A century after the collapse of the Habsburg Monarchy, Vienna has revived itself with parallels to its golden past. But the city's recent history teaches important lessons.
A little more than a hundred years ago, Austria experienced the greatest transformation of its history. Austria’s economy rapidly modernized and caught up with the advanced countries in Western Europe, and heavy investments in education yielded the most extensive school system on the continent. Voting rights were among the most democratic in the world by 1907. Austria’s capital, Vienna, became a place where Germans, Czechs, Poles, Slovenians, Jews, Hungarians, Croats, Serbs, Slovaks, Romanians, Ukrainians, and Italians lived in security, peace, and increasing prosperity.
Vienna ballooned into one of the great cosmopolitan centers of Europe, with pioneering scientists, philosophers, architects, and artists to its name. It was the city of Gustav Mahler, Arnold Schönberg, Otto Wagner, Adolf Loos, Sigmund Freud, Ludwig Wittgenstein, Oskar Kokoschka, and many others. For the first time, Vienna came to be known for its intellectual achievements, not just its music.
Sliding toward calamity
With WWI and the 1918 collapse of the Habsburg Monarchy, this great period ended. The peace treaties and the dissolution of Austria-Hungary left Austria a shadow of its former self. It lost more than sixty percent of its territories and most of its people to the neighboring countries: Czechoslovakia, Yugoslavia, Poland, Italy, and Romania. Austria’s main source of agriculture and industry fell outside its new borders which caused starvation and hyperinflation in the 1920s. Vienna, once an imperial city, was much too big for what Austria had become, and awkwardly located at its eastern fringe.
This geopolitical and economic crisis was made worse by a crisis of identity. Who were the remaining 6.5 million people of this tiny Austria? They were ethnic Germans who wished to integrate into the more powerful German Republic. This was reasonable: Germany and Austria had been part of the same empire for a long time – the Holy Roman Empire and the German Confederation – and Germany, despite also losing the war, offered a vision for the future that the truncated first Austrian Republic did not.
But the Allied Powers vetoed the combination because they feared that it would strengthen Germany, leaving Austria independent. Austria’s interwar decades fell into bloody conflicts between the private militias of the left-wing Social Democrats and the ruling conservative Christian Socials. There was no political compromise in interwar Austria, only extremism, and persistently high unemployment.
In Vienna, the Social Democrats retained power and embarked on a fifteen-year (1919-19134) experiment in utopian democratic socialism which came to be known as “Red Vienna.” In an effort to cultivate a new class of educated and self-assured worker (Neue Mensch), the city built public daycare centers, libraries, bathing houses, health clinics, and advisory centers. It also hosted an international workers' olympics in 1931. This sweeping socialist welfare program was funded by a sharply progressive real-estate tax and taxes on luxury spending.
Within a decade, Red Vienna also built 63,000 municipal apartments that came to house eleven percent of the city's population. Equipped with running water, indoor toilets, and artificial lighting, they were a huge upgrade for the residents who had previously lived in abhorrent conditions. Many of these flats are inside catchy Art Deco buildings named after international socialist thinkers such as Jean Jaurès. Most famous is the monumental Karl-Marx-Hof in District 19, a socialist utopian city within the city, complete with 1,400 apartments, kindergartens, communal washing rooms, and lecture halls.
Red Vienna ended with the 1934 Civil War, after which Austria morphed into a one-party dictatorship under the Christian Social Chancellor Engelbert Dollfuss. Dollfuss banned the Social Democrats, dissolved the parliament, rewrote the constitution, and proceeded to build a corporatist state inspired by Mussolini’s fascism. He relied on the Catholic Church whose influence was greatly expanded, for example within the Austrian school system.
The Nazi period of 1938-1945
Dollfuss persecuted his political opponents, including the Austrian Nazis who became his greatest threat with Adolf Hitler’s rise to power in Germany in 1933. In the face of Nazi pressure and provocations, Dollfuss banned the Austrian Nazi party and tried to drum up feelings of Austrian patriotism through his political forum, The Fatherland Front.
The intention of Hitler, who grew up in Austria, was to unite Germany with his homeland. In 1934, the Austrian Nazis assassinated Dollfuss as part of a coup attempt, paving the way for Hitler to seize power. Many Austrians were sympathetic to unification and to Hitler’s Third Reich. Austria’s poverty and persistently high unemployment made Germany’s robust economy and military look impressive in comparison.
On March 13, 1938, Hitler’s German troops invaded Austria without a fight. The image haunts Vienna to this day: a huge crowd of euphoric people cheering Hitler on Heldenplatz. Austria officially became the southeastern corner of Germany. The Austrian military was integrated into the Wehrmacht. The Nazi period resulted in the complete elimination of Vienna’s Jewish community, which had been the third biggest in Europe after that of Warsaw and Budapest.
