Austria's Soviet Satellite Status: Fact Or Fiction?

Austria was not a Soviet satellite state. After World War II, it was jointly occupied by the Western Allies and the Soviet Union until 1955, when it was granted full independence.

Austria was divided into four occupation zones, with Vienna also subdivided, but the central district was collectively administered by the Allied Control Council. The country was not included in the Soviet sphere of influence cutting across most of central and eastern Europe, but it was earmarked for heavy economic exploitation.

Austria's independence was restored on 27 April 1945, and the occupation ended when the Austrian State Treaty came into force on 27 July 1955. The country promised perpetual neutrality, and the last occupation troops left on 25 October 1955.

The Soviet Union's economic exploitation of Austria

Following World War II, Austria was divided into four occupation zones, jointly occupied by the United Kingdom, the Soviet Union, the United States, and France. While Austria was not included in the Soviet sphere of influence cutting across most of central and eastern Europe, the country was still earmarked for heavy economic exploitation.

The Soviet Union expropriated over 450 formerly German-owned businesses, and by 1955, the majority of these companies were close to bankruptcy. The Soviets had no intention of reinvesting their profits, and USIA assets gradually decayed and lost their competitive edge. By 1955, the value of these USIA firms had dropped dramatically due to a lack of investment and general neglect.

The Austrian government refused to recognise USIA legal title over its possessions, and in retaliation, the USIA refused to pay Austrian taxes and tariffs. This competitive advantage helped keep USIA enterprises afloat despite their mounting obsolescence. The Soviets had no intention of reinvesting their profits, and USIA assets gradually decayed and lost their competitive edge. The Austrian government feared paramilitary communist gangs sheltered by the USIA and scorned it for being "an economy of exploitation in colonial style".

In addition to the above, the Soviets also exploited Austria's oil fields. Austria was Europe's third-largest oil producer (after the Soviet Union and Romania), and the Soviets had taken hold of these oil fields in April 1945. Initially, the Soviet holding company USIA accounted for about 30% of the industrial output of the zone, at its peak controlling about 10% of the Austrian workforce, or a total of 50,000 employees.

In summary, the Soviet Union's economic exploitation of Austria took the form of expropriating and neglecting Austrian businesses, as well as exploiting the country's oil fields.

The Austrian Communist Party's lack of popularity

The Austrian Communist Party (KPÖ) has historically lacked popularity, with the party failing to gain a single mandate in parliament during the First Republic. The party's influence was limited by the ability of the Social Democratic Party (SPÖ) to unite the workers as an opposition movement, as well as internal factional struggles.

In the first provisional government under Karl Renner, the KPÖ was represented by seven members, along with ten socialists and nine Christian socialists. However, Renner outmanoeuvred the Communists by appointing two undersecretaries from opposing parties to each ministry, limiting the power of the KPÖ.

In the first National Council elections in 1945, the KPÖ won only 5.4% of the votes, resulting in the party being represented by only four members in parliament. This was despite the KPÖ assuring the Soviets that they could win as much as 30% of the vote. The party's poor performance was attributed to Austrian electors refusing to honour the Communist contribution to the Austrian resistance to Nazi occupation, instead identifying the KPÖ with the Red Army's plundering and raping.

The closeness of the KPÖ to Moscow also made many voters wary of the party and its aims. In the territories of the former Austro-Hungarian Empire, democratic systems were being undermined by local pro-Soviet communist parties, as was observable in Czechoslovakia, Hungary, and Poland. As the Iron Curtain was being drawn, Austrians feared the same fate as their neighbours.

The KPÖ's failure to condemn the bloody suppression of the 1956 Hungarian uprising led to a wave of withdrawals from the party. The party lost representation in the National Council in 1959, receiving only 3.3% of the total vote tally.

In more recent years, the KPÖ has continued to lack popularity, with the party consistently being critical of the NATO and the European Union. The KPÖ's vote share in the 2019 legislative election was only 0.7%, well below the 4% minimum required to obtain seats in the National Council.

However, there have been some signs of a revival for the KPÖ, particularly in the state of Styria. In the 2023 Salzburg state election, the party won 11.7% of the vote, securing four seats. In the 2024 European Parliament election, the KPÖ more than tripled its result from 2019, gaining 3% of the vote. Despite these gains, the KPÖ remains a minor force in national politics.

The Molotov Plan and Austria's neutrality

The Molotov Plan, also known as the Fourth Five-Year Plan, was a series of initiatives by the Soviet Union to integrate the East European countries into its planned economy. The plan was named after Soviet Foreign Minister Vyacheslav Molotov.

Austria was occupied by the Allies and declared independent from Nazi Germany on 27 April 1945. The country was divided into four zones and jointly occupied by the United Kingdom, the Soviet Union, the United States, and France. Vienna was similarly subdivided, but the central district was collectively administered by the Allied Control Council.

Austria's neutrality was established in the Austrian State Treaty, which was signed on 15 May 1945 in Vienna, at the Schloss Belvedere among the Allied occupying powers (France, the United Kingdom, the United States, and the Soviet Union) and the Austrian government. The treaty re-established a free, sovereign and democratic Austria.

