Austria (Republic of)

History of Relations | Diplomatic Representation | Travel Info | Health Requirements | Climate Info | Currency Info | Trade Info | Visits and Meetings | Agreements | Interest Groups/ Organisations | Country Profile

History of Relations

Since 1994 South Africa and Austria have enjoyed sound relations. Several high-level visits have taken place since then with a view to further improve relations.

In addition to engaging the Austrian Government at national level in support of development programmes and increased economic involvement, provincial partnerships with key Austrian provinces have also resulted in support for development needs for South Africa.

Development cooperation is small, but has increased since 1994. Support concentrates on programmes to strengthen democratic institutions and gender issues.

Diplomatic Representation

South African Representation in Austria

HE Mr L M Gumbi
Ambassador Extraordinary and Plenipotentiary

South African Embassy

Office Hours:
Monday to Friday: 08:00 to 16:30
Lunch : 12:45 to 13:30

Consular Hours:
Monday to Friday: 08:30 to 12:30

Austrian Representation in South Africa

HE Dr H Freudenschuss
Ambassador Extraordinary & Plenipotentiary

Embassy of Austria

Travel Info

Visa Requirements for South Africans

For more information contact the Embassy of Austria in Pretoria or visit the web site of the Austrian Ministry of Foreign Affairs.

Health Requirements

Proof of a medical insurance must be produced prior to departure from South Africa.

For further information go to Travelers' Health.

Climate Info

The climate varies sharply (from + 35ºC in summer to - 20ºC in winter), owing to great differences in elevation. The mean annual temperature is between 7C and 9C.

For up-to-date weather information click here.

Currency Info

The monetary unit is the Euro, abbreviated to EUR. The currency is freely convertible.

For current exchange rates click here.

State and Official Visits / Bilateral Meetings

Bilateral Agreements

Trade Statistics

For current information on trade statistics between South Africa and Austria, visit the web site of the Department of Trade and Industry of South Africa

Interest Groups and Information

Trade Commission
Austrian Trade Commission
Tel : (011) 422 7100

COUNTRY PROFILE: THE REPUBLIC OF AUSTRIA

TABLE OF CONTENTS

1. STATISTICAL PROFILE
1.1 General
1.2 Government
1.3 Economic indicators
1.4 Social indicators
1.5 Political indicators

2. GENERAL BACKGROUND

3. POLITICAL STRUCTURE
3.1 National legislature
3.2 Electoral system
3.2.1 National elections
3.2.2 Provincial elections
3.3 Head of state
3.4 National government
3.5 State legislatures
3.6 Main political parties
3.6.1 Social Democratic Party (SPÖ)
3.6.2 People's Party (ÖVP)
3.6.3 Alliance for Austria's Future (BZÖ)
3.6.4 Freedom Party (FPÖ)
3.6.5 The Greens (Die Grünen)
3.7 Domestic politics
3.8 Immigration and border control
3.8.1 Schengen agreement
3.8.2 Immigration

4. THE AUSTRIAN ECONOMY
4.1 Current economic situation

5. FOREIGN POLICY AND INTERNATIONAL RELATIONS
5.1 European Union
5.1.1 Introduction of the Euro
5.1.2 EU presidency
5.2 Central and Eastern European relations
5.2.1 EU - Eastern enlargement - Austrian position
5.3 NATO
5.4 WEU
5.5 OSCE
5.6 Peacekeeping
5.7 EU/SADC relations
5.8 Development assistance
5.9 Multilateral/UN

6. RELATIONS WITH SOUTH AFRICA
6.1 Political relations
6.1.2 High-level bilateral visits
6.2 Economic relations
6.2.1 Trade relations
6.2.2 Austrian investment in SA
6.2.3 SA investment in Austria
6.3 Tourism
6.4 SA-Austrian development cooperation
6.4.1 Structure of cooperation
6.4.1.1 Planned projects 1995 and 1996
6.4.1.2 Current projects 2005
6.4.1.3 Ended projects
6.5 Independent development cooperation projects
6.6 Provincial cooperation

ANNEX A: THE AUSTRIAN CABINET

ANNEX B: BILATERAL AGREEMENTS

COUNTRY PROFILE: THE REPUBLIC OF AUSTRIA

1. STATISTICAL PROFILE

1.1 General

1.2. Government

1.3 Economic Indicators

1.4 Social indicators

1.5 Political Indicators

2. GENERAL BACKGROUND

The Republic of Austria was proclaimed in 1918. Following annexation by Nazi Germany in 1938 and subsequent occupation by the victorious Allied forces, Austria's 1955 State Treaty declared the country "permanently neutral" as a condition of Soviet withdrawal. Neutrality, once such an ingrained part of Austrian cultural identity, has been called into question since the Soviet collapse and Austria's increasingly prominent role in European affairs.

The country lies in Central Europe, bordered by Switzerland and Liechtenstein to the west, by the Federal Republic of Germany to the north, the Czech Republic and Slovakia to the north and north-east respectively, by Hungary to the east and by Italy and Slovenia to the south. The climate varies sharply (from + 38ºC in summer to - 15ºC in winter), owing to great differences in elevation. Austria can be divided into three climatic regions. The east has a continental pannonian climate. The central alpine region has the characteristic features of the alpine climate and the remainder of the country belongs to the transitional central European climatic zone. Austria is one of Europe's most heavily wooded countries, with 47% of its total area accounted for by forests.

The capital is Vienna (Wien) with1.63 million inhabitants. The provinces are Vienna, Tyrol (Tirol - 691 800), Lower Austria (Niederösterreich - 1.57 million), Upper Austria (Oberösterreich - 1.396 million), Burgenland (278 200), Salzburg (526 000), Styria (Steiermark - 1.198 million), Vorarlberg (360 800) and Carinthia (Kärnten - 559 900). 2005 official estimate.

3. POLITICAL STRUCTURE

3.1 National Legislature: Bi-cameral Federal Parliament

Austria is a parliamentary democracy, constituted in the form of a federal state, with nine provinces. The legislative bodies are the two houses of parliament, the Lower House or National Assembly Nationalrat), and the Upper House or Federal Assembly (Bundesrat). The Nationalrat is elected for a four-year term through a system of proportional representation. The members of the Bundesrat are chosen by the parliaments of the individual provinces. The number of delegates chosen by each province is proportional to the size of its population.

3.2 Electoral System

Universal adult suffrage over the age of 18. Voting is compulsory in three provinces. Under a law introduced in February 1990, Austrians of voting age have the right to vote while they are temporarily resident in another country.

3.2.1 National elections

Last election: Nov 2002
Next election: 2006

3.2.2 Provincial elections

In March 1999, provincial elections were held in three Austrian provinces (Carinthia, Salzburg and Tyrol). More than one-fifth of the Austrian electorate was called upon to cast their votes in the elections.

The most dramatic of the 1999 votes took place in Carinthia (Kaernten). The leader of the right-wing Freedom Party (FP) Joerg Haider was elected as the new governor of the province of Carinthia, after the provincial elections of 7 March 1999. It was the second time that Haider became provincial governor of Carinthia.

In Salzburg and Tyrol the Austrian People's Party under Governors Schausberger and Weingartner, respectively, managed to retain their long-standing absolute majority in the 1999 votes. In 2002 Tyrol's Governor Weingartner retired, and he was replaced by Dr. Herwig van Staa.

The provincial election held on 3 December 2000 in the province of Burgenland drew attention. In this election both coalition parties at national level (People's Party and Freedom Party) suffered losses with the Social Democrats winning the election with 46.6% of the votes.

In 2001 in the provincial elections of the Province (and capital city) of Vienna, the Social Democrats won with 46.9 percent of the votes, the Freedom Party suffered losses.

In March 2003, the provincial elections of Lower Austria showed a clear winner, the People's Party with 53.3% of the votes gaining the absolute majority. The big loser of the election was the Freedom Party falling from 16.1 % in 1999 to 4.5 % (minus 11.6%).

In September 2003, the provincial elections in the provinces of Upper Austria and Tyrol showed gains for the Social Democrats, in opposition at national level. In Tyrol the ÖVP won back its absolute majority lost in the last provincial elections five years ago (49.9 %). In both provinces the Freedom Party (FPÖ) was more than halved with 8.5% (- 12.2%). It was the continuation of a series of disastrous results for the rightist party, which began in general elections in November 2002.