Most of these 182,000 people were assimilated Jews who had meaningfully contributed to Vienna's economy, arts, and intellectual life. In the months after the annexation, Jewish people were subjected to awful humiliations – for example, ordered down on all fours and forced to clean the street with a brush while passersby mocked them. Jewish businesses were confiscated, Jewish employees fired, Jewish children expelled from public schools.
Before the Final Solution was decided in 1942, the intention of the Nazis had been to expropriate all Jewish assets – apartment, savings, jewelry – and force every Jewish person to emigrate from Germany and Austria. This is why two-thirds of the Jewish community managed to flee from Vienna before the deportations began. Starting in October 1941, further emigration was prohibited and ultimately 65,000 Viennese Jews were killed in the concentration camps and extermination sites of Theresienstadt, Auschwitz, and Minsk, Maly Trostenets.
What makes the legacy of the Nazi period particularly uncomfortable in Austria is the extreme brutality of the Austrian Nazis, who were regarded as extremists even by their German colleagues. For example, during Kristallnacht, on November 10, 1938, they set 42 synagogues and prayer rooms on fire across Vienna. Austrians also held many leadership positions, as with Adolf Eichmann, who oversaw the entire logistics of the Holocaust.
Cold War: neutrality, prosperity
After the war, Austria fell between the Western and the Soviet spheres of influence and hence was jointly occupied by the Allied Powers. This was the case in Vienna itself, which was split into a Soviet Zone, an American Zone, a British Zone, and a French Zone. The historic city center (District 1) was administered jointly, as famously depicted in the 1949 movie, The Third Man. In this new Cold War calculus, Austrian Nazi crimes were quietly laid to rest as the United States shifted its attention to halting the Soviet expansion.
As in neighboring Hungary, the Soviet Union tried to install its agents in the democratically elected pro-Western government and take over the country. But Austria proved more resistant because unlike in Hungary, the Western Powers were present in force. Austria’s position between East and West rendered it strategically important for the US, which heavily subsidized the Austrian economy through the Marshall Plan aid program in order to diminish the Soviet influence. As in West Germany, these American-funded infrastructure investments and subsidies fueled Austria’s “economic miracle” of the 1950s and 1960s.
Architecture also became a propaganda tool. The glitzy new high rise of the Ringturm, completed in 1955 in Vienna’s American Zone, became the tallest building after the Saint Stephen’s Cathedral and was meant to project capitalist success to the grim Soviet side across the Danube Canal.
After Stalin’s 1953 death, the new leader of the Soviet Union, Nikita Khrushchev, wished to improve relations with the West and agreed to pull out of Austria on the condition that Austria become a neutral country similar to Switzerland. In 1955, the State Treaty was ceremoniously signed, Austria became independent, and all Allied troops left the country. (Unlike the US, the Soviet Union had been milking Austrian assets during the occupation, for example mineral oil reserves, and forced Austria to pay reparations after its withdrawal.)
The Social Democrats (SPÖ) and the Christian Conservatives (ÖVP) remained the biggest parties, but this time was different. They avoided sliding into civil war and dictatorship thanks to a grand coalition based on shared governance and a politics of compromise. This political cohesion owed to the Social Partnership, a complex system of backroom cooperation between employers and trade unions with an eye on stability and investor confidence. (The Social Partnership model has proven remarkably successful and still exists today.)
Austria’s stable domestic politics yielded impressive economic growth. Boosted by a thriving consumer society and tourists from Germany, living standards rose dramatically and by 1970 Austria became a model of prosperity similar to Western European countries.
Kaiser Bruno
Austria's most colorful politician of the otherwise not very eventful 1960s and 1970s was the larger than life Bruno Kreisky, the charismatic socialist Chancellor between 1970 and 1983. Kreisky wasn’t the typical Austrian politician: he was an assimilated Jewish intellectual who was imprisoned in the 1930s both by the conservative dictatorship and later the Nazis.
He was smart, ambitious, and able to connect with people. “A man too big for his country,” as one historian put it. Capitalizing on Austria’s neutrality, he positioned Vienna as an ideal hub for international diplomacy and it was thanks to him that the United Nations selected Vienna as the location for its third headquarters, which opened in 1979 in an area now known as Vienna International Center.
Kreisky’s active neutrality policy meant not just building trade relations with Western Europe, but Austria also became a gateway to the Communist countries in the East, such as Hungary and Czechoslovakia. He was involved with high-profile international negotiations and put Austria back on the map for the first time since the Habsburg days. This helped foster an independent Austrian identity. At a time when many still sympathized with integrating into Germany, Kreisky’s vision for a small-state, neutral Austria appealed to people.
Unlike the economy, the progressive intellectual culture of pre-war Vienna did not revive. This owed largely to the disappearance of the Jewish community, which had been central in the fields of theater, arts, journalism, and sciences. Rather than the cosmopolitan urban culture of the past, Austria now paraded its rural, Alpine character through movies, music festivals, and folk clothing. Even in Vienna, many people wore loden jackets, which came to embody this countryside attitude.
