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'No and No Again' The Rocky US Relationship with Little Austria

Austria may be small, but according to US Embassy dispatches from Vienna, the country causes big headaches in Washington. Not only are Austrian leaders seen as disconnected from international affairs, the country's neutrality means it is willing to do business with America's enemies.

The tone used by the US envoys in their reports to Washington ranges from resigned to openly hostile. Is it possible, they ask in bewilderment, for a tiny Alpine republic only half the size of the US state of Washington to ignore the primary objectives of American foreign policy?

It would seem that it is. SPIEGEL has seen roughly 1,700 sent to the State Department by the US Embassy in Vienna over the last decade. Together, they suggest that, while the Austrian government has always listened attentively to the wishes of its American partners when it comes to issues such as Guantanamo, North Korea and sanctions against Iran, it has been primarily focused on its own interests.

Diplomats stationed at the US Embassy in Vienna were at times "frustrated and extremely disappointed," occasionally "increasingly concerned" and sometimes simply "unhappy" when the Austrians yet again broke promises or refused to go along -- when they continued doing business with Iran and North Korea; when they allowed a wanted leader of the Kurdistan Workers' Party (PKK) to leave the country; when they refused to accept any detainees from Guantanamo.

The diplomats did have occasional words of praise for Austria's "professional" European Council presidency in 2006, as well as the "constructive" role it had played in the Kosovo conflict. But Washington's differences of opinion with Vienna were much deeper than those with Berlin -- and US diplomats were often much more forceful. The number of reports classified as "secret" or "confidential" coming out of the Austrian capital was sizeable.

Looking Out for Themselves

Vienna, according to the American diplomats, has two problems. The first is fundamental: "Austria's engagement with the world is slipping and narrowing for many reasons." Embassy personnel sees those in power in Vienna as being only interested in domestic affairs, such as promoting exports, sealing off Austria's labor and agricultural markets, and ensuring stability in the nearby Balkans. All things considered, the American diplomats count the Austrians among the "most euro-skeptical" citizens of any EU member state and describe them as "increasingly isolationist."

The second problem has to do with those in charge. The US reading of the powers-that-be in Vienna is both accurate and revealing.

Shortly after the inauguration of Chancellor Werner Faymann -- who had already earned a reputation for "cultivating excellent contacts with the media" while serving as the minister for transport, innovation and technology in 2007 -- the US Embassy wrote: "It has become clear that Faymann has no personal interest in foreign affairs." Cited as dependable sources for this devastating assessment are senior advisers to Faymann himself as well as veteran officials within Austria's Foreign Ministry.

Foreign Minister Michael Spindelegger, on the other hand, "seemed to focus largely" on promoting "Austrian economic penetration" of the Black Sea region and the Caucasus. His advocacy for the Nabucco gas pipeline was "of clear benefit to the US," according to the cables.

And then there was Defense Minister Norbert Darabos, the first "not to have served in the military" to hold the office in post-World War II Austria, as US diplomats pointed out. He was apparently just as "uninterested in foreign and international security affairs" as his chancellor, as well as being "openly hostile to deploying Austrian troops on dangerous missions abroad." What's more, the diplomats wrote in a cable to Washington, "military contacts complain that Darabos is unable, perhaps unwilling, to secure increased funding for the armed forces. He is widely perceived as an ambitious politician stuck against his will in one of Austria's less desirable cabinet posts."

The assessment of the administration prior to that of Faymann was more gracious when it came to competence, but less so when discussing the loyalty Austria showed to its allies. The Americans saw Alfred Gusenbauer, the Social Democrat who briefly served as Austria's chancellor between 2007 and 2008, as knowledgeable and open-minded, but also as a loose cannon. As one dispatch put it: "We would not be surprised … to see him indulge in confrontational rhetoric when it suits his needs." Gusenbauer had been clear on the issue of missile defense, saying, according to a dispatch, that "the US has to understand that they are not the only ones that are going to determine what is happening in the world."