An exception was that in March 2004 Joerg Haider scored an unexpected triumph in his home province elections (Carinthia) with 42.5% and would continue as Carinthia's governor for another five years. The same time, the Carinthia elections ended in a disastrous defeat for the conservative People's Party, led at national level by Chancellor Wolfgang Schuessel, with 11.6% (-9.1%). The Social Democrats gained 38.4% (+ 5.6%).

Also in March 2004, the Salzburg provincial elections brought a sensation. For the first time since World War II in the Salzburg province, the People's Party (ÖVP) was ousted as strongest party with 38% (-0.7%). The Social Democrats moved easily into the first place with 45.3% (+ 12.9%), meaning the province's governor moved from ÖVP to SPÖ. The new governor is a lady, SPÖ Salzburg leader Ms Gabi Burgstaller. Main loser in this election was the Freedom Party (FPÖ) with 8.7% (-9.1%).

The provincial election in Vorarlberg on 19 September 2004 saw the smooth re-election of Governor Herbert Sausgruber (ÖVP) with 54.9% of the votes cast for his party. The SPÖ (16,9%), FPÖ (12.9%) and the Greens (10.2%) were next in line.

The provincial elections held in the Austrian Province of Styria on 2 October 2005, the People's Party (ÖVP) suffered a severe blow when it lost control of this key central province for the first time since World War II. A landslide victory by the Social Democrats (SPÖ) swept ÖVP Governor Waltraud Klasnic out of office and her party into second place. The election results of 2 October 2005 in Styria were the following:

SPÖ 1.7% (+9.4%)
ÖVP 38.7% (-8.6%)
KPÖ (Communists) 6.3% (+5.3%)
Greens 4.7% (-0.9%)
FPÖ 4.6% (-7.8%)
BZÖ 1.7%

The right-wing Freedom Party lost nearly two-thirds of its vote and crashed out of the provincial parliament. The FPÖ's breakaway party, the Alliance for Austria's Future (BZÖ), led at national level by Joerg Haider and which is the junior partner in the Austrian coalition government, did even worse. The BZÖ could only obtain 1.7% of the votes.

The Communist Party (KPÖ) led by Ernest Kaltenbrunner, whose personal popularity in Styria is based on his social projects, supported him well to a good performance and he obtained third place with 6.3% of the votes. The election results confirmed that only four parties would be represented in the Styrian Provincial Parliament, i.e. the SPÖ, ÖVP, KPÖ and the Greens.

In the provincial elections in the Burgenland, Austria's easternmost province, on 9 October 2005, the Social Democrats (SPÖ) obtained the absolute majority of votes and seats. The conservative People's Party (ÖVP) gained slightly, the Greens lost minimally and the right-wing Freedom Party (FPÖ) was more than halved, but remains in third place ahead of the Greens. All four parties will remain in the provincial parliament (Landtag). Governor Hans Niessl (SPÖ) can now rely on a comfortable majority in the "Landtag", but is by statute obliged to form a coalition government at the executive branch. This is according to the strength of the parties, ie. A SPÖ/ÖVP combination. The percentage poll was high at 80.9%, but 1.8% percentage points lower than in the last provincial election in 2000.

The results:
SPÖ 52.23% (+5.68%)
ÖVP 36.34% (+1.01%)
FPÖ 5.76% (-6.87%)
Greens 5.20% (-0.29%)

The Viennese municipal (and simultaneously provincial) elections on 23 October 2005 brought a surprise to the Social Democrats (SPÖ) under Mayor Michael Häupl. He won 49% of the votes (+ 2.1%) and - due to election arithmectics - the absolute majority of seats in the Town Hall. Yet the SPÖ stayed below expectations, not even reaching the 50% mark, not to speak of the predicted 55%. The coveted second place went to the ÖVP, which enlarged its distance to the Greens and polled 18.8% of the votes. For the first time in 14 years the ÖVP is second in Vienna. Local leader Johannes Hahn gained an increase of 2.4%, the largest percentile increase of all the parties on this election Sunday. The "old" Freedom Party under their young leader Heinz-Christian Strache lost 5.3% against 2001, which was much less than feared. It landed even shortly ahead of the Greens who - due to election arithmetics - have one seat more than the FPÖ. For the Alliance for Austria's Future (BZÖ) it was a disaster under its local leader Hans-Joerg Schimanek, with 1.2% away from the required 5% for a seat in the Town Hall.

The results:
SPÖ 49.3% (+2.12%)
ÖVP 18.75% (+2.36%)
FPÖ 14.88% (-5.28%)
Greens 14.67% (+2.22%)
KPÖ 1.47% (+0.83%)
BZÖ 1.15%

3.3 Head of State

The Austrian Federal President is the head of state. The Federal Chancellor is the head of government. The President is elected for a six-year term. The current President (Dr. Heinz Fischer) was elected on 25 April 2004, representing the Social Democrats, and inaugurated on 8 July 2004. The President is elected directly by the people. Among his duties are the signing of treaties, the swearing in of the government members and provincial governors and the verification of laws passed by Parliament. He is also Commander-in-Chief of the Armed Forces. The President has the power to dismiss the government and dissolve parliament, although these powers have not been used since World War II. Next Presidential election: 2010

3.4 National Government

The Council of Ministers or Cabinet (Ministerrat) is headed by the Federal Chancellor (Bundeskanzler), who is appointed by the President. The current Austrian Chancellor is Dr Wolfgang Schüssel (ÖVP). The Austrian Government consists of a coalition between the People's Party (ÖVP) and the Alliance for Austria's Future (BZÖ).

3.5 State Legislatures

Each province is administered by its own government, headed by a governor elected by the provincial parliament. Each province also has the right to protest to the constitutional court if it believes that any federal legislation encroaches on its authority. Each of the provinces has its own constitution. The provinces have autonomy in affairs such as nature conservation, building and hunting regulations, certain aspects of education, land ownership, tourism, etc.

3.6 Main Political Parties

3.6.1 Social Democratic Party of Austria (Sozialdemokratische Partei Österreichs - SPÖ)

This party was founded as the Austrian Socialist Party in 1889. The SPÖ advocates democratic socialism and Austria's permanent neutrality. It draws the majority of its support from the trade union movement and has a membership of 700 000. With the exception of the years 1966-70 and 1999-2003, the SPÖ always held government responsibility since 1945. From 1970 to 1999 the party, without interruption, provided the Chancellor (from 1970 to 1983 in one-party governments).

Leader: Alfred Gusenbauer.

3.6.2 The Austrian People's Party (Österreichische Volkspartei - ÖVP)

The ÖVP was founded in 1945. It is a Christian Democratic Party of the progressive center, as defined in the "Salzburg Programme" (1972). It perceives itself as a party, which unites all middle-class and conservative groups (Roman-Catholic). The ÖVP is closely linked with the federations of business, farmers, blue- and white-collar workers, and its political predominance in the Chambers of Economy and Chambers of Agriculture ensures a strong backing. The People's Party together with the BZÖ is currently in government for the second time.

Chairman: Dr Wolfgang Schüssel (current Chancellor).

3.6.3 Alliance for Austria's Future (Bündnis Zukunft Österreich - BZÖ)

In early 2005 it became clear that the traditional Freedom Party (Freiheitliche Partei Österreichs, FPÖ, see below) was becoming untenable as a junior partner in Chancellor Wolfgang Schüssel's center-right government. The FPÖ had suffered a series of devastating defeats in regional elections and became notorious for pro-Nazi utterances by several of its officials.

As a consequence - and in order to get rid of their nationalist right wing - former FPÖ Chairman and present Governor of Carinthia, Joerg Haider, and other prominent FPÖ members founded a new party, the "Bündnis Zukunft Österreich" (BZÖ, Alliance for Austria's Future). This step meant a split in the already small FPÖ into the "old" FPÖ and the BZÖ. While the BZÖ emphasizes a social component in politics and economics, the FPÖ continues its populist and nationalist course.

The leader of the BZÖ is Joerg Haider. He, however, has no seat in the cabinet and directs his movement/party from Klagenfurt, Carinthia, where he is Governor.

3.6.4 Freedom Party of Austria (Freiheitliche Partei Österreichs - FPÖ)

This party was founded in 1955. It was originally a liberal party, which partially succeeded the League of Independents (VdU), which dissolved in 1956. The FPÖ stands for moderate social reform and the participation of workers in management, stressing personal freedom and anti-collectivism. Since 1986 the party's basic policy has shifted. It now stands for stricter immigration controls and tightening up of law and order. Support for the party has risen dramatically in Austrian politics in recent years but dropped from 26.9 % to 10% in the November 2002 elections.