The basis for the treaty was the Moscow Declaration of 30 October 1943, which stated that Austria would be regarded as the first victim of Nazi aggression and treated as a liberated and independent country after the war. The agreement and its annexes provided for Soviet oilfield concessions and property rights of oil refineries in Eastern Austria and the transfer of the assets of the Danube Shipping Company to the USSR.

Austria's neutrality was not included in the original text of the treaty but was declared by parliament on 26 October 1955, after the last Allied troops left Austria according to the treaty. This date became a national holiday, known as the Day of the Flag.

Austria's policy of neutrality helped make the small country an important mediator of East-West differences during the Cold War, and neutrality became a crucial part of Austria's postwar identity.

The Soviet Union's post-war expansionist policies

One of the key ways in which the Soviet Union expanded its influence was through the establishment of satellite states. These were countries that were nominally independent but had to stay within the limits of Soviet policy, enforced by the threat of forceful regime change or direct action by the Soviet Armed Forces. Notable examples of Soviet satellite states include East Germany, Hungary, Czechoslovakia, Poland, and Afghanistan.

The Soviet Union also sought to gain a foothold in other regions, such as Central America and Africa, by taking advantage of power vacuums created by decolonisation. For instance, the Soviet Union became allies with the Sandinista regime in Nicaragua and gained influence in Guinea, Mozambique, and Angola. Additionally, the fall of the Ethiopian imperial regime in 1974 allowed the Soviet Union to establish a Communist dictatorship in the oldest African state.

Another aspect of the Soviet Union's expansionist policies was economic expansion. The post-World War II period saw a broad economic expansion, often referred to as the "Golden Age of Capitalism," which included countries devastated by the war, such as West Germany, Austria, and Japan. The Soviet Union itself experienced a decade of prosperous and undisturbed economic growth in the early 1950s, making it one of the top 15 countries in terms of GDP per capita.

However, by the mid-1960s, the Soviet Union's economic growth slowed as resources were diverted towards large military and space projects. This shift in priorities, along with the rise of consumerism, the welfare state, and the space race, contributed to the eventual end of the postwar economic boom in the early 1970s.

The role of the Marshall Plan in Austria's recovery

In the aftermath of World War II, Austria found itself in a state of devastation, with its economy and infrastructure severely damaged. The country was occupied by the Allied forces, with the Soviet Union controlling the eastern part and the United States, Britain, and France controlling the western part. The question of whether Austria was a Soviet satellite during this time is a matter of historical debate, but it is clear that the country's recovery was heavily influenced by the competing interests of the East and West. One of the key factors in Austria's recovery and its alignment with the West was the implementation of the Marshall Plan.

The Marshall Plan, named after US Secretary of State George Marshall, was an American initiative to provide economic assistance to war-torn European countries. It was designed to rebuild Europe's economy, strengthen pro-Western sentiment, and counter the growing influence of the Soviet Union. Austria was a significant beneficiary of this plan, receiving over $960 million in aid between 1948 and 1952. This aid played a crucial role in stabilizing Austria's economy, rebuilding its infrastructure, and laying the foundation for its eventual prosperity.

One of the primary objectives of the Marshall Plan in Austria was to restore the country's industrial base and increase its productivity. A large portion of the aid was directed towards rebuilding factories, modernizing equipment, and providing technical expertise. This led to a significant increase in industrial production, particularly in key sectors such as steel, machinery, and textiles. The plan also focused on improving agricultural productivity, providing farmers with modern equipment, fertilizers, and improved seeds. As a result, Austria's agricultural output increased significantly, contributing to the country's overall economic growth.

In addition to industrial and agricultural development, the Marshall Plan played a crucial role in stabilizing Austria's currency and controlling inflation. The plan provided support for monetary reforms, including the introduction of a new currency, the Austrian schilling, in 1947. This reform, coupled with the influx of Marshall Plan aid, helped stabilize prices and encouraged foreign investment, further boosting Austria's economic recovery. The plan also facilitated the restructuring of Austria's banking system, leading to the establishment of the Oesterreichische Nationalbank, the country's central bank, in 1955.

The social impact of the Marshall Plan in Austria was also significant. The plan funded various social welfare programs, including housing construction, healthcare initiatives, and educational reforms. This led to improved living standards for many Austrians, contributing to social stability and a sense of gratitude towards the United States and its Western allies. Additionally, the cultural aspect of the Marshall Plan, often overlooked, played a role in shaping Austrian society. American films, music, and literature became more accessible, and educational exchanges brought Austrian students and scholars to the United States, fostering a greater understanding of Western values and ideals.

The success of the Marshall Plan in Austria had a profound impact on the country's political trajectory. It strengthened the position of pro-Western political forces and contributed to the emergence of a stable, democratic government. The economic recovery and social stability brought about by the plan made Austria an attractive partner for Western European integration. In 1955, the same year that the Soviet Union withdrew its occupation forces, Austria declared its neutrality, committing to a foreign policy of non-alignment and paving the way for its eventual membership in the European Union.

In conclusion, the Marshall Plan played an indispensable role in Austria's recovery from the devastation of World War II. It provided the economic foundation for the country's prosperity, stabilized its currency, and boosted industrial and agricultural production. Additionally, the social and cultural impact of the plan contributed to improved living standards and a pro-Western sentiment among Austrians. As a result, Austria was able to chart a course towards democracy, neutrality, and eventual integration with Western Europe, solidifying its position as a sovereign and independent nation.

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