Austria's Free-Enterprise: Nazi Take Over Impact

On March 12, 1938, Nazi Germany annexed Austria, an event known as the Anschluss. This was the first act of territorial aggression and expansion by the Nazi regime, which violated the Treaty of Versailles and the Treaty of Saint-Germain. The annexation was widely popular in both Germany and Austria, with many Austrians enthusiastically participating in the Nazification of their country. However, the Nazis' rise to power in Austria was marked by violence and terror, with Austrian Nazis carrying out a propaganda and terror campaign that targeted political opponents and the country's Jewish population. While the Nazis abolished parliamentary democracy and banned rival parties, there is no specific mention of them abolishing free enterprise in Austria. Instead, the focus appears to have been on gaining control of the Austrian government, persecuting Jews, and consolidating power through propaganda and repression.

The Austrian Nazi Party's failed coup in 1934

On 25 July 1934, the Austrian Nazi Party attempted a coup d'état against the Austrofascist regime. Members of the Vienna SS, disguised as Bundesheer soldiers and policemen, forced their way into the Austrian Chancellery and assassinated Chancellor Engelbert Dollfuss. Another group of putschists occupied the RAVAG radio building and broadcast a false report about the transfer of power from Dollfuss to Anton Rintelen, a member of the Christian Social Party. This was to be the signal for Nazis across Austria to begin an uprising against the state.

The coup failed. The majority of Austrians remained loyal to the government, and the Austrian military and police forces quickly defeated the conspirators. Over 200 people were killed in six days of fighting. Many of the defeated insurgents fled to Germany, where they joined the Austrian Legion. Kurt Schuschnigg became the new Chancellor and continued his predecessor's authoritarian policies.

The coup attempt had significant international ramifications. German dictator Adolf Hitler had ordered the coup, probably in June 1934, and the German government provided financial, logistical, and material support to the Austrian Nazis. However, when the coup failed, Hitler denied any involvement and claimed that it had been a rogue plan carried out by the Austrian Nazi Party. Fascist Italy, which was allied with the Austrofascist regime, sent troops to the Austrian border to defend Austrian sovereignty. This marked the beginning of a period of tension between Italy and Germany over Austria.

The Austrian Nazi Party's terrorist campaign in 1933

The German government claimed that the Austrian government was treating the Austrian Nazis unfairly. In response, the German government announced an economic sanction against Austria, requiring Germans to pay a 1,000 Mark customs fee to travel to Austria. This crippled Austria's tourism industry, which was highly dependent on German visitors.

In June 1933, in response to a fatal Nazi bombing in Krems, the Dollfuss regime banned the Austrian Nazi Party and its affiliates. However, the Austrian Nazis continued to operate illegally within the country, and thousands of Austrian Nazis fled across the border into Germany, where they formed a paramilitary unit known as the Austrian Legion.

Despite the ban, the Austrian Nazis continued their terrorist attacks, targeting government institutions and individuals. In the first half of 1934, 17 people were killed and 171 injured in these attacks. On July 25, 1934, Austrian Nazis attempted a coup, assassinating Chancellor Dollfuss. This failed coup attempt and the continued terrorist attacks ultimately led to the German annexation of Austria in 1938, known as the Anschluss.

Hitler's Berchtesgaden Agreement with Austrian chancellor Kurt Schuschnigg in February 1938

On February 12, 1938, Austrian Chancellor Kurt Schuschnigg met with Hitler at the Berghof residence in Berchtesgaden, Bavaria. Schuschnigg hoped to discuss the worsening relations between Austria and Germany, but Hitler was ready to take full control of Austria. He presented Schuschnigg with a set of demands, including:

• Austria's foreign and military policies were to be coordinated with Germany's.
• Austrian Nazi Arthur Seyss-Inquart was to be placed in charge of policing and security matters.
• Austrian Nazis who had been imprisoned by the Austrian government were to be amnestied.

Hitler used the presence of several German generals to intimidate Schuschnigg, who ultimately gave in and signed the agreement. This agreement, named after the town where it was signed, is known as the Berchtesgaden Agreement. It effectively undermined Austrian sovereignty and independence.

Following the agreement, Schuschnigg attempted to reassert Austrian independence by calling for a plebiscite (referendum) on March 13, 1938. However, Hitler responded by mobilizing the 8th Army and demanding Schuschnigg's resignation. On March 11, Schuschnigg conceded and resigned, leading to the annexation of Austria into Nazi Germany, known as the Anschluss.