Leader: Heinz-Christian Strache, former FPÖ chairman in Vienna.

3.6.5 The Greens - The Green Alternative (Die Grünen - Die Grüne Alternative)

Founded in 1986, this party campaigns for environmental protection, peace and social justice. The entry of the Greens into Austrian parliament in 1986 was an unprecedented event in the sense that, for the first time, a party, which did not belong to any of the traditional ideological camps, scored a relative success with 4.9% of the votes. In the 2002 elections the Greens could already gain 8.96% of the votes. Since founding of the party, the Greens were an opposition party.

Leader: Prof. Alexander van der Bellen

3.7 Domestic Politics

On 3 October 1999 the Austrian National elections took place and resulted in considerable gains for the right-wing Freedom Party. The then Chancellor, Dr Viktor Klima (SPÖ), was unable to form a new government with his former coalition partner, the ÖVP. Chancellor Klima was instructed by President Klestil to form a minority government consisting of SPÖ members and so-called "independent experts", but could not garner enough support from the remaining parties to do so.

Parallel to the SPÖ's search for the formation of a government, the ÖVP and the Freedom Party (FPÖ) started their own negotiations on forming a new government. Four months after the national elections in Austria, at 12:00 on Friday 4 February 2000, President Klestil swore in the new Austrian Government. A coalition government between the right-wing Freedom Party and the conservative People's Party was formed. The international community reacted negatively and voiced deep concern regarding the implications of a right-wing shift in Austrian society and the 14 EU members proceeded to institute bilateral sanctions against Austria.

In June 2000 the 14 EU members agreed on an "evaluation" of the situation in Austria, as a first step towards finding a solution to the bilateral sanctions which had been imposed upon Austria since the inauguration of the conservative-right-wing government. Three so-called "wise men" were appointed by the European Court of Human Rights to compile a report on Austria that would cover the following areas of concern:

- the Austrian government's commitment to European values, in particular the rights of minorities, and the treatment of refugees and immigrants.

- the development of the political nature of the Freedom Party.

The report by the "Three Wise Men" endorsed the Austrian Government's commitment to observe principles of human rights and good governance. No actions by the new government that would point to increased racist or xenophobic tendencies could be found, although strong criticism in this regard was leveled at certain elements in the Freedom Party.

In summer 2002 the coalition government of People's Party-Freedom Party collapsed because of Freedom Party leader Joerg Haider's feuding with other party leaders. In the course of the struggles the FPÖ members Vice-Chancellor Riess-Passer and Minister of Finance Grasser resigned from their posts as well as from their FPÖ party-membership. National Elections took place in November 2002. The result was an election triumph and for the first time in 36 years a clear rank one for the People's Party and their leader Wolfgang Schuessel with 42.27 % of the votes (plus 15.36 % against the 1999 elections). The Social Democrats gained a distanced 2nd place while the Freedom Party experienced a fiasco of only 10.16% of the votes (minus 16.77% against the 1999 election).

Joerg Haider resigned as FPÖ party leader and in February 2003 the new government was installed, a renewed coalition of the People's Party and the Freedom Party. The current cabinet under Chancellor Wolfgang Schuessel consists of 19 members; 7 ministers and 2 secretaries of state are from the People's Party. 3 Ministers and 3 secretaries of state are from the Freedom Party. 2 ministers and 2 state secretaries have no party affiliation. As leader of the Freedom Party (and Vice-Chancellor), Minister of Social Affairs, Herbert Haupt was inaugurated but replaced in 2004 as leader of the then Freedom Party by Ursula Haubner and as Vice-Chancellor by Hubert Gorbach. The former and current Minister of Finance, Grasser, resigned from his FPÖ membership and joined Chancellor Schuessel's cabinet as a non-party-affiliated member.

3.8 Immigration and Border Control

3.8.1 Schengen Agreement

The name "Schengen" originates from a small town in Luxembourg, where the first seven European countries signed the treaty to end internal border checkpoints and controls. At present, there are 15 Schengen member countries: Austria, Belgium, Denmark, Finland, France, Germany, Iceland, Italy, Greece, Luxembourg, Netherlands, Norway, Portugal, Spain and Sweden. All these countries expect Norway and Iceland are European Union members.

Although Austria's eastern neighbouring countries, Slovenia, Slovakia, Hungary and the Czech Republic became full members of the European Union with effect from 1 May 2004, they did not yet fulfill the requirements to sign the Schengen treaty. Under the provisions of the Schengen Agreement, Austria therefore is obliged to treat its borders as external EU borders. Such borders must be strictly controlled against illegal goods and immigrants while there is internal freedom of movement among the Schengen members.

3.8.2 Immigration

In July 1993, a new, restrictive law for foreigners came into force in Austria, despite strong opposition by human rights groups, among them Amnesty International, as well as the Greens and the Catholic Church. The law was designed by the former coalition government (SPÖ and ÖVP) - apparently in response to growing fears among Austrians of an influx of economic refugees, especially from the struggling economies in former east-bloc countries. The new law sets limits to immigration.

Recent legislation has further reduced the limits to immigration, while improving the situation (subject to criteria such as permanent employment and residence) of current immigrants with regard to immigration by direct family members. In recent times former interior minister Ernst Strasser was quoted as saying, "Austria cannot continue to shut out immigration without damaging the economy". The statement was made in light of the discord that currently exists over the immigration quota. In 2000, Strasser's proposal to raise the immigration quota to include an additional 2000 places for skilled workers in the area of information technology was rejected outright by several members of government, notably those belonging to the Freedom Party.

4. THE AUSTRIAN ECONOMY

4.1 Current Economic Situation

Business activity has clearly lost momentum since the beginning of the year. Stimulus from exports, which has supported economic growth last year, is fading while private household demand is not showing the hoped-for recovery. The business climate in manufacturing has weakened, albeit not as much as in the Euro area. Only the tourism and construction sectors see their situation improving. The rate of inflation is barely falling, due to high-energy prices and a number of domestic factors, and unemployment remains on an upward trend.

Better than with private consumption is the situation in the more export-driven sectors of the economy. Demand from the oil-producing countries is picking up significantly. Although growth of merchandise exports has decelerated from the high rates recorded last year, it was still close to 5% year-on-year in nominal terms in the period from January to September 2005. Investment in machinery and motor vehicles declined over the same period. Going forward, the business cycle currently shows no clear trend, which explains the cautious attitude of corporate investors.

Austria has a social market economy, which is in principle organized on a private ownership basis.

The strategic industries in Austria were nationalized in 1946. Due to financial losses that these companies suffered over the past years, there currently an effort to privatize them, but this process is experiencing political and economic difficulty. In this regard, a law was passed during December 1993 which radically reformed the state-owned industries, including plans for a step-by-step privatization of some major sectors of production.

The so-called Social Partnership (Sozialpartnerschaft) makes Austria a world leader in the field of labour relations, thereby setting the basis for very stable economic activity. The Social Partnership entails formalized cooperation in the form of a forum between the bodies representing the legitimate interests of entrepreneurs and employers, farmers and employees. These representative organizations are: the Federation of Austrian Industrialists (Industriellenvereinigung) and the Federal Chamber of Commerce (Bundeswirtschaftskammer) for entrepreneurs and employers; the Chamber of Agriculture (Landwirtschaftskammer) for the farming community; and the Austrian Trade Union Federation (Österreichischer Gewerkschaftsbund - ÖGB) for employees. There is no legal framework for this system, but it has developed through decades and is firmly anchored in everyday life.

The activities of the Social Partnership focus on shaping prices and income policy and advising the government on economic policy. They meet regularly under the chairmanship of the Austrian Chancellor. This system was developed step-by-step after World War II when Austria's economy was completely shattered. The main objective of this cooperation between labour, industry and the government is to maintain social and labour peace.

Some commentators called the social partners a "shadow government" others even a "super government". In any event, when there was political agreement across party lines, the social partners were able to muster the lion's share of members in parliament, even for constitutional amendments.

Ever since the installation of the conservative-liberal ÖVP/FPÖ government in February 2000, the relationship with the social partners has moved from co-operation towards more confrontation. There were token negotiations on matters such as the austerity budget (aiming at a zero deficit, but burdening the citizens with a host of higher and new taxes and levies), the pension reform, the reform of the public service, social insurance, parastatals etc, but in the absence of consensus on all of these matters, the Schüssel - Riess-Passer/ Haupt/Gorbach governments were riding roughshod over the social partners and pushed government's proposals through parliament with their simple majority.

