Hidden Hands and Cross Purposes: Austria and the Irreconcilable Conflict between Neutrality and...

Hidden Hands and Cross-Purposes: Austria and theIrreconcilable Conflict between Neutrality and

Market Laws

ANDREW E. HARROD

AUSTRIA EMERGED IN 1955 from a ten-year occupation administered by the four majorpowers of the successful anti-Third Reich coalition of WorldWar II—France, the SovietUnion, the United Kingdom, and the United States—as a united, independent state. The

15 May 1955 State Treaty signed by these countries and Austria spared Austria the fate of ColdWar division suffered by Austria’s neighbor to the north (in the ultimate East-West breakdownof Germany’s parallel postwar quadripartite occupation).1 Paving the way for Austria’s goodfortune was a political quid pro quo agreed between Austrian leaders and their Sovietcounterparts in Moscow the previous April. In the 15 April 1955 Moscow Memorandum,Austria consented to becoming a permanently neutral state modeled on Switzerland. Thisneutrality precluded a possible Austrian membership in NATO in exchange for a long-delayed Soviet assent to an end of Austria’s occupation regime with a concomitantabandonment of the Soviet occupation zone and the withdrawal of all occupation troops.2

After the completion of this withdrawal, a fully sovereign Austria made good on its pledgewith the passage on 26 October 1955 of a constitutional law declaring Austria to be“permanently neutral” and foreswearing all military alliances.3

1A copy of the State Treaty is available at the website European Navigator, see: State Treaty, accessed 3 December2005; available from http://www.ena.lu/mce.cfm. A German edition is also available at: Staatsvertrag betreffend dieWiederherstellung eines unabhängigen und demokratischen Österreich, accessed 30 January 2006; available fromhttp://www.oesterreichistfrei.at/geschichte3_4.htm. In print, see: Heinrich Siegler, ed., Austria: Problems andAchievements since 1945 (Bonn, 1969), 178–92.

2A copy of the Moscow Memorandum is available in: Alfons Schilcher, Österreich und die Großmächte: Dokumentezur österreichischen Außenpolitik, 1945–1955, Materialen zur Zeitgeschichte series (Vienna, 1980), 284–85. A copy ofthe Moscow Memorandum can also be found online, see: Moskauer Memorandum, accessed 30 January 2006;available from http://www.oesterreichistfrei.at/geschichte3_3_2.htm; and, in English translation, MoscowMemorandum, accessed 27 February 2006; available from http://www.ena.lu/mce.cfm. All translations in thisarticle are by the author. One basic monograph on Austria’s occupation and the events leading to the MoscowMemorandum and the State Treaty is: Sven Allard, Russia and the Austrian State Treaty: A Case Study of SovietPolicy in Europe (University Park, PA, 1970).

3Gerald Stourzh, “The Origins of Austrian Neutrality,” in Neutrality: Changing Concepts and Practices, ed. Alan T.Leonhard, 35–57 (Lanham, MD, 1988), 51. The German original can be found in: Bruno Kreisky, Neutralität und

Austrian History Yearbook 43 (2012): 165–188 © Center for Austrian Studies, University of Minnesota 2012doi:10.1017/S0067237811000646

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Even before the end of the occupation and Austria’s declaration of neutrality, though,Austria’s experience with Marshall Plan aid and its attendant restrictions designed to preventSoviet Bloc enrichment indicated that Austria would have difficulty being truly neutral in themarketplace. Austrian adherence to western Cold War export controls only continued apattern of support for western trade embargoes against the Communist Bloc by a self-proclaimed neutral country. Irrespective of Austrian wishes, though, Austria’s great andgrowing interdependence with Western economies throughout the Cold War left Austriawith little choice but to countenance such embargoes lest Western sanctions impedeAustrian prosperity and thereby weaken Austria’s commitment to neutrality.

Even as Austria became increasingly economically integrated with its European neighborsand the wider Western world, Austria also had to contend with significant energydependencies, both upon coal and oil supplies from the Communist Bloc and upon theworld’s leading oil-producing nations. The latter dependency prompted Austrianinvolvement in the 1974 International Energy Program (IEP), a consortium of Western oil-consuming nations designed to counter any future oil shock like that caused by previousOrganization of Petroleum Exporting Countries (OPEC) oil embargoes. Despite Austria’senormous dependence upon global trade flows, meanwhile, stockpiling measures in Austriafor withstanding any cutoffs during a crisis situation remained deficient.

None of these facts of Austria’s economy technically violated Austrian neutrality, a statusaccording to international law and Austrian conceptions concerning only military matters andonly operational during any given conflict. In contrast, Soviet conceptions of a “total” neutralitypolicy rejected by Austrian leaders during State Treaty negotiations encompassed political andeconomic aspects of a neutral country as well.4 Nonetheless, such lopsided trade flows calledinto question Austria’s ability to maintain, in various potential conflicts, the neutrality law’srequirement that any economic sanctions be impartial, particularly in any escalation in Europeof the very Cold War that gave rise to Austrian neutrality. Commonly accepted notions ofpermanent neutrality expressed in the Swiss Vorwirkungslehre demanded that a permanentlyneutral country like Austria pursue a peacetime “neutrality policy” designed to make credibleany possible wartime institution of neutrality. As some commentators noted, though, integratedglobal markets made this task akin to squaring the circle.5

Not Trading with the Enemy, I: The Curious Case of Austria under theMarshall Plan

Austrian desires to participate fully in the economic life of the Western world ultimatelypresented problems for the West’s drive to hinder the Soviet Bloc from strengthening itself

Koexistenz: Aufsätze und Reden (Munich, 1975), 68. An English translation can also be found online at: Austria—Constitutional Law on the Neutrality of Austria, accessed 13 March 2006; available from http://www.oefre.unibe.ch/law/icl/au06000_.html.

4See, e.g.,WolfgangMueller, “KalterKrieg,Neutralität undPolitischeKultur inÖsterreich,”AusPolitik undZeitgeschichte:Beilage zur Wochenzeitung Das Parlament, nos. 1–2 (2009): 11–19, at 17. Also available online at: Aus Politik undZeitgeschichte: Politische Kultur im Kalten Krieg, accessed 11 October 2011; http://www.bpb.de/files/DYKJMY.pdf.

5Renate Kicker, “Die Außenpolitik in der Zweiten Republik,” in 1945 bis 1995: Entwicklungslinien der ZweitenRepublik (Special edition of the Informationen zur Politischen Bildung series), ed. Bundesministerium fürUnterricht und kulturelle Angelegenheiten, 61–70 (Vienna, 1995), 64. Also available online at: Die AußenpolitikÖsterreichs in der Zweiten Republik, accessed 11 October 2011; available from http://www.demokratiezentrum.org/fileadmin/media/pdf/kicker.pdf.

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at the West’s expense, both before and after the State Treaty. Austria, for example, was amongthe sixteen European countries meeting in Paris from 12 July to 22 September 1947 to establisha plan for American aid, under the European Recovery Program (ERP or Marshall Plan), to flowto Europe.6 After participating in the founding of the Committee of European EconomicCooperation that summer, Austria was also a signatory to the 16 April 1948 agreementfounding the Organization of European Economic Cooperation (OEEC) to administer theERP.7 Austrian foreign minister Karl Gruber, whose 1988 memoirs record him signing inParis “with a certain pride” for Austria, remembered that the “imposing treaty text” inFrench alphabetically listed Autriche first among the OEEC countries, given that Albania anda divided Germany (Allemagne) were not present in Paris. Thus, Gruber signed first, and“Austria stood in the birth certificate of the united Europe of the future with its signature atthe very top.”8 Austria subsequently complemented its participation in the ERP by helping toestablish the multinational payments system of the European Payments Union in September1950.9

The participation of a united but nonetheless quadripartite-controlled Austria in the ERPand wider European economic developments was by no means a sure thing, however. TheAustrian diplomat Hans J. Thalberg remembered in his 1984 memoirs that:

for Austria new and outright existence-threatening questions developed through the insistence of theAmerican authorities to allow Marshall Plan aid to benefit only the American occupation zone,perhaps the English and French zones as well, but under no circumstances the part of Austriastanding under Soviet control. Large-scale and long lasting diplomatic and political efforts werenecessary to illustrate to American authorities, the competent departments, and the Congress theseriousness of a threatened division of our country along the lines of Germany.10

A key sticking point for the Americans, remembered Gruber, was that the Marshall Planallowed aid only “where American inspectors could control the distribution,” something “outof the question” in the Soviet zone. Gruber’s memoirs recounted that “to our great luck” an“especially intensive lobbying of the White House and the Congress,” aided by the Americanhigh commissioner Lieutenant General Mark Clark, “ultimately made understandable toeveryone that the control reports of Austrian authorities” would have to suffice.11 Gruberwrote in 1953:

The State Department, meanwhile, showed great understanding for our situation. We worked outtogether a process by which trusted Austrians were supposed to act as commissioners of theAmericans and to deliver the necessary control reports. The American representatives began,moreover, to understand very quickly that in our system of free democracy, free press, and freepublic criticism the utilization of Marshall Plan resources was an open book for every observer andthat therefore special controls were not necessary. For our part, we were naturally very concernedto prevent Soviet authorities from diverting American aid into their own pockets.12

6Heinrich Siegler, ed., Austria: Problems and Achievements since 1945 (Bonn, 1969), 75; and Karl Stuhlpfarrer,Austria—Permanently Neutral: Austrian Foreign Policy since 1945 (Vienna, 1985), 12.

7Stuhlpfarrer, 12.8Karl Gruber, Meine Partei ist Österreich: Privates und Diplomatisches (Vienna, 1988), 146.9Stuhlpfarrer, 12.10Hans J. Thalberg, Von der Kunst, Österreicher zu sein: Erinnerungen und Tagebuchnotizen, Dokumente zu Alltag,

Politik und Zeitgeschichte series (Vienna, 1984), 182.11Gruber, Meine Partei, 145.12Karl Gruber, Zwischen Befreiung und Freiheit: Der Sonderfall Österreich (Vienna, 1953), 179–80.