Hitler's ultimatum to Schuschnigg in March 1938

On 11 March 1938, Hitler sent an ultimatum to Schuschnigg, demanding that he hand over all power to the Austrian Nazis or face invasion. The ultimatum was set to expire at noon, but was extended by two hours. Without waiting for an answer, Hitler had already signed the order to send troops into Austria at one o'clock.

Hitler's ultimatum to Schuschnigg was the culmination of a series of demands and threats that began on 12 February 1938, when the Austrian chancellor met with Hitler at Berchtesgaden. Hitler demanded that Schuschnigg appoint Nazi sympathisers to positions of power in the Austrian government, including Arthur Seyss-Inquart as Minister of Public Security with full control of the police. In return, Hitler would publicly reaffirm Austria's sovereignty. Intimidated and browbeaten by Hitler, Schuschnigg agreed to these demands.

On 9 March 1938, Schuschnigg called a referendum on Austrian independence, to be held on 13 March. Infuriated, Hitler demanded that Schuschnigg cancel the referendum and resign. Hitler's plan was for his appointee, Seyss-Inquart, to call for German troops to rush to Austria's aid, restoring order and giving the invasion an air of legitimacy. In the face of this threat, Schuschnigg cancelled the referendum.

On the evening of 11 March, Schuschnigg resigned. However, President Wilhelm Miklas refused to appoint Seyss-Inquart as Chancellor. Tired of waiting, Hitler ordered the invasion to commence at dawn on 12 March, regardless of whether his demands had been met. Around 10 pm, a forged telegram was sent in Seyss-Inquart's name asking for German troops. Seyss-Inquart was not installed as Chancellor until after midnight, when Miklas resigned himself to the inevitable.

The Soviet Union's occupation of Austria in 1945

On 20 April 1945, the Soviets instructed Renner to form a provisional government, which took office a week later. Renner's cabinet declared Austria's independence from Nazi Germany and called for the creation of a democratic state along the lines of the First Austrian Republic.

The Soviets accepted Renner, but the Western allies suspected the establishment of a puppet state and refused to recognize him. The British were particularly hostile, and even American President Harry Truman denied him recognition. Renner's cabinet included Austrian Communists, who held crucial seats such as the Secretary of State of the Interior and the Secretary of State for Education.

The Soviets began to comb the captured territories, arresting former Red Army men, Wehrmacht soldiers, and civilians. In July and August, they brought in four regiments of NKVD troops to "mop up" Vienna and seal the Czechoslovak border. The Red Army suffered 17,000 losses in the Battle of Vienna.

The Western allies, including American, French, and British troops, arrived in Austria in late April and early May. The first Americans arrived in Vienna at the end of July 1945. The British arrived in September.

The Soviets occupied only parts of Austria, including the capital, while the Anglo-American troops entered from Germany and Italy. Thereafter, France, Great Britain, the United States, and the Soviet Union divided Austria into four occupation zones.

The Soviets treated Austria as a defeated Axis power but adhered to the general line that it was a victim of Germany. As a result, Austria avoided losing any territory and the fate of ethnic Germans from Eastern Europe, who were expelled or deported for slave labour. The Western Allies also successfully opposed the Kremlin's plans for burdensome war reparations on Austria.

However, the Western Allies consented to Moscow's demand for German assets in Austria's occupation zone. The Soviets considered any property with German owners or investors at the end of the war to be German property. This resulted in Austria paying more than what Stalin initially demanded. Local governments were obliged to feed and clothe the Red Army, which was a significant burden.

The Soviets deployed NKVD teams to extract reparations through requisitions, seizing industrial plants and production installations. In June 1946, 30% of the national budget went towards covering occupation costs. From 1946 to 1955, Austria paid the Soviet Union 36.8 billion Schillings, or two percent of its accumulated GDP.

The Soviets did not impose a communist dictatorship in Austria, and the scale of political violence was more limited compared to other countries occupied by the Red Army. By 1955, when the Red Army pulled out of the country, they had arrested 2,400 Austrians, with 1,250 prosecuted for crimes ranging from war crimes to criminal activity.

The Soviets pulled out of Austria in 1955, along with the Western Allies, in exchange for Austria's promises of neutrality during the Cold War.

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