At the same time, the constituents of social partnership underwent major changes: The presidency of the ÖVP-dominated Chamber of Commerce moved from Leopold Maderthaner to Dr Christoph Leitl, who immediately revamped the Economic Chamber, making it leaner and concentrating on purely economic issues. The Agricultural Chamber (also ÖVP-dominated) has been loosing significance in regard of its share of the population as well as of national economy.

It is clear that the Social Democrats dominated Trade Union Federation and Chamber of Workers have not yet recovered from the shock of loosing power after 30 years in government. They are looking for a new direction and are also reorganizing. The number of trade unions is to be cut from 15 to 8 in order to give individual unions more clout. Of course, the unions to be "swallowed" are protesting.

Austria, with its well-developed market economy and high standard of living is closely tied to other EU economies, especially Germany's. Membership in the EU has drawn an influx of foreign investors attracted by Austria's access to the single European market. Through privatization efforts (the budget consolidation programmes, and austerity measures) Austria has brought its total public sector deficit down to 1.1% of GDP in 2003 and 1.2% in 2004 and public debt - at 64.7% of GDP in 2003 and 64.2 % in 2004 - slightly above the 60% of GDP required by the European Economic and Monetary Union's (EMU) Maastricht criteria. Cuts have affected mainly the civil service and Austria's generous social benefit system, the two major causes for the government's deficit. To meet increased competition from both EU and Central European countries, Austria will need to emphasize knowledge-based sectors of the economy and deregulate the service sector.

5. FOREIGN POLICY AND INTERNATIONAL RELATIONS

Austria concentrates on regional cooperation in Europe and works towards world peace based on human rights, good governance and democracy on a bilateral and multilateral level. The modern state of Austria came into being in 1955 with the signing of the State Treaty, which guaranteed permanent neutrality. The end of the Cold War and Austria's EU membership in 1995 has forced the Austrians to rethink their present policy of neutrality. In recent times Chancellor Schüssel had spoken about Austria's need to shed its neutrality in favour of closer cooperation with EU members. It seems that the BZÖ and ÖVP coalition deem neutrality obsolete. The opposition, the SPÖ and the Greens, however, want to maintain neutrality.

The need for closer cooperation with EU members has become even more urgent in the light of the new military demands placed on EU members after the adoption of the new defense and security policy in 1999, and the NATO membership of neighbouring countries Poland, Hungary, Slovenia, Slovakia and the Czech Republic. Austria is compelled to modernize its military infrastructure for military preparedness set by the EU. Austria is currently in the process of putting a new defense policy into place.

5.1 European Union (EU)

In June 1994, a referendum on accession to the EU was held in Austria, resulting in a two-thirds majority vote in favour of membership of the Union. Austria's accession treaty to the EU was signed on 22 November 1994, which enabled Austria to become a member of the EU on 1 January 1995, along with Sweden and Finland. Austria is represented on all the institutions of the EU.

Austria has 18 seats in the European Parliament. The composition after the European Parliament elections took place on 13 June 2004, is as follows (in brackets are the previous composition which was proportional to the party strengths in the Austrian Parliament in 1999):

Social Democratic Party (SPÖ): 7 (7)
Peoples Party (ÖVP): 6 (7)
Freedom Party (FPÖ): 1 (5)
Greens: 2 (2)
Liste "Martin" 2 (-)

The List "Martin" is the list of the European MP, Hans Peter Martin, who had previously broken with his one-time party, the SPÖ and ran for the first time with his own list. The next elections to the European Parliament will take place in 2009.

5.1.1 Introduction of the Euro

In the biggest transfer of sovereignty since the creation of the Common Market in 1957, the finance ministers of 11 members of the EU handed the reins of monetary power to the European Central Bank on 31 December 1998 and ushered in a new currency, the EURO. From that date, the Euro was available, however, for non-cash transactions, such as check and credit card payment only. Euro banknotes and coins were introduced in January 2002.

5.1.2 EU Presidency

On 1 July 1998, Austria assumed the presidency of the Council of the European Union for a period of six months. The most important task of the presidency was to convene the Council of the European Union and to chair its meetings and negotiations. The Austrian presidency regarded itself as a working presidency, it held numerous ministerial meetings and two meetings of heads of state and government at which it tackled Europe's management tasks and set the course ahead for central policy areas of special importance for Europe.

Although other EU-member countries and journalists praised the constructive spirit and excellent atmosphere of the Austrian presidency, it was criticized in that important resolutions for the Agenda 2000 issue. The lack of constructive results in the negotiations for the EU reform was passed on to Germany, which took over the chairmanship on 1 January 1999.

Austria is preparing for its next term of EU presidency in the first half of 2006.

5.2 Central and Eastern European Relations

Because of its central geographical location in Europe, Central and Eastern Europe is an important part of Austrian foreign policy and trading patterns. The opening up of Eastern Europe has had a big impact on the country's trading patterns and labour market in recent years. Since the beginning of the 1990's an estimated 100 000 new jobs have been created and Austrian exports to Eastern Europe have trebled. Austria has invested roughly 10% ($2.5 billion) of its total foreign investment in Eastern Europe.

Austria plays a prominent role in the Central European Initiative (CEI). This organization came into being early in November 1989 when the Foreign Ministers of Austria, Hungary, Italy and the former Yugoslavia (now divided into the Federal Republic of Yugoslavia (FRY), Serbia and Montenegro, Macedonia, Croatia, Slovenia and Bosnia-Herzegovina), met in Budapest and decided on the strengthening of regional cooperation among the countries concerned. Since then, the CEI's role has expanded to include a bridging function for the majority of its members which still stand outside the mainstream of the rapidly developing European integration process.

5.2.1 EU - Eastern Enlargement - Austrian Position

The fall of the Iron Curtain has led to fundamental political, economic and military changes in Europe. In view of Austria's geographical and political situation, the security and stabilization of Eastern European countries are of the utmost importance for Austria, which sees the accession of the Eastern European candidate countries to the European Union as the best way of ensuring political, economic, social and ecological stability in the Eastern European region. The prospect of EU enlargement has also triggered real and often irrational fears among the Austrian population over a loss of jobs and being flooded by their eastern neighbours - this is one of the main factors that caused the gains of the nationalist Freedom Party in the 1999 elections. Austria has extensive borders with the Czech Republic, Hungary, Slovenia and Slovakia. The enlargement process has also threatened the border regions to loose their privileged status in respect of agricultural and other economic subsidies. Other threats perceived by Austria through EU eastward expansion are the question of financing of infrastructure, transport, the environment and nuclear safety.

Although the former leader of the right-wing Freedom Party Dr Joerg Haider has made strong calls for a referendum on the matter, casting doubt on Austria's full support for EU eastward expansion, officially Austria's foreign policy remained fully supportive of eastward enlargement.

Austria welcomed and supported the 5th enlargement of the EU, which with 10 newly acceded countries (Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia joined the EU with effect 1 May 2004) represents the widest to date and as the completion of the unification of Europe. Following this enlargement the European Union will be home to more than 450 million people. Being the strongest trading power in the world with a strong common currency, the enlarged EU is also playing an increasingly important role on the international political stage.

Only enlargement offers Austria the opportunity to shift from the periphery into the heart of Europe. The Austrian economy saw the opportunities opening up on the new markets at a very early stage and was quick to seize and exploit them. Austria's close economic ties particularly with its Central and Eastern European neighbours Hungary, the Czech Republic, Slovenia and Slovakia are a major pillar of the Austrian economy. Today, for instance, neighbour Slovenia imports more Austrian products than Japan, Russia or China. Austria exports as many goods to Hungary as it does to the USA.

Austria's need in this wider Europe is to remember its common spiritual and cultural bases. To assist in this process the "Platform Culture - Central Europe" was established with the aim of (re)discovering Austria's shared cultural roots with the Central European countries of the Czech Republic, Hungary, Slovakia and Slovenia.

5.3. NATO (North Atlantic Treaty Organization)

Although Austria joined NATO's "Partnership for Peace" on 10 February 1995, full membership of NATO remains a point of contention among all the political parties and other opinion formers in Austria. Especially following the NATO bombing of Serbia during the Kosovo crisis in 1999 the public opinion towards NATO membership became even more negative. However, it can be expected that reality will dictate Austria's future participation in the European Union's defense programmes.