HIDDEN HANDS AND CROSS-PURPOSES 167

Internal State Department documents in the National Archives reveal that the Americans hadgood reason not to restrict Marshall Plan aid to Western Austria. Even though some “leakage”of raw materials and products from the Soviet zone in Austria to the Soviet Bloc would occur,according to a late 1940s memorandum on the ERP and Austria, this “would represent therelatively small price which would be entailed in preserving the unity of Austria and therebyits independent orientation.” The memorandum furthermore observed:

It has been the policy of the United States to treat Austria as a political and economic unity andaccordingly to provide assistance to the Austrian Government of all the territory and populationunder its jurisdiction. Moreover, four-power agreements governing the powers and functions of theAllied Council in Austria stipulate that indigenous or imported supplies are to be pooled regardlessof zonal boundaries and that restrictions are to be lifted from the movement of persons, goods, andtraffic between the zones. Under the circumstances, an attempt to confine United States assistanceto the Western zones would be inconsistent with agreements to which we are a party, wouldencourage and possibly lead to partition, and afford the Soviets an opportunity to place the onuson the United States for partition. If developments threatened partition, the Austrians might finallyin desperation submit to Soviet pressures and join the Eastern bloc in order to preserve nationalunity.13

The memorandum also worried about possible effects on western Austria of anydiscrimination against the Soviet zone, given that this zone supplied Austria with food andoil supplies.14 Soviet-run USIA firms, meanwhile, also had an important role in the Austrianeconomy. The Austrian economic historian Wilfried Mähr, for example, recalled that USIAwas the largest Austrian “producer of electrical appliances and installations,” the withdrawalof which “from the entire Austrian market could have a negative effect upon reconstruction.”15

Thus, a process was necessary for enabling USIA firms to receive “very specific ERP goods.”Formed by American authorities, the Vienna Screening Committee “reviewed requests of USIAfirms in light of macroeconomic effects.” The committee supported the request if it involved “aproduct important for Austria” and the Austrian federal government confirmed “that no otherfirm could produce the same product more economically.” The Austrians also had to obtainSoviet assurance that the USIA product made with American assistance would remainavailable for Austria and not for export to Eastern Europe.16

With American objections out of the way, Gruber recalled in his memoirs that the Sovietshad little objection to the Marshall Plan in Austria and “seemed ultimately only concernedabout securing American aid deliveries for the Soviet zone without discrimination.”17 Thiswas ironic given strong prior Soviet opposition to the Marshall Plan in Austria andelsewhere.18 Thus, the Soviet zone in Austria was the only area administered by the Sovietsever to receive Marshall Plan aid.19 As the Austrian journalist Fritz Molden recalled, though,

13Extension of ERP Assistance to Austria as a Whole; ERP (Marshall Plan) Folder I (A-850); Box 6; Entry 1174A; Lot54D331; Subject Files on Austria, 1945–50; Records of the Office of Western European Affairs, 1941–54; GeneralRecords of the Department of State, Record Group (RG) 59; National Archives (NA) Building II, College Park, MD.

14Ibid.15Wilfried Mähr, Der Marshallplan in Österreich (Graz, 1989), 122.16Ibid.17Gruber, Meine Partei, 145.18Mueller, 13; and Elke Kimmel,Marshallplan: Der Blick von Osten, accessed 11 October 2011; available from http://

www.bpb.de/themen/IODMNJ,0,Der_Blick_von_Osten.html.19Günter Bischof, Austria in the First Cold War, 1945–55: The Leverage of the Weak, King’s College Cold War

History Series (New York, 1999), 102–3.

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Soviet sensibilities prevented “the marking of factories rebuilt or newly installed through theMarshall Plan” to the same degree as in the western occupation zones of Austria. “This smallgesture,” commented Molden, “for the reassurance of Soviet mistrust or, more appropriately,as compensation for Soviet inferiority complexes cost no one anything and was gladlyaccepted if Austria’s eastern zone could thereby enjoy Marshall Plan funds.”20

American authorities still remained reticent, however, to invest Marshall Plan funds inSoviet-occupied territory. The previously cited State Department memorandum noted that“as for capital equipment sent to Austria under the ERP, informal approaches to theAustrian government could assure that this would for the most part be installed and utilizedin the Western zones.”21 The net result noted by Austrian scholars like Michael Gehler isthat eastern Austria participated in the Marshall Plan only to a limited degree. In 1953, forinstance, only 18 percent of Marshall Plan funds in Austria went to the Soviet zone.22 In all,13 percent of ERP aid in Austria went to the Soviet zone and 6 percent to Vienna, Sovietsectors included.23 The Austrian scholar Hannes Hofbauer noted that:

in Vienna and Lower Austria there were 5,000 Schillings of ERP monies for every employed personwhile in Salzburg 66,000 Schillings per worker came from ERP funds. Salzburg was the secretcapital of Austria between 1945 and 1955. In this period a structural gap also developed betweenwestern and eastern Austria that continued decades later.24

Not Trading with the Enemy, II: Austria and the COCOM Embargo

Restrictions on ERP funds in Austria’s Soviet zone were part and parcel of overall Westernembargo policies against the Soviet Bloc. Austrian participation in the Marshall Plantherefore meant that Austria had to monitor not only the use of American aid in easternAustria, but also Austrian exports to Soviet Bloc countries. With two-thirds of Austrianimports coming from the ERP than from Eastern Europe, it was only logical that ForeignMinister Gruber agreed in October 1948 to coordinate the control of Austrian exportswith Washington, DC. In the words of Gehler, though, Gruber evinced “subliminalresistance” to export controls. To the dismay of American officials, he insisted that theAustrians would only become active in export controls when they had “concreteinformation” about violations but would not undertake independent investigations ofsuspicious firms.25

Western Cold War export controls took on formal shape the following year with theformation of the Coordinating Committee for Multilateral Export Controls (COCOM) on 22November 1949. COCOM included all NATO countries (except Iceland) and, later, Japan.The Mutual Defense Assistance Control Act (Battle Act) of 1951 imposed even tighter export

20Molden, 140.21Extension of ERP Assistance to Austria as a Whole.22Michael Gehler, Der lange Weg nach Europa: Österreich von Paneuropa zum EU-Beitritt, vol. Darstellung

(Innsbruck, 2002), 146.23Bischof, 102–3.24Hannes Hofbauer, “Österreich zwischen Metropole und Peripherie: Ökonomische Integrationsprozesse seit der

Ersten Republik,” in Österreich auf dem Weg zur 3. Republik: Zwischen “Deutschnationalismus” und “Habsburger-Mythos,” ed. by the Österreichische Assoziation Kritischer Geograph/inn/en, 71–83 (Vienna, 1992), 81.

25Michael Gehler, “Die Besatzungsmächte sollen schnellstmöglich nach Hause gehen: Zur österreichischenInteressenpolitik des Außenministers Karl Gruber 1945–1953 und zu weiterführenden Fragen eines kontroversenForschungsprojekts,” Christliche Demokratie 11, no. 1 (1994): 27–78, at 56.


controls in the United States.26 Although not formally a COCOM member, Austria allowedAmerican authorities to review its planned economic agreements with, and export licensesto, Eastern Europe.27 Thus, American ambassador Llewellyn S. Thompson cabled toWashington, DC, from Vienna on 27 May 1953, that:

despite the special circumstances in Austria vis-à-vis the Soviets, an effective control system has beendevised in which the United States participates directly. A close but highly secret liaison with theAustrian Government has been developed which enables the United States to maintain an informalbut direct control over strategic shipments of Austrian origin.28

A CIA report dated 22 January 1954 explained that “occupied Austria, for obvious reasons, isnot a member of this group of sovereign states [COCOM] but it participates in all measuresadopted by this body.” According to the CIA, therefore, “Austria’s controls are roughly equalin scope to those prevailing in the United States; they exceed by far the control obligationsundertaken by members of COCOM, the informal international control organization, locatedin Paris.” The CIA report elaborated:

Cooperation between the US authorities in Vienna and the Austrian Government is very close andcomprehensive but of necessity completely informal and confidential. US officials sit in on thedeliberations of Austria’s interministerial Trade Advisory Board when it discusses licensingproblems and questions of commercial policy; US officials follow step by step all trade negotiationswith Soviet bloc countries and keep a close watch on the kind and quantity of strategic goodswhich Austria must agree to deliver in order to obtain certain essential counterdeliveries; USofficials exerted their influenced on the composition of the commodity lists which are subject toAustrian export license and which include—but do not reveal—all items on the US and theinternational strategic lists; US officials intervene in cases of economic hardship caused toindividual firms by the blocking of Eastern trade; US officials also review all important exportapplications for shipments to the Soviet bloc and keep informed on all USIA license requests.29

A fall 1955 State Department memorandum added that during the occupation a “jointEmbassy-Foreign Office screening session twice weekly” reviewed strategically sensitive tradeissues. “Informally and secretly inaugurated to assist Austria in determining whether proposedshipments would contravene COCOM or U.S. Battle Act standards,” these meetings “enabledan Embassy Officer to screen Austrian export applications of strategic goods.”30

26Paul Luif, “Strategic Embargoes and the European Neutrals: The Cases of Austria and Finland,” in Challenges andResponses in European Security (TAPRI Yearbook 1986), ed. Vilho Harle, 174–88 (Tampere, Finland, 1986), 174–75.For more on COCOM and other measures of Western economic warfare against the Communist Bloc, see: GunnarAdler-Karlsson,Western Economic Warfare, 1947–1967: A Case Study in Foreign Economic Policy (Stockholm, 1968).

27Oliver Rathkolb, “Von der Besatzung zur Neutralität: Österreich in den außenpolitischen Strategien desNationalen Sicherheitsrates unter Truman und Eisenhower,” in Die bevormundete Nation: Österreich und dieAlliierten 1945–1949, ed. Günter Bischof and Josef Leidenfrost, 371–405 (Innsbruck, 1988), 379–80.

28Cable from the American Embassy in Vienna, Austria, 27 May 1953; East-West Trade—1953 Folder (A-490); Box8; Entry 1174B; Lot 56D294; Austrian Desk Files, 1950–54 (Arthur Compton File); Records of the Office of WesternEuropean Affairs, 1941–54; General Records of the Department of State, RG 59; NA.

29Security Trade Controls in Austria; CIA Records Search Tool (CREST); CIA-RDP; Job 79T01049A; Box 0010;Folder 0005; Document 0002-3; Archives Library Information Center (ALIC); NA.

