Austria's Delicate Diplomacy: Navigating the Complexities of its Russian Relations

Austria faced a startling revelation in December of last year as it grappled with its heavy reliance on Russian gas imports. Despite the European Union's urgent calls to decrease dependence on Russian gas amidst the ongoing conflict in Ukraine, Austria continued to import over 70% of its gas from Russia. This stark contrast to other EU member states, which successfully reduced their Russian gas imports to less than 15% of the total, raises concerns about Austria's stance on neutrality and its ability to adapt to evolving geopolitical dynamics. The intricate relationship between Austria and Russia goes beyond energy dependencies. The country finds itself in a delicate position, torn between maintaining lucrative economic ties with Moscow and demonstrating solidarity with the EU's united front against Russia's aggression in Ukraine. While Austria has publicly condemned Putin's actions, provided humanitarian aid to Ukraine, and endorsed EU sanctions against Russia, commercial connections between the two countries persist behind the scenes, particularly in the energy and finance sectors.

This delicate balancing act poses significant challenges for Austria, especially as it faces pressure from both its Western partners and critics who question its commitment to European unity. Some argue that Austria's professed "military neutrality" and its perceived middle-ground approach to the Ukrainian crisis betray a level of cynicism among the country's elites when dealing with Russia. Critics fear that Austria's alignment with Russia, coupled with Hungary's similar disposition, could create a Russia-tolerant zone at the heart of Europe, undermining efforts to present a unified front against Russian aggression. The concerns surrounding Austria's relationship with Russia extend beyond geopolitics. There are growing apprehensions about Moscow's infiltration of Austria's establishment over the years, with one senior European Commission official describing Austria as the "EU's soft underbelly concerning Russia." This infiltration, combined with the country's ongoing economic engagement, raises questions about Austria's willingness to prioritize European interests over its own.

To truly comprehend Austria's complex stance toward Russia, one must delve into the country's history, particularly its decision to embrace neutrality. In 1955, a decade after World War II, Austria remained under occupation by the four allied powers and was divided into zones. To regain full sovereignty, Austria agreed to enshrine neutrality in its constitution, a compromise that was seen as a necessary evil by the population at the time. This neutrality law, while allowing Austria to participate in armed conflicts if necessary, prohibited the country from joining military alliances or hosting foreign troops on its territory.  Initially, the Austrians did not harbor concerns about offending the Soviets. Many Austrian men had fought against the Soviets as part of the German army during World War II and had experienced time in POW camps. Thus, there was little love lost between the two countries. In fact, when the Soviets crushed the Hungarian uprising in 1956, triggering a wave of refugees into Austria, Vienna readily joined other Western nations in criticizing Moscow's actions at the United Nations.

However, Austria quickly realized the advantages of its neutral status, wedged as it was between NATO and the Soviet bloc. As a nonaligned country, Austria could engage in business and maintain relations with both sides of the Iron Curtain. In June 1968, Austria became the first Western European nation to sign a long-term contract with the Soviet Union for the supply of natural gas. The gas arrived through Czechoslovakia, reaching a distribution hub just inside Austria's border. This landmark deal with the Soviets brought economic benefits to Austria, establishing the country as a crucial conduit for Russian gas destined for Western Europe. Yet, just months after the 1968 gas deal, Austria faced a defining moment in the Cold War. In August of that year, Soviet tanks rolled into Czechoslovakia, crushing the Prague Spring. Fearing a similar fate, Austrians were apprehensive that the Soviets might invade their own country. The government even made contingency plans to relocate its operations from Vienna to the far west. To avoid provoking the Soviets, Austrian troops were stationed 30 kilometers away from the Czechoslovakian border. Fortunately, the feared invasion did not materialize, and the gas continued to flow.

This historical context highlights Austria's reliance on its neutrality for economic prosperity and security. The country's neutral status also facilitated its emergence as an important venue for international diplomacy. Throughout the decades, organizations such as OPEC, the United Nations, and the Organization for Security and Cooperation in Europe found a home in Vienna. Austria's historical connection with Russia, built on a foundation of fear and economic opportunity, diverges from the cultural and historic affinity that some Germans have with Russia.

For Russia's elite, Austria offers an enticing mix: a gateway to the West without complete Western alignment. Vienna, with its faded imperial splendor, pliable politicians, and renowned gemütlichkeit, has long attracted oligarchs and apparatchiks. It has been a welcoming place for Russians seeking citizenship or investing in prestigious Alpine real estate, as exemplified by figures like former Russian President Boris Yeltsin's daughter and Putin associate Oleg Deripaska. The political connections between Austria and Russia are noteworthy for their broad bipartisan nature. Former Austrian chancellors, regardless of their political affiliation, often pursued job opportunities in Russia after leaving office. For example, Wolfgang Schüssel, a former chancellor from the center-right People's Party, joined the boards of Russian companies like MTS and Lukoil. Alfred Gusenbauer, his Social Democratic successor, became associated with the pro-Russian think tank "Dialogue of Civilizations Research Institute," established by a Putin ally. Likewise, Christian Kern, another Social Democrat, joined the board of the Russian state railway RZD. Former ministers also followed similar post-political career paths, with figures such as Hans Jörg Schelling and Karin Kneissl assuming positions at Gazprom and Rosneft, respectively.