A few artists and art movements did attract international attention – the body art of the Vienna Actionism group and the writer Thomas Bernhard, for example – but this was no longer like the early 20th century when Vienna was a pioneer of modernism. It is telling that a common theme in Thomas Bernhard’s plays is the widespread anti-intellectualism that pervades 1980s Vienna. According to many accounts, indeed, Vienna felt provincial, even depressing, for an intellectual person well into the 1980s.
A time of reckoning
In the shifting politics of the Cold War, Western countries had no incentive to alienate Austria. As a result, the prosecution of Austrian Nazis quickly lost steam after the war and Austria started to view itself as a victim rather than a co-perpetrator of Nazi oppression. This rewriting of history continued for four decades, eventually erupting in the Waldheim Affair in 1986.
Kurt Waldheim was the Secretary General of the UN between 1972 and 1981, and during his campaign for Austria’s presidency in 1986 it came to light that he had lied about unsavory aspects of his military record during World War II. He had hidden the fact that as a lieutenant, he was attached to a German High Command in the Balkans and, at the very least, witnessed tens of thousands of Jewish people being sent to Auschwitz. (He had claimed that he was medically discharged from the Wehrmacht and studying law in Vienna at the time.)
Waldheim refused to withdraw and won the election. There were protests against Waldheim, but most locals reacted to the scandal by decrying the “international Jewish lobby” that was undermining Austrian democracy. Waldheim’s six-year presidency turned into an international humiliation as he was banned from entering the United States and unwelcome in most Western countries.
But the Waldheim Affair did prompt a reckoning with the past: Austrian politicians for the first time publicly recognized Austria’s shared responsibility in the crimes of the Third Reich. In 2000, the Austrian government created funds to compensate victims of the Nazi period. Most of these people were long dead, but the Reconciliation Fund still received valid claims from more than 130,000 people who each got €1,500 to €7,500 depending on the severity of forced labor they had to carry out in Austria.
Public memorials also started to appear. Alfred Hrdlicka’s 1989 memorial on Albertinaplatz was the first in Vienna to specifically address the Holocaust and more have followed in recent years. There’s also focus on educating the public. The House of Austrian History, which opened in 2018, presents an unvarnished picture of this Nazi period and Austria’s complicity in the Holocaust. Still, recent surveys show that anti-semitism in Austria is among the highest in Europe.
The land of opportunities?
Driven by a strong financial services sector, a robust industry, and high-end tourism, Austria’s economy has continued to thrive. In 2023, Austria’s GDP per capita reached €54,000, above those of Germany, France, and the UK each. As with Western European countries, Austria’s falling birth rate has been more than offset by immigration. Since the 1960s, Vienna in particular has experienced high levels of both economic migrants and refugees. The fact that Austria is the closest developed country to Eastern Europe made it an attractive destination for Serbian, Bosnian, Romanian, Polish, Hungarian, Croatian, and Bulgarian workers. This is, of course, a replay of the migration patterns of the Habsburg Monarchy.
The Serbian and the Turkish communities are especially sizable due to a 1960s international labor agreement that was meant to ease Austria’s labor shortage. Many immigrants also came after the fall of the Iron Curtain and especially since 2004, when the formerly Communist countries of Eastern Europe joined the EU. They are mainly low-skilled workers employed in manufacturing and services (many Viennese waiters, for example, are Hungarian).
Refugees to Austria have comprised Hungarians who fled during the Revolution of 1956; Czechs who fled during the Prague Spring of 1968; and Bosnians and Croatians who fled during the Yugoslav Wars. The more recent arrivals include Syrians, Afghans, Iraqis, and Ukrainians escaping civil wars and war zones. In fact, Austria was one of the countries most affected by the 2015 European migration crisis as the migrant route toward Germany passed through Austria and many stayed and applied for asylum. Hence the 100,000 Syrians who live in Austria currently, with more than half in Vienna.
In fact, Vienna is becoming a mini "New York City of Europe." Nearly half of Viennese residents were born outside of Austria and the city’s skyrocketing population now exceeds two million compared to 1.6 million in 2005. This number is a symbolic threshold given that the last time Vienna was so big was in 1914, during the Habsburg period. For a young Viennese person today it is normal to live in a mixed society, alongside others who speak, eat, and look differently. This was second nature to his or her great-grandparents, but less so for the generations in between. Vienna is once again the land of opportunities.
Still, Austria has not embraced itself as a multi-cultural haven for other nationalities. The rise of the Freedom Party of Austria (FPÖ) is closely tied to its anti-immigration rhetoric: the party first gained mainstream popularity after the 1989 fall of the Iron Curtain, when it played up the threat of Eastern European immigrants coming to Austria and taking the jobs of local people.
