VZCZCXRO4835
RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV RUEHSR
DE RUEHVI #0272/01 0690725
ZNR UUUUU ZZH
R 100725Z MAR 09
FM AMEMBASSY VIENNA
TO RUEHC/SECSTATE WASHDC 2123
INFO RUCNMEM/EU MEMBER STATES
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC
RUEAEPA/EPA WASHDC

UNCLAS SECTION 01 OF 02 VIENNA 000272 
 
SIPDIS 
SENSITIVE 
 
TREASURY FOR FTAT, OCC/SIEGEL, AND OASIA/ICB/ATUKORALA 
TREASURY PASS FEDERAL RESERVE, FINCEN, AND SEC/JACOBS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN SENV KGHG AU
SUBJECT: Green Islands in Sea of Old-Style Stimulus in 
Austria 
 
REF: (A) Vienna 54; (B) 08 Vienna 1571 
 
¶1. (U) SUMMARY: The GoA has adopted economic stimulus 
measures totaling EUR 5.7 billion (c. 2% of GDP, above 
the EU benchmark of 1.5%/GDP).  About one in ten Euros of 
new spending will be on "green" projects -- mostly energy 
efficient building retrofits.  Even that modest sum still 
puts Austria in Europe's vanguard, since less than 2% of 
EU-wide stimulus spending is allocated for green 
measures.   END 
SUMMARY. 
 
EUR 2.9 Billion In Spending, 2.3 Billion In Tax Cuts 
- - - - - - - - - - - - - - - - - - - - - - - - - - - 
 
¶2. (U) The GoA was an early mover in this crisis, passing 
stimulus packages in October and December 2008 (before 
the EU's "European Economic Recovery Program"): 
-- the October 28 "Stimulus Package I" (EUR 1 billion) 
contained mainly guarantees for SMEs/Small and Medium 
Enterprises 
-- the December "Stimulus Package II" (EUR 1.9 billion) 
will fund primarily infrastructure 
 
¶3. (U) The GoA has agreed in principle on a tax reform to 
be adopted by April including EUR 2.3 billion of tax cuts 
and EUR 500 million of transfer payments to families 
(septel to follow).  NOTE: The GoA counts all three 
stimulus packages (EUR 5.7 billion) as part of the 
European Economic Recovery Program, and Chancellor 
Faymann has called Austria's stimulus the "second 
largest" in the EU.  It will not be Europe's fastest 
though: a significant part consists of loan guarantees 
(which hinge on outside lending) and many infrastructure 
projects will not be implemented until at least 2010 -- 
END NOTE. 
 
Details on Stimulus Spending 
- - - - - - - - - - - - - - - 
 
¶4. (U) The EUR 1 billion "Stimulus Package I" (adopted by 
Parliament October 28) was an early attempt to stabilize 
the Austrian economy through loans and loan guarantees 
for Small and Medium Sized Enterprises (SMEs): 
-- EUR 170 million will go for investment credits 
(including micro-credits) through AWS, an Austrian 
government investment agency; 
-- EUR 200 million in loans will be issued through the 
European Investment Bank (EIB), including EUR 100 million 
for SMEs and EUR 100 million for research/development; 
-- EUR 100 million will be funneled through the German 
KfW Group (Bank for Reconstruction), earmarked for 
environmental technology, energy efficiency, and waste 
reduction projects; 
-- the GoA will guarantee EUR 400 million of AWS loans to 
SMEs to stimulate new lending by commercial banks; and 
-- a EUR 80 million fund will be created through AWS, 
where SMEs can apply for equity investments. 
Only about EUR 100 million of this first package will be 
funded in the 2009 budget (according to MinFin), meaning 
the impact will be felt mainly in 2010. 
 
¶5. (U) The GoA's EUR 1.9 billion "Stimulus Package II" 
(adopted by the cabinet on December 23; no parliamentary 
vote needed for most items) is mainly for infrastructure. 
The package includes: 
-- EUR 875 million for new construction (public offices 
and schools/universities) and energy-efficient 
renovations; 
-- EUR 570 million to subsidize faster depreciation by 
private enterprises (to promote replacement of old 
equipment); 
- EUR 100 million for "thermal renovation" of private 
buildings (EUR 50 million for households, 50 million for 
companies); 
- EUR 150 million for a "Regional Job Creation 
Initiative" (EUR 80 million for business projects that 
create new jobs, and EUR 70 million to re-train the 
unemployed); 
- EUR 100 million for Research/Development (including EUR 
33 million for business-related research and 17 million 
to modernize university equipment); and 
- EUR 140 million to finance an obligatory pre-school 
kindergarten year for all children (COMMENT:  it is 
 
VIENNA 00000272  002 OF 002 
 
 
unclear why the GoA counts this as a stimulus measure). 
 
5-11% For Green Business 
- - - - - - - - - - - - - 
 
¶6. (SBU) Like most EU crisis spending, Austrian 
"stimulus" measures tend to be subsidies for established 
industries and favored sectors (such as SME's) or are 
simply popular measures by a different name -- such as 
the free kindergarten year.  Even with Austria's early 
start, the money will flow mostly in 2010:  the Federal 
Real Estate Company (which will administer most of the 
government's construction program) has too few projects 
in the pipeline now to ramp up spending quickly. 
 
¶7. (U) In our analysis, about a tenth of new GoA spending 
can be labeled "green" stimulus:  EUR 200 million in 
environmental technology projects and efficiency 
retrofits, plus another EUR 120 million (NOTE: Post 
estimate) of new spending on public building renovation 
and research projects.  This accounts for about 11% of 
GoA stimulus spending.  If we add tax cuts to the 
baseline (which the GoA itself does), the "green" slice 
of the stimulus pie falls to 5-6%.  Still, this is well 
ahead of the EU pack:  a February analysis by Belgian 
think-tank Bruegel (reported in EU Observer/February 9) 
found that less than 2% of EU-wide stimulus spending will 
go for "green" projects. 
 
KILNER