30Detailed Development of Major Actions Relating to Austria, (NSC 164/1) from 7 April 1955 through 14 November 1955;Austria 1958 Folder; Box 15; Lot 62D430; Records Related to State Department Participation in the OperationsCoordinating Board and the National Security Council, 1953–60; General Records of the Department of State, RG 59; NA.

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Austrian cooperation with Western trade controls was not always effective in the face ofSoviet occupation. The American diplomat W. Averell Harriman explained to PresidentHarry Truman in a 7 November 1952 memorandum that a 1948 Austrian Foreign TradeLaw “subjects deliveries of certain commodities to export licensing regardless of country ofdestination.” This allowed Austria “in administering this law” to be “cooperative with respectto all problems relating to U.S. aid” even though “as a country occupied by four powers, oneof which is the Soviet Union, Austria is not in a position to enact or enforce export controlswhich specifically prohibit deliveries to the USSR or its allies.” Nonetheless:

Soviet Occupation forces have to date refused to observe the Law and regularly take goods out ofAustria without complying with the licensing requirements or subjecting the goods to Austriancustoms inspection. The Austrian Government has repeatedly protested Soviet evasions of Austriantrade and customs legislation but these protests have been unavailing.31

The Austrians, moreover, had sometimes granted the Soviets export licenses for strategicallysensitive goods because refusals of the licenses would probably not have prevented delivery ofthe commodities to the countries concerned. In all probability, the Soviet authorities would havedesignated the goods as “Soviet Military Property” and transported them out of Austria withoutclearance by the Austrian authorities if the license application had been rejected.32

Ambassador Thompson noted in his 27 May 1953 cable that such Soviet removals would be“without clearance by the Austrian authorities, without payment of duties and other fees, andwithout the benefit of foreign exchange earnings to the Austrian economy.” Thompson alsoemphasized American understanding for Austria’s continuing dependence on traditionaltrade with Eastern Europe even though, contrary to prewar trade patterns, “the Soviet blochas been reluctant to supply material unless considerable quantities of heavy manufacturedgoods—some of them strategic—were offered in return.” Thompson explained that:

the continuing need for Eastern products, coupled with the tightening of Western export controls andSoviet occupation of part of the country, has placed Austria in a difficult position. The problem waspartially met by American aid, which made it possible for Austria to purchase most of its foodstuffsand an important part of its vital coal requirements in the dollar area. But despite this aid, Polish andCzech coal and Rumanian grain imports continue to make important contributions to the Austrianeconomy. If these imports should be further reduced, double pressure on Austria would result.Additional dollar exchange would be required to buy the substitute imports. In addition, theexports intended for Eastern markets would be difficult to dispose of elsewhere, and substantiallyincreased unemployment could be expected.33

“A final reason for not entirely curtailing all shipments of strategic goods to the Soviet bloc,”Thompson cited:

is that the U.S.S.R. is an occupying power. Obvious discrimination against the Soviet bloc could resultin direct retaliatory measures by the Soviets in Austria. The Soviet Union actually exercises the powerof controlling the movement of goods from the Eastern to the Western Occupation Zones of Austria.This power often has been used for Soviet political reasons, including the extortion of desired

31Memorandum ofW. Averell Harriman, Director for Mutual Security, to the President, 7 November 1952; East-WestTrade (Numeric File 490) Folder; Box 7; Entry 1174C; Lot 54D541; Office of Italian and Austrian Affairs, 1949–53;Records of the Office of Western European Affairs, 1941–53; General Records of the Department of State, RG 59; NA.

32Ibid.33Cable from the American Embassy in Vienna, Austria, 27 May 1953.


concessions from the Austrian government. The intensification of Soviet controls to the point of acomplete blockade would completely disorganize the Austrian economy, and in effect would resultin an economic, if not political, partitioning of the country. Austria is an integrated economic unitwith the basic industries chiefly in the Western Zones, and the processing industries and chief foodcrops in the Eastern Zone. The consequences of such a blockade would be a heavy decline inproduction, a reduction in exports, increased unemployment, and a substantially increased level ofimport needs in the Western Zones from the Eastern Zone of Austria.34

Austrian and Western officials emphasized the need for secrecy in the implementation oftrade controls during the occupation, whatever their effectiveness. Gehler recounted that “in1951, Gruber secretly told the American ambassador, Walter Donnelly, that there should beno publicity concerning Austria’s cooperation with the West in restricting exports to theEast.”35 Thompson as well referred in his May 1953 cable to the “highly secret nature of ourrelations with the Austrian government in export control matters” and warned that“publicity would have an unfortunate effect not only on our relations with the Austrians, butwould also make it difficult for the Austrians vis-à-vis the Soviet occupation forces.”36 TheCIA’s January 1954 report also warned that:

since Austria’s controls are directed against one of the four powers which occupy the country jointlyand with equal rights, all controls activities have to be handled with special care and discretion toachieve the desired goal and protect the personal safety of the officials involved.37

Although the need for secrecy may have subsided, Austria continued to restrict trade instrategically sensitive goods to the Soviet Bloc after the four-power occupation ended in 1955.Writing after the State Treaty, the 1955 State Department memorandum noted that “thus farthe Embassy-Foreign Office screening sessions have continued.”38 Such trade restrictions,however, were extremely questionable for the newly neutral Austria under international lawnorms. Article 9 of the 1907 Convention Respecting the Rights and Duties of Neutral Powers andPersons in Case of War on Land (Hague Convention V) stipulates that a neutral country’srestrictions on relations with warring countries “must be impartially applied by it to bothbelligerents.” This stipulation applied not just to means of communication between belligerentsunder the convention’s Article 8, but also to Article 7, which stated that “a neutral Power is notcalled upon to prevent the export or transport, on behalf of one or other of the belligerents, ofarms, munitions of war, or, in general, of anything which can be of use to an army or a fleet.”39

34Ibid.35Michael Gehler, “Austria and European Integration, 1947–60: Western Orientation, Neutrality and Free Trade,”

Diplomacy & Statecraft 9, no. 3 (1998): 154–210, at 163.36Cable from the American Embassy in Vienna, Austria, 27 May 1953.37Security Trade Controls in Austria.38Detailed Development of Major Actions Relating to Austria, (NSC 164/1) from 7 April 1955 through 17 November

1955.39Convention Respecting the Rights and Duties of Neutral Powers and Persons in Case of War on Land. Article 7 of

Hague Convention XIII from 1907 concerning neutrality at sea also stated that a “neutral Power is not bound toprevent the export or transit, for the use of either belligerent, of arms, ammunition, or, in general, of anythingwhich could be of use to an army or fleet.” Yet the immediately following Article 8 demanded that a FIX “neutralGovernment is bound to employ the means at its disposal to prevent the fitting out or arming of any vessel withinits jurisdiction which it has reason to believe is intended to cruise, or engage in hostile operations, against a Powerwith which that Government is at peace. It is also bound to display the same vigilance to prevent the departurefrom its jurisdiction of any vessel intended to cruise, or engage in hostile operations, which had been adaptedentirely or partly within the said jurisdiction for use in war.”

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Clearly, though, COCOM regulations administered by Austria did not “impartially” stop “theexport or transport” of “anything which can be of use to an army or a fleet.” Perhaps the onlyloophole for Austria was the fact that the Cold War did not become hot and thereforeCOCOM remained a peacetime embargo not invoking Hague Convention provisions forwartime neutrality. According to the letter of neutrality law, Austria could unilaterally embargothe Soviet Bloc in peacetime but not during a war, provided that international trade stillexisted during a possible East-West war of however long duration.

Whether Austria adhered to the spirit of neutrality, though, was no mere academic matter.Commonly accepted understandings of neutrality under international law as expressed in theOfficial Swiss Conception of Neutrality promulgated on 26 November 1954 included theobligation of permanently neutral countries “to conduct a policy of neutrality” as part of aneutral’s efforts “to do everything so that the neutral is not drawn into war and to abstainfrom anything which might draw the neutral into war.”40 Austrian legal scholar HanspeterNeuhold explained that “permanent neutrality entails the obligation to practice a policy ofneutrality. The objective of this policy is to strengthen this status in the eyes of the otherstates beyond compliance with the legal obligations.” Echoing the Official Swiss Conception ofNeutrality’s own language, Neuhold recognized that the formulation of this policy is “left tothe discretion of each government concerned,” but warned that “ultimately the success ofthis policy depends on the response of the rest of international society to it.”41

Austria was not the only neutral country to cut legal corners in the area of trade. Even theclassically neutral Switzerland agreed to abide by COCOM regulations in the informal Hotz-Linder Agreement of 23 July 1951 [named after its American, Harold Linder, and Swiss, JeanHotz, negotiators].42 The Austrian People’s Party (Österreichische Volkspartei or ÖVP)politician Andreas Khol later noted in 1985 that the Swiss had displayed their traditional“pragmatism” by declaring that “considerations of neutrality policy” actually forbadea neutral country from “bypassing a trade embargo.”43 A 1959 State Departmentmemorandum later even offered this argument as justification for Austrian cooperation withCOCOM. The memorandum observed:

Failure to cooperate might endanger the neutral status of Austria since the Austrian economy would thenbe taking advantage of the self-denial ofWestern FreeWorld countries to increase Austrian trade with bloccountries. (This is the rationale on which the Swiss Government bases its controls on strategic goods).44

40Waldemar Hummer and Hans Mayrzedt, eds., 20 Jahre Österreichische Neutralitäts- und Europapolitik (1955–1975), vol. 1., Schriftenreihe der Österreichischen Gesellschaft für Aussenpolitik und Internationale Beziehungenseries (Vienna, 1976), 42.

41Hummer and Mayrzedt, 42; and Hanspeter Neuhold, “Permanent Neutrality and Nonalignment: Similarities andDifferences,” in The Austrian Solution: International Conflict and Cooperation, ed. Robert A. Bauer, 161–204(Charlottesville, VA, 1982), 166.

