Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
The Eurasia Center 2947 Massachusetts Ave NW Washington, DC 20016 www.eurasiacenter.org Email:[email protected] LUXEMBOURG COUNTRY REPORT One of the smallest sovereign states in Europe, the Grand Duchy of Luxembourg is influential within the European Union as its capital city (Luxembourg City) is one of the three official capitals of the European Union and the seat of the European Court of Justice. In addition to its political clout, Luxembourg has grown to become one of the economic leaders in the region. Its prosperity was formerly based on steel manufacturing, but with the decline of that industry, Luxembourg diversified and is now best known for being Europe’s most powerful financial center.1 The country has been successful in maintaining high rates of investment in order to preserve further growth prospects. However, heavy reliance on the financial sector has also been analyzed to serve as a potential risk factor.2 Therefore, several efforts in diversification continue to be taken in areas like space-mining, communication, and technology.3 HISTORY The history of Luxembourg dates back to the year 963 AD when the Count of Ardennes, the founder of the Luxembourg dynasty, built a castle on the territory of today's city of Luxembourg. Beginning in the 14th century, members of the Luxembourg dynasty became influential political figures as Holy Roman Emperors. Luxembourg's history is intertwined with its powerful neighbors. Luxembourg was ruled by the Burgundians, Spanish, Habsburgs, and French until Luxembourg became an autonomous Grand Duchy in 1815 under political union with both the Netherlands and the German Confederation.4 The First Treaty of London in 1839 revised this arrangement, and is considered the date of Luxembourg’s independence.5 Luxembourg’s independence and neutrality were affirmed in the Second Treaty of London in 1867.6 1 BBC Country Profile, Luxembourg, http://www.bbc.co.uk/news/world-europe-17548470 http://ec.europa.eu/europe2020/pdf/csr2016/cr2016_luxembourg_en.pdf 3 http://www.wsj.com/articles/luxembourg-sets-aside-funds-for-asteroid-mining-push-1464947123 4 Encyclopedia Britannica, Luxembourg, https://www.britannica.com/place/Luxembourg#toc23420 5 CIA World Factbook, Luxembourg 6 Encyclopedia Britannica, Luxembourg. 2 Luxembourg’s neutrality was violated by German occupation during both World Wars. After the Second World War, the country abandoned its perpetual neutrality and became an enthusiast for international cooperation and European political, economic, and military integration.7 Luxembourg, along with Belgium and the Netherlands, created the BENELUX Economic Union in 1944, and participated in the Brussels Treaty of 1948 and formation of the North Atlantic Treaty Organization (NATO) in 1949. The country improved its economic position through European Steel and Coal Community (1952) and was a founding member of the European Economic Community (1957), a forerunner for the European Union, in which Luxembourg continues to play an active role.8 In 1999 Luxembourg joined the euro currency area.9 GOVERNMENT Luxembourg is a parliamentary democracy headed by a constitutional monarch, and is the world’s only remaining grand duchy.10 The executive branch is led by the head of state, currently Grand Duke Henri who succeeded to the title in 2000, and the Prime Minister, currently Xavier Bettel. The Prime Minister is commonly the leader of the majority party or majority coalition within the Chamber of Deputies, and is appointed by the monarch.11 Mr. Bettel formed a government in December 2013 after snap elections in which his Democratic Party, the Socialists, and the Greens emerged with a small majority over the largest overall group, the conservative Christian Social Party. Mr. Bettel is the country’s first openly gay prime minister.12 The head of state’s role is largely ceremonial, and was further restricted by a constitutional crisis in 2008 that resulted in the parliament rescinding the monarch’s right to veto legislation.13 The legislature consists of the unicameral Chamber of Deputies, containing sixty seats with members elected every five years. A 21-member Council of State, appointed by the Grand Duke on the advice of the prime minister, serves as an advisory body to the Chamber of Deputies.14 The Council's opinions have no binding effect, and the responsibilities of its members are in addition to their normal professional duties. The separation of powers is flexible in Luxembourg, and there are many relationships between the executive and legislative powers; the judiciary remains completely independent.15 The judicial branch consists of the highest court, the Superior Court of Justice which includes the Court of Appeal and the Court of Cassation, and the Constitutional Court. Judges of both courts are appointed by the monarch for life.16 MEDIA 7 BBC Country Profile, Luxembourg, http://www.bbc.co.uk/news/world-europe-17548470 Encyclopedia Britannica, Luxembourg. 9 CIA World Factbook 10 Luxembourg Government, http://www.luxembourg.public.lu/en/le-grand-duche-se-presente/systeme-politique/index.html 11 CIA World Factbook 12 BBC Country Profile, Luxembourg 13 BBC Country Profile, Luxembourg. 14 CIA World Factbook 15 Luxembourg Government, http://www.luxembourg.public.lu/en/le-grand-duche-se-presente/systeme-politique/index.html 16 CIA World Factbook 8 Luxembourg exerts an extensive media influence and has a long tradition of operating radio and TV services for pan-European audiences, including those in France, Germany, and the UK. Behind much of this activity is the Radio-Television-Luxembourg (commonly known as RTL), which is Europe's premier private radio and television broadcaster and has been a key part of media markets across Europe for decades. Luxembourg is also home to Europe's largest satellite operator, Societe Europeenne des Satellites (SES), which operates the Astra fleet – greatly extending the country’s media empire. Freedom of speech and freedom of the press are guaranteed by Luxembourg’s constitution. Print media are privately owned and reflect diverse viewpoints.17 ECONOMY Luxembourg’s small, stable, high-income economy has historically featured solid