More recently, the FPÖ capitalized on the migration crisis from the Middle East with sharply xenophobic messages. The high unemployment rate among the newly arrived immigrants and the fact that they receive an increasing share of Austria's welfare benefits are causing widespread outrage, especially after some highly publicized cases. Surveys show that immigration is currently the most pressing problem for the majority of Austrians. The result: the FPÖ won the most seats in the Austrian central parliament during the recent elections of 2024.
Red Vienna: then and now
Vienna regularly ranks as the most liveable city in the world. This is, of course, a somewhat subjective claim but it does show that Vienna has successfully trailed Western European urban progress. The arc of this progress was not unusual. Following the car-forward and suburb-forward Zeitgeist of the 1950s, Vienna also rediscovered its inner city and the treasures of dense urban environments. Since the late 1970s, the city has pedestrianized many streets, revamped its public transport, and created new green spaces, most famously the Donauinsel, an artificial island in the Danube River.
In many ways, the city is still Red Vienna: since the end of WWII, the Social Democrats (SPÖ) have won every single election and nominated every single mayor. Some argue that the line between the party and the city has become murky – eighty years of uninterrupted power over local politics and the economy is a long time and the party's tentacles have reached far and deep.
Most people believe that Vienna’s housing policy is the reason for the SPÖ's popularity. The city continued to push social housing after WWII, and today about half of the population lives in one of 220,000 municipal flats (Gemeindewohnung) or 200,000 subsidized apartments (Geförderte Wohnung), both with deeply discounted rents. This makes the city of Vienna one of the biggest real estate managers in the world. In addition, rents are centrally controlled in all pre-war buildings. Although quickly growing, private rental makes up only a fifth of Vienna’s rental market.
To keep up with the rapid population growth, the city has overseen enormous brownfield developments in recent decades. New residential neighborhoods have sprung up in place of dilapidated industrial sites and train stations. Examples include the Nordbahnviertel, the Sonnwendviertel, and Aspern Seestadt. Many are textbook examples of urban planning, designed and monitored by the city but involving private developers.
Vienna's first subway didn’t open until 1978, but the city has since built five lines – roughly five subway lines in so many decades – with the sixth currently under construction. This 83 km of underground network makes Vienna one of the best served capitals in Europe by subway and comes on top of 171 km of tram lines, the sixth longest network in the world.
As an incentive to switch from cars to public transport, the municipal transit authority (Wiener Linien) sells the annual public transportation passes for the deeply discounted price of €365. This headline price has remained unchanged for more than a decade and doubles as a nifty marketing strategy: one can traverse Vienna all year for just one euro per day. The stellar reputation of the Wiener Linien, however, has suffered recently from persistent overcrowding on trams and trains as a result of the sudden population growth.
The city of museums
Vienna was the capital of the Habsburg Monarchy for 650 years (1278-1918) and the cultural legacy of this period is completely enthralling, especially for a small country such as Austria. Vienna's center still projects the kind of imperial air that I find both grand and frightening. There are at least a dozen museums whose collections hark back to a Habsburg emperor or archduke, including one of the greatest painting galleries and natural history museums in the world. But Vienna’s culture isn’t stuck in the past.
In 2001, for example, the city converted the Habsburg imperial horse stable into a massive cultural and social hub with two newly erected museums, one for early modern art (Leopold), another for contemporary art (mumok). In the case of the Leopold, the Austrian state made an agreement with Rudolf Leopold, a private collector who held the largest collection of Egon Schiele paintings in the world: the state would build a swanky museum and pay for its maintenance if the works could be made accessible to the public. Last year, the Leopold Museum drew 440.000 visitors, its best year ever.
Since its 2023 reopening, the municipal City Museum has been rightfully the cultural highlight of Vienna. The exhibition presents the history of Austria’s capital on three expansive levels, ranging from Gothic artifacts of the Saint Stephen's Cathedral to Ottoman military drawings in preparation of their 1683 siege, to the glory days of Austria-Hungary. Visitors can also learn about the taming of the Danube, the years of Red Vienna, the Nazi period and the Holocaust, the post-war boom, and the urban renewal of the city center. As a nod to the city's socialist values, entry is free for all visitors.
What’s next?
Surely, Austria was fortunate to land on the better side of the Cold War and enjoy the financial and moral support of the United States from 1945 onward. But Austria took full advantage of the situation and thanks to decades of stable politics and a strong economy, it has achieved living standards that attract many people from around the world, who in turn contribute to its success and diversity. Vienna is once again a big and dynamic place – an important regional center.
It is hard not to feel hopeful about the future even as day-to-day politics can be dispiriting. History teaches us that these golden moments don’t last forever, but they can be prolonged by recognizing how precious and fragile they are. For this, Austria need look no further than its own recent history.
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