'Not the 51st American State '

In their reports, the diplomats described in painstaking detail all the nuanced ways in which Austrian politicians have questioned the role of the superpower. Ahead of a visit to Vienna in 2007, then-US Secretary of State Condoleezza Rice was warned of the "increasingly populist rhetoric" of her Austrian counterpart, Foreign Minister Ursula Plassnik, of the conservative Austrian People's Party (ÖVP). According to the cables, Plassnik had told the Austrian parliament: "Austria is not the 51st state of the US."

Wolfgang Schüssel, for his part, a man who served as Austria's chancellor between 2000 and 2007, was regarded somewhat suspiciously owing to his alliance with the right-wing populist Austrian Freedom Party (FPÖ). From the American perspective, Schüssel was the lesser of two evils. He and his coalition partners "rarely went out of their way to poke the US in the eye." In fact, as long as he felt that there was no price to pay in terms of domestic politics, Schüssel "tended to seek ways to support the US."

On the other hand, US envoys sound piqued when reporting on Schüssel's leadership: "In recent years, our leverage over Austrian policy has been extremely limited by the reality that there were very few things Vienna wanted from Washington." To remedy this situation -- which was problematic from the Americans' point of view -- they recommended a "deft" approach: "Austrian officials should receive the message that odds of their obtaining our support will increase if the government (in Vienna) begins to show more concern over issues of top priority for the US."

From today's perspective, it seems clear that this strategy was a failure. As the Americans saw it, "the gap between Austria's self-proclaimed vision of itself in the world, and its increasingly limited performance" had not become any narrower, according to a cable from June 2009.

This is largely due to a lack of coordination in policy areas that, in January 2009, outgoing US Ambassador David F. Girard-diCarlo singled out as the most important on the American-Austrian agenda: Iran, Afghanistan, energy security and cooperation in fighting terrorism.

Profit Seeking and Pacifism

The business relationships of Austrian banks -- particularly Raiffeisen Bank -- regularly appear on the radar screens of American's global strategists. According to an American memo from February 2006, about three-quarters of a total of 292 "suspicious activity reports" since the late 1990s, including those with "shell companies used by criminal groups" were tied to the financial institution, which has its roots in Christian-conservative political circles.

The Americans were especially upset about Raiffeisen Bank's contacts with Iran, which led the Americans to ask to meet with Austrian bankers in Washington and Vienna. The US delegation in Austria refused to accept the Austrians' assurances that Raiffeisen was not a major player in Iran. The US ambassador wrote in a report that the bank was taking "serious reputational risks."

Indeed, it is precisely Austria's interactions with Iran that US diplomats see as the crux of the country's approach to politics. Austria, the US believes, combines a pronounced profit-seeking motive with an underlying pacifist stance. As the Americans see it, it's hard to take action against a country in which "Austrian business leaders believe they are well within their rights (in trading with Iran), and indeed exemplify the country's neutralist tradition." Viennese officials went on record in 2008 as saying that "maintaining ties with Iran will be more effective in influencing its behavior than attempting to 'strangle' the regime in Tehran." As early as 2005, US diplomats concluded that the Austrians will not back away from any business deals or support any diplomatic initiatives "on our say alone. They need to be convinced."

Saying It Like It Is

An employee at Austria's Economics Ministry provided assistance in the effort to convince. In the case of arms manufacturer Steyr-Mannlicher, US envoys issued sharp protests against the company's dealings with Iran. The state-owned energy company OMV merely shrugged after it had signed a memorandum of understanding to jointly develop the South Pars natural gas field with Iran's state-owned oil company despite UN sanctions against Tehran. A fuming US ambassador described this decision as a "propaganda victory" for the Iranians.

Still, there were also a number of curious controversies that saw members of the Austrian government put on the spot. For example, in January 2009, when outgoing US Ambassador David F. Girard-diCarlo was making his farewells in Vienna, he issued a rather undiplomatic though veiled threat in the presence of Foreign Minister Michael Spindelegger. "It is simply not credible," Girard-diCarlo said, "if you tell us that the government has no sway over major private sector companies in Austria. Such statements are not well received in Wasthington."

