>The city somehow managed to find an identity on its own that somehow makes it work.
It's not "somehow" by magic. The explanation is that as a neutral country between NATO and the former Iron Curtain, it was a middle-man for business, politics and trade between the two blocks in the cold war era, profiting from both parties without having to pay obligations to any of them. Basically it won the geopolitical lottery, similar to a Switzerland Light. Today with the Iron Curtain gone and the EU-Schengen borders extended east beyond Austria, it's a lot less relevant than it used to be and therefore a lot less profitable.