After being joined to Nazi Germany from 1938-1945, Austria was occupied by the Allies, who divided up the country and the capital Vienna into separate sectors.
However, the 1955 State Treaty - signed by the Allies - guaranteed Austria's unity, ensuring it did not suffer Germany's fate of being split between the Soviets and the Western Cold War blocs.
In return, Austria declared permanent neutrality, to which it still adheres.
There were some questions surrounding this when two thirds of voters supported EU membership in a referendum in 1994 and entry followed in 1995.
The entry into Austria's coalition government of the far-right Freedom Party in February 2000 sent shockwaves across Europe. Austria's relations with the EU were severely strained after some states imposed sanctions in protest. These were lifted some months later.
The capital, Vienna, is home to key international organisations, including the Organisation for Security and Cooperation in Europe (OSCE), the International Atomic Energy Agency (IAEA) and Opec, the Organisation of Petroleum Exporting Countries.
Austria has a very rich cultural heritage. Wolfgang Amadeus Mozart occupies a place of his own as composer of some of the best loved European classical music while the works of Franz Schubert enjoy great popularity too.
In the world of philosophy and ideas, Sigmund Freud still provokes controversy while Ludwig Wittgenstein was one of the major influences in 20th century thinking. In fine art, the paintings of Gustav Klimt are widely admired.
President: Heinz Fischer
Heinz Fischer, a centrist politician committed to the welfare state and Austrian neutrality, was elected to the largely ceremonial presidency in April 2004 and again 2010.
In the 2010 poll he warded off a challenge by Barbara Rosenkranz of the anti-foreigner and anti-European Union Freedom.
He has spent most of his life in politics. After graduating with a law degree from the University of Vienna in 1961, he took a position in the Social Democratic Party (SPO), entering parliament as a deputy in 1971 and staying on until 2004.
During this time, he served as science and research minister between 1983 and 1987, before being elected parliamentary president in 1990. He was re-elected three times.
Between 1992 and 2004, he was also a vice-president of the European Socialist Party.
Once in office, he officially renounced any party membership to become independent.
Chancellor: Werner Faymann
A new grand coalition government was sworn in in Austria in December 2008, two months after snap general elections.
It is made up of the centre-left Social Democrats (SPOe) and the conservative People's Party, whose previous coalition collapsed during the summer.
Social Democrat leader Werner Faymann took the job of chancellor, while Michael Spindelegger of the People's Party (OeVP) serves as vice chancellor.
The Social Democrats won the September elections with 30% of the vote. But they, and the People's Party, with 26%, had their worst results since 1945. Far-right parties won nearly 29% of the vote, doubling their support since the 2006 elections.
Although Austria has weathered the economic downturn that began in 2008 better than many other European countries, the government's austerity measures left it struggling to retain the support of the electorate.
The coalition suffered a further setback in the Viennese municipal election of October 2010, when the far-right Freedom Party won 26% of the vote, placing it second only to the Social Democrats.
Mr Faymann is a former Vienna city councillor and was transport and infrastructure minister in the cabinet of his predecessor, Alfred Gusenbauer. He is seen as a pragmatist with a populist streak.
Austria's public broadcaster, Oesterreichischer Rundfunk (ORF), has long-dominated the airwaves. Lately, it has faced competition from private broadcasters, particularly in Vienna.
Private broadcasting in Austria is a recent development. Local commercial radio was given the green light in the 1990s. A national TV licence was granted to commercial station ATV - which opened in 2000 - and local TV stations have sprung up.
Cable or satellite TV is available in most Austrian homes and is often used to watch German stations, some of which tailor their output for local viewers.
A daily newspaper is a must for many Austrians. National and regional titles contest fiercely for readers.
There were 6.14 million internet users by June 2010, around 75 per cent of the population (InternetWorldStats.com).