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The USSR's occupation of Austria from 1945 to 1955 involved the expropriation of hundreds of Austrian businesses, including industrial plants and production installations, and the seizure of German assets in Austria. The Soviets aimed to exploit Austria's economy to rebuild their own war-ravaged country. They controlled over 400 enterprises, employing around 60,000 people, or 10% of Austria's industrial labour force. However, by 1953, the value of these firms had dropped significantly due to a lack of investment, and many Soviet-controlled companies moved to the West, leaving the USSR with empty shells. The US and Austrian governments also invested Marshall Plan funds into competing businesses outside the Soviet zone, further reducing the USSR's influence in Austrian industry.
| Characteristics | Values |
|---|---|
| Dates of Soviet occupation of Austria | 1945-1955 |
| Reason for occupation | Austria was treated as a defeated Axis power, but Moscow also adhered to the line that Austria was a victim of Germany |
| Soviet policy towards Austria | Moscow did not try to impose a communist dictatorship in Austria, and the country experienced less political violence than others occupied by the Red Army |
| Soviet economic policy in Austria | Initially plunder, but from 1946 focused on running expropriated Austrian businesses for profit |
| USIA | A conglomerate of over 400 enterprises controlling 5% of Austrian economic output but with a significant share in some industries |
| USIA employees | 22,000 in 1946, 60,000 in 1951, 36,000 in 1955 |
| Marshall Plan | Began in 1950, targeted improvement in factory-level productivity, labour-management relations, free trade unions and modern business practices |
| Soviet withdrawal | 1955 |
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What You'll Learn
Soviet Occupation of Austria
Immediately following World War II, Austria was divided into four occupation zones, with Vienna similarly subdivided. The country was jointly occupied by the United Kingdom, the Soviet Union, the United States, and France. The Soviet occupation of Austria lasted from 1945 to 1955.
The Soviet Union treated Austria as a defeated Axis power, but it maintained that Austria was a victim of Germany, and therefore, the country avoided some of the worst fates of Germany. Austria did not lose any territory, and Austrians were not expelled or rounded up for slave labour. The Western Allies also opposed the Kremlin's plans to impose heavy war reparations on Austria, although they did consent to Moscow's demand to be entitled to German assets in Austria in their zone of occupation.
The Soviet occupation of Austria was marked by systematic sexual violence against women, repression against civilians, and plunder. The Soviets deployed NKVD (secret police) teams to seize industrial plants and production installations, confiscating goods in the quantity of 31,200 freight cars. The Soviets also expropriated hundreds of businesses in their zone, placing them under the conglomerate USIA (Administration for Soviet Property in Austria). USIA controlled over 400 enterprises and employed around 60,000 people at its peak, but it was weakly integrated with the rest of the Austrian economy.
In 1955, Austria was granted full independence, and the last occupation troops left the country on October 25 of that year.
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USIA and Soviet Expropriation
The USIA (Russian: УСИА, Управление советским имуществом в Австрии) or the Administration for Soviet Property in Austria was formed in June 1946 in the Soviet zone of Allied-occupied Austria. It operated until the withdrawal of Soviet troops in 1955. The USIA was a de facto state corporation that controlled over 400 expropriated Austrian factories, transportation, and trading companies. These included formerly independent Austrian companies (ÖAF), factories once owned by German corporations (AEG), and former SS enterprises (DEST).
The USIA was formed following the Soviet expropriation of Austrian businesses. In 1945, the Soviet command transformed the Department for Investigation of German Properties into the Administration for Soviet Property in Eastern Austria (USIVA) and placed all industrial assets in its Soviet zone under its control. Between February and June 1946, the Soviets expropriated hundreds of businesses, and on June 27, 1946, they were all amalgamated into the USIA. The USIA accounted for only 5% of Austrian national output but possessed a substantial, even monopolistic, share in certain industries such as glass, steel, oil, and transportation.