5.4 WEU (Western European Union)

In November 1996, Austria signed a cooperation (security) agreement with the WEU, with whom it has observer status. Current discussion on whether to formally join the organization (the EU's primary security organization) is taking place within the neutrality debate.

5.5 OSCE (Organization for Security and and Co-operation in Europe)

Vienna is the seat of the OSCE and Austria, led by then Foreign Minister Benita Ferrero-Waldner, was the Chair of the OSCE in 2000. Austria plays an active role in this organization and is a large contributor to OSCE-led peace-keeping missions abroad.

5.6 Peacekeeping

Austria prides itself in having built up many years of experience in international peacekeeping and conflict resolution and offers internationally recognized training courses at Schlaining. Over the past few years it has been a voluntary contributor of troops to peacekeeping missions inter alia in Cyprus, Lebanon, Afghanistan, Namibia, Cambodia, Somalia and Rwanda. Since 1996 Austria has been concentrating on Bosnia, Slovenia, Guatemala, Albania and Kosovo. Austria has also contributed to several humanitarian missions and emphasizes the role of civil society in its conflict prevention and peacekeeping efforts.

Due to severe budget constraints imposed by the new government, Austria intends to reduce their involvement in peacekeeping operations by half, but the country still wishes to remain a reliable partner in international operations. Their involvement in Africa, already limited, may be further affected.

5.7 EU/SADC relations

EU/SADC relations featured prominently during Austria's presidency of the EU in the latter half of 1998.

- Austria hosted a seminar on conflict prevention in Harare in August 1998.

- Austria hosted a seminar on the region's transport network in Maputo in October 1998.

- From 10 to 12 October 1998 Austria hosted the SADC/EU Parliamentary and NGO Conference on the topic "European - Southern African Cooperation in a Globalizing World".

- Austria hosted the Third EU/SADC Joint Ministerial Conference in Vienna from 3 to 4 November 1998. The late Minister Nzo, in his capacity as Chair of the Council of Ministers of SADC, co-chaired the event with his Austrian colleague, Minister Schuessel.

5.8 Development Cooperation

Austrian development policy was given a new legal basis with the passage of the Federal Development Cooperation Act in 2002 and its amendment in 2003. Under this law development policy in the context of an international development policy

- comprises all measures aimed at promoting sustainable economic and social development of developing countries or preventing impairment to such development; in particular, it comprises development cooperation (§ 1(1) and (2) Development Cooperation Act).

In this way the law defines the activities that are reported as part of Austria's Official Development Assistance (ODA). The law goes beyond the narrow framework of development cooperation and states:

- The Federal Government, in the fields of policy it pursues that may have effects on developing countries, shall take into consideration the objectives and principles of development policy (§1(5) Development Cooperation Act).

This clause takes account of the question of coherency of the various policy areas in pursuing the aims and principles of Austrian development policy.

The Austrian development policy is guided by the following objectives:

1. combating poverty in developing countries by promoting economic and social development aimed at a process of sustainable economic activity and economic growth combined with structural, institutional and social change;
2. ensuring peace and human security, especially by promoting democracy, rule of law, human rights and good governance; and
3. preserving the environment and protecting natural resources that form the basis for sustainable development (§1 (3) Development Cooperation Act).

The Austrian development policy is based primarily on the following principles. Any adopted measure must take into consideration:

1. the aims of the respective governments and populations in the developing countries, with regard to the speed and kind of development process and their right to choose their own way of development;
2. the integration of measures into the social environment, with specific regard being paid to cultural aspects and use of appropriate technology;
3. equality between men and women; and
4. in a suitable manner, the needs of children and of people with disabilities (§1 (4) Development cooperation Act).

The three guiding principles of the Development Cooperation Act - poverty reduction, ensuring peace and environmental protection - are mutually reinforcing aspects of global sustainable development and as such are in full accord with Austria's international obligations, Millennium Development Goals (3-year Programme 2004 to 2006 on Austrian Development Policy, Revised version, Vienna 2003 [pursuant to §23 Development cooperation Act 2002 as amended: Federal Law Gazette, No 65/2003)].

Effective from 1 January 2004, the operational implementation of projects and programmes under the Austrian Development Cooperation (Ministry of Foreign Affairs) has been outsourced to the Austrian Development Agency (ADA). The Austrian Federal Government is the sole founder and owner of the ADA, and the Austrian Ministry of Foreign Affairs represents the ADA's interests. The supervising board for ADA is Dr. Georg Lennkh, Department for Development Cooperation, Austrian Ministry for Foreign Affairs.

The ADA is responsible for the implementation of development cooperation programmes and projects at operational level. Its working basis is the government programme on Austrian Development Policy, which continues to be prepared by the Ministry of Foreign Affairs.

The Austrian Development Cooperation has identified priority and cooperation countries in five key regions:

Central America:
Nicaragua, Guatemala, El Salvador, Costa Rica

West Africa:
Cape Verde, Burkina Faso, Senegal

East Africa:
Ethiopia, Uganda, Kenya, Burundi, Tanzania, Rwanda

Southern Africa:
Mozambique, Namibia, South Africa, Zimbabwe

Himalaya-Hindukush:
Bhutan, Nepal, Pakistan

South Africa is regarded as a partner country (formerly co-operation country) in Southern Africa one of the focus regions of the Austrian Development Cooperation. For the Southern African Region as regional focus decentralization within the sector of human rights and good governance has been defined. According to national poverty reduction strategies and other governmental development plans decentralization is seen as the main developmental motor to reduce poverty, the overall aim and objective of the Austrian Development Cooperation.

Austria's official development cooperation with the Republic of South Africa was started in 1993, after international sanctions had been ended. In 1993, South Africa became a focus country of the Austrian foreign policy, official contacts were intensified, and first projects of development cooperation were initiated - mainly in the fields of democratization, legal education and assistance (e.g. land rights), grassroots initiatives of local community development and women's empowerment, and formal education.

Austria's total bilateral ODA since 1995 in million EUR:

5.9 Multilateral/UN

Multilateral politics form an important part of Austria's foreign policy. Vienna is one of three world centers, which host United Nations Offices:

The United Nations Office in Vienna (UNOV) ranks third after the UN Headquarters in New York and the United Nations Office in Geneva. UNOV is responsible for the UN Office on Drugs and Crime (CPCS) and its Secretariat, the International Narcotics Control Board (INCB) (previously CND); the UN Commission on Crime Prevention and Criminal Justice; the Office for Outer Space Affairs, and the United Nations Commission on International Trade Law Secretariat. Vienna is host to the International Atomic Energy Agency (IAEA), the United Nations Industrial Development Organization (UNIDO) and the Comprehensive Nuclear Test-Ban Treaty Organization (CTBTO). Also located in Vienna is the Organization for Security and Cooperation in Europe (OSCE), as well as the headquarters of the Organization of Petroleum Exporting Countries (OPEC). Multilateral non-proliferation bodies based in Vienna include the Nuclear Suppliers Group, the Zangger Committee and the Wassenaar Arrangement.

Vienna was originally selected to be a United Nations center mainly because of its neutrality vis-à-vis the Cold War situation. In recent times, however, Austria has been moving closer to the Western alliance, and although it has not yet joined NATO, the debate is under way. Austria's State Treaty signed in 1955 actually entrenches Austria's permanent neutrality, and this is an issue which is currently being addressed and debated.

Austria has in general been a strong supporter of the UN and all its activities, and is in the forefront of initiatives in support of disarmament (e.g. landmines) and human rights promotion. It is also very active in UN peacekeeping activities, and is prominently represented in UN peacekeeping forces in Cyprus and the Golan Heights. It also contributes to UN observer missions in such places as Iraq/Kuwait, Kosovo and Western Sahara. Austria continues to sponsor UN conferences in Vienna.

6. RELATIONS WITH SOUTH AFRICA

6.1 Political Relations

Bilateral relations between SA and Austria are good. The Austrian crisis precipitated in February 2000 as a result of the participation of the nationalist rightwing Freedom Party (FPÖ) in government did not directly affect bilateral relations between the two countries.

The visits to Austria by former Deputy-President Mbeki, Ministers Alec Erwin, Fraser-Moleketi, Nzo and Hanekom during the EU-SADC Ministerial Meeting in 1998, the visit by former Chancellor Klima in February 1999, the visit of Minister Dullah-Omar in 2001, visits of Minister Fraser-Moleketi in 2001 and 2002, the participation of Ministers Ferrero-Waldner and Molterer at the WSSD Johannesburg 2002, the visit of Minister Skweyiya in April 2003, and the visit of the Minister of Interior, Mr Strasser in May 2003, gave a positive impetus to bilateral relations in a number of fields.

