballot.

The Freedom Movement attracts those who desire no association with the two major parties. Recently, the party's mixture of populist and anti-establishment themes has won increased support. Nationally, it attracted 22% in the 1995 elections. The Liberal Forum, more focused on libertarian ideals, split from the Freedom Party in February 1993 and received 5.5% of the vote in the 1995 election. The Greens, a left-of-center party focusing on environmental issues, received 4.8%.