Pompeo goes to Vienna: No consensus on China and Russia between the US and Austria

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Despite frictionless bilateral relations and sympathies between President Trump and Chancellor Kurz, Austria does not support the US measures to contain China and Russia in Central Eastern Europe. Chinese companies will remain partners for building the 5G infrastructure – and Russia an important energy provider.

From 11 to 15 August 2020 US Secretary of State Mike Pompeo traveled to the Czech Republic, Slovenia, Austria, and Poland to discuss regional and bilateral matters. Already in February 2019, he had visited Hungary, Slovakia, and Poland. Central Eastern Europe’s (CEE) strategic importance for Washington increased significantly after the end of the Cold War. The NATO Eastern enlargement of 1999 and 2004 highlights Washington’s security commitment to the region.

While in the 1990s and early 2000s Russia was regarded as the main rival, more recently China is viewed as an additional strategic competitor. The Trump administration is keen to strengthen the “efforts to counter malign actions of Russia and communist China”. It is a task the European Union (EU) faces, too. However, due to a lack of consensus, both in regard to Russia and China the EU has no robust strategy.

Whereas Russia remains a crucial source of oil and gas for many European nations, China became in the last years an important investor and provider of technology, notably for 5G. The Belt and Road Initiative (BRI) and the 17+1 cooperation format with the CEE and Western Balkan countries are tools to strengthen Beijing’s economic and political influence in Europe.

Pompeo in Vienna

In his talks in Vienna on 14 August, Mike Pompeo aimed to convince his Austrian counterparts to support the US policies and actions to contain Russian and Chinese influence in CEE. Pompeo met with the Austrian President Alexander Van der Bellen, Chancellor Sebastian Kurz, Foreign Minister Alexander Schallenberg, and Minister of Finance Gernot Blümel as well as numerous business people.

Unlike the other countries Pompeo visited, neutral Austria is not a member of NATO. Due to its geographic location, it is nevertheless strategically relevant to the US. Vienna is the host city for many international organizations, among them the United Nations (UN), the Organization for Security and Co-operation in Europe (OSCE), and the Organization of the Petroleum Exporting Countries (OPEC). Also, many international companies have their headquarters in Austria from where they manage their business activities in Central Eastern and Southeastern Europe. The reason is that due to the common history during the Habsburg empire and the close neighborhood, the knowledge about this region is considerably high in Austria. In this region, Vienna yields significant economic and political influence. The government, therefore, needs to closely monitor the activities of regional and outside actors – including espionage activities, as Vienna is still infamous as a city of spies.

The US is Austria’s third-largest trade partner. Despite overall frictionless bilateral relations, it was only the second bilateral visit of a US Secretary of State since 1945 after Madeleine Albright in 1998. However, then Presidents Richard Nixon and George W. Bush paid bilateral visits in 1972 and 2006, respectively. On other occasions, high-ranking American politicians used Vienna as a place for multilateral negotiations, for instance, the Iran agreement in 2015 or during the Cold War.

Conversely, Austrian politicians visited regularly their US counterparts. Chancellor Kurz left a very positive impression with President Trump during their talks in the White House in February 2019 (in the surprising presence of most high-ranking American Cabinet members). According to Peter Rough, in the view of the Trump administration the young conservative Chancellor “represents the future of European politics”. Trump and Kurz strongly agree on restricting (illegal) migration and a pro-Israel stance. However, in many other international matters, Washington and Vienna disagree, notably in questions concerning climate change, the Iran nuclear deal, the North Stream 2 gas pipeline, and Huawei. The latter two issues directly affect Austria’s relations with Russia and China.

Limited interest in China despite its growing relevance

Russia’s influence on Austria is much stronger than the Chinese one. Vienna has traditionally excellent relations with Moscow. Especially during the times of the coalition government of Kurz’s conservative People’s Party (ÖVP) and the far-right Freedom Party (FPÖ), the latter promoted close ties with the Putin regime. In a secretly recorded meeting (infamous as the so-called “Ibiza video”) with the fake niece of a Russian oligarch, two former FPÖ leaders seemed to offer her lucrative public deals in exchange for financial donations to associations close to the FPÖ. President Putin even attended the wedding ceremony of then foreign minister Karin Kneissl in 2018. Leading representatives of the Austrian economy also speak out in favor of close relations and are critical of the EU sanctions. The energy company OMV, Austria’s largest firm, cooperates closely with Gazprom and is heavily engaged in the North Stream 2 project. Though, there have also always been critical voices about Russian influence. In August 2020, Austria sent a strong diplomatic message, as it expelled a Russian diplomat amid allegations of economic espionage.