42Oliver Rathkolb, Washington ruft Wien: US-Großmachtpolitik und Österreich, 1953–1963 (Vienna, 1997), 134.This agreement is described online at: Hotz-Linder-Agreement, accessed 6 April 2006; available from http://www.lexhist.ch/externe/protect/textes/d/D48308.html. Significant Swiss primary documents concerning this agreementare also available online, see: Haltung der Schweiz im Ost-West-Handel, accessed 8 April 2006; available fromhttp://dodis.netcetera.ch/docs/7230.pdf; and Notice pour Monsieur le Conseiller fédérale Petitpierre, accessed 8 April2006; available from http://dodis.netcetera.ch/docs/8820.pdf.

43Andreas Khol, “Im Dreisprung nach Europa: Kooperation—Assoziation—Union,” Europäische Rundschau 13,no. 3 (1985): 29–45, at 35.

44Background Memorandum on Strategic Trade Controls in Austria; Austria—Pitterman Visit (1959) Folder; Box 1;Entry 5293; Lot 68D123; Records Relating to Austria, 1957–64; Bureau of European Affairs, Country Director for Italy,Austria, and Switzerland (EUR/AIS); General Records of the Department of State, RG 59; NA.


COCOM successively reduced its lists of restricted goods in 1954 and 1958. The ExportAdministration Act of 1969, meanwhile, loosened the stricter American export controls.45 As theCold War entered a phase of renewed intensity in the late 1970s, though, the United Statesreimposed stricter export controls on the Soviet Bloc. Under pressure from the ReaganAdministration, COCOM also reviewed its list of sensitive products in the fall of 1982, resulting innew controls for computer and information technology in July 1984. At the same time, criticism ofAustria and other Western countries for their laxity with respect to high technology transfer to theSoviet Bloc appeared at the Pentagon, in United States Senate Subcommittees, and in Americanpublications like Business Week and the Wall Street Journal.46 According to one estimate in themid 1980s in particular, continental Europe’s four neutral states (Austria, Finland, Sweden, andSwitzerland) were responsible for 18 percent of Soviet high technology imports. Sweden, forexample, delivered in the early 1980s the Soviet Union’s only floating dry dock capable of servingKiev-class aircraft carriers, promptly put into operation by the Soviet Northern Fleet.47

Such trade concerns led the United States in the 1980s to seek stricter trade regulations fromneutral countries such as Austria, Finland, Sweden, and Switzerland, as well as from India andHong Kong.48 As Austrian international relations scholar Paul Luif noted, various individuals inneutral countries, such as Austrian and Swedish politicians, “refused the demands by theWestern allies” as “a first reaction.” They objected that:

neutrals would not be able to participate in a politically motivated embargo. But their industries requiredsecure access toWestern, especially US, high technology. The United States threatened to reduce or evenstop the exports of high technology to countries not complying with the COCOM controls. The “hightechnology vulnerability trap” would have made any prolonged resistance impossible.49

45Luif, “Strategic Embargoes and the European Neutrals,” 175.46Paul Luif, “Neutrality and External Relations: The Case of Austria,” Cooperation and Conflict 21, no. 1 (1986): 25–41,

at 37–38. ForBusinessWeek’s coverage ofWestern technology transfer to the Communist Bloc with particular emphasis onAustria, see “Technology Transfer: A Policy Nightmare,” Business Week, no. 2784 (4 April 1983): 94–102. TheWall StreetJournal dealt with technology transfer in a two-article series on 24–25 July 1984. In the second article focusing on Austria,one unnamed American trade investigator growled, “I don’t like the Russians, but I hate the Austrians.” “I’ve had it up tomy ears with them,” he added. The investigator’s “I hate the Austrians” remark “touched off a furor in Austria and sparkeddemands by the Austrian government for an apology,” the Wall Street Journal reported on 30 July 1984. RichardMcCormack, assistant secretary of state for economic and business affairs, telephoned an apology to Austrianambassador Thomas Klestil for the “unprofessional” remark. McCormack qualified the comment as probably from a“low level” official and denied its accuracy for U.S.-Austrian relations. “We have a very good relationship withAustria,” McCormack said. Ambassador Klestil found the apology “quite satisfactory.” In speaking with the Wall StreetJournal about their reporting, McCormack considered it unfair “to single out Austria.” McCormack said that“problems of leakage of advanced technology isn’t restricted to Austria. It happens all over the world.” McCormackhailed the “extraordinary progress” made by the Americans in approaching the Austrians on this problem. All three ofthese Wall Street Journal articles (“Losing Battle: Keeping Technology Out of Soviet Hands Seems to be Impossible”from 24 July 1984; “Losing Battle: Austria Ignores Efforts by the U.S. to Curtail Technology Shipments” from 25 July1984; and “U.S. Apologizes for Aide’s Remark on Austrian Exports” from 30 July 1984) are available online at: Factiva,accessed 20 December 2006; available from http://factiva.com/.

47Stephan Kux, Europe’s Neutral States: Partners or Profiteers in Western Security?, European Security Studies series(London, 1986), 29.

48Ingemar Dörfer, “The European Neutrals in the Strategy of the Reagan Administration,” in The NeutralDemocracies and the New Cold War, ed. Bengt Sundelius, 182–97 (Boulder, CO, 1987), 194.

49Paul Luif, On the Road to Brussels: The Political Dimension of Austria’s, Finland’s and Sweden’s Accession to theEuropean Union, Austrian Institute for International Affairs Laxenburg Papers series (Vienna, 1995), 143. In aparticular example, Luif noted that “when state-owned VOEST-Alpine wanted to set up a joint venture for micro-chip production with American Microsystems Inc., in Austria, the US administration delayed the export of thefabrication equipment.” See: Luif, “Neutrality and External Relations,” 38.

ANDREW E. HARROD174

In Austria’s particular case, an American delegation visiting Austria in October 1984achieved an agreement to expand Austrian trade controls. Austria subsequently amended theAustrian Foreign Trade Act on 12 December 1984 to allow the Austrian Trade Ministry tomonitor Austrian importers of high technology so as to prevent illegal re-exportation. Thenew amendment also made computer exports subject to a license. An additional amendmentto the Foreign Trade Act passed by the Nationalrat on 9 January 1985 applied criminalpenalties to violations of Austrian trade law previously treated purely as matters of civilcontract.50 Austria also signed a U.S.-Austrian Customs Mutual Assistance Agreement in1986 and made COCOM lists part of the Foreign Trade Act in 1987.51

Enforcement of these Cold War trade regulations presented Austria with various problemsand irritations. Interviewed in 2005, former Austrian foreign minister Erwin Lanc (SPÖ), forexample, expressed resentment that American officials had committed a “violation ofsovereignty” against Austria by visiting Austrian factories to determine what they wereexporting. Lanc also took exception to American companies outwitting their Austriancompetitors by being better positioned to obtain export approval under American andCOCOM trade regulations.52 Luif also noted in 1986 that:

the Austrians still insist on the free export of their own high technology. But what is genuine Austriantechnology? Today’s international division of labor implies that one product will include parts fromvarious countries. Therefore, a satisfactory definition of Austrian technology has not been foundyet. To reduce its technological dependence on the US, Austria, together with the other EFTAcountries, now tries to cooperate more closely with the EC on high technology research.53

While restricting technology exports to the Communist Bloc, meanwhile, Austria actuallyparticipated in many European research initiatives, a contrast that could only cast onAustrian neutrality policy more of the doubts indicated by Neuhold. Austria, for example,joined the European atomic research organization CERN on 10 November 1959 and becamea full member of the European Space Agency (ESA) in 1987.54 Austria also received in 1985an invitation from the American Secretary of Defense, Caspar Weinberger, to participate inthe Strategic Defense Initiative (SDI) but rejected the offer outright, along with Greece and theNetherlands. French President François Mitterand, however, proposed in April 1985 aninitiative to strengthen European civil technology, resulting in the European ResearchCoordination Agency (EUREKA) supported by the EC and EFTA, as well as Turkey. Austriabecame the third largest participant after Sweden and Finland. As the American historianThomas O. Schlesinger, once a U.S. Army intelligence officer stationed in occupied Austria, wrote:

the point was to counteract the opening of a technology gap as a result of “civilian” spin-offs from thepotentially large investments of resources in SDI. In the absence of an integrated European approach

50Luif, “Strategic Embargoes and the European Neutrals,” 183; and Anselm Skuhra, “Austria and the New ColdWar,” in The Neutral Democracies and the New Cold War, 136. Luif has also written about Cold War technologytransfer issues in Zukunft, see: Paul Luif, “USA—Österreich: Der Konflikt um den Technologietransfer,” Zukunft,no. 12 (1985): 17–20, at 17–20.

51Luif, On the Road to Brussels, 143.52Erwin Lanc, interview by author in Lanc’s office at the Vienna International Institute of Peace in Vienna on 10

August 2005.53Luif, “Neutrality and External Relations,” 38.54Herbert Denk, “Europäische Forschungsvorhaben und Österreich,” International, no. 4 (1987): 65–67, at 67; and

Ludwig Steiner, “Die Außenpolitik Julius Raabs als Bundeskanzler,” in Julius Raab: Eine Biographie inEinzeldarstellungen, ed. Alois Brusatti and Gottfried Heindl, 212–41 (Linz, 1986), 238.


to research, it was feared, that the large funds that were to flow from Washington’s SDI would lead toexcessive American government influence on the flow of research investments in Europe. Greatadvantage might have accrued to those favored by, and politically able, to accept the SDI contracts.55

After the Cold War’s end, COCOM itself went out of existence on 31 March 1994. Yet thiswas not the end of export controls among the world’s democracies. Austria and other neutralcountries joined control regimes such as those against the proliferation of atomic, biological,and chemical (ABC) weapons and their delivery systems. Accordingly, in December 1995,twenty-eight countries including Austria, all fourteen of its new partners in the EuropeanUnion, Canada, Norway, Russia, Switzerland, and the United States signed the WassenaarArrangement on Export Controls for Conventional Arms and Dual-Use Goods andTechnologies. “In a somewhat historical irony,” Luif observed, “the countries agreed to locatethe secretariat of the Wassenaar Arrangement in Vienna, Austria.”56

Trading with the West: Austria’s Economic Integration into the West

Austria’s dependence on high technology from COCOM nations was part of a wider trend ofAustrian postwar integration into economies of Western Europe and the wider industrializedworld. As an example of this, the Austrian diplomat Thomas Nowotny referred in 1986 toVienna’s airport. “In fact,” he pointed out, “the lion’s share of flights go to the West—wherethe actual relationships are the closest. Austria is hardly a country ‘between the blocs’ or ‘inthe heart of Europe.’ Austria is much more the easternmost state of Western Europe.”57 Thefollowing 1990 graphs showing Austrian trade flows through the years, expressed inpercentages, bears out Nowotny’s assessment.58

This phenomenon of Western economic integration was not limited to Austria, but affectedall of Europe’s neutral states as Finnish scholar Harto Harkovirta calculated in 1988.59

Indeed, the trade flows of Europe’s neutral states were not fundamentally different fromthose of a NATO state, as shown by the following 1982 graph.60

Among Europe’s neutral states, however, Austria’s trade with the European Community(EC) throughout the years was particularly pronounced.61

55Thomas O. Schlesinger, The United States and the European Neutrals, Studien zur Politischen Wirklichkeit seriesof the Instituts für Politikwissenschaft der Universität Innsbruck (Vienna, 1991), 134.

