Sputnik Escalates the Cold War
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Central European state comprising 32,377 square miles, making it slightly larger than the U.S. state of South Carolina. Austria is bordered by Germany and the Czech Republic to the north, Slovakia and Hungary to the east, Italy and Slovenia to the south, and Switzerland to the west. As with Germany, at the end of World War II Austria found itself between East and West. While Germany was divided into two states during the Cold War, Austria, a nation of some 7 million people in 1946, remained intact. Through cautious diplomacy, the renewed Republic of Austria managed to establish itself between the two blocs of the Cold War, beholden to neither side. Nevertheless, the Austrian position was precarious.

In 1938, through the infamous Anschluss, Germany had annexed Austria. Austrian soldiers fought with the German Army, the Austrian economy contributed significantly to the German war effort, and Austria's population had offered little resistance to German occupation. There were, therefore, solid reasons for treating Austria as a defeated nation at war's end.

Early Anglo-American plans called for Austrian war reparations and marked the country for dismemberment. By 1943, however, fears of Soviet expansion changed those plans. In the Moscow Declaration of 1 November 1943, the Allies committed themselves to the reestablishment of an independent Austria. Reparations would be allowed under a complicated formula, but the Allies now agreed that Austria had been the "first victim" of Hitler's aggression and should be treated accordingly.

Austria's restoration proved difficult. The Soviets treated Austria as a conquered nation, although they had no plans to annex it. Upon entering Austria, Soviet soldiers raped and looted with impunity, while Soviet officials concentrated on extracting as much industrial production and wealth as possible from the country. In April 1945 Soviet forces installed Karl Renner, a prewar advocate of Austro-Marxism, as head of an interim government. With no representatives in Austria, the Allies suspected Renner of being a Soviet puppet and refused to recognize the government. Meanwhile, the Soviets pressed Renner to legitimize their plundering of Austrian economic resources, in accordance with their interpretation of the Moscow Declaration. Renner's government resisted, invoking the Allies' interest.

This delicate balancing act became the hallmark of Austrian statecraft during the Cold War. Continued Soviet pressure for reparations—they demanded a sum of $250 million at the Allied Potsdam Conference in July and August 1945—brought an increasing Westward tilt, however. Free elections held in November 1945 returned a solid democratic majority. The conservative People's Party captured almost 50 percent of the vote while the Social Democrats took about 45 percent, leaving the Austrian communists with just over 5 percent.

With the avenue to power apparently closed to the Austrian communists, the United States began to fear that Austria would be the target of a preemptive, external communist takeover. Austria was therefore singled out by President Harry S. Truman's administration as a priority aid recipient in the 1947 European Recovery Program (Marshall Plan). Although the Soviets tried to block Marshall Plan payments to Austria, the country nonetheless received some $1.5 billion in aid from the United States.

When communist-led strikes in Austria coincided with the invasion of South Korea during the summer of 1950, the United States agreed to secretly arm Austria as a preventive measure. The Soviets were in any case covertly arming their own adherents in Austria in similar fashion. The result was a stalemate in Austria's full reconstitution plan through 1952, as each side suspected the other of attempting to draw Austria into its sphere of influence.

The death of Soviet dictator Josef Stalin in March 1953, however, opened a new chapter in Austrian history. The Soviet Union's new collective leadership formulated a more flexible foreign policy known as peaceful coexistence, wherein Austria emerged as a test case. Soviet policy now advocated the creation of a neutral, independent Austrian state as a means of preventing it from joining the Western bloc. The United States initially resisted the idea but eventually embraced it on the conditions that neutrality not be linked to demilitarization and that the Austrian settlement not be linked to a German settlement.

This position, after nearly two years of complex negotiations, came to form the basis of the Austrian State Treaty. As part of their peace offensive, the Soviets agreed to accept greatly reduced reparations payments. Signed on 15 May 1955, the treaty established Austria as an independent state with the understanding that it would remain neutral. The Austrian parliament duly passed a measure on 26 October 1955—one day after the last Allied soldier left Austrian territory—making permanent neutrality part of the constitution.

Austria's moment in the spotlight faded as quickly as peaceful coexistence. For most of the Cold War, Austria remained inconspicuous and prosperous while scrupulously maintaining its neutrality. Its location between East and West, together with its official neutrality, made it a convenient meeting spot for spies and diplomats. Vienna, the Austrian capital, hosted a summit meeting between Soviet Premier Nikita Khrushchev and U.S. President John F. Kennedy in June 1961, and the United Nations opened a third International Center in Vienna in 1980.

Austria's domestic politics were carefully balanced between the Social Democrats and the conservative People's Party, but economically and culturally Austria clearly leaned to the West. When Soviet tanks rolled into Budapest, Hungary, to suppress the 1956 revolution there, Austria opened its borders to some 150,000 refugees, much to the displeasure of the Soviet Union. Not coincidentally, it was also the opening of the Austro-Hungarian border on 2 May 1989 that signaled the beginning of the end of the Cold War. The Republic of Austria subsequently joined the European Union and became a member in the Partners for Peace program of the North Atlantic Treaty Organization (NATO) in 1995 but is not a full-fledged member of NATO.

Although it never quite served as the bridge between East and West that the founders of the Second Republic envisioned, Austria prospered as a tourist destination and a symbol of mutual cooperation between East and West.

Timothy C. Dowling

Further Reading
Bamberg, James. British Petroleum and Global Oil, 1950-75: The Challenge to Nationalism. Cambridge: Cambridge University Press, 2000.; Brook-Shepherd, Gordon. The Austrians: A Thousand-Year Odyssey. New York: HarperCollins, 1997.; Mück, Hugo. Die Zweite Republik [The Second Republic]. Vienna: Lind, 2004.; Thaler, Peter. The Ambivalence of Identity. West Lafayette, IN: Purdue University Press, 2001.

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