As I wrote in a previous article, “Compared to other European nations, notably the CEEC, Austria is a late-comer in seeking deeper relations with China in general and stronger participation within BRI in particular.” It was only in April 2018 that a large Austrian delegation consisting of the highest-ranking politicians and business people visited China to sign a series of cooperation agreements. China is already Austria’s fifth-largest trade partner, well ahead of Russia. Austria, though, has deliberately not formally endorsed the BRI in the form of a Memorandum of Understanding.

Surprisingly, despite the increased economic exchange with China and Beijing’s growing influence in Austria’s neighborhood, China is not a contested issue – unlike in Slovakia and in particular the Czech Republic. There the positive and negative perceptions of China are very strong, and consequently, the debate is extremely heated. In fact, China is in Austria, with a few exceptions, not even a major topic in politics, media, or academia. One reason is that, other than the CEE 17+1 members, Beijing does not target Austria, a 17+1 observer, directly with its propaganda.

Another reason is the still lacking awareness of China’s growing influence in Europe among Austrians. In general, expert knowledge about China is limited in Austria. In the public and the media, the US and Russia attract much more interest. Very often the (usually critical) perception of US policies provides the lens for viewing the great power behavior of Russia and China less negatively.

Even in the Foreign Ministry, China enjoys no priority. There is only a small China desk within the Asia-Pacific department, established by Kneissl during her term as foreign minister (2017–2019). In general, only a few diplomats deal with Asia as such. At the university level there exists only one Department of East Asian Studies (with a Chinese Studies section), namely at the University of Vienna. There are two Confucius Institutes (CI), one at the University of Vienna, the other at the University of Graz. The director of the Viennese CI stresses its independence from China. Both CI focus on language and cultural exchange; only a few public discussions deal with political topics such as the BRI. All in all, the public influence of the two CI is very limited.

Huawei and ZTE

Illustrative for the view of China in Austria is the case of Huawei and its role in building the national 5G infrastructure. The Austrian government refuses to exclude the Chinese companies Huawei and ZTE. Kurz emphasizes that Austria is “fundamentally technology-neutral”. The government argues that it is up to the Austrian telecom companies to choose their partners as long as they adhere to data security standards. This policy is in line with the EU guidelines on cybersecurity. The Austrian government also stressed that it has no knowledge about cyberespionage committed by Chinese companies related to the creation of the 3G and 4G infrastructure.

Magenta, a major provider and subsidiary company of Deutsche Telekom, and the smaller regionally oriented Liwest cooperate with Huawei. Drei, fully owned by Hong Kong-based Hutchison, works together with ZTE. A1, the biggest telecom firm, relies on Nokia. In general, though, the major Austrian telecom companies collaborate with more than one firm; Nokia, Ericson, and Cisco are also partners.

Referring to 5G, both Pompeo and Schallenberg stated after their talks that there exist topics where they could not reach an agreement. Unlike Slovenia, the Czech Republic, and Poland, Austria did not join the US Clean Network initiative. Most Austrian media – already very biased against Trump – are critical about the US pressure on Austria to exclude Chinese companies. They highlight the lack of evidence for cyberespionage and favor the existence of a pool of competing companies.

A more complicated balance of relations

The advocacy of a restrictive migration policy binds Austria and the Visegrad-4 (V4) in the European Union together. However, due to opposing aims, e.g., nuclear energy and, most recently, Vienna’s criticism of the increased EU budget and the recovery fund to mitigate the impacts of the Corona pandemic, Austria is not part of a CEE bloc within the EU. In fact, Austria is not a member of any stable country group that would support it in promoting its national interests.

In lieu of credible and comprehensive EU strategies on Russia and China, Austria has to find its own balance. As a small and neutral country, Austria does neither balance against nor bandwagon with any great power. Vienna will further rely on friendly relations with the US, Russia, and China, aiming to reap economic benefits from its relations with all three. However, due to China’s increasing influence in Austria and the region covered by 17+1, finding a sound balance in the relations with the US, Russia, and China to promote the Austrian strategic, economic, and political interests will become even more challenging.

Cover photo: US Embassy in Austria

  • Alfred Gerstl is the President of CEIAS. He holds a Marie Sklodowska-Curie Individual Fellowship at the Department of Asian Studies at Palacký University in Olomouc (Czech Republic).