56Paul Luif, “Austria’s Permanent Neutrality—Its Origins, Development, and Demise,” in Neutrality in Austria, ed.Günter Bischof, Anton Pelinka, and Ruth Wodak, 129–59 (New Brunswick, NJ, 2001), 141.

57Thomas Nowotny, “Anmerkungen zur multifunktionalen Standardrede über die österreichische Außenpolitik,”Österreichisches Jahrbuch für Internationale Politik 3, (1986): 23–53, at 29.

58Otmar Höll, “Die österreichische Neutralität und die wirtschaftliche Integration,” in MitteleuropäischePerspektiven, ed. Thomas H. Macho and Arno Truger, 165–78 (Vienna, 1990), 168. Höll’s colleague at theAustrian Institute for International Affairs, Paul Luif, has tabulated similar data: see: “The Development ofAustrian Foreign Policy,” in Security for the Weak Nations: A Multiple Perspective, ed. Syed Farooq Hasnat andAnton Pelinka, 183–202 (Lahore, 1986), 192–93; and “Neutrality and External Relations,” 29.

59Harto Hakovirta, East-West Conflict and European Neutrality (Oxford, 1988), 46.60Dieter S. Lutz, “Neutralitat: (K)eine sicherheitspolitische Alternative für die Bundesrepublik Deutschland?” in

Neutralität—Eine Alternative? Zur Militär- und Sicherheitspolitik Neutraler Staaten in Europa, ed. AnnemarieGroße-Jütte and Dieter S. Lutz, 7–42 (Baden-Baden, 1982), 34–5.

61Paul Luif, “Neutrale und europäische Integration: Neue Aspekte einer alten Problematik,” ÖsterreichischeZeitschrift für Politikwissenschaft 16, no. 2 (1987): 117–31, at 129.

ANDREW E. HARROD176

FIGURE 1: Austrian Exports According to Country Groups

FIGURE 2: Austrian Imports According to Country Groups

FIGURE 3: Shares of NATO and Warsaw Pact Countries in the European Neutrals’Foreign Trade (percent of Total Trade)

FIGURE 4: Percentage of Total Import/Exports to Organization for EconomicCooperation and Development (OECD) Countries

FIGURE 5: Percentage of Total Austrian, Swedish, and Swiss Exports to the EuropeanCommunity


Among various non-Communist, non-EC European states in 1987, Austria had the highestpercentage of total foreign trade with the EC. Finland (43 percent), Iceland (55 percent),Norway (57 percent), Sweden (54 percent), Switzerland (64 percent), and Turkey (46percent) all had less significant trade relationships with the EC than did Austria (66percent).62 Austria in 1987 even had stronger trade relationships with the EC than manymembers of the EC itself. Austrian scholar Manfred Rotter calculated that among EFTA andEC states that year, only Switzerland and Belgium/Luxemburg had higher percentages oftotal imports from the EC (both 72 percent) than did Austria (68 percent). Only the ECmembers Belgium/Luxemburg (74 percent), Greece (67 percent), Ireland (73 percent), theNetherlands (75 percent), and Portugal (71 percent) exported more of their total exports tothe EC than did Austria (64 percent).63

For Austria, economic integration with Western Europe and the wider Western worldrepresented a shift from traditional markets in the former parts of the Austro-HungarianEmpire and other areas of Eastern Europe. “In the Cold War,” noted Gehler in 1994,“Austria’s foreign trade with the Soviet satellites was considerably reduced.” Imports fromthese countries fell to 8 percent of all Austrian imports in 1955 from 32 percent in 1937.Despite USIA exports, Austrian exports to Soviet satellites also fell to 8 percent of allAustrian exports in 1955 from 28 percent in 1937. During this same period, Austrianimports from the countries of the Organization of European Economic Cooperation (OEEC)grew from 40 percent to 75 percent of all imports, whereas Austrian exports to the OEECgrew from 53 percent to 71 percent of all exports. Scholars like Gehler, though, haveobserved that the westward trend of Austrian trade had already begun before World War IIand only intensified under the Third Reich.64 Luif, for example, has calculated that thepercentage of Austrian exports going to the Austro-Hungarian successor states fell from 46.7percent in 1924 to 38.7 percent in 1929 and finally to 31.8 percent in 1937.65

As noted by several scholars, the Federal Republic of Germany (FRG) was most pronouncedamong Austria’s postwar trade partners.66 In 1988, for instance, 35 percent of all Austrianexports went to the FRG, whereas 45 percent of all Austrian imports came from there. Thiswas new in Austrian history, for according to Luif, “in the interwar period this extremeconcentration on Germany was not there. At that time foreign trade was relatively equallydistributed among the neighbors.”67 Similarly, 75 percent of all tourists visiting Austria and37 percent of all industry investment (itself three-fourths foreign in origin) came from theFRG.68

Neuhold concluded in 1982 that “if the economy of FRG sneezes, its Austrian counterpart willsuffer from pneumonia.”69 In this respect, various analysts have noted deliberate policy linkages

62Paul Luif, “Grundbegriffe und Genese der europäischen Integration,” Politische Bildung 10, no. 4 (1988): 210–17,at 214.

63Manfred Rotter, “Mitgliedschaft, Assoziation, EFTA-Verbund: Die Optionen der österreichischen EG-Politik,”Österreichische Zeitschrift für Politikwissenschaft 18, no. 3 (1989): 197–208, at 197–98.

64Michael Gehler, “Vom ERP-, EFTA- und EWR- zum EU-Mitglied: Österreichs sukzessive europäischeIntegrationspolitik, 1945–1995,” Christliche Demokratie 11, no. 3 (1994): 27–82, at 30.

65Paul Luif, “Außenwirtschaftspolitik,” in Handbuch des politischen Systems Österreichs, 688.66For example: Hakovirta, 47; and Hanspeter Neuhold, “Österreichs Außenpolitik in den Ost-West-Beziehungen,”

in Außenpolitik und Demokratie in Österreich: Strukturen—Strategien—Stellungnahmen, ed. Renate Kicker, AndreasKhol, and Hanspeter Neuhold, 290–320 (Salzburg, 1983), 312.

67Luif, “Außenwirtschaftspolitik,” 679.68Anselm Skuhra, “Austria and the New Cold War,” in The Neutral Democracies and the New Cold War, 129.69Hanspeter Neuhold, “Austrian Neutrality on the East-West Axis,” inNeutrality and Non-Alignment in Europe, ed.

Karl E. Birnbaum and Hanspeter Neuhold, 62–71 (Vienna, 1982), 70.

ANDREW E. HARROD178

with the FRG by the Austrian central bank and government since 1955. Monetary policies closelytied to Germany, for example, allowed for long-standing Austro-German currency exchangestability. Many other Austrian economic policies concerning prices, wages, and fiscal planningalso remained intentionally linked to a wealthier and more stable German economy during theCold War. Austrian economic indicators such as inflation, unemployment, and gross nationalproduct (GNP) accordingly often fluctuated in tandem with those of Germany.70

Thalberg ironically observed in reference to the Third Reich’s annexation of Austria in 1938:

The Anschluß was dead, but many of my countrymen stared as if enchanted at the FRG that had risenlike a phoenix out of the ashes. Politically the State Treaty and, above all, permanent neutrality had setlimits to Austria’s relationships with Germany that could not be overstepped. Economically andculturally, however, the FRG proved to be a magnet of continually growing attractive force.71

Not only was Austrian trade oriented to the West, but the Austrian economy as a whole wasalso quite dependent upon trade, as the following 1978 chart illustrates (see Figure 6).72

The Austrian legal scholar Waldemar Hummer observed in 1977 that the importance to Austriaof goods exports was “considerable,” making up “longterm” around 20 percent of Austrian GNP.This was higher than for the FRG (19 percent), Japan (10 percent), the United Kingdom (16percent), and the United States (6 percent).73 In 1974, the percentage share of Austrian GNP ingoods exports (22.7 percent) was the sixth largest in the world, only smaller than that ofBelgium (53.6 percent), Canada (23.7 percent), the FRG (23.1 percent), the Netherlands (48percent), and Sweden (28.7 percent).74 Noting in 1991 that Austria exported more per capitathan France, Italy, Japan, the United Kingdom, the United States, or Taiwan, Die Presse editorAndreas Unterberger concluded that Austria was “extremely dependent on foreign trade.”75

Squaring the Circle: Neutral Independence and Economic Interdependence

The lopsided pro-Western nature of trade relationships between Europe’s neutral countries likeAustria and the rest of the world was suspect to many from the perspective of Austria’sinternational obligations. Christian Democratic publicist Ludwig Reichhold wrote in 1968that neutrality “demands an approximate balance of Austria’s economic contacts with theWest and the East, including the world across the seas.” Reichhold added:

Only to the extent in which the West is interested in respecting Austria’s economic ties with the East,and only to the extent in which the East is interested in respecting Austria’s economic ties with the

70Jeffrey S. Lantis and Matthew F. Queen, “Negotiating Neutrality: The Double-Edged Diplomacy of AustrianAccession to the European Union,” Cooperation and Conflict 33, no. 2 (1998): 152–82, at 162.

