Return to dreamland: Has the musical killed off operetta? Simon Broughton looks back to Vienna's Gold and Silver Ages and argues that there's more to Lehar than Lloyd Webber in Austro-Hungarian dress

Last month there was a world premiere at Vienna's Theater an der Wien: Elizabeth, a new musical about the life and death of 'Sissy', wife of the Emperor Franz Joseph. World premieres have been few and far between at the Theater an der Wien in recent years, but in its heyday the theatre premiered not only Mozart's The Magic Flute and Beethoven's Fidelio, but dozens of operettas that set Vienna waltzing and were successfully exported around the world.

For over half a century Vienna was a powerhouse of popular music theatre. Johann Strauss's Die Fledermaus in 1874 was followed by his Gypsy Baron, Karl Millocker's Beggar Student, Franz Lehar's The Merry Widow, The Count of Luxemburg and The Land of Smiles, Emmerich Kalman's Csardas Princess and Countess Mariza and other shows by Oscar Straus, Leo Fall and Robert Stolz, 'the last of the Waltz Kings'. All these shows, and many others, played in London, most of them at the fashionable Daly's Theatre in Leicester Square, now the site of the Warner West End cinema.

Over the last decade, though, the pattern has been reversed with shows like Cats, Les Miserables and The Phantom of the Opera packing them in at the Theater an der Wien and other Viennese houses.

The new show at the Theater an der Wien, Elizabeth, is Vienna's attempt to reassert itself as a theatrical centre, with direction by the opera director Harry Kupfer and sets by Hans Schavernoch. The music, by Sylvester Levay, is rather like a guided tour through the musicals of the past 20 years, but its subject matter - the dance of death accompanying the break-up of the Habsburg Empire - is purely Viennese. As a picture of that fin de siecle world, Elizabeth goes a lot deeper than the old operettas, but seeing shows like Elizabeth or Phantom of the Opera in Vienna underlines the connections between the two musical forms. It's no accident that the Viennese cast album of Phantom is so much better than the London one. You feel the Viennese singers and musicians really have it in their blood.

So what are the links between the Viennese operetta and the musicals of today? Both are popular boulevard entertainment: not the high art of the opera house, but escapist fantasies designed for as broad an audience as possible. Melody and romance are at the soft centre of highly professional musical confections. Despite the fashionable sneering that Lloyd Webber receives, Phantom of the Opera is rich in lyricism, highly charged with emotion and well constructed.

But beyond the music there's the marketing. The Merry Widow was not only an international export, but the first great vehicle for merchandising spin-offs. American cartoons satirised the craze for Merry Widow hats, corsets, cigarettes and cocktails, images as familiar as the Les Mis orphan girl or the Phantom mask.

The plot of Phantom centres on Christine. She is torn between her love for the Phantom, a disfigured outcast who intoxicates her with his musical gifts, and her fiance, Raoul, a conventional and respectable figure with whom she is united at the end. Compare this with Lehar's Gypsy Love, written in 1910: Zorika has a similar choice between a hot-blooded gypsy violinist who sets her heart on fire and the decent nobleman to whom she is engaged. Zorika, like Christine, takes the safe way out. Both plotlines tap the continuing power of the same emotional dilemma - the exotic but dangerous versus the conventional but safe.

The history of Viennese operetta is usually divided into Gold and Silver ages. The Golden Age stars Strauss and Millocker and reflects Habsburg society at its height. The Gypsy Baron, for instance, with its Hungarian setting, extols the Dual Austro-Hungarian Monarchy established in 1867 and was both politically admired and commercially successful in Vienna and Budapest.

The works of the Silver Age, inaugurated by The Merry Widow in 1905, were more nostalgic and romantic. Viennese operetta was always escapist, but the dreams of an era can be seen as a sort of distorting mirror of its preoccupations. After the First World War, foremost among these was a nostalgic longing for the Empire that had been swept away. Golden Age operetta was an escape from the present, Silver Age operetta was a retreat into the past.

Some shows, though, found themselves on the cutting edge of contemporary issues: Kalman's Csardas Princess caused a scandal in 1915 by making fun of the aristocracy when the country's best officers were dying in battle. And the Hungarian, Jeno Huszka's 1902 hit, Prince Bob, depicts the crown prince of England falling for a common street-girl and precipitating a constitutional crisis. Forget mincing social commentary, this is operetta displaying uncanny political prescience.

With the rise of Hitler, all the operetta scribblers were brought back to reality. Many of the composers were Jewish (Kalman, Straus, Leon Jessel, Edmund Eysler, Paul Abraham) and even more of the book writers. Does this explain operetta's fascination with Gypsies and their music? The Gypsies and the Jews were the professional folk musicians in the Ruritanian lands where many of these pieces were set, playing on demand to make people forget their troubles. Did the composers and librettists see in their romantic Gypsy characters an analogy for their own work in creating a musical dreamland?

Nazi persecution united the fate of Gypsies and Jews even further. The lucky ones escaped to the United States (Robert Stolz played an important role in smuggling Jews to safety) and were influential in post-war American musical theatre. Others, such as Leon Jessel, composer of The Black Forest Girl, and Fritz Lohner-Beda, one of the librettists of The Land of Smiles, died at the hands of the Gestapo or in concentration camps.

After the war, Robert Stolz returned to Vienna and tried to recreate the cosy world of operetta, refusing to see that the real world had simply changed too much. Scores such as Spring in the Prater (1949) and New Year's Parade (1964) sound more like pastiche. The eastern half of the old Habsburg Empire was swallowed up under Soviet domination and operetta was forced into the service of the state, a back- handed compliment to the popularity of the form. Film operettas were set in factories and department stores and featured miners and sales girls to make them more relevant to the working class. It didn't do much for operetta's appeal to the younger generation.

On the Continent, operetta is more widely performed than here, where it seems to be out of fashion. It's ignored by serious music critics, which is a shame because, in addition to the bitter-sweet music, some of the scores have more depth than they're given credit for. The problems are the plots and the productions. Shows at the Vienna Volksoper are like tepid museum pieces with uninspiring direction and performances.

By far the best operetta production I've seen was Miklos Szinetar's Budapest staging of Paul Abraham's Viktoria. A highly successful composer of jazz-influenced operetta, the Hungarian-born Abraham made his name in Vienna and Berlin before being confined to mental hospitals in America after the war. Both Viktoria and another of his successful shows, Ball in the Savoy, played London in the 1930s.

On the evidence of the Budapest staging, Viktoria is one of the shows ripe for rediscovery. What are needed are good performers and directors. With G&S now getting radical new treatment from Ken Russell, it might be time to look again at Lehar, Kalman and Abraham.

'Music on Two: Phantom of the Operetta', produced by Simon Broughton, is shown on BBC2 tonight at 7.40pm