AUSTRIA: Letter from Vienna - When the Curtain went up.

AUSTRIA: Letter from Vienna - When the Curtain went up. - Austria's new, important role in the revitalisation of its eastern neighbours could help to restore Vienna's significance in Europe.

by Charlotte Smith.
Last Updated: 31 Aug 2010

Austria's new, important role in the revitalisation of its eastern neighbours could help to restore Vienna's significance in Europe.

A German travel writer visiting Vienna in 1838 noted that the city's famous Herrengasse "swarmed with Croats, Slavonians and Serbians" as people from all over the Austrian Empire flocked to the capital in search of a living. Those words might have been written this year. Under very different circumstances, Vienna has again become a magnet for the disaffected from all Austria's eastern neighbour states. This time it is Communnisim, not colonialism, which has caused the influx. In the last days of June this year, three months into the civil war in Bosnia-Herzegovina, up to 300 desperate Bosnians were arriving in the Austrian capital each day. Most cities would be overwhelmed, but not Vienna. As the state government's refugee co-ordinator, Friedrich Bruner, points out, "When you share three borders with the East (Slovenia, Slovakia and Hungary) and three to the West (Germany, Italy and Switzerland), you get used to coping with people on the move." Successive crises in Hungary (1956), Poland (1981) and then East Germany, Czechoslovakia and Romania in 1989 brought hordes seeking asylum, shelter and work. The Bosnians, over 40,000 of them, are simply the latest arrivals.

It is an irony which is kept rather quiet that Bosnia was one of the states annexed by the Austro-Hungarian Empire in its last days of glory before World War I. But, every since the empire was dissolved under the Versailles treaty, Vienna's significance in Europe has never quite been able to match up to the fabulous architectural pomp of the Ringstrases. Cut off during the Cold War from its neighbours to the east by an Iron Curtain of varying ideological thickness, and dwarfed to the west by the might of West Germany, the country could be forgiven for suffering a minor identity crisis.

But now, what was for decades a geographical disadvantage has become a real advantage. Austria is drawing on its traditional links with the East to play a significant role in the economic revitalisation of its eastern neighbours. Chancellor Franz Vranitzky has set up an East-West fund to encourage firms to invest directly in the new markets and believes there is "tremendous potential" for fruitful links. If he sounds buoyant, he has every reason. Austria's economy is still managing to outperform almost all the top OECD nations. Real GDP growth is expected to be 3% both this year and next. Inflation is being kept well pegged at under 3.5%, and the Schilling remains strong.

In fact, the changes in central Europe have proved very helpful in boosting this rosy status quo. Vienna, and the whole of Austria, is taking advantage of cheap labour and in so doing keeps a firm hand on wage-push inflation. Many manufacturers have also been able to shift their production sites across borders into Slovakia or Hungary. As the average monthly Austrian salary is still seven times higher than the equivalent in Hungary, the switch is a worthwhile investment. In addition, Austrian exports to Hungary, Poland and Czechoslovakia have more than doubled in the three years, with Hungary now ranking as Austria's sixth largest export destination after growth of nearly 40% last year.

Vienna's proximity to these markets also means many international firms are using the city as a base from which the co-ordinate eastern European operations. And now that tourists have realised they can fit in three, possibly four countries in as many days from Vienna, there seems to be no end to the hotel and office building going on across the city.

All this attention after so long in the shade is not to every Austrian's taste. Already, rumblings of discontent have started about cheap eastern labour undercutting the job market. My taxi driver complained bitterly that too much money was being lavished on projects in the East when it should be spent on Austria. Fears like these are music to the ears of the radical right, whose political party, the FPO, has raised alarming levels of support.

The vast majority of Austrians want no more to do with the right-wing demonds of their country's past. Sixty thousand people gathered this summer at a high-profile, anti-racism concert on Vienna's Heldenplatz. As the era of controversial president Kurt Waldenheim draws to a close, Austria's greatest challenge will perhaps be to prove its modern democracy can bear the burden of such dramatic change at its borders.

Charlotte Smith is a freelance journalist based in Berlin.

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