71Thalberg, 317.72Hans Kernbauer, “Die Integration Österreichs in die Weltwirtschaft,” Österreichische Zeitschrift für

Politikwissenschaft 7, no. 3 (1978): 291–304, at 297.73Waldemar Hummer, “Österreichs “Besondere Beziehungen” zur EWG und EGKS in rechtlicher Sicht,” in Die

Europäische Gemeinschaft und Österreich, ed. Fried Esterbauer and Reinhold Hinterleitner, 25–101 (Vienna, 1977), 64.74Anselm Skuhra, “Österreich im Nord-Süd-Konflikt während der siebziger Jahre: Seine Reaktionen und

Leistungen hinsichtlich der Forderungen der Entwicklungsländer,” Österreichische Zeitschrift für Politikwissenschaft10, no. 2 (1981): 119–37, at 121.

75Andreas Unterberger, “Probleme und Vorteile einer österreichischen EG-Mitgliedschaft,” Europäische Rundschau19, no. 2 (1991): 43–54, at 51.


West, can one speak of respect for neutrality, which must have not least an economic basis.Conversely, the maintenance of neutrality also in an economic sense is an essential criteria againstwhich Austria’s will to be neutral will be judged in the East and in the West.76

West Germany’s strong economic presence in Austria throughout the Cold War (and beyond)also raised concerns with respect to the State Treaty’s prohibition of any kind of new Anschluss inArticle 4. Although Neuhold in 1983 dismissed talk of a “violation of Article 4 in the Austrian StateTreaty and ‘an Anschluß through the backdoor,’” he could not ignore that “the domination of theFRG in Austria’s trade ties, a domination which is also present in tourism and other economicsectors, would have to give pause from the perspective of neutrality politics.”77 WhetherAustria maintained trade ties with West Germany or any other country, however, the problemof economic dependence with the resulting potential for political pressure remained the same.Swiss legal scholar Dietrich Schindler observed in 1970 that “the credibility of permanentneutrality would be damaged if it became evident that a state would not be capable ofmaintaining neutrality because of economic reasons.”78

“Austria as a permanently neutral state,” noted Neuhold, was “actually commanded underinternational law to strive for an independence, whose realization is today no longer evenpossible for Great Powers.” Yet efforts to remain independent “ran counter above all to thegrowing interdependence in international society in the economic realm. A state that wants toexpand the wealth of its inhabitants cannot exclude itself from the international integration anddivision of labor, although this increases the state’s vulnerability to the use of pressure.”79

The American scholar and former Pentagon official Joseph Kruzel at a November 1986conference agreed:

Today’s neutral states are obliged to maintain an economic posture in peacetime that will givemaximum credibility to their desire to remain neutral in wartime. In other words, no neutral cancompromise its capacity to remain neutral in wartime through its economic activities in peacetime.This general principle, so easily enunciated, has become increasingly difficult to follow in aninternational economic system whose primary feature is growing interdependence.80

Likemany others, the Austrian international relations scholar HansMayrzedt described in 1970 a

quickly increasing interdependence that has taken the place of the traditional, i.e., “qualified”independence of states. In other words: Through interdependence the substance of individual state

FIGURE 6: Austrian Foreign Trade measured as a Percentage of Gross National Product(GNP) (1964 Prices)

76Ludwig Reichhold, Scheidewege einer Republik: Österreich 1918–1968 (Vienna, 1968), 238–39.77Neuhold, “Österreichs Außenpolitik in den Ost-West-Beziehungen,” 312.78Dietrich Schindler, “Spezifische politische Probleme aus Schweizer Sicht,” in Die Neutralen in der Europäischen

Integration, 283.79Hanspeter Neuhold, “Grundlagen Österreichischer Sicherheitspolitik,” in Wie Sicher ist Österreich, 244.80Joseph Kruzel, “The Future of European Neutrality,” in Between the Blocs: Problems and Prospects for Europe’s

Neutral and Nonaligned States, ed. Michael H. Haltzel and Joseph Kruzel, 295–311 (Cambridge, 1989), 305.

ANDREW E. HARROD180

independence is reduced. Interdependence consists of the restriction of the freedom of action ofindividual states—conditioned by the increasing factual dependency on one another. Theobservable system of interdependence distinguishes itself by a great—and moreover, increasing—variety. This system stretches across the most varied areas of politics, economics, and scholarship.The needs of states have led to the conclusion of numerous international treaties—at timescontaining substantial obligations—and to the foundation of many international organizations.Almost simultaneously, the economic integration of national economies—and thereby also thedependency of business cycles—have gained strength. The action radius of an individual state’sforeign policy is being strongly restricted with respect to the need for increasing consideration ofthe interests of other states and of facts created outside one’s own area of influence.81

In a 1988 review of neutrality, a group of scholars addressed what exactly interdependencemeant for Europe’s neutral nations vis-à-vis the EC. “In Sweden, Austria and Switzerland,”they observed, “the process is already advanced of their major industries merging or locatingwithin the Community and, effectively, creating a situation where industrially they alreadybelong to the Community but politically they are committed, by their neutrality, to remainoutside it.” The scholars concluded that “there is no doubt that in a number of waysneutrality tends to be backward-looking and not altogether in touch with today’s realities ofthe international environment such as nuclearism, interdependent economic relations, andincreased dependence on military technology.”82

Thus, throughout the years many analysts rejected any notion of conforming Austrian tradeto the demands of neutrality. Austrian scholar Gerhard Rosegger, for example, wrote in 1964that to argue:

as the Soviet Union and the Austrian Communist party have done on occasion—that the geographicstructure of trade ought to be a dependent variable of a policy of ‘economic neutrality’—is clearly animpossible demand upon an economy such as Austria’s, which is oriented so considerably towardforeign trade. In today’s highly competitive world markets, a small country has to trade where itcan find partners.83

Similarly, Nowotny argued in 1989 that even though Austria’s “close economic integrationwith the West doubtlessly increased the ‘Western economic potential,’” there was “without adoubt no alternative to this ‘tie to the West [Westbindung].” “An ‘equidistance’ in economicand foreign trade policy,” stated Nowotny, “would not allow itself to be realized, even if thiswere desired. Austria could never increase its eastern trade to 50 percent or lower the ‘Westportion’ to 50 percent.” Nor could Austria do without trade. Nowotny explained:

Understood in the sense of the largest possible autarchy, the concept of economic neutrality issenseless. The proportion of foreign trade in Gross National Product is growing in all industrialstates. It is growing especially strong among the small industrial states and has reached 40 percentin Austria. Economic autarchy is therefore, particularly for a small state, not a realistic option.84

81Hans Mayrzedt, “Veränderungen der politischen Bedingungen der Neutralität,” in Die Neutralen in derEuropäischen Integration: Kontroversen–Konfrontationen–Alternativen, eds. Hans Christoph Binswanger and HansMayrzedt (Vienna, 1970), 35. Emphasis in the original.

82Ulrich Albrecht, Burkhard Auffermann, and Pertti Joenniemi, Neutrality: The Need for Conceptual Revision,Occasional Papers of the Tampere Peace Research Institute series (Tampere, Finland, 1988), 2, 24.

83Gerhard Rosegger, “Austrian Neutrality and European Integration,” Orbis 7, no. 4 (1964): 849–60, at 852.84Thomas Nowotny, “Neutralitätspolitik: Mythos und Realität,” Europa Archiv 44, no. 13 (1989): 423–32, at 425,

429.


Rotter described the problem of neutral countries having “to deal with two strongly opposedgoals,” namely, the “trend of the global economy towards ever stronger integration of thenational economies” and the preservation of “the highest possible autonomy of one’s owneconomic system,” as proverbially “approaching the squaring of the circle.”85 In a case of“damned if you do, damned if you don’t,” moreover, a lack of economic integration andattendant economic growth could pose its own dangers to neutrality. Bruno Kreisky wrote ina 1959 edition of Foreign Affairs that “we should not forget that a nation which withholdscooperation in a necessary venture in economic integration may suffer some degree ofeconomic atrophy and in consequence, as recent history has shown, lose its independence.”86

Expressing similar sentiments during an earlier 20 June 1958 address in Vienna, Kreiskyspeculated:

whether economic backwardness and hindered economic development do not lead to economicdependence, which in the final analysis hinders a state in the effective representation of itssovereignty. Increasing economic prosperity as the consequence of a strengthened Europeanintegration can, at any rate, contribute more to the independence of a state than economicunderdevelopment.87

Throughout the Cold War, many Austrians, such as the diplomat Hellmuth Strasser in 1972,wondered whether the Austrian people would continue to support their country’s neutralitypolicy if it entailed economic costs.88 Likewise, an October 1961 report of the ÖVP’s foreignpolicy committee stressed the:

necessity for Austria to keep up with the advances in living standards and/or wealth of the highlydeveloped nations, because any regression in this respect would probably in the long run endangersovereignty and neutrality more than would complete participation in the strictest form ofintegration. This means that sovereignty and neutrality are most endangered when economic policyis not capable of maintaining full employment, financial stability, and economic growth, wherebyextremist tendencies would be furthered. This means in the present economic situation that Austriamust participate in the economic integration of the Western lands if Austria does not want to beeconomically isolated and consequently pushed towards the east in economic and political terms.89

An official Austrian briefing memorandum prepared for the September 1967 visit of FrenchPrime Minister Georges Pompidou and Foreign Minister Maurice Couve de Murville echoedand gave historical context to the ÖVP’s views. With respect to Austrian efforts at the timeto achieve an “arrangement of a special nature” with the Common Market, thememorandum warned that:

should Austria, however, remain excluded from participation in the large market of the EEC[European Economic Community] with which Austria is particularly tightly bound on the basis ofthe traditional structure of its foreign trade and trade flows which cannot be changed at will, sowould the Austrian economy gradually fall victim to a shrinking process with very disturbing socialeffects and consequences, a process which would be not at all propitious for the economy’s viability

85Manfred Rotter, Die dauernde Neutralität, Schriften zum Völkerrecht series (Berlin, 1981), 204.86Bruno Kreisky, “Austria Draws the Balance,” Foreign Affairs 37, no. 2 (1959): 269–81, at 281.87Bruno Kreisky, Reden, vol. 1 (Vienna, 1981), 60.88Hellmuth Straßer, Der Weg Österreichs zu den Verträgen mit Brüssel, Informationen zur Außenpolitik series

(Vienna, 1972), 37.89Gehler, Der lange Weg nach Europa, vol. Dokumente, 295. Emphasis in the original.

