Although each province has a documentary history stretching back to the Roman occupation, the events relevant to the formation of the national culture begin after the First World War. After losing the war, the Austro-Hungarian Empire disintegrated into a number of nation-states—Hungary, Czechoslovakia, and Yugoslavia—based primarily on language affiliation. The German-speaking provinces, some with sizable non-German populations, became the (First) Republic of Austria. Other provinces, some with large German populations, especially in the regional centers, were ceded to Italy (South Tirol), Poland (Galicia), and Romania (Transylvania) . National integration was hampered by postwar famine, disease, the loss of provincial markets and areas of supply, and the inflationary cycle and depression of 1926-1938. Pan-German nationalist political ideologies that linked the small, vulnerable Austria to the more powerful German state to the north were popular alternatives to Austrian nationalism, and in 1938 a majority of the country welcomed "Anschluss," the annexation of Austria by the Third Reich. The struggle between German and Austrian nationalism led to cultural warfare that severely damaged—or even, in some cases, destroyed—the country's Jewish, Gypsy, Croatian, and Slovene communities during World War II. After the war, the four Allied powers each occupied a separate sector of the country and of Vienna. In 1955, sovereignty was returned to Austria under the condition of perpetual political neutrality. The war experience, the failure of Pan-Germanism, the Permanent neutrality, and the legacy of the destruction of the minority communities became the basis for a new national identity in the Second Republic of Austria.
Germany remains the most significant cultural focus outside Austria. The Austrian schilling is tied to the German mark in international money markets. German corporations are heavily invested in the Austrian economy. The German press is read and German trends in government, society, and consumption are closely monitored. Austria also has Important relationships with Hungary and the Czech and Slovak Federative Republic. Although relations were strained after the dissolution of the Austro-Hungarian Empire and the erection of political barriers in the 1950s and 1960s, the three countries now maintain a cordial association. Currently, their citizens may freely cross their frontiers without visas. Ethnic conflicts have created difficult relations with three other neighbors. In northern Italy (South Tirol), German-speaking Tirolese separatists still wage guerrilla actions against Italian institutions from Austria. Although the Austrian government deplores these actions and has successfully prosecuted offenders, relations with Italy have been strained for many years. German nationalist sentiment has also antagonized Yugoslavia. Croatian minorities in Burgenland and Slovene communities in Carinthia have been subject to discrimination by local and provincial officials. Of all its neighbors, Romania has the most strained relations with Austria. A large number of Protestant Upper Austrians migrated to Transylvania after the Counter-Reformation, but they maintained links to their original communities. These new communities were under the direct threat of "Romanianization" and the destruction of their ethnic identities. After the 1989 rebellion in Romania, however, the threat was mitigated and relations between the countries improved.