Austria is special. Its tourist board will tell you that, as will the headlines on the infrequent occasions when the Alpine republic grabs global attention. One of those rare occasions happened this weekend: Austria's far-right parties scooped up 29 per cent of the votes between them in a general election, pushing them ahead of the conservative People's Party, and only just behind the Social Democrats.

The last time Austria was in the news was in April when Josef Fritzl was arrested for imprisoning his own daughter in a cellar and fathering her seven children. While it would be absurd to connect the horrifying Fritzl case directly to Austria's troubled politics, the fact that Fritzl blamed his behaviour on his harsh upbringing under the Third Reich shows that the country remains hobbled by its history in a way that is no longer true of neighbouring Germany. By and large the Germans have faced up to and faced down their Nazi past. The Austrians have not, hence why, unlike Germans, a third of them are willing to vote for xenophobic parties.

Until this decade, Austrian schools continued to teach that the country was “Hitler's first victim”, rather than his earliest collaborator. The 1938 newsreel films showing the delirious Viennese crowds welcoming Hitler back give the lie to that particular piece of special pleading. As well as Hitler, many of the worst Nazi war criminals - including two of those hanged at Nuremberg, the SS leader Ernst Kaltenbrunner and Arthur Seyss-Inquart, overlord of the occupied Netherlands - were Austrians; as was Otto Skorzeny, reputed leader of the postwar Odessa organisation of former SS men.

But the shadows of Austria's history go back further than the Third Reich. Anyone taking a trip around Vienna's ring-road will gaze at the grandiose palaces, opulent museums and opera houses, and realise that this was once the hub of an empire, a multinational kennel in which the Austrians were, however insecurely, top dogs.

The Austro-Hungarian Empire collapsed 90 years ago. In 1918 the emperor departed, his threadbare ethnic quilt of an empire ripped apart, and the Habsburgs became history. Austria was left as a rump republic, a landlocked little nation whose 8.3 million people still long for their past imperial grandeur. Many of them hoped to find it with Hitler, but when he failed them too in 1945 all they were left with was a kind of angry nostalgia, easily exploited by nationalist politicians.

Ironically, the modern Austrian political system, against which its people have voted so spectacularly, was born behind the wire of Hitler's concentration camps. It was there that detained Social Democrats and Catholic conservatives came together and agreed to sink the bitter differences that had caused civil war in 1934 and made Austria such easy prey for Hitler.

Every institution, every state-run enterprise, was neatly divided between the socialist “reds” and the conservative “blacks”. In the state broadcasting corporation ORF - where I worked as a radio journalist - each department had a “red” boss and a “black” deputy, or vice-versa. This system, known as Proporz (“Proportionality”), allowed often talent-free party hacks the pick of the best jobs, the best perks and even the best housing. Originally designed to end class war and division, it bred bitter resentment among the majority who were excluded from the cosy but corrupt arrangement.

Jörg Haider, at 58 now the ageing enfant terrible of the far Right, skilfully rode such resentment after he took over Austria's small liberal Freedom Party in the 1980s and transformed it into a successful populist movement. Despite his praise for Hitler's employment policies and his attendance at Waffen SS reunions, he is a modern politician. He swapped brown shirts and lederhosen for designer suits and blue jeans as he denounced the immigration that had “swamped” Austria since the collapse of Communism. Such xenophobia struck a chord and Haider won 26 per cent of the vote in the late 1990s.

Tired of Haider's egotism, his party split in 2005 and a much younger pretender, the sharp-suited, white-toothed Heinz-Christian Strache, took over the leadership. Meanwhile the country groaned under a grand coalition between the Social Democats and Conservatives in which the worst faults of Proporz were further magnified.

Haider, always a prima donna, flounced off to form his own League for the Future of Austria (BZO), but as the latest election has shown, the two rival parties have garnered even more votes than the Freedom Party in Haider's glory days, threatening to make Austria ungovernable without their participation.

As the rest of Europe tut-tuts over the return of Austria's nasty habits, the Austrians will enjoy their moment of notoriety. Austrians like cocking a snook at the outside world. But the outside world will soon forget them again - until the next skeleton emerges from a long-forgotten cellar.

Nigel Jones's Countdown to Valkyrie: The July Plot against Hitler is published in December by Frontline Books

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