ANDREW E. HARROD182

and independence, but rather, quite the opposite, would have to strengthen the economy’s actualdependency, be it on Germany, be it on the Communist economic block, something which couldnot at all be in the interest of France or Europe. Specifically in Paris, where a special understandingfor historical reminiscences and contexts is gladly invoked, one might not forget and overlook thatprecisely the hopeless situation of the Austrian economy in the interwar period—still long beforethe seizure of power by Hitler—was without a doubt one of the strongest roots of the Anschlußmovement at the time. The fact that Austria today is thoroughly viable and possessing a will to liveis certainly no reason to neglect Austria, though, and deny it the means and possibilities for alasting stability and further development of its viability.90

Foreign observers as well recognized the problematic relation of economic concerns toAustrian neutrality. The father of West Germany’s Wirtschaftswunder, Economics MinisterLudwig Erhard, warned in a 1962 issue of Österreichische Monatshefte that without a vibrantrelationship with the Common Market, Europe’s neutral nations would be forced into“isolation” and dependence upon the Communist Bloc. Given that Erhard saw a benefit tothe neutral countries functioning as the West’s intermediaries to the Communist Bloc, hewas concerned about maintaining those countries as a “desirable enrichment in the mosaicof European integration.”91 Similarly, a 2 January 1964 State Department memorandumagreed that:

effective neutrality cannot be maintained by a country unable to sustain itself economically. HowAustria’s vital trade interests are preserved in its relations with the Common Market will bearclosely on its future ability to remain effectively neutral, and to maintain even that degree oflatitude in its international actions which it has so far succeeded in maintaining.92

Energy: The Other Austrian Economic Dependency

Austria shared not only trade links with the West, but also its large-scale dependence onimported sources of energy. One Austrian scholar, Harald Glatz, calculated in 1983 theproportion of net energy imports to Austria’s total energy needs with the following(increasing) annual percentages: 1955: 20.5; 1960: 33.9; 1965: 42.4; 1970: 57.8; 1975: 60.4;1980: 69.4. For 1983, Glatz estimated that imports from members of the Organization ofPetroleum Exporting Countries (OPEC) covered 28.8 percent of Austria’s energy needs,whereas imports from Communist Council for Mutual Economic Assistance (COMECOM)countries covered an additional 31.3 percent. Broken down into specific energy sources, theimport numbers showed that OPEC delivered 62.1 percent of Austria’s petroleum productimports (supplying 54.7 percent of Austria’s total petroleum energy needs), whereasCOMECOM supplied Austria with 22.5 percent of its petroleum-based imports (19.8 percentof Austria’s total petroleum energy needs), 99.9 percent of its natural gas imports (60.2percent of Austria’s total natural gas energy needs), and 77.7 percent of its coal imports (60.9percent of Austria’s total coal energy needs).93

90Ibid, 408.91Ludwig Erhard, “Europa ohne die Neutralen,” Österreichische Monatshefte 18, nos. 4–5—Special Issue:

“Österreich und der Europäische Großmarkt” (1962): 11–13, at 12.92Austrian Interest in European Integration, 2 January 1964; Austria Folder; Box 249; Entry 5041; Lot File 70D199;

Records of the Policy Planning Council (S/PC), 1963–64; General Records of the Department of State, RG 59; NA.93Harald Glatz, “Abhängigkeit im Bereich von Rohstoffen und Energie,” inÖsterreich im internationalen System, ed.

Helmut Kramer, 118–27 (Vienna, 1983), 122–23.


Unterberger reflected in 1992 that although Austrian COMECOM oil imports [had] waveredbetween 20–30 percent of all oil imports throughout the years, in some years coal imports fromCOMECOM topped 80 percent of all coal imports.94 “These figures,” Neuhold stated at aNovember 1984 conference while presenting similar data, “raise the question of whetherAustria’s dependence on East European energy is so heavy that it also constitutes a politicalproblem and may pose a threat to the country’s security in crisis situations.”95 Indeed, theSoviet occupation of Czechoslovakia in 1968 temporarily disrupted anthracite coal deliveriesfrom East Germany to Austria.96

With respect to the oil needs of Western nations, Austrian Foreign Minister PeterJankowitsch noted in 1981 that “the basic similarity of their interests was always apparent.”Thus, Austria joined with fifteen other OECD nations in the wake of the 1973–1974 OPECoil embargo to create the International Energy Program (IEP) on 18 November 1974. Asdescribed by Jankowitsch, this was an “explicit and detailed agreement … ambitious” inscope, covering “every major energy policy issue,” and designed “to provide assurancesagainst the disruptive effects of oil emergencies.”97 Among other things, the IEP called formember countries to develop an ability to endure ninety days cutoff from their normal oilimports (calculated according to the latest annual levels) and created a collective oil poolingarrangement for emergencies.98 The International Energy Agency (IEA), headquartered inParis, was to oversee the IEP.99

“In deciding to join the International Energy Agency,” recalled Jankowitsch, “Austriacarefully weighed its needs as an oil-importing country against certain demands of a policyof permanent neutrality.”100 Thus, a communiqué issued by the Austrian Foreign Ministryon 18 November 1974, explained that the “foreign policy aspects of participation in theagreement had been thoroughly examined.” “In particular, intensive contacts over theagreement with Sweden and Switzerland … examined above all … whether the agreementwas compatible with neutrality.” The Austrian government:

came in these considerations to the conviction that participation in the agreement does not contradictthe status of a neutral state. Austria, however, analog to the approach of Sweden and Switzerland, alsoexpressly referred to its generally recognized status as a permanently neutral state on the occasion ofsigning. Austria thereby recalled that its participation in the agreement may not contradict in any wayits status of neutrality and that the Austrian government would therefore continue to behave as thegovernment considers necessary in accordance with the generally recognized status of Austria’spermanent neutrality.101

94Andreas Unterberger, “Die außenpolitische Entwicklung,” in Politik in Österreich: Die Zweite Republik—Bestandund Wandel, ed. Wolfgang Mantl, 204–39 (Vienna, 1992), 231.

95Hanspeter Neuhold, “Austria and the Soviet Union,” in European Neutrals and the Soviet Union, ed. Bo Huldt andAtis Lejins, 83–118 (Stockholm, 1986), 101.

96Gerhard Böhner, Die Wehrprogrammatik der SPÖ, Österreichische Schriftenreihe für Rechts- undPolitikwissenschaft series (Vienna, 1982), 68.

97Peter Jankowitsch, “Foreign Policy,” in Modern Austria, ed. Kurt Steiner (Palo Alto, CA,1981), 366–67.98For a copy of the IEP agreement, see: International Energy Program, accessed 1 May 2006; available from http://

www.iea.org/Textbase/about/IEP.PDF.99Hummer and Mayrzedt, 681. Austria’s fifteen fellow founders of the IEP were Belgium, Canada, Denmark,

Ireland, Italy, Japan, Luxemburg, the Netherlands, Sweden, Switzerland, Spain, Turkey, the United States, and theUnited Kingdom. Norway formed a special arrangement with the IEP, and other countries such as New Zealandhave subsequently joined.

100Jankowitsch, 367.101Hummer and Mayrzedt, 677.

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At the time, Jankowitsch noted, “Austria made it equally clear that it did not perceive the neworganization as a vehicle for confronting oil-exporting developing countries, with many of whomAustria had long maintained close and friendly relations.” Austria thus “insisted on the urgentneed of continuing dialogue with those countries” and “continued to call for a more open andunderstanding attitude toward the needs of oil-producing developing countries, for many ofwhom oil remains the only means of promoting their economic and social welfare.”102 TheForeign Ministry communiqué emphasized that “Austria is consistently concerned that noconfrontation develops in the relationship to the oil producing states, but rather, quite thecontrary, that ways and means be sought and found to bring about constructive cooperationwith these states.”103 The IEP agreement itself, meanwhile, expressed in its preamble a desire“to promote co-operative relations with oil producing countries and with other oil consumingcountries, including those of the developing world, through a purposeful dialogue, as well asthrough other forms of co-operation, to further the opportunities for a better understandingbetween consumer and producer countries.”104

Neutral Security in Stockpiling?

Austria was dependent on imports not just for energy, but also for other critical raw materials.The Landesverteidigungsplan approved in 1983 estimated that fully two-thirds of the “basic andraw materials” required by Austria’s economy were imported.105 Among the imports, in thewords of the Austrian army (Bundesheer) officer and security studies analyst HeinzDanzmayr, were “especially critical items,” such as copper, chrome, manganese, and nickel.106

Other neutral countries in Europe, meanwhile, faced similar issues and planned accordingly.In an address in Graz on 23 April 1968, for example, Bundesheer colonel HermannStrohschneider estimated that “the other neutral countries have secured in the course of theirstockpiling polices the most important foodstuffs and production goods for the duration ofone year.”107 The Swiss scholar Theodor Veiter wrote that same year that entire factories inSwitzerland operated solely for the purpose of creating critical supply stockpiles for wartimeemergencies. Swiss law also required private households to store provisions expected to lastanywhere from two to four weeks.108

Austrian political scientist Gerhard Böhner made similar observations in 1982, noting the onemillion Swedish Kronen and 1.4 million Swiss Francs expended in Sweden and Switzerland,respectively, for industrial stockpiles. Sweden also required private corporations to stockpileraw materials and “often maintained for military crises entire industries (textile, metal, plastics)in gigantic storage facilities (with a total value of 5.5 billion [Austrian] Schillings), partially inprotected mountain bunkers.” Switzerland also stored a year’s supply of foodstuffs.109

102Jankowitsch, 367.103Hummer and Mayrzedt, 677.104International Energy Program.105Landesverteidigungsplan (Vienna, 1985), 181.106Heinz Danzmayr, “Österreichs Sicherheitspolitik: Orientierung an der Schweiz?” in Österreich-Schweiz:

Nachbarn, Konkurrenten, Partner, ed. Hans Thalberg, 319–60 (Vienna, 1988), 337.107Hermann Strohschneider, “Die zivilen Elemente einer zeitgemäßen Landesverteidigung,” Österreichische

Militärische Zeitschrift 6, no. 4 (1968): 276–80, at 278.108Theodor Veiter, “Über den glaubhaften Schutz unserer Neutralität: Unter Berücksichtigung schweizerischer

Beispiele von Krisenvorsorge,” Berichte und Informationen 23, no. 1164 (1968): 1–3, at 2.109Böhner, 71, 77–78.


