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| Luxembourg PROFILE
OFFICIAL NAME: Geography People Government Economy HISTORY June 9, 1815, after 400 years of domination by various European nations,
Luxembourg was made a grand duchy by the Congress of Vienna. It was granted
political autonomy in 1838 under King William I of the Netherlands, who also was
the Grand Duke of Luxembourg. The country considers 1835 to be its year of
independence. In 1867, Luxembourg was recognized as independent and guaranteed
perpetual neutrality. After being occupied by Germany in both World Wars,
however, Luxembourg abandoned neutrality and became a charter member of the
North Atlantic Treaty Organization (NATO) in 1949.
The present sovereign, Grand Duke Jean, succeeded his mother, Grand Duchess
Charlotte, on November 12, 1964. Grand Duke Jean's eldest son, Prince Henri, was
appointed "Lieutenant Représentant" (Hereditary Grand Duke) on March
4, 1998. On December 24, 1999, Prime Minister Juncker announced Grand Duke
Jean's decision to abdicate the throne in September 2000, in favor of Prince
Henri who assumed the title and constitutional duties of Grand Duke.
GOVERNMENT Legislative power is vested in the Chamber of Deputies, elected directly to
5-year terms. A second body, the "Conseil d'Etat" (Council of State),
composed of 21 ordinary citizens appointed by the Grand Duke, advises the
Chamber of Deputies in the drafting of legislation. The responsibilities of the
members of the Conseil d'Etat are extracurricular to their normal professional
duties.
Luxembourg law is a composite of local practice, legal tradition, and French,
Belgian, and German systems. The apex of the judicial system is the superior
court, whose judges are appointed by the Grand Duke.
Principal Government Officials Luxembourg maintains an embassy in the United States at 2200 Massachusetts
Avenue, NW, Washington, DC 20006 (tel. 202-265-4171). Consulates or honorary
consulates are located in many U.S. cities.
POLITICAL CONDITIONS The DP is a center party, drawing support from the professions, merchants,
and urban middle class. Like other west European liberal parties, it advocates
both social legislation and minimum government involvement in the economy. It
also is strongly pro-NATO. In the opposition since 1984, the DP had been a
partner in the three previous consecutive coalition governments.
The Communist Party (PCL), which received 10%-18% of the vote in national
elections from World War II to the 1960s, won only two seats in the 1984
elections, one in 1989, and none in 1994. Its small remaining support lies in
the "steel belt" of the industrialized south.
The Green Party has received growing support since it was officially formed
in 1983. It opposes both nuclear weapons and nuclear power and supports
environmental and ecological preservation measures. This party generally opposes
Luxembourg's military policies, including its membership in NATO.
National elections are held at least every 5 years and municipal elections
every 6 years. In the June 1999 parliamentary elections, the CSV won 19, the DP
15, the LSAP 13, the ADR (a single-issue party that emerged from the LSAP
focused on pension rights) 6, the "Greens" 5, and the PCL 1. Hence,
for the first time since 1974, the Socialists (LSAP) ceded their junior
coalition position with the long-reigning Christian Socialist (CSV) majority to
the Liberal Democrats. Jean-Claude Juncker (CSV) remained for a second 5-year
term as Prime Minister, and Lydie Polfer (DP), the former Luxembourg City mayor,
was named Vice Prime Minister and Foreign Minister.
Somewhat unexpectedly, the Socialists gained ground in the October 10, 1999
municipal elections, with candidates taking 34% of municipal seats nationwide,
including seven town mayorships. In Luxembourg City, the Grand Duchy's largest
municipality, the electorate followed its postwar voting pattern and chose
Liberal Democrat Paul Helminger, who had been named to finish Lydie Polfer's
term when she became Foreign Minister.
ECONOMY In 1876, English metallurgist Sidney Thomas invented a refining process that
led to the development of the steel industry in Luxembourg and the founding of
the Arbed company in 1911--now the second-largest steel producer in Europe. The
iron and steel industry, located along the French border, is the most important
single sector of the economy. Steel accounts for 29% of all exports (excluding
services), 1.8% of GDP, 22% of industrial employment, and 3.9% of the work
force.
The restructuring of the industry and increasing government ownership in
Arbed (31%) began as early as 1974. As a result of timely modernization of
facilities, cutbacks in production and employment, government assumption of
portions of Arbed's debt,
and recent cyclical recovery of the international demand for steel, the company
is again profitable. Its productivity is among the highest in the world. U.S.
markets account for about 6% of Arbed's output. The company specializes in
production of large architectural steel beams and specialized value-added
products.
There has been, however, a relative decline in the steel sector, offset by
Luxembourg's emergence as a financial center. Banking is especially important.
In 1997, there were 215 banks in Luxembourg, with 21,000 employees. Political
stability, good communications, easy access to other European centers, skilled
multilingual staff, and a tradition of banking secrecy have all contributed to
the growth of the financial sector. Germany accounts for the largest-single
grouping of banks, with Scandinavian, Japanese, and major U.S. banks also
heavily represented. Total assets exceeded $200 billion at the end of 1996, of
which some 81% was denominated in foreign currencies, primarily U.S. dollars and
German marks. More than 9,000 holding companies are established in Luxembourg.