The Soviets changed their economic policy from outright plunder to running expropriated Austrian businesses for profit. The Austrian government refused to recognize the USIA's legal title over its possessions and, in retaliation, the USIA refused to pay Austrian taxes. The USIA was also exempt from Austrian tariffs and could easily trade with Eastern Europe despite the Iron Curtain and Western trade embargoes.
The USIA was very weakly integrated with the rest of the Austrian economy. Its products were primarily shipped to the East, and its profits were de facto confiscated by the Soviets. The Austrian government, anxious about Soviet influence, invested Marshall Plan funds into competing businesses outside the Soviet zone. As a result, Soviet-occupied territories lagged behind in economic growth, and their plant and equipment soon became substandard. Some USIA-ran Austrian companies moved their operations to the West, leaving the Soviets with empty shells.
The USIA's internal structure mirrored that of the Soviet cabinet, with nine divisions paralleling nine ministries of industries. Eleven ministries in Moscow had a say in USIA affairs. The number of employees varied from 22,000 in 1946 to a peak of 60,000 in 1951. A disproportionately high number of USIA staff were Austrian Communists.
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Soviet Economic Policy
The Soviet economic policy, from its inception in 1917 to 1991, was marked by intense political and social conflict, and several U-turns that altered the scope for market organisation and consumer choice. The Soviet economy was designed to build national power and reflected the ideas of the Bolshevik leaders who admired the German and American models of economic organisation. The German model was of a modern war economy with mobilisation for mass warfare and sacrifice, and the American model was of standardised commodities, mass-produced under centralised management.
The Soviet Union's economic policy was characterised by a centralised single-party dictatorship, with leaders who viewed the world as hostile and their country as perpetually under threat. This mindset influenced their economic policies, which focused on repressing consumption to finance industrial and military projects, resulting in a vast military industry for armament mass production.
During the civil war, the Soviet state assumed control over the acquisition and distribution of grain and other foodstuffs, as well as the administration of industries and various economic activities. This approach, dubbed "War Communism" by Lenin, reflected the Bolsheviks' desperation to overcome shortages, particularly food. In 1921, Lenin introduced the New Economic Policy (NEP), marking a significant shift in the party's economic strategy. The NEP included a tax-in-kind, allowing peasants to sell their food surpluses on the open market, leading to the denationalisation of small-scale industries and services, and the establishment of trusts for large-scale industries.
During World War II, the Soviet Union occupied several countries, including Austria, and expropriated their economic assets. In Austria, the Soviets seized control of hundreds of businesses, factories, and transportation companies, amalgamating them into the USIA (Administration for Soviet Property in Austria). Despite possessing significant shares in certain industries, the USIA contributed to only 5% of Austrian national output due to weak integration with the Austrian economy.
In the post-war period, the US and its Western allies implemented the Marshall Plan, which aimed to improve productivity and growth in Austria. While the Marshall Plan aided in the recovery of heavy industries, it had a detrimental effect on agriculture. The Soviet-occupied territories in Austria lagged behind in economic growth due to a lack of investment, and some companies moved their operations to the West to escape Soviet control.
In the 1980s, the Soviet economy faced stagnation and crisis due to various factors, including resource depletion and structural imbalances. Gorbachev's leadership struggled to address the economic decline, and the introduction of perestroika further exacerbated the economic situation, leading to a hard currency debt crisis by 1989.
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Austrian Recovery Efforts
The Soviet Union occupied Austria from 1945 to 1955. During this time, the country was subjected to economic exploitation, with the Soviets seizing control of Austrian industries and expropriating assets.
Austria's recovery efforts began in earnest after the Second World War, as the country sought to rebuild its economy and society. Here is an overview of the key aspects of these recovery efforts:
- The Marshall Plan: The Marshall Plan, initiated in 1947, played a crucial role in Austria's recovery. It aimed to improve factory-level productivity, labor-management relations, and the introduction of modern business practices. The plan channelled financial aid into heavy industries, particularly in the American and British zones, such as around Linz and in British-occupied Styria. While the Marshall Plan was not initially popular, as it negatively impacted some trades like agriculture, it successfully boosted heavy industry output to 150.7% of pre-war levels by 1951.