Austrian preparations for wartime neutrality paled in comparison. Strohschneider in 1968estimated that the “average stock of import-dependent goods stockpiled in Austria coverspeacetime needs only for about two months.” Strohschneider considered possible rawmaterial shortages in Austria particularly troubling because Austria, unlike Switzerland,produced very few high value products tradable for vital imports.110 Given that “Austria hasat its disposal no noteworthy stockpiles in contrast to the two neutral states Sweden andSwitzerland,” one scholar noted in 1979, “all factories that are dependent upon foreign rawmaterials would have to close within three to six weeks in case of barriers to trade.”111

Possible food shortages in wartime also worried many Austrians. This was true even though,according to Böhner in 1982, Austria satisfied about 80 percent of its food needs throughdomestic cultivation and could meet all of its nutritional demands without imports in acrisis. Only deficiencies in certain oil-rich plants might lead to dangerous food shortages.112

Yet, as the parliamentarian and ÖVP defense policy spokesman Heinrich Neisser noted inthe same year, Austria lacked a system for properly distributing agricultural products duringa crisis.113 Böhner observed that only in 1967 did the printing and distribution to districtoffices of ration cards for foodstuffs and consumer products take place. Attempts byVorarlberg’s provincial government in 1970 to create stockpiles securing the provincialpopulation’s needs for three to six weeks failed because of a lack of funds, storage rooms,and support from the federal government. By 1982, Vorarlberg alone had stockpiled merely11,300 calories per person in the province, enough to sustain the population for five days incase of crisis.114 Nor did private Austrian stockpiles exist to make up the difference. “It iscurrently assumed,” the Austrian political science professor Peter Pernthaler stated in 1982,“that less than a third of all households have decided to stockpile provisions that wouldenable their survival for many months without grocery purchases.”115

Contemplating conflict-induced disruptions to Austrian trade flows, Strohschneider thusconcluded in 1968 that “at the time we hardly possess the ability to maintain our neutrality ina long lasting neutrality contingency and therefore we are, for better or worse, at the mercy ofthe benevolence or disfavor of the belligerents.”116 Reporting a “complete stagnation during thelast years in the stockpiling sector,” Neisser fourteen years later warned that “Austria could beplunged from one day to the next into an existential crisis alone through measures ofeconomic blackmail.”117 Although Danzmayr recalled that the Austrian government during the1980s tried measures such as the development of processes to recycle raw materials from trashand used products, it is doubtful that this was sufficient.118 Unterberger remembered in 1992that “economic national defense” had been “ignored by various administrations.” Kreisky, forexample, had declared during a televised discussion on 28 September 1980 that he had “nouse” for emergency import substitution measures costing potentially billions of Schillings.119

110Strohschneider, 278.111Sverre Baumgartner, “Schattenorganisation der Umfassenden Landesverteidigung,” Politikwissenschaft 8, no. 4

(1979): 399–416, at 412.112Böhner, 71.113Heinrich Neisser, “Dimensionen der Österreichischen Sicherheitspolitik,” in Wie Sicher ist Österreich? Beiträge

zu einer konzeptiven Sicherheitspolitik, ed. Heinrich Neisser and Fritz Windhager, 338–46 (Vienna, 1982), 344.114Böhner, 71, 78.115Peter Pernthaler, “ULV—Zwischen Utopie und Realität,” in Wie Sicher ist Österreich, 401.116Strohschneider, 280.117Neisser, 344.118Danzmayr, 337.119Unterberger, “Die außenpolitische Entwicklung,” 218.

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Advances in technology only made the problem worse. At a September 1973 conference,Strohschneider mentioned that “the determination of vital needs is becoming a very specialproblem” that in Austria “still has not been investigated.” According to Strohschneider’sreadings, the Swiss found:

this determination ever more complicated because of, for example, the presence of tiny lamps onwhich the functioning of all data processing depends and that, because these are only produced inAmerica, for example, a new item of vital necessity has been created and if this is not stockpiledthe entire preparatory planning work is at once no longer retrievable.120

Conclusion: Unaffordable Neutrality

Austria solemnly pledged in 1955 to be permanently neutral, but modern conditions havehollowed out such promises. The operations of Adam Smith’s proverbial invisible handamong utility-maximizing producers and consumers acting according to the laws of supplyand demand have brushed aside any realistic notions that permanent neutrality might havean economic dimension. All countries in an increasingly interdependent world, whetherneutral or not, must confront the fact that profits and politics do not always point in thesame direction. Nonetheless, any self-proclaimed “permanent” policy with respect to thewhole world such as neutrality makes this problem particularly acute because, in theory, apermanently neutral country does not have the legal liberty to pick and choose when tovalue the one interest over the other. The permanent nature of the Cold War, encompassingpeacetime measures of bloc struggle such as embargoes in anticipation of their possiblestrategic wartime effects, highlighted this rigidity of permanent neutrality even more.

In Austria’s case, the demands of a credible status of permanent neutrality and itsconcomitant peacetime neutrality policy simply could not overcome the realities of Austria’sintegration into the West’s global economy on the basis of market demands. Historiccommercial relationships between a small Austrian state dependent upon foreign trade andthe Western world only became stronger with its growing prosperity and economicintegration begun, in part, by the Marshall Plan. Communism, meanwhile, only aggravatedEastern Europe’s destitution and isolation, thereby accelerating a preexisting diminution ofAustrian trade with the region. Thus, the Cold War division of Europe into blocs separatedalong economic and other lines that brought forth Austrian neutrality also ironically assuredthat this neutrality would not be applicable to the economic sphere. Additionally, it wasimpossible for permanent neutrality to ignore the natural geographic distribution of globalenergy supplies with all of its political ramifications.

Neutral government efforts to attempt to counteract global interdependencies in case of crisisthrough stockpiling, difficult and expensive under the best of circumstances, never took effectiveform in Austria. This was due in part precisely because the enormity of an effective stockpilingprogram would have made its prospect for success appear quixotic to many Austrians likeKreisky, an economic parallel to building civil defense shelters for use in nuclear war.Moreover, stockpiling would have been moot during any invasion of Austria, presumably byCommunist Bloc forces, in a European conflict, as Austria would have thereby become abelligerent freed from neutrality’s strictures and at liberty to ally with other countries. Allcountries, whether neutral or not, meanwhile, face enormous costs in creating and sustainingeffective civil defense or emergency preparedness measures. In this regard, Americans need

120Probleme der Krisenvorsorge im Bereich der Land- und Forstwirtschaft (Vienna, 1973), 42–43.


only consider the effectiveness of official responses to the devastation of the 2005 HurricaneKatrina. Accordingly, Austrian negligence with respect to stockpiling is not so surprising.Rather, it is the Swiss and Swedish efforts in this area, products of long-standing nationalcommitments to independent, neutral security policies, that seem exceptional. And eventhese efforts might very well have proven deficient.

Global market linkages between self-proclaimed neutral countries such as Austria and thewider Western world also allowed for other hidden or not so hidden hands in the politicalrealm to control sensitive export flows through Austria to the Communist Bloc. Given achoice between mutual market-based prosperity with the West and avoiding embargopolicies in the name of upholding neutrality, neutral countries such as Austria were neverwilling to pay an economic price for their neutrality. Indeed, such costs of neutrality in theform of diminished prosperity would have actually weakened the socioeconomicindependence of the neutral countries and called into question the willingness of theirpopulations to support any policy of permanent neutrality, however defined.

The effect of the market’s laws on the law of permanently neutrality has required self-proclaimed neutral countries to violate the spirit of neutrality by pursuing deficient neutralitypolicies in peacetime and perhaps not even being able to uphold the letter of neutrality lawon the opening Day X of any given conflict. Participation by neutral countries, alreadyintegrated into the West’s market economy, in Western embargo efforts against theCommunist Bloc, as well as in Western initiatives with respect to technology developmentand oil shocks, left no doubt as to where the interests of these countries lay. Thevulnerability of these economic interests to Western trade sanctions well-nigh ruled out anysudden switch by neutral countries like Austria to impartial trade policies if ever an East-West conflict broke out. Moreover, in any such shooting war that might decide vital interestsin a period of perhaps weeks, East-West trade wars would have been the last thing onanyone’s mind. A NATO-Warsaw Pact conflict involving a brief Soviet blitzkrieg and a likelyescalation to nuclear weapons would have made long-term economic warfare considerationsmoot.121

Europe’s permanently neutral countries such as Austria perhaps could have abided byneutrality’s economic dicta with respect to a faraway regional conflict. Where neutralityreally counted in the Cold War conflict that gave rise to Austrian neutrality in the first place,however market interdependence effectively made economic dimensions of this policy a deadletter. Private market forces of buying and selling were simply too powerful for neutralpublic policies of abstinence and impartiality.

ANDREW E. HARROD is a free-lance researcher and writer living in Arlington, Virginia. He holds a PhDfrom the Fletcher School of Law and Diplomacy and a JD from the George Washington UniversityLaw School. He is admitted to the Virginia State Bar.

121Various national security analysts during the Cold War thought in terms of a high intensity “come as you arewar” of brief duration. See, e.g., Michael A. Hennessey, “Fleet Replacement and the Crisis of Identity,” in ANation’s Navy: In Quest of a Canadian Naval Identity, ed. Michael L. Hadley, Rob Huebert, and Fred W. Crickard,131–56 (Montreal, 1996), 137; Benjamin Lambeth, The Transformation of American Airpower, Cornell Studies inSecurity Affairs (Ithaca, NY, 2000), 57; and Peter Wilson, “Issues of Force Structure, Nuclear Infrastructure, andSurvivability,” in Nuclear Weapons in a Transformed World: The Challenge of Virtual Nuclear Arsenals, ed.Michael J. Mazaar, 77–102 (New York, 1997), 79.

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