This month Austria marked the 70th anniversary of the Anschluss, the onset of the country’s occupation by Nazi Germany. The commemorations were appropriately somber, save for discussion of a chronically unresolved chapter in Austria’s history: the restitution of artworks that were stolen from Austrian Jews and never returned to their rightful owners.

The issue of art restitution has caused much rancor here in the last month, since an Austrian parliamentarian publicly questioned the provenance of more than a dozen paintings held by one of Vienna’s newest and most highly acclaimed museums. Instead of bringing acclaim to this cultural capital, these masterworks have caused the nation’s reputation to once again be stained.

Before and during the Holocaust, thousands of paintings, drawings and sculptures that once belonged to Jewish collectors were expropriated by the Nazis, sold under duress or simply left behind when the owners escaped or were deported to the concentration camps. After 1945, the Austrian government did everything in its power to discourage the restitution of these assets, even in cases where the former owners or their heirs filed a claim.

Some of the claimants accepted a pittance as compensation, while others just gave up the fight. But a wave of negative publicity abroad, as well as a newfound willingness among Austria’s political elite to take responsibility for the crimes of the past, drove Parliament to pass a restitution law in 1998.

Under the legislation dozens of pieces were finally returned. The most prominent case was a Gustav Klimt portrait of Adele Bloch-Bauer, which together with four other Klimt paintings was returned to Maria Altmann, the niece of the depicted Viennese socialite, in early 2006 after a seven-year-long legal fight. The painting was then sold to Ronald Lauder for a then-record $135 million, and now hangs as the prize showpiece in Lauder’s Neue Gallerie on Manhattan’s Upper East Side.

The same legislation is now being used to pressure Rudolf Leopold, an 83-year old Austrian art collector who acquired dozens of works by Klimt, Egon Schiele and other early modern Austrian painters in the 1950 and 1960s. Leopold was a physician with a limited budget, but due to changed tastes and the absence of the Jewish bourgeoisie that had once been the prime collectors of such pieces, he was able to amass his collection at a relatively low price.

In 1994, the government of Austria bought Leopold’s entire collection — more than 5,000 artworks — at a large discount and put it into a foundation, which in turn built the Leopold Museum, a striking white cubical building located across the street from Vienna’s world-famous Art History Museum. Leopold was named director for life.

For decades Leopold has failed to provide provenance information on any of the pieces he acquired, and to this day he continues to fight tooth and nail against every attempt to make him return looted works to their Jewish owners or heirs. The law has to some extent been on his side: Unlike in the United States, in Austria assets acquired in good faith can often be kept even if they later turn out to have been looted.

The consequence has been yet another public relation disaster for Austria — and yet another one involving Leopold.

A decade ago one of his choice Schiele paintings, “Portrait of Wally,” was impounded by American authorities during a Museum of Modern Art exhibit, after The New York Times reported that the painting had once belonged to a Jewish art dealer and Leopold had been aware of these origins. The painting is still locked up in the museum’s cellar, while lawyers continue to fight over its ownership.

Leopold’s latest run-in with restitution efforts came in February, when the Leopold Museum opened a large exhibit of works by Austrian painter Albin Egger-Lienz. Wolfgang Zinggl, an Austrian parliamentarian, claimed that 14 of the exhibited works had likely been looted during the Nazi era, or at a minimum were of questionable provenance.

The president of the organized Jewish community in Vienna, Ariel Muzicant, subsequently caused an uproar by demanding that the Leopold Museum be closed until all ownership disputes are settled. Austrian Culture Minister Claudia Schmied said the government’s hands are tied, despite the fact that the state provides generous subsidies to the museum.

Leopold, meanwhile has rejected all charges against him, casting himself as a victim of a global conspiracy. He accuses the restitution claimants — all of whom are Jewish — of being motivated solely by greed.

“I alone collected Klimt and Schiele after the war because I loved their work,” Leopold said. “Now, as the prices are rising, others get interested, because they want to buy shares.”

Unfortunately, Leopold has plenty of public support. It is hard to explain to the average Austrian how justice is being served by removing a painting from public display in a museum and shipping it off to a claimant in New York and California, who then invariably turns around and sells the work at Christie’s or Sotheby’s. Unlike many of the old Austrian Holocaust survivors still waiting for compensation for their material losses, the claimants for looted art are usually not in financial need, a fact not lost on many Austrians.

Nonetheless, quickly resolving the remaining looted art disputes remains very much in Austria’s interest. True, there is plenty of Nazi-era looted art held by museums in France, the Netherlands and even the United States. But from a public relations standpoint the issue is most damaging to Austria, which has such a troubled history when it comes to dealing with Nazi crimes and which is so keen on tourism.

Austrians would do well to revisit the saga of the most contentious restitution battle to date, that over Klimt’s “Adele Bloch-Bauer I.” During the last years it was on display at Vienna’s Belvedere Museum, the painting was an embarrassment to anyone who followed media reports. Since it was brought to the Neue Gallerie in Manhattan, by contrast, the portrait has become one of the greatest advertisements for the beauties of Vienna.

To be sure, there are plenty of legal and political difficulties involved, but Austria has the laws in place to act quickly and generously to settle old debts. Austria should not wait for Rudolf Leopold to pass away before it takes the stain of history off its artists’ masterworks.

Eric Frey is managing editor of the Vienna daily Der Standard.