Allied-occupied Austria

After the Anschluss in 1938, Austria had generally been recognized as part of Nazi Germany. In 1943, however, the Allies agreed in the Declaration of Moscow that Austria would instead be regarded as the first victim of Nazi aggression—without denying Austria's role in Nazi crimes—and treated as a liberated and independent country after the war.


In the immediate aftermath of World War II, Austria was divided into four occupation zones and jointly occupied by the United Kingdom, the Soviet Union, the United States, and France. Vienna was similarly subdivided, but the central district was collectively administered by the Allied Control Council.


Whereas Germany was divided into East and West Germany in 1949, Austria remained under joint occupation of the Western Allies and the Soviet Union until 1955; its status became a controversial subject in the Cold War until the warming of relations known as the Khrushchev Thaw. After Austrian promises of perpetual neutrality, Austria was accorded full independence on 15 May 1955 and the last occupation troops left on 25 October that year.

Marshall Plan[edit]

Austria finalised its Marshall Plan program in the end of 1947 and received the first tranche of Marshall Plan aid in March 1948.^[55] Heavy industry (or what was left of it) was concentrated around Linz, in the American zone, and in British-occupied Styria. Their products were in high demand in post-war Europe. Naturally, the administrators of the Marshall Plan channeled available financial aid into heavy industry controlled by the American and British forces.^[56] American military and political leaders made no secret of their intentions: Geoffrey Keyes said that "we cannot afford to let this key area (Austria) fall under the exclusive influence of the Soviet Union."^[57] The Marshall Plan was deployed primarily against the Soviet zone but it was not completely excluded: it received 8% of Marshall plan investments (compared to 25% of food and other physical commodities).^[58] The Austrian government regarded financial aid to the Soviet zone as a lifeline holding the country together. This was the only case where Marshall Plan funds were distributed in Soviet-occupied territory.^[59]


The Marshall Plan was not universally popular, especially in its initial phase.^[60] It benefited some trades such as metallurgy but depressed others such as agriculture. Heavy industries quickly recovered, from 74.7% of pre-war output in 1948 to 150.7% in 1951.^[61] American planners deliberately neglected consumer goods industries, construction trades, and small business. Their workers, almost half of the industrial workforce, suffered from rising unemployment.^[62] In 1948–1949, a substantial share of Marshall Plan funds was used to subsidize imports of food. American money effectively raised real wages: the grain price was about one-third of the world price, while agriculture remained in ruins.^[63] Marshall Plan aid gradually removed many of the causes of popular unrest that shook the country in 1947,^[64] but Austria remained dependent on food imports.


The second stage of the Marshall Plan, which began in 1950, concentrated on productivity of the economy.^[65] According to Michael J. Hogan, "in the most profound sense, it involved the transfer of attitudes, habits and values as well, indeed a whole way of life that Marshall planners associated with progress in the marketplace of politics and social relationships as much as they did with industry and agriculture."^[66] The program, as intended by American lawmakers,^[67] targeted improvement in factory-level productivity, labor-management relations, free trade unions and introduction of modern business practices.^[68] The Economic Cooperation Administration, which operated until December 1951, distributed around $300 million in technical assistance and attempted steering the Austrian social partnership (political parties, labor unions, business associations, and government) in favor of productivity and growth instead of redistribution and consumption.^[69]


Their efforts were thwarted by the Austrian practice of making decisions behind closed doors.^[70] The Americans struggled to change it in favor of open, public discussion. They took a strong anti-cartel stance, appreciated by the Socialists, and pressed the government to remove anti-competition legislation.^[71] But ultimately they were responsible for the creation of the vast monopolistic public sector of the economy (and thus politically benefiting the Socialists).^[72]


According to Bischof, "no European nation benefited more from the Marshall Plan than Austria."^[73] Austria received nearly $1 billion through the Marshall Plan, and half a billion in humanitarian aid.^[34][74] The Americans also refunded all occupation costs charged in 1945–1946, around $300 million.^[75] In 1948–1949, Marshall Plan aid contributed 14% of national income, the highest ratio of all involved countries.^[76] Per capita, aid amounted to $132 compared to $19 for the Germans.^[34] But Austria also paid more war reparations per capita than any other Axis state or territory.^[77] Total war reparations taken by the Soviet Union including withdrawn USIA profits, looted property and the final settlement agreed in 1955, are estimated between $1.54 billion and $2.65 billion^[77] (Eisterer: 2 to 2.5 billion).^[78]