AUSTRIANS SKEPTICAL AFTER 10 YEARS OF EU

UNCLAS SECTION 01 OF 02 VIENNA 001312

SIPDIS

STATE FOR EB/IFD/OIA, EUR/ERA, AND EUR/AGS

E.O. 12958: N/A
TAGS: PREL ECIN ECON ETRD AU EUN
SUBJECT: AUSTRIANS SKEPTICAL AFTER 10 YEARS OF EU
MEMBERSHIP


Summary
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1. A recent poll by the Austrian Association for
European Politics (OGE) revealed that the Austrian public
remains highly skeptical of the EU. A significant
majority of Austrians do not believe EU membership has
brought the benefits they expected, such as higher
growth, lower inflation, and reduced crime rates. An OGE
official concluded the overwhelming "yes" vote in the
1994 membership referendum represented a peak in pro-EU
sentiment. In response to the OGE poll, the Austrian
National Bank (ANB) characterized EU membership as
positive from an economic standpoint. The OGE poll
indicated that various factors contributed to the
negative view: weak association with a European identity;
a general distrust of Brussels-generated policies, which
Austrian media and politicians often exploit; and
lingering resentment at sanctions the EU imposed on
Austria in 2000. End Summary.


Austrians Highly Skeptical of EU
--------------

2. Ten years after accession, Austrians remain highly
skeptical of the EU, according to a recent poll by the
non-partisan Austrian Association for European Politics
(OGE). OGE Secretary General Gerhard Bauer opined that
the 67% vote for EU membership in 1994 was the peak of
"EU-phoria" in Austria. Bauer noted Austrians' negative
views of the EU were somewhat surprising given that
Austria is a highly integrated EU member. Economic data
confirms the benefits of EU membership, and no political
party questions EU membership.


Poll Results - Perceptions Lag Behind Reality
--------------

3. The OGE poll asked Austrians what they had expected
from EU membership and whether membership had fulfilled
these expectations. The results are astonishingly
negative. Sixty-nine percent of respondents expected
improved economic growth from membership, but only thirty-
one percent believed the EU had met that goal. Forty-six
percent expected lower inflation, whereas only twelve
percent agreed the EU had helped reduce inflation. Fifty-
one percent expected the EU would successfully combat
crime, but a mere thirteen percent believe the EU has
succeeded in this area. Asked whether Austria or
Switzerland had fared better since 1995, 46% choose
Switzerland, 23% Austria, 11% saw no difference, and 20%
had no opinion.


The Economic Reality - Overall Positive
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4. In response to the OGE poll, Austrian National Bank
Vice Governor Wolfgang Duchatczek said that economic
reality does not support the population's skepticism.
Duchatczek added that from an economic standpoint,
Austria's EU accession is a tremendous success story.
The 2004 accession of ten new member states brought
additional benefits and opportunities for Austria.


5. Duchatczek noted that Maastricht criteria had given
the GoA the impetus to reduce the budget deficit and
public debt, as well as to implement overdue structural
reforms. Consumer inflation averaged 1.7% annually
during 1995-2004 compared to 2.8% in 1985-1994. After EU
accession, growth in exports led to a diminishing trade
deficit, culminating in a trade surplus in 2002. FDI in
Austria and Austrian FDI abroad has boomed, particularly
Austrian FDI in the new member states in Central Europe.
Although Austria's unemployment rate of 3.9% in 1995 had
risen to 4.5% by 2004, Austria consistently has one of
the lowest rates amongst the EU-15. Nevertheless,
stiffer competition in several sectors following
accession (e.g., the food processing industry and the
freight forwarding sector) forced restructuring and
disproportionate job losses in affected sectors.


Reasons for Skepticism
--------------

6. The OGE findings, according to Bauer, reflect
sentiments, emotions and bias. Moreover, the high share
of "no opinion" in all categories signals a lack of
information about the EU. The poll confirms the result
of another OGE study from October 2004, which also
revealed an ambivalent public perception of the EU and
growing skepticism. The 2004 poll cited several reasons
for the skepticism: weak association with a European
identity; general distrust of EU policies, which the
media and politicians often exploit; and a lingering
resentment towards the EU for imposing sanctions on
Austria in 2000 in response to the inclusion of the
Freedom Party in the governing coalition.


A Former Commissioner's View
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7. In an April 16 press interview, former Austrian EU
Commissioner Franz Fischler attributed Austrians'
increasing skepticism about the EU to emotions.
Austrians, according to Fischler, fear the speed of
enlargement, can no longer comprehend the "EU project,"
and feel at the mercy of political concepts with no idea
where the journey will end. The EU, in Fischler's
opinion, needs to clarify its grand strategy, develop its
democratic structures, and promote a European identity.


Comment
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8. Austria has indeed reaped tremendous economic
benefits from EU membership and recent enlargement.
Politically, membership secured Austria a front seat in
Europe's integration and gave it co-decision rights in
all areas. Enlargement placed Austria in the center of
the EU geographically, providing Austrian financial and
commercial interests additional opportunities. Despite
these tangible benefits, sentiments and emotions on a
whole range of issues - immigration, crime, lack of an EU
identity - will continue to drive ordinary Austrians'
perspectives on the EU.

BROWN