Otto was made king of Hungary by a referendum, though one with the British and Italians putting a finger on the scales. Otto and the new Hungarian government seem to be using neutrality as insulation to drive for a western style democracy, like the post Authoritarian government in Romania.
Austria is a Fascist state, the former Austrian Dictator has been recovered from Nazi custody and it back in power. it seems to be setting up like the Warsaw Pact states of OTL. The Austrian Fascists will run the local affairs de facto, and de jure the foreign policy; but Italy is the senior partner and reserves a right to meddle if Austria seems to be leaving the Fascist line. Italy wants Austria string though as both a market for them, and to add a credible military to its assets for the expected next round with the Soviets.
I could see some resurgent Habsburg support in Austria here. Namely that if the Hungarian experiment succeeds certain antiFascists could see the dynasty as Antifascist, allies of democracy, and absence of excessive foreign influence. Had to say how the Hungarians will feel; by the time the Cold War ends. Though there will be no reborn AH i am intrigued at the concept of some kind of Danubian confederation between some of the former Habsburg possessions.
I don't know if it's a proper cliche or not, but I always kind of get a rise out of Austria forming a sort of fascist "South Germany" counterpart to the democratic West Germany and the communist East Germany - one that once the three-wayish Cold War ends, sees all three reform a united Germany.
Ah. Might want to be more clear in the future. It read very differently as initially posted.
Looking back, I realize it might have been seen as an endorsement of conspiracy theories - given I think that's a bannable offense, I am REALLY glad I got to elaborate.