Since 1994 bilateral relations have been actively conducted on all three levels of government. In addition to engaging the Austrian Government at national level in support of development programmes and increased economic involvement, provincial partnerships with key Austrian provinces have also resulted in support for development needs for South Africa. At the local government level the City Council of Vienna has provided consistent material support for educational programmes in Gauteng.

6.2 High-level Bilateral Visits

The following high level visits between SA andAustria have taken place since 1994:

- The former Austrian Minister of Public Enterprises, Dr Klima, visited South Africa during February 1995.

- Former Deputy President Mbeki paid a highly successful visit to Austria in September 1995, at the invitation of Chancellor Vranitzky.

- The Speaker of Parliament, Dr Frene Ginwala, and a delegation comprising of senior management officials from parliament visited Vienna on a fact-finding tour in September 1996.

- The then Austrian Foreign Minister, Dr Wolfgang Schüssel, paid a working visit to South Africa in November 1996. Minister Schüssel was accompanied by the Minister for Economic Affairs, Dr Farnleitner, and a business delegation. A bilateral Agreement on the Promotion and Reciprocal Protection of Investments, as well as an Agreement on the Abolition of Visa Requirements for Holders of Diplomatic and Official Passports were signed during this visit.

- Former Deputy President Mbeki again visited Austria on 3 October 1997 at the invitation of the Chancellor. During this visit, he met with the President, Chancellor and Foreign Minister and also exchanged the instruments of ratification for the implementation of the Investment Protection Agreement with Austria.

- Minister Erwin accepted an invitation by the Austrian Minister for Economic Affairs, Dr Johannes Farnleitner to visit Austria in January 1998. A Nedlac delegation also visited Austria at the same time.

- The former Austrian State Secretary for Foreign Affairs, Dr Benita Ferrero-Waldner, visited South Africa on 3 February 1998 at the invitation of Deputy Minister Aziz Pahad for discussions on EU/SADC cooperation.

- The former Austrian Minister for Women's Affairs, Mrs Prammer, invited both Ministers Fraser-Moleketi and Dlamini-Zuma to visit Austria. Minister Fraser-Moleketi visited Vienna in March 1998.

- Former President Mandela and Former Chancellor Klima met in Cardiff in June 1998 during the EU Summit for general discussions on Austria's EU Presidency and South Africa's position as chair of the SADC.

- Premier Stofile of the Eastern Cape visited Lower Austria in June 1998 to formalize cooperation between the two provinces.

- Archbishop Tutu attended the 50th anniversary of the UN's Universal Declaration on Human Rights in Vienna in June 1998.

- The former Speaker of Parliament, Dr Frene Ginwala, attended the SADC/EU Parliamentarian Conference in Vienna from 10 - 12 October 1998.

- The late Minister Nzo, in his capacity as Chair of the Council of Ministers of SADC, visited Vienna in the first week of November 1998. He acted, together with the then Austrian Minister of Foreign Affairs, Dr Schüssel, as co-chair of the EU/SADC Ministerial Conference.

- The previous Director-General, in his former capacity as DG of the Department of Labour, met with key Austrian labour market institutions in Vienna on 13 November 1998. The purpose of the discussions was to propose and initiate cooperation with Austria in the development of human resources in the South African labour market.

- The former Austrian Chancellor, Dr Viktor Klima, the Minister of Finance, Mr. Rudolf Edlinger and a high-level business delegation visited South Africa from 2 to 4 February 1999. Various matters of interest to both countries were discussed.

- In his capacity as President of the Inkhata Freedom Party, former Minister Mangosutho Buthelezi paid a visit to Vienna from 2-3 March 1999. He was invited to attend the Conference of the European People's Party (EPP) which was held in Vienna from 1 - 6 March 1999.

- Former Deputy Minister Brigitte Mabandla was scheduled to visit Austria in 1998 in order to look at ways of increasing cultural relations with South Africa. The visit was postponed by the South African side due to clashes in the Deputy-Minister's programme.

- Official visit by General Nyanda to Austria in June 2001 on invitation by the Austrian Defense Force.

- Former Minister Dullah-Omar visited Austria in 2001 to attend an International Railway Congress.

- The former Austrian Minister of Foreign Affairs, Ferrero-Waldner and former Minister of Agriculture, Molterer attended the WSSD Johannesburg in 2002

- Minister Skweyiya paid a visit to Austria in April 03 to attend a Ministerial UN Meeting (CND).

- The visit of former Austrian Minister of Interior, Mr Strasser to South Africa in May 2003 to sign a Bilateral Police Cooperation Agreement.

- Visit of the National Council of Provinces: KwaZulu/Natal Standing Committee to Austria in May 2003.

- Visit of the National Council of Provinces, led by Mrs Naledi Pandor to Austria in June 2003 on invitation f the Austrian Federal Council of Parliament.

- Visit of Dr Erwin Proell, Governor of Lower Austria and delegation to Eastern Cape in August 2003.

- Visit of Mr Nelson Mandela to Austria in October 2003 on invitation by former Austrian Minister of Foreign Affairs Ferrero-Waldner.

- Visit of Ms Susan Shabangu, former Deputy Minister of Minerals and Energy, and Ms Myakayaka-Manzini, Deputy President of the ANC Women's League, to Austria in November 2003, to attend the "Women without Borders" Conference.

- Visit of Ms Tshabalala-Msimang, Minister for Health, to Austria in June 2004 to attend the World Conference on Injury Prevention and Safety Promotion.

- Visit of the Judge President Tshabalala of the High Court in Durban to Vienna in September 2004

- Visit of Deputy Minister Hanekom and delegation to Vienna from 27 to 29 October 2004, to attend the Panel on Science and Technology Promotion, Advice and Application for the Achievement of the Millennium Development Goals (UNCSTD). Met with Austrian Minister of Education, Science and Culture, Mrs Gehrer and Deputy Minister of Technology, Mr Mainoni, as well as the head of the Austrian Academy of Science.

- Visit of a delegation of the South African Department of Public Enterprises (DG & DDG's) to Austria from 6 to 9 February 2005.

- Visit of the Chief Justice, Mr Pius Langa to Austria from 26 to 29 October 2005.

6.2 Economic Relations

Austrian foreign trade patterns are dominated by the EU. The EU 25 accounts for 71.8% and 77.1% of Austria's exports and imports, respectively (2004 figures).

By 2004 (latest available figure) total Austria FDI stock amounted to € 52.3 billion. The 19 CEEC countries accounted for no less than 40.2% of this amount. Austrian companies focus their investment efforts primarily on Central Europe, owing to historic ties and better understanding of the Central European markets, low labour costs in those states, and the close proximity of Central Europe.

The favourable conditions for investment improved through the entry into force of an Avoidance of Double Taxation Agreement and the Reciprocal Protection of Investment Agreement in 1997.

6.2.1 Trade Relations

In 2004, Africa accounted for only 1.1% of Austrian exports and only 1.1% of Austrian imports. Although Austria has a high volume of trade with the oil producing states of Africa, such as Algeria and Nigeria, South Africa is Austria's most important trading partner on the continent, accounting for 30.3% of Austria's total foreign trade with Africa.

6.2.1.1 Major SA Exports to Austria 2003 - 2004

6.2.1.2 Major SA imports from Austria 2003-2004

6.2.1.3 Foreign Trade between South Africa 2001 - 2004

6.2.2 Austrian investment in SA

The composition of the Austrian industry sector consists of small and medium-sized business - 85% - and large industries are still predominantly state owned. This is set to change as the new Austrian government has committed itself to actively speed up the pace of privatization. Due to the proximity of the EU market and the emerging markets of Eastern Europe, the trend is for Austrian industries to focus on investing in nearby countries. By end 2004, Austrian FDI increased by € 5.2 billion of which more than half were invested in CEEC. The Czech Republic, Croatia, Slovenia and Hungary were the major recipients.

Some 400 Austrian companies are currently associated with trade activities with South African companies. Excluding portfolio investment, 13 Austrian companies have invested directly in South Africa (mainly machinery, gaming, textiles and electrical equipment).

