Austria supports the EU sanctions against Russia, but apparently does not want to cause any permanent damage to the lucrative business relationship with Moscow.
Vienna – Austria stands with Kiev in the Ukraine war, publicly criticizes the invasion of Russian President Vladimir Putin and supports EU sanctions against Moscow. Nevertheless, Russia remains the second largest investor in the Alpine republic. Apparently, Vienna doesn’t want to forfeit the lucrative business relationship with Moscow in the long term, and there are also historical reasons for this.
Lucrative business relationships: Russia remains an important investor in Austria
It would be going too far to accuse Austria of a seesaw policy. From an economic point of view, however, the country is apparently trying not to alienate its lucrative trading partner Russia in the long term. Trade relations between the two countries remain intact, with money flowing largely as it did before the war, especially in the financial and energy sectors.
Germany is Austria’s most important trading partner, and Russia is already in second place among the largest foreign investors. Two thirds of the 65 Austrian companies on the Russian market plan to continue their business there despite the war, like one Kyiv School of Economics survey in January revealed. These include the company Rotax, whose engines were found on Iranian drones, but also the famous energy drink manufacturer Red Bull.
The Austrian Raiffeisen Bank International (RBI) is the most important western bank in Russia. The Russian subsidiary of RBI has played an important role in international payment transactions since the outbreak of the Ukraine war, as numerous Russian banks were excluded from the international financial system SWIFT as a result of the sanctions against Moscow. RBI’s Russia business continues to be the bank’s biggest revenue generator, Reuters reported. It’s about billions of dollars in profits. Ukraine accuses the bank of helping finance Putin’s war.
Austrian Chancellor traveled to Russia: Putin’s gas continues to flow
Just a few weeks after Russia annexed the Crimean Peninsula in violation of international law in 2014, Kremlin chief Putin was in Vienna for a state visit. During the Ukraine war, Austrian Chancellor Karl Nehammer was the first European head of state to travel to Moscow since the Russian invasion. As a neutral country, Austria could act as a “bridge builder”, explained Nehammer, who had previously also traveled to Ukraine. After the meeting with Putin, the Austrian Chancellor spoke of a “tough and open talk”, but the Russian gas continued to flow into the Alpine republic.
The attitude of the government in Vienna towards Russia also has historical roots dating back to 1955. Ten years after the end of World War II, the country pledged to be “perpetually neutral” and not to enter into any military alliances. Austria quickly discovered the economic advantages of its neutral status, as it allowed business relationships to be established on both sides of the Iron Curtain.
The first Western European country to sign Government in Vienna in 1968 signed a contract with the Soviet Union for the long-term supply of natural gas. Austria was also one of the few EU countries that did not send any Russian diplomats home after the poisoning of ex-spy Sergei Skripal in England. Because of its neutrality, Austria is also not a member of the NATO defense alliance, but maintains a permanent diplomatic representation in the alliance.
EU Commission reprimands Austria: share of Russian gas still high
Russian gas had a market share of 80 percent in 2021 – the highest figure in the EU, as announced by the Federal Ministry for Climate Protection (BMK).. In March 2023, the proportion was still 78 percent. The country plans to phase out Russian gas by 2027, but how exactly is unclear. In May, the EU Commission reprimanded Austria for not having a clearly defined plan to reduce Russian gas imports.
A long-term contract between the partially state-owned Austrian energy company OMV and the Russian state-owned company Gazprom, which runs until 2040, makes the exit particularly difficult. Ex-Chancellor Sebastian Kurz, who was considered Putin’s “last friend” among Western European countries, signed the contract with Gazprom in 2018.
Numerous federal politicians and ministers from various parties took up lucrative posts in Russian corporations after their term in office. Former Foreign Minister and FPÖ politician Karin Kneissl even invited Vladimir Putin to her wedding in 2018. The Kremlin boss actually stopped by and brought a large bouquet of flowers. Kneissl only left her position on the supervisory board of the Russian energy company Rosneft under great international pressure three months after the start of the war.
The so-called Ibiza scandal also made waves internationally. In a secretly filmed video, the then Austrian Vice Chancellor Heinz-Christian Strache showed himself ready to offer illegal political agreements to an alleged Russian oligarch for money. After the material became known, new elections were held, as it showed the closeness to Russia and corruption in the highest political circles.
Eurobarometer survey: A quarter of Austrians against EU sanctions against Russia
Compared to other EU countries, the Austrian population is more hesitant about the solidarity measures for Ukraine. 41 percent fully agreed with the EU sanctions against Russia, like according to a Eurobarometer survey. The EU average was 55 percent. However, a quarter of Austrians (25 percent) spoke out partially or completely against it, compared to 16 percent across the EU. In the EU, Austria’s ambivalent attitude is viewed critically and feared that Hungary and Austria could politically form a “Russia-tolerant” zone, as the US newspaper says political reported.
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