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Austrian economy still focused on Russia, despite the war

A gas pipeline of the Austrian company OMV in Schwechat, about 25 kilometers east of Vienna. AFP - DIETER NAGL

Text by: Isaure Hiace Follow

5 min

Austria continues, despite the war in Ukraine, to have close economic contacts with Russia. The two countries are still linked by gas, although Austria remains dependent on its Russian neighbour, but not only.

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From our correspondent in Vienna,

Austria is a neutral state, not a member of NATO. Since the beginning of the Russian invasion of Ukraine, the country's position has been clear: while Austria is neutral militarily, it is not morally neutral and supports Ukraine politically and humanitarianly. But economically, the situation is more mixed. Despite a year of war, Austria continues to have close economic contacts with Russia. A relationship symbolized by gas.

Before the Russian invasion of Ukraine, Austria imported 80% of its gas from Russia. After the start of the war, this share logically decreased, but in December 2022 it again reached a very high level: that month, Austria imported 71% of its gas from Russia. If this share fell again to reach 47% the following month, in January 2023, the December figure marked the spirits in Austria, proving, in fact, that the country has not sufficiently freed itself from Russian gas.

However, the Austrian government has set itself a clear objective: to be completely independent of Russian gas by 2027. Problem: the contract between the Russian giant Gazprom and the Austrian energy company OMV, owned for a third by the Austrian state, runs until 2040. Gerhard Mangott, professor at the University of Innsbruck and Russia specialist, doubts that Austria will achieve this goal:

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Presumably, the government has decided to accept that Russia will remain a major gas supplier to Austria for a long time to come, and I do not believe that there will be no more Russian gas in Austria by 2027. Especially since there is this contract that OMV has signed and which stipulates that even if gas deliveries do not take place, they must be paid. Whether the government could get out of this contract through the courts depends on the content of that contract. However, we experts do not know it, because it is secret.

The details of that contract appear to be known only to OMV, which states that the contract signed with Gazprom does not allow it to leave. Chancellor Karl Nehammer himself has indicated that his own government does not know its contents.

A confiscated debate?

In addition to the energy sector, there has been a lot of talk in recent weeks in Austria about a bank, the second in the country: RBI, Raiffeisen Bank International. This bank is still present in Russia, an activity that pays off. The RBI has announced record profits of 3.6 billion euros for the year 2022, 60% of which comes from its Russian subsidiary. It must be said that the RBI is one of the few banks present in Russia still allowed to participate in the Swift system, from which many Russian banks are excluded. As a result of this activity, OFAC, the US Sanctions Authority, sent a questionnaire to the RBI in early 2023 to question it about its actions in Russia. But the latter, like all Austrian companies, claims that it applies the sanctions to the letter.

Although this subject is of great importance, it is not really debated in Austria. "Just as we don't discuss the OMV contract, we don't discuss the RBI," Mangott said. "This is partly because Raiffeisen is closely linked to the main party in government, namely the conservative party. He wants to avoid anything that could financially harm the RBI and wants Austrian companies, which are active in Russia, to remain on the Russian market. To do that, they need UBI. One gets the impression that the government is banking on the fact that the war will end at some point and that we can then start doing business again as before, and therefore in the meantime, we must do everything possible to avoid cutting trade ties with Russia. »

If the debate is not taking place on the side of the governing Conservatives, it is not taking place in opposition either. Especially not on the side of the FPÖ, the far-right party, currently leading in voting intentions, according to the polls. In 2016, the party signed a five-year cooperation agreement with Vladimir Putin's United Russia party. In 2021, the FPÖ, now led by Herbert Kickl, indicated that the agreement had not been renewed.

What exactly did this agreement contain? Parliamentarians have asked the FPÖ in recent weeks, which has refused to answer. One thing is certain: the far-right party has not renounced its pro-Russian positions. Since the beginning of the war, Herbert Kickl has openly criticized European sanctions against Russia, he did so again recently, at the beginning of March, when he was received in Budapest by Hungarian Prime Minister Viktor Orban. If the Greens, who govern with the conservatives, and the small liberal party Neos try to start a debate on the economic ties that Austria continues to maintain with Russia, it is clear that the major Austrian parties do not want it, at the risk of isolating Austria on the European scene.

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