Despite their political differences, these Austrian politicians justified their engagement with Russia using a self-serving logic: Austria must remain a bridge to Russia for the benefit of the West. It's worth noting that many of them faced public scrutiny and pressure to relinquish their positions following Russia's escalation of the war last year.

In summary, Austria's historical commitment to neutrality and its transactional relationship with Russia provide crucial context for understanding the country's complex stance toward Russia today. The interplay between economic interests, security concerns, and political connections shapes Austria's delicate balancing act as it navigates the dynamics of the EU, its Western partners, and Russia.

Russia continued to be the second-largest investor in Austria after Germany, with foreign direct investment totaling €25 billion at the end of last year, comprising 13 percent of the total. Austrian companies that had invested in Russia also remained active there, with a significant majority planning to continue their operations. Notable Austrian companies maintained their presence in Russia as well. OMV, Austria's largest company, continued to play a major role in Russia's energy sector, obligated to purchase a significant amount of Russian gas annually until 2040. Raiffeisen Bank International, an Austrian-owned bank, remained the largest foreign lender active in Russia and an essential part of the Russian financial system. Even Red Bull, based in Salzburg, continued to sell its energy drinks in Russia. 

Despite international scrutiny of Austria's ties with Russia, the country's leaders employed diversion, obfuscation, and whataboutism to counter criticism. Austria presented itself as a small, neutral country that sought dialogue and common ground with all nations. However, revelations such as the secret video footage showing Vice Chancellor Heinz-Christian Strache offering political influence for investment with a supposed Russian oligarch's niece demonstrated the willingness of Austria's political establishment to cater to Russian interests. The war in Ukraine and subsequent events further strained tensions and brought the issue into the open. Western officials had long warned Austria about potential Russian infiltration of its security services, which had been dismissed. The exposure of a suspected high-ranking mole in the Austrian intelligence service and the country's suspension from Western intelligence sharing prompted Austria to disband its intelligence service and start anew.

Criticism of Austria's Russian ties persisted, with Poland accusing Austria of being "pro-Russian" after Austrian Foreign Minister Schallenberg warned against excluding Moscow from the Vienna-based OSCE. The U.S. Treasury's sanctions enforcement division also sent inquiries to Raiffeisen Bank regarding its Russian operations, seen as a message for Austria to address its issues. The European Commission highlighted Austria's insufficient efforts to reduce its dependence on Russian gas, warning of significant challenges to its energy security. Despite that, Austria's dependence on Russian gas remained high, with 60 percent of its gas purchases coming from Russia in 2022, compared to 80 percent before the invasion of Ukraine. Raiffeisen Bank faced challenges in breaking its reliance on Russia, with significant profits earned in Russia unable to be repatriated due to international sanctions. The bank expressed a desire to exit Russia but had yet to find a viable solution.

The increased scrutiny of Austria's ties with Russia prompted a change in rhetoric from Austrian officials. However, substantial policy shifts have yet to materialize, and given the prevailing political landscape, such changes may never come. The far-right, pro-Russian Freedom Party, which supports lifting all sanctions against Russia, has led national polls since November. Although most Austrians still support sanctions, the party's popularity reflects frustration with the incumbent government rather than enthusiasm for its Russia policy. Austria's intricate dance with Russia has brought its alliances and commitments into question, sparking concerns and scrutiny both within and beyond its borders. The bipartisan nature of political links between Austria and Russia, as former chancellors and ministers find themselves entangled in Russian ventures, underscores the complexity of their relationship. While these politicians argue that Austria must serve as a bridge to Russia for the benefit of the West, their actions have not gone without public scrutiny, especially in the wake of Russia's actions in Ukraine.

With a historical commitment to neutrality and a transactional approach to Russia, Austria finds itself delicately balancing economic interests, security concerns, and political connections. The interplay of these factors shapes Austria's stance as it navigates the European Union, its Western partners, and Russia. However, questions linger about Austria's willingness to prioritize European interests over its own, as the country's alignment with Russia challenges the notion of a united front against Russian aggression.

Beyond geopolitics, worries persist about the extent of Russian infiltration within Austria's establishment. Suspicions of moles within the intelligence service and the suspension of intelligence sharing have exposed vulnerabilities, necessitating reform and heightened vigilance to safeguard national security.Criticism from other European nations, such as Poland, and inquiries from the United States Treasury further underline the urgency for Austria to address its ties with Russia. Reducing dependence on Russian gas and ensuring energy security are paramount, requiring strategic efforts to diversify energy sources.

At this critical juncture, Austria's choices carry weighty implications. The decisions it makes will reverberate not only within its own borders but also across Europe, shaping the cohesion and stability of the continent. Despite shifting rhetoric, tangible policy changes have yet to materialize, leaving uncertainty surrounding Austria's future course of action regarding Russia. In this intricate dance with Russia, Austria must find a harmonious balance between economic interests, security imperatives, and European unity. Navigating this complex landscape will define Austria's position on the international stage and its ability to adapt to the evolving geopolitical dynamics. As the spotlight shines brightly on Austria's choices, the world watches, eager to see if Austria can strike a balance that safeguards its interests while upholding the principles of unity and security for which Europe strives.