'Austria has so many positive aspects and achievements to offer that it does not need to shy away from the criticisms of its artists. The public can be trusted to make up their own minds,' Moya-Goetsch says. 'Besides, speaking as a civil servant, I would feel uncomfortable having to judge which Austrian artists were sufficiently 'patriotic' to support. It is enough that an artist or his product is from my country, we consuls on principle do not engage in artistic or political criticism of the works that we promote.'

Her sentiments might be taken as a given in Europe, but such a laissez-faire attitude among government officials towards filmmakers laying bare their own country's flaws is hardly universal: one needs only to recall how generations of mainland directors - from Zhang Yimou and Chen Kaige to Jia Zhangke and Lou Ye - have been harassed and silenced by censors because their films were perceived as showing China in a bad light. And at a time when nationalistic fervour reaches a crescendo in Hong Kong, ahead of next month's Olympics in Beijing, Moya-Goetsch's comments about her government's way of dealing with its critics provides much food for thought.

'It's practically a characteristic of modern Austrian art - not just in the film sector, even more so in our literature - to be critical of our society and institutions,' she says, citing the example of Elfriede Jelinek, whose novels, like Haneke's films, have raised questions about the problems beneath the pristine facade of Austrian society.

The Piano Teacher, Jelinek's novel about an emotionally stunted middle-aged piano tutor who maims herself both to vent her angst and to attain sexual gratification, was adapted for the screen by Haneke in 2001.

'We consider such a critical stance to be a valuable contribution to a vibrant, open society. Criticism and the reaction it provokes are, after all, necessary for social progress,' says Moya-Goetsch.

And critical is what Austrian artists have been in recent years.

The rise of far-right political parties and their inclusion in a seven-year ruling coalition with mainstream conservatives drew fire from Jelinek.

Barbara Albert's Northern Skirts, made in 1999 - the year Joerg Haider's anti-immigrant Freedom Party cruised to electoral victory - shows Vienna as a multicultural city, in a clear rejection of the racist sentiment the extreme right had been fanning for years.

Filmmaker Stefan Ruzowitzky said his decision to make The Counterfeiters, an Oscar-winning film about a group of concentration camp inmates made to forge British banknotes for the Nazis, was partly due to his revulsion at the rise of politicians such as Haider, who once professed his admiration for Adolf Hitler's employment policies.

The directors emerging from Austrian cinema in recent years are known for their confrontational work. Michael Glawogger's Slumming, for example, revolves around a yuppie prankster who, not content with bringing dates to sleazy bars and then taking snaps of them from under the table, takes a drunk he finds on the streets of Vienna to the Czech Republic and dumps him there just for kicks.

And after making a string of gritty documentaries about wannabe starlets (Models), bizarre pet owners (Animal Love) and devout Catholics (Jesus, You Know), Ulrich Seidl offers his latest film, the fictional feature Import/Export (below), a dispassionate account of the disturbing scenarios facing a Ukrainian nurse recently relocated to Austria and two lorry drivers winding up their journey in a Ukrainian town.

Talking about the success of Austrian pictures at international film festivals, Moya-Goetsch says the premise of films crossing national borders in Europe allows 'directors a fairly large degree of discretion and artistic freedom'.

The Austrian cultural authorities have funded some of these films. That such strident dissident voices are given succour by the authorities might sound ironic, but it has provided a milieu in which many challenging filmmakers have been able to flourish.

Michael Haneke retrospective, Broadway Cinematheque, Palace IFC. Ends July 20