Dismantling of Iron Curtain Sets Stage for an Overhaul in Austria : Foreign policy: Vienna takes its role as a bridge between East and West seriously. But a top priority is not to be shut out of the European Community after 1992.

The collapse of Communist rule in Eastern Europe is stirring hopes and fears in Austria, which for nearly 40 years has seen itself as a neutral bridge between East and West.

The hope for new economic and cultural opportunities as the artificial postwar barriers dissolve is tempered by fears among Austrians of an unmanageable influx from their eastern neighbors.

The government is also weighing how the reshaping of the Continent’s economic map will affect its own top foreign policy objective--steering Austria into the European Community.

Chancellor Franz Vranitsky reflected the optimistic school of thought in an ebullient New Year message to his 7.5 million countrymen.

“In one stroke, the expression ‘country in the heart of Europe’ does not just have a geographic sense but gains a political, economic and cultural dimension,” he declared.

However, he rejected the idea that Austria might be some form of political hermaphrodite.

“It is often said Austria lies politically between East and West. That is false. In a political sense Austria belongs to the West,” he said.

Economically it does, too, with trade dominated by exchanges with West Germany.

Although Vienna and the Czech city of Bratislava were once linked by a tram line, the Austrian capital has become effectively the terminus of West European rail and road links.

Austria is the only country from which Soviet troops actually withdrew after World War II and, unlike Hungary, Czechoslovakia and Yugoslavia, it has maintained its multiparty democracy, free press and largely private economy.

Last year the government applied to join the European Community, which it considers vital if it is not to be shut out of the single European Community market after 1992.

But, reflecting a line in the national anthem that the country is “like a strong heart at the center of the region,” it has taken its pivotal role seriously.

Austria is the host for several East-West security conferences, a United Nations headquarters and other institutions and it is arranging--with Hungary--a World Exhibition in 1995.

Peter Michael Lingens, publisher of the weekly magazine Wochenpresse, spoke of a potential for Viennese culture to recapture the glories of the Austro-Hungarian Empire, when it drew inspiration from Prague and Budapest.

The end of Communist control and opening up of borders across the region “offer us the greatest opportunities since the collapse of the monarchy (in 1918),” he said.

“Not because, as some people may imagine, we could again become the center of a great world empire but because Austria could re-emerge as a cultural power in the world,” once again drawing on its diverse roots across the region.

While political commentators waxed lyrical about the chances for the Alpine state, the response within the overwhelmingly bourgeois society, which has grown rich while its Communist neighbors languished, has been ambivalent.

As tens of thousands of Czechs, Slovaks, Hungarians, Poles and East Germans took advantage of new freedoms to take a peek inside the well-stocked stores of Vienna’s consumer society, many in the capital became defensive and possessive.

An opinion poll showed that 63% of Viennese found the peaceful invasion across the dismantled Iron Curtain unwelcome and only 22% said they felt good about it.

Warm-hearted gestures to offer free transportation and theater tickets to their less well-off Eastern visitors drew angry protests from some Viennese, who complained of discrimination.

“It is well known that we don’t exactly have a great sensitivity for historic moments,” said public opinion researcher Rudolf Bretschneider.

Although the Vienna telephone directory is dominated by non-German names and many of the city’s 1.5 million people are themselves refugees from Communist countries, resentment toward foreigners from the East is always near the surface.

A Polish woman in her 30s who has lived in Vienna for more than four years was told sharply by a native Viennese during a dispute over a parking place: “Go back to your homeland.”

A special Cabinet session on the anti-Communist revolution at Austria’s northern, southern and eastern borders confirmed that the country should retain its role as a transit and asylum country but tighten its checks on illegal workers.

Many politicians, including Vranitsky, believe that Austria, with its stability and economic success, could be taken as a model by the East Bloc states as they rebuild their economies.

“We, too, had to start from nothing (after World War II), and today we receive general recognition and respect for our neutrality, our political freedom, our economic success and our social security system,” the chancellor said.

Other commentators, such as veteran conservative politician Erhard Busek, who has long cultivated central European links, was more cautious.

Although Busek saw an opportunity for Austria to assert itself as a key player in the heart of Europe, he warned of the danger of the German-speaking country being viewed as “a third German state” or an historic part of the German nation.

He also referred to half-joking assessments that Austria, much of whose heavy industry and banking is at least part state-owned, could itself become “the last East Bloc country” if it did not bring in economic and political reforms.

He mentioned specifically the immense social and economic power of the two big political parties--the Socialists and the conservative People’s Party--and the monopoly of the state broadcasting system.