This article gives an overview of the process of domestic adjustment a
nd of the formation of Austrian policy priorities within the European
Union (EU). It argues that, while certain problems of economic and pol
itical adjustment, including the neutrality issue, are still being add
ressed, the coalition governmetn of Social Democrats and Christian Dem
ocrats is basically determined to establish Austria in the integration
core in Europe if and when differentiated integration processes emerg
e, and particularly in relation to Economic and Monetary Union.