Most notably, Voest-Alpine Technologies involvement in South Africa over the past 22 years is estimated at R 3 billion. In April 1996, Voest-Alpine was awarded a contract for the supply of the COREX Gas Based Direct Reduction Plant for the steel project in Saldanha Bay. This technology transfer is valued at US $ 130 million. In December 1997 it was reported that VAI, a subsidiary of VA Stahl had a 60% in the South African plant building market, making it the market leader.

In October 1997, a 100% takeover of South Africa's only private points builder, Cementation Railways, resulted in Austria's VAE (Voest Alpine Railways) expanding its leadership in points building and electronic securing. A parallel co-operation agreement with Transwerk (Spoornet) promises VAE orders for modernizing South African railways and those of neighbouring countries. A major investor is Casinos Austria, having invested around US$ 110 million in gaming resorts to date. During 2001 and 2002 the EP Holding, a private trust, invested in excess of R 50 million in tourism in the Western Cape.

6.2.3 SA Investments in Austria

South Africa is thought to be the only African country with any substantial direct investments in Austria.

Mondi has considerable interests in the Austrian paper and pulp industry through the Frantschach group. Mondi has invested some US $ 250 million in the Austrian paper and pulp industry. In 1992, Mondi acquired 44% of Patria Paper in Frantschach, Carinthia (the largest Austrian private company), and in May 2000 increased its share to 80%. Since 2003 Frantschach is 100% owned by Mondi.

In September 1997, it was announced that Austria's leading non-wood paper manufacturer, KNP Leykam, was sold to Sappi Ltd. for the amount of ATS 9.38 billion (R 3.53 billion). The deal included all four Leykam subsidiaries in Styria, the Netherlands and Belgium which have a work force of 4 300 and an annual turnover of almost ATS 14 billion. According to reports, the deal ensured an increase in Sappi's share of the European market from 7% to 22% (in addition to Sappi's dominance of the US and South African markets).

6.3 Tourism

In line with the European trend, tourism between Austria and South Africa has undergone a phenomenal increase of 124 % since 1990. Austrians, like the Germans and the Swiss are generous spenders when on vacation and spending on foreign travel by Austrians, as a percentage of private consumption, amounted to 8.2% in 1995 (OECD figures), placing Austria at the top of the list in terms of percentage. Statistics from the Austrian National Tourist Office demonstrate the positive trend:

Austrians visiting South Africa:

In line with a general decrease in European tourists to South Africa in 2004, the number of Austrian tourists went slightly down as compared to 2003.

In South Africa there is a large Austrian community of about 20 000 which attracts many visitors. South African Airways (SAA) and Austrian Airlines (AUA) have announced plans to establish a code share agreement in 2005 - which is a positive signal for a future re-establishment of a direct flight between Vienna and Johannesburg.

The South African Tourism office in Vienna (responsible for Austria and Central Europe) was closed in 1999 and marketing activities for Austria are now conducted by South African Tourism in Johannesburg. The Embassy Vienna supports these activities for the Austrian region.

6.4 SA - Austrian Development Cooperation

For South Africa a new country strategy (2005 - 2008/9) is in the process of being worked out.

Following the regional approach (see 5.8) the Austrian Development Co-operation concentrates its engagement in South Africa in local government/local governance on provincial level in the Limpopo Province and Eastern Cape. The Austrian Development Co-operation supports the institutional development of decentralised/local structures (governmental and non-governmental) so that development challenges and priorities are identified and adequate development problem solving strategies are planned, implemented and monitored.

The Austrian Development Co-operation provides technical assistance and funding for projects designed in co-operation with South African partners covering the following main activities:

- institutional and capacity development of the governmental structures

- definition of the relationship and co-operation between the involved institutional stakeholders (governmental and non governmental), their co-ordination, management and monitoring

- empowerment of representatives of the local civic society in order to make them aware of their human rights (political, social, cultural and economic rights) and constitutional rights and how to implement them with the overall aim that local development plans are in line with national decentralisation strategies and thus contributing to reduce poverty in South Africa.

6.4.1 Structure of Cooperation

The ADA is responsible for the implementation of development cooperation programmes and projects at operational level in South Africa. Its working basis is the government programme on Austrian Development Policy, which continues to be prepared by the Ministry of Foreign Affairs.

6.4.1.1 Planned/ projects 1995 and 1996:

- 2194-00/2005: Strengthening the Developmental Capacity of the Blouberg Municipality and its rural communities in Limpopo Province

Period: to be started with 12/2005
Budget: € 550 000 (planned, not committed)
Partners: Blouberg Local Municipality / executing agency in to tendering process

The project aims that skilled and resourced municipal staff and elected councilors in structured meaningful and ongoing interaction with empowered communities initiate and drive appropriate, integrated and sustainable social and economic development processes in the rural areas of Blouberg Municipality

The whole project will be implemented in 3 phase: a) a 3 years' pilot phase (including the preparation of the pilot phase and the implementation of the pilot phase, b) a 3 years' implementation phase and finally c) a phasing out phase of 1 - 2 years.

- ¼.-00/2005: Supporting effective dialogue and communication in planning and development in the Alfred Nzo District of Eastern Cape

Period: to be started with 12/2005
Budget: € 550 000 (planned, not committed)
Partners: Alfred Nzo District Municipality / executing agency to be tendered

The project aims that an effective dialogue and communication between municipalities and between municipalities and communities is institutionalized in the development and ongoing review of the 2006 integrated development plan for the Alfred Nzo District.

- ¼.-00/2006: Call for proposal for the implementation of parts of the IDP Blouberg Municipality
Period: to be started with 04/2006
Budget: € 600 000 (planned, not committed)

- ¼.-00/2006: Call for proposal for the implementation of parts of the IDP Alfred Nzo District
Period: to be started with 04/2006
Budget: € 600 000 (planned, not committed)

6.4.1.2 Current projects 2005:

- EZA Project 2016-01/2004: Civil Society Preparations for the Local Elections 2005 in Free State

Period: 01.11.2004 - 31.03.2006
Budget: € 152 699
Partners: Free State Rural Development Association
(FSRDA), Free State Local Government Association
(FRELOGA) / HORIZONT3000

The project aims to make the law, democracy and governmental services available for the rural poor by building capacity for citizens in the Free State to actively engage with and participate in local government at all levels and on the occasion of the local elections 2005 in the Free State.

- EZA Project 1990-00/2004: Gender Mainstreaming in and Gender Training for Local Government in Western Cape

Period: 01.01.2004 - 31.12.2005
Budget: € 163 468
Partners: Gender Education and Training Network (GETNET) / Austrian North South Institute

The project aims to contribute towards good governance within the sphere of local government through building the skills of councillors and officials to integrate gender into policies, planning and service delivery.

- EZA Project 2191-00/2003: Decentralized Integrated Rural Development

Period: 01.09.2003 - 31.08.2006
Budget: € 339,033.27
Partners: Border Rural Committee / Austrian North South Institute

The project aims to support the implementation of two key decentralised rural development processes in the Amatole District of the Eastern Cape namely the Land Reform and Settlement Plan (LRSP) and locally-driven development arising out of the successful settlement of restitution claims.

- EZA Project 1995-00/2003

Period: 01.01.1999 - 31.03.2005
Budget: € 643 101
Partners: Community Law Center, University of Western Cape / Austrian North South Institute

The project's aims are threefold: a) Advancing appropriate policies that would contribute to local government fulfilling is democratic and developmental mandate; b) Train and inform municipal councilors and officials about the new system of financial management and c) Equip municipal councillors and officials with the requisite knowledge and understanding of the legal and policy framework which is aimed at giving effect to democratic and developmental government.

- EZA Project 2171-00/2002: Establishment of a National Cleaner Production Center
Period: 01.10.2002 - 30.09.2005
Budget: € 764 250
Partners: Process Technology Center at the Council for Scientific and Industrial Research (CSIR), Department for Trade and Industry (DTI), Government of South Africa / United Nations Industrial Development Organization

The project aims at increasing the competitiveness and the productive capacity of South Africa's industry through building national capacity in cleaner production, fostering dialogue between industry and government and enhancing investments to transfer and develop environmentally sound technologies. This will contribute to facilitating the market access of the national economy and strengthening the economy in a way compatible with environmental protection and social development, the two other dimensions of sustainable development.