Likewise, anyone who tried to turn a profit with countries belonging to President George W. Bush's "axis of evil" was likely to be called out. Austrian Finance Minister Karl-Heinz Grasser was personally questioned on the issue of why, beginning in 2001, the Bank Austria Creditanstalt (BA/CA) completed a dozen "mostly nuclear related" transactions in Iran, as well as having business ties with North Korea. Grasser grudgingly agreed to look into the matter. In February 2006, American diplomats reported that the BA/CA had agreed to sever its business ties "with North Korean entities."

'Unappetizing Arrangements'

US Embassy dispatches on the company RosUkrEnergo (RUE) also offer interesting insights into a gas deal plagued by corruption. The highly profitable Russian-Ukrainian joint venture, registered in the Swiss canton of Zug, was being discussed as a possible middleman for gas deliveries from Central Asia. RIAG, an Austrian subsidiary of Raiffeisen Bank, was the trustee for the initially unnamed owners of the Ukrainian part of the company.

In March 2006, while the rest of the world was still wondering whether the alleged Russian mafia boss Semion Mogilevich could be involved, US Embassy representatives in Vienna had begun questioning Raiffeisen executives. According to the US Embassy's report, Raiffeisen Central Bank (RCB) general director Walter Rothensteiner and Raiffeisen Bank International (RBI) CEO Herbert Stepic had claimed that "senior Ukrainian and Russian government officials, including Presidents Putin and Yushchenko, were aware of all the details behind the RUE gas deal." Stepic also said that it "would be extremely naive to think otherwise. Putin and Yushchenko know everything about RUE."

The statements the Austrian bankers made to the US ambassador are particularly remarkable given the fact that that Russian Prime Minister Vladimir Putin had complained that Ukrainian politicians were siphoning money away from the deal while then-Ukrainian President Viktor Yushchenko offered merely monosyllabic statements in support of RUE.

Still, the American ambassador sharply rebuked the Austrians for their role in the Russian-Ukrainian gas deal, writing: "It was hard not to suspect that the Trusteeship was simply a fig leaf to cover an unsavory arrangement." As other cables from the US embassy in Kiev suggest, it apparently emerged in 2007 that a partner in the deal was a "close friend and confidant" of then-President Yushchenko. At the same time, this individual was identified as a person with contacts to the presumed Russian Mafia boss Mogilevich, whose "permission" was needed "when he established various businesses."

Where Do Austria's Political Values Really Lie

Raiffeisen Bank's business dealings are just one example of US suspicion of Austria. "It is a tenet of Austria's national mythology" US diplomats concluded in 2007, "that the country's ability to maintain ties throughout the world constitutes a real contribution to peace and stability." But was little Austria really a broker on a grand stage? And could it not be that political neutrality was merely a catchphrase for the art of always being involved but never having any real responsibility? In the American's eyes, this general criticism also includes the fact that Austria took considerable pains to be perceived as a site of international conferences -- irrespective as they derisively note, of the "substance" of such events.

In fact, the Americans apparently had a real hard time figuring out the exact political views the Austrians represented. "Austria continues to maintain close political and commercial ties to countries of concern to the US, including some which we have designated as state sponsors of terrorism," they wrote in a 2005 cable. For the Americans, the "bridge building role as a continuing legacy of Austria's Cold War neutrality," had become practically second nature to the citizens of the Alpine republic. "Austria's approach makes it prone to take a benign view of activities which give us pause," the cable added.

The Price of Rejection

What's more, the Austrians did not look as charitably on things that were of great importance to the Americans. American attempts at all levels to soften "early and total rejection" of former Guantanamo detainees by the Austrian government repeatedly went nowhere.

The US was desperately trying to find homes for former Guantanamo detainees -- and treating every success as proof of loyalty. According to a US Embassy cable from January 2009, the response from Vienna was clear: "No, and no again ... and again."

As Austrian Foreign Minister Michael Spindelegger put it: "Whoever causes a problem must also bring about its solution." It was a position that is difficult to contest, but was also unlikely to improve US-Austrian relations.

As the US Embassy wrote in an August 2009 memo: "The Austrian government wants contact with the Obama administration at cabinet level and higher. We are making it clear that such contact requires real US-Austrian partnership."

Translated from the German by Christopher Sultan
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