The European Investment Bank -- the financial institution of the European Union
-- also is located there.
Government policies promote the development of Luxembourg as an audiovisual
and communications center. Radio-Television-Luxembourg is Europe's premier
private radio and television broadcaster. The government-backed Luxembourg
satellite company "Societe Europeenne des Satellites" (SES) was
created in 1986 to install and operate a satellite telecommunications system for
transmission of television programs throughout Europe. The first SES
"ASTRA" satellite, a 16-channel RCA 4000, was launched by Ariane
Rocket in December 1988. SES presently operates five satellites with two more to
be launched before the year 2000.
Luxembourg offers a favorable climate to foreign investment. Successive
governments have effectively attracted new investment in medium, light, and
high-tech industry. Incentives cover taxes, construction, and plant equipment.
U.S. firms are among the most prominent foreign investors, producing tires
(Goodyear), chemicals (Dupont), glass (Guardian Industries), and a wide range of
industrial equipment. The current value of U.S. direct investment is almost $1.4
billion, on a per capita basis--the highest level of U.S. direct investment
outside of North America.
Labor relations have been peaceful since the 1930s. Most industrial workers
are organized by unions linked to one of the major political parties.
Representatives of business, unions, and government participate in the conduct
of major labor negotiations.
Foreign investors often cite Luxembourg's labor relations as a primary reason
for locating in the Grand Duchy. Unemployment in 1999 averaged less than 2.8% of
the work force.
Luxembourg's small but productive agricultural sector provides employment for
about 1%-3% of the work force. Most farmers are engaged in dairy and meat
production. Vineyards in the Moselle Valley annually produce about 15 million
liters of dry white wine, most of which is consumed locally.
Luxembourg's trade account has run a persistent deficit over the last decade,
but the country enjoys an overall balance-of-payment surplus, due to revenues
from financial services. Government finances are strong, and budgets are
normally in surplus.
FOREIGN RELATIONS Luxembourg is the site of the European Court of Justice, the European Court
of Auditors, and other vital EU organs. The Secretariat of the European
Parliament is located in Luxembourg, but the Parliament usually meets in nearby
Strasbourg.
DEFENSE Luxembourg has no navy or air force. A 1967 law made the army an
all-volunteer force with current strength of approximatel 450 professional
soldiers, about 340 enlisted recruits and 100 civilians, and a total budget of
$120 million. Luxembourg has participated in the European Corps (EUROCORPS)
since 1994, has contributed troops to the UNPROFOR and IFOR missions in former
Yugoslavia, and participates with a small contingent in the current NATO SFOR
mission in Bosnia. The Luxembourg army is integrated into the Multinational
Beluga Force under Belgian command. Luxembourg has financially supported
international peacekeeping missions during the 1991 Gulf war, in Rwanda and,
more recently, Albania. The army also has participated in humanitarian relief
missions such as setting up refugee camps for Kurds and providing emergency
supplies to Albania.
U.S. RELATIONS Principal U.S. Officials The U.S. Embassy in Luxembourg is located at 22 Boulevard Emmanuel Servais,
L-2535 Luxembourg City (tel. 352-460-123).
TRAVEL AND BUSINESS INFORMATION Emergency information concerning Americans traveling abroad may be obtained from the Office of Overseas Citizens Services at (202) 647-5225. For after-hours emergencies, Sundays and holidays, call 202-647-4000. Passport information can be obtained by calling the National Passport Information Center's automated system ($.35 per minute) or live operators 8 a.m. to 8 p.m. (EST) Monday-Friday ($1.05 per minute). The number is 1-900-225-5674 (TDD: 1-900-225-7778). Major credit card users (for a flat rate of $4.95) may call 1-888-362-8668 (TDD: 1-888-498-3648). It also is available on the internet. Travelers can check the latest health information with the U.S. Centers for Disease Control and Prevention in Atlanta, Georgia. A hotline at 877-FYI-TRIP (877-394-8747) and a web site at http://www.cdc.gov/travel/index.htm give the most recent health advisories, immunization recommendations or requirements, and advice on food and drinking water safety for regions and countries. A booklet entitled Health Information for International Travel (HHS publication number CDC-95-8280) is available from the U.S. Government Printing Office, Washington, DC 20402, tel. (202) 512-1800. Information on travel conditions, visa requirements, currency and customs regulations, legal holidays, and other items of interest to travelers also may be obtained before your departure from a country's embassy and/or consulates in the U.S. (for this country, see "Principal Government Officials" listing in this publication). U.S. citizens who are long-term visitors or traveling in dangerous areas are encouraged to register at the U.S. embassy upon arrival in a country (see "Principal U.S. Embassy Officials" listing in this publication). This may help family members contact you in case of an emergency. |
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