- EZA Project 1879-00/1997: Establishment of outreach centers to counteract violence against women

Period: 01.09.1997 - 31.12.2003 (prolonged till May 2005)
Budget: € 585 161
Partners: UNDP/United Nations Crime Prevention and Criminal Justice Division (UNCPCJD)

The project aims to constitute part of this vision of the National Crime Prevention Strategy. It would enable women subjected to violence, to seek help, receive education and counseling as well as allow men to enroll in programs geared toward the control of anger. Thus be one further step toward reducing violence against women and children.

- the promotion of social, political and economic basic rights - National Association of Democratic Lawyers (NADEL). The continuation of the 1996 - 1999 project (1996 to date) concentrates on the incorporation of a democratic, non-racial legal system into South Africa's new constitution. This follow-up project focuses on the practical implementations of constitutional rights (human rights and basic social and economic rights) by means of legal research, monitoring in the field of democratization, and legal education. Financial volume of this project until end of 2002: € 1 297 000.

- Support of Community Self-government - University of the Western Cape. In May 1999 the constitutionally guaranteed right of self-determination came into force for South Africa's communities. Various aspects of this new law, in particular the financial independence and issues of influence by the national and provincial governments, had to be investigated and concretized. In addition the local level lacked the expert qualification required for compiling the proclamations and legal frameworks necessary for self-determination. Therefore, the Community Law Center of the University of the Western Cape wanted, on the one hand, to provide strategy papers as discussion bases for decisions at the political level and, on the other, set concrete steps for supporting and training local councilors and administration officers. The follow-up phase in this project foresees that the Community Law Center of the Western Cape University supports the elected community representatives and administration officers, who often lack the technical skills for drafting by-laws required for self-government at community level, by processing regulatory frameworks and demands on local government into guidelines for practical application. This information is made available both through print media (quarterly bulletin), Internet and providing training at community level. For this purpose € 491 000 was made available up to the end of 2002.

- Network for Gender Training - organizational structure of GETNET. GETNET offers gender education and training for key personnel of public and non-public offices. After completion of a first project phase, education and training of trainers and establishment of a separate division for consultancy services will now be funded. The training scheme for local governments will be revised and in future be offered as an overall package including a follow-up. A total of approximately € 488 000 was donated to the Network up to the end of 2002.

6.4.1.3 Ended projects:

- Local Government Transformation and Development - Community Research and Planning Organization (CORPLAN). A total of ATS 10 m (R 4.8 m) was made available until the end of 1997. Another ATS 2.8 m (R 1.34 m) has been received until the end of 2000.

- Training programme by the Mpumalanga provincial government for female local representatives. With its engagement in Mpumalanga, the ÖEZA also wants to strengthen the existing provincial partnership with Carinthia. Mandated by the Mpumalanga Provincial Government, the programme is to be implemented by a private consulting firm. Until mid-1998 ATS 1.4 m (R 0.67 m) were disbursed for this project.

- Establishing local consulting centers against domestic violence in Mpumalanga and Eastern Cape (a UNDP project). A total of approximately ATS 8.5 m (R 4.08 m) was made available to this programme until the end of 2000.

- Supporting the "Commission on Gender Equality". In 1998/99 a total of ATS 3 m (R 1.44 m) was provided to the Commission.

- Advisory programmes on land rights - National Land Commission. A total of more than ATS 3 m (R 1.73 m) was made available to this project until mid-2000.

- Supportive measures for the Independent Electoral Commission (approximately ATS 1 m, R, 0.48 m) in 1999.

6.5 Independent development cooperation projects:

- The City of Vienna and the Vienna Chamber of Commerce jointly presented a project to the Vienna City Council during November 1994 for the building of the Masibambane School (Orange Farm Education Center) in the Orange Farm Township near Johannesburg. In addition to the City of Vienna's initial contribution of ATS 3.4 million (R1.7 million), the Vienna Chamber of Commerce also committed itself to an additional sum of ATS 500 000. (R250 000) The "Viennese School" was officially opened in September 1996. The Vienna School Council also announced its intention to establish a school partnership programme in co-operation with Education Africa. This partnership makes provision for an exchange programme for students and teachers. The City of Vienna has since also financed the second stage of the Orange Farm Education Center. Several scholarship trusts for needy scholars of the school are being financed by the Vienna City Council.

- A children's home at the SOS children's village (SOS Kinderdorf) was established in Cape Town through funding by companies in the province of Upper Austria.

- Austria has donated an amount of ATS 2 million (R1 million) to the Truth and Reconciliation Commission.

- During Chancellor Klima's visit to South Africa in February 1999 a donation of one million Rand was made to the Nelson Mandela Children's Fund (to be used towards the purchase of school textbooks).

- During Mr Nelson Mandela's visit to Austria in October 2003 a donation from Austrian companies in cooperation with the Austrian Foreign Ministry was made to the Nelson Mandela Children's Fund.

6.6 Provincial Co-operation

Provincial partnership agreements exist between three South African and Austrian provinces. These are between:

- Upper Austria and Western Cape (1995)
This agreement covers aspects such as economic issues and science, nature and environment, culture, education and youth, and information and commerce. Since the signing, several visits have taken place and these have resulted in a number of projects in support of skills training, capacity building in the administrative field, culture, education, bio-agriculture and technology transfer.

- Mpumalanga and Carinthia (1997)

The agreement is based on the intention to cooperate in the areas of promoting economic interaction with the emphasis in the field of tourism, local government and capacity building in provincial legislative structures. While several high-level visits after 1997 resulted in projects in support of investment promotion, tourism training and cultural exchanges, the partnership has been dormant since 1999 when both provinces held elections and obtained new Premiers. In Carinthia, the controversial nationalist leader Joerg Haider became Governor in March 1999, and no further political contact has taken place since then.

- Eastern Cape and Lower Austria (1998)

This is a very active partnership as Lower Austria has committed itself to assist with capacity building programmes in the field of provincial and local government administration, economic exchange, active investment promotion and tourism training. Premier Stofile has visited Lower Austria twice and in September 2000 two tourism post-graduate students selected by the Eastern Cape Government arrived in Austria on a fully paid four-year bursary at the internationally renowned Tourism and Management School at Krems. Governor Proell visited Eastern Cape in August 2003 and donated € 60.000 for a medical clinic to be built in Hartbeesfontein, Rustenburg.

- The City of Vienna has a policy of notentering into formal partnership agreements. However in practice it is strongly involved in Gautengthrough the Orange Farm schoolproject. A business delegation led by the Gauteng MEC forEconomic Affairs was scheduled to visit Vienna in November 2000 at the invitation of the Chief Executive of Vienna to look at business establishment practices and marketing strategies.

ANNEX A: THE AUSTRIAN CABINET

ANNEX B: BILATERAL AGREEMENTS

The following agreements between Austria and South Africa have been concluded:

- Extradition Treaty - signed in 1873 and renegotiated in 1901.

- Parcel Post Agreement - concluded in 1957.

- Exchange of Notes on the Commonwealth War Cemetery in Klagenfurt - concluded in 1967.

- Air Transport Agreement - signed in 1969.

- Agreement on the Issue of Visas Free of Charge - signed in 1981.

- Air Services Agreement - concluded in February 1995.

- Agreement between the Western Cape and Upper Austria - an Agreement on Partnership between the Province of Upper Austria and the Province of Western Cape was signed on 15 May 1995 during a visit to Austria by Premier Kriel.

- Double Taxation Agreement - an Agreement on the Avoidance of Double Taxation was signed by Deputy President Mbeki and Ambassador Palla on 4 March 1996 in Cape Town and entered into force during the first half of 1997.

- Protection of Investment Agreement - signed in November 1996 during the visit to South Africa by the Austrian Vice Chancellor and Foreign Minister, Dr W Schüssel. The agreement entered into force on 3 January 1998.

- Agreement on the Abolition of Visa Requirements - an Agreement on the Abolition of Visa Requirements for Holders of Diplomatic and Official Passports was signed in November 1996 between Minister Schüssel and Minister Nzo. The Agreement entered into force in January 1997.

- Letter of Intent between Mpumalanga and Carinthia - the letter of intent regarding closer cooperation between the provinces of Mpumalanga and Carinthia was signed on 11 March 1997.

- Declaration of Intent between the Eastern Cape and Lower Austria - this declaration on closer cooperation was signed on 16 June 1998 during a visit to Lower Austria by Premier Stofile.

- Bilateral Police Cooperation Agreement - signed in May 2003. (Ratification remains to be facilitated as well as follow-up visit to Austria by South Africa's Minister of Safety and Security.

Updated: Nov. 2005.