growth, low inflation, and low unemployment. The country continues to enjoy an extraordinarily high standard of living, with its GDP per capita ranking among the highest in the world and is the highest in the euro zone. Luxembourg also has one of the highest current account surpluses as a share of GDP in the euro zone, and it maintains a healthy budgetary position and the lowest public debt level in the region.18 The country has a highly industrialized, export-intensive, and high-tech service economy. Luxembourg’s economy prospered greatly from the steel industry, but in recent decades the country diversified its economy to include financial and technological services. The industrial sector expanded to include the production of chemicals, machinery and equipment, rubber and other products. The financial sector accounts for approximately 36% of GDP and serves as the leading sector in the economy.19 As for technology, Luxembourg is the center of audiovisual and communication technologies. Most recently, Luxembourg has been promoting the e-commerce sector by making significant investments in digital infrastructure to become the leading country in the number of high-speed Internet connections per capita. Overall, Luxembourg offers a favorable climate to foreign investment and US firms are among the most prominent foreign investors with Goodyear producing tires, DuPont producing chemicals, and Guardian Industries producing glass. The government incentives for such medium, light and high-tech industries cover taxes, construction and plant equipment.20 In recent years, Luxembourg has lost some of its advantage as a favorable tax location because of OECD and EU pressure.21 In April 2009 the G20 added Luxembourg to the "grey list" of countries with questionable banking arrangements. The country immediately made legislative improvements, and in July 2009 the Organization for Economic Co-operation and Development (OECD) commended Luxembourg for improving financial transparency with agreements on the 17 BBC Country Profile, Luxembourg. CIA World Factbook 19 CIA World Factbook 20 Ibid. 21 CIA World Factbook 18 exchange of tax information with a dozen countries.22 In 2015, Luxembourg’s government complied with EU requirements to implement automatic exchange of tax information on savings accounts, thus ending banking secrecy. This has depressed banking activity and dampened GDP growth. Additionally, changes to the way EU members collect taxes from e-commerce has cut Luxembourg’s tax revenues, requiring the government to raise additional levies and to reduce some direct social benefits.23 ECONOMIC INDICATORS GDP (purchasing power parity): $58.74 billion, up from $56.58 billion in 2015. Country comparison to the world: 107. GDP - real growth rate: 3.5%, down from 4.4% in 2015. GDP - per capita (PPP): $102,000, up from $100,800 in 2015. Country comparison to the world: 2. GDP - composition by sector: agriculture: 0.2%, industry: 11.1%, services: 88.7%. Unemployment rate: 6.7%, down from 6.9% in 2015. Country comparison to the world: 78. Exports: $17.1 billion in 2016. Export commodities include: machinery and equipment, steel products, chemicals, rubber products, glass. Export partners: Germany 22.1%, Belgium 16.7%, France 16.6%, UK 4.7%, Italy 4.6%, Netherlands 4% (2015). Imports: $18.33 billion in 2016. Import commodities include: commercial aircraft, minerals, chemicals, metals, foodstuffs, luxury consumer goods. Import partners: Belgium 27.6%, Germany 22.9%, China 11.7%, France 9.5%, US 8.4%, Netherlands 4.2%, Mexico 4.1% (2015). Central bank discount rate: 0.05% (31 December 2013). Note this is the European Central Bank's rate on the marginal lending facility, which offers overnight credit to banks in the euro area. CULTURE The people of Luxembourg are called Luxembourgers. The immigrant population increased in the 20th century due to the arrival of immigrants from Belgium, France, Italy, Germany, and Portugal.24 Annually, over 10,000 new immigrants arrive in Luxembourg, mostly from the EU states, as well as Eastern Europe. In 2000 there were 162,000 immigrants in Luxembourg, accounting for 37% of the total population.25 Luxembourg has been heavily influenced by its neighbors France, Belgium, and Germany. Many of its inhabitants are trilingual in French, German and Luxembourgish - a dialect of German. Each of the three official languages is used as the primary language in certain spheres. Luxembourgish is the language that Luxembourgers generally use to speak to each other, but it is not often used as the written language. Since the 1980s, an increasing number of novels have however been written 22 BBC Country Profile, Luxembourg CIA World Factbook 24 http://www.statistiques.public.lu/stat/TableViewer/tableView.aspx?ReportId=384&IF_Language=fra&MainTheme=2&FldrName=1 25 http://www.compas.ox.ac.uk/publications/papers/Country%20Case%20Luxembourg.pdf 23 in Luxembourgish. Most official business is carried out in French. German is usually the first language taught in school and is the language of much of the media and of the church.26 Luxembourg's education system is also trilingual. The first years of primary school are in Luxembourgish, before changing to German, while in secondary school, the language of instruction changes to French. Proficiency in all three languages is required for graduation from secondary school, but half the students leave school without a certified qualification, with the children of immigrants being particularly disadvantaged.27 Luxembourg is a secular state, but the state recognizes certain religions as officially mandated religions. This gives the state a hand in religious administration and appointment of clergy, in exchange for which the state pays certain running costs and wages. The predominant religion is Roman Catholicism, at 87% of the population.28 Acknowledgements: Research and Data Development Provided by: Toghrul Aliyev and Olivia de Vesci, Research Assistants, under the supervision and coordination of Dr. Gerard Janco, President of the Eurasia Center. 26 http://www.eu2005.lu/fr/savoir_lux/lux_publications/a_propos_langues/a_propos_langues.pdf http://ec.europa.eu/public_opinion/archives/ebs/ebs_243_en.pdf 28 CIA World Factbook 27