- Productive Economy Focus: The second stage of the Marshall Plan, starting in 1950, focused on increasing the productivity of the Austrian economy. This involved transferring attitudes, habits, and values associated with progress in the marketplace, politics, and social relationships. The Economic Cooperation Administration distributed $300 million in technical assistance to steer the Austrian social partnership towards productivity and growth.
- Food Aid: In June 1947, the US government provided $300 million in food aid when Austria faced a food crisis due to the cessation of UNRRA shipments. This aid was vital in addressing hunger and helped sustain the country until the first tranche of Marshall Plan aid arrived in March 1948.
- Addressing Soviet Expropriation: The Soviets had expropriated numerous Austrian businesses and controlled key industries through the USIA (Administration for Soviet Property in Austria). To counter this, the Austrian and US governments invested Marshall Plan funds into competing businesses outside the Soviet zone, causing USIA-controlled enterprises to lose their market advantage.
- Political Stability: The election of 1945 resulted in a coalition government of Christian Democrats (ÖVP) and Social Democrats (SPÖ). Despite initial tensions with the Soviets, this government worked to stabilize the country and foster economic growth.
- Agricultural Recovery: While the Marshall Plan initially depressed agriculture, Austrian agriculture eventually recovered. The country's farmers faced challenges due to the influx of food aid, which discouraged local production. However, over time, Austrian agriculture rebounded, contributing to the country's overall recovery.
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Soviet Withdrawal
The Soviet Union's withdrawal from Austria occurred in 1955, marking the end of the country's decade-long occupation. During this period, the Soviets sought to exploit Austria's economic resources, particularly in key industries such as glass, steel, oil, and transportation. The Administration for Soviet Property in Austria, known as the USIA, played a central role in this exploitation.
The USIA, formed in June 1946, controlled over 400 expropriated Austrian businesses, including factories, transportation, and trading companies. While it only accounted for 5% of Austria's national output, the USIA held a significant, often monopolistic, share in certain industries. For example, it controlled 60% of glass-making, 43% of leather, and 40% of iron and steel production. The USIA's assets were exempt from Austrian tariffs and taxation, and it easily traded with Eastern Europe, further solidifying its dominance.
However, the USIA's grip on the Austrian economy began to weaken over time. The Austrian and US governments, concerned about Soviet influence, invested Marshall Plan funds into competing businesses outside the Soviet zone. This strategic move gradually eroded the USIA's competitive advantage, and by 1953, the value of USIA firms had significantly dropped due to a lack of investment and neglect. Additionally, some USIA-ran companies relocated their operations to the West, further diminishing the Soviet presence in Austria's economy.
The Soviet Union's own policies also contributed to the decline of their influence in Austria. Unlike other occupied countries, the Soviets did not impose a communist dictatorship in Austria, recognizing its status as a victim of Nazi Germany. This restraint was partly due to Austria's geographical distance from the Soviet Union and its lower geopolitical priority. Additionally, the Soviets shifted their focus from outright plunder to managing expropriated assets for profit, indicating a change in their economic strategy.
The Soviet withdrawal in 1955 marked a turning point for Austria, allowing the country to reclaim its sovereignty and chart its own course free from Soviet influence. The USIA's failure to invest in and adapt its enterprises accelerated the Soviet decline in Austria, ultimately leading to their departure.
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Frequently asked questions
The USSR left Austrian industry in 1955, when Soviet troops withdrew from Austria.
The USIA (Russian: УСИА, Управление советским имуществом в Австрии) was the Administration for Soviet Property in Austria. It was a de facto state corporation that controlled over 400 expropriated Austrian businesses.
The USIA had a significant or monopolistic share in the glass, steel, oil, and transportation industries.
At its peak in 1951, the USIA employed around 60,000 people, or 10% of Austrian industrial labor.
No, the USIA did not pay Austrian taxes. The Austrian government refused to recognize the USIA's legal title over its possessions, and in retaliation, the USIA refused to pay taxes.
