3 - Austria

Summary

In the second half of the 1960s, Austria seized on the Italian gas-for-pipe initiative and closed a deal with the Soviet Union. This presented a peculiar problem for the country’s small economy. Under the hegemony of convertibility of the US dollar, as well as the competitive, liberalizing impetus initiated in the establishment of the EEC, Austria feared that the coming large outlays in purchases of Soviet gas would not in turn be spent in Austria. The Soviets were pressuring Austria to liberalize its markets and do away with the strict balancing of trade that had been the norm during Bretton Woods through the technology of negotiated, long-term trade lists. They were right to fear. The Soviets were eager to spend the convertible currency earned through gas exports as profitably as possible. Years before military exports and Petrodollar recycling resolved a similar problem for the United States and Western Europe, Austria struggled to maintain the kind of accounts-balancing, barter exchange with the socialist world it had enjoyed in the postwar period. Market integration seemed inexorable. And the face of that inexorability was the Soviet Union.