This image provided by the Kremlin shows Russian President Vladimir Putin during his visit to Siberia (archive image, 2018). © picture alliance/dpa | -
Austria supports the EU sanctions against Russia, but apparently does not want to cause permanent damage to its lucrative business relations with Moscow.
Vienna – Austria stands by Kyiv in the Ukraine war, publicly criticizing Russian President Vladimir Putin's invasion and supporting EU sanctions against Moscow. Nevertheless, Russia remains the second largest investor in the Alpine republic. Vienna apparently does not want to permanently spoil its lucrative business relations with Moscow, which is also due to historical reasons.
Lucrative business relations: Russia remains an important investor in Austria
To accuse Austria of a seesaw policy would be too far-fetched. From an economic point of view, however, the country is apparently trying not to alienate its lucrative trading partner Russia permanently. 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 doing business there despite the war, according to a survey conducted by the Kyiv School of Economics in January. Among them is the company Rotax, whose engines were found on Iranian drones, but also the famous energy drink manufacturer Red Bull.
Austria's Raiffeisen Bank International (RBI) is the main Western financial institution in Russia. RBI's Russian subsidiary has played an important role in international payments since the outbreak of the Ukraine war, as numerous Russian banks were excluded from the SWIFT international financial system as a result of the sanctions against Moscow. RBI's Russian business continues to be the financial institution's biggest revenue generator, as reported by the Reuters news agency. It's about billions of dollars in profits. Ukraine accuses the bank of helping to finance Putin's war.
Austrian Chancellor traveled to Russia: Putin's gas continues to flow
Only a few weeks after Russia annexed the Crimean peninsula in 2014 in violation of international law, Kremlin leader Putin was in Vienna for a state visit. In the Ukraine war, Austrian Chancellor Karl Nehammer became the first European head of state to travel to Moscow since the beginning of the Russian invasion. Austria, as a neutral country, could act as a "bridge builder," explained Nehammer, who had previously also traveled to Ukraine. Following the meeting with Putin, the Austrian chancellor spoke of a "tough and open conversation", but Russian gas continued to flow to the Alpine republic.
The attitude of the government in Vienna towards Russia also has historical roots that go back to 1955. Ten years after the end of World War II, the country pledged to be "perpetually neutral" and not to enter into military alliances. Austria quickly discovered the economic advantages of its neutral status, as it allowed business relations to be established on both sides of the Iron Curtain.
In 1968, the government in Vienna was the first Western European country to sign 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 Russian diplomats home after the poisoning of ex-spy Sergei Skripal in England. Due to its neutrality, Austria is not a member of the NATO defence alliance, but maintains a permanent diplomatic representation in the alliance.
EU Commission reprimands Austria: share of Russian gas remains high
Russian gas had a market share of 2021 percent in 80 – the highest figure in the EU, according to the German Federal Ministry for Climate Action (BMK). In March 2023, the share was still 78 percent. The country plans to phase out Russian gas by 2027, but it is unclear exactly how. 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 group OMV and the Russian state-owned company Gazprom, which is valid until 2040, makes the exit even more difficult. The contract with Gazprom was signed by former Chancellor Sebastian Kurz in 2018, who was considered Putin's "last friend" among Western European countries.
Former Chancellor of Austria, Sebastian Kurz in 2018 with Vladimir Putin. Meeting in the context of the opening of the exhibition "Imperial Metropolises: St. Petersburg - Vienna" in Russia. © picture alliance/dpa | Georg Hochmuth
Numerous federal politicians and ministers from various parties took on lucrative positions 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 head of the Kremlin actually came by and brought a large bouquet of flowers. It was not until three months after the start of the war that Kneissl left her position on the supervisory board of the Russian energy company Rosneft under great international pressure.
Internationally, the so-called Ibiza scandal also made waves. In a secretly filmed video, the then Austrian Vice Chancellor Heinz-Christian Strache showed himself willing to offer illegal political collusion for money to an alleged Russian oligarch. After the material became known, new elections were held, as it showed the proximity to Russia and corruption in the highest political circles.
Eurobarometer survey: A quarter of Austrians oppose EU sanctions against Russia
Compared to other EU countries, the Austrian population is more hesitant to support the solidarity measures for Ukraine. 41 percent fully agreed with the EU sanctions against Russia, according to a Eurobarometer survey. The EU average was 55 percent. However, a quarter of Austrians (25 percent) were partially or completely against it, compared to 16 percent across the EU. The EU is critical of Austria's ambivalent attitude and fears that a "Russia-tolerant" zone could emerge politically with Hungary and Austria, as the US newspaper Politico reported.