Grand Duchy of Luxembourg
Area: 2,586 sq. km. (999 sq. mi.; about half the
size of Rhode Island).
Cities: Capital--Luxembourg (pop. 77,300)
(2004). Other cities--EschAlzette,
Terrain: Continuation of Belgian Ardennes in the
north, heavily forested and slightly
mountainous; extension of French Lorraine
plateau in the south, with open, rolling
Climate: Cool, temperate, rainy; like the U.S.
Population (2005): 455,000.
Annual growth rate (2005): 0.75%.
Ethnic groups: Celtic base with French and
German blend; also guest workers from Portugal,
Italy, France, and Belgium.
Religion: Historically Roman Catholic.
Luxembourg law forbids the collection of data on
Official languages: Luxembourgish, French, and
German; English is widely spoken.
Education: Years compulsory--9.
Health: Life expectancy--avg. 78 years;
males 75 years, females 82 years. Infant
Work force (2004, 293,670): Services--27%;
government and social services--22%;
financial services --28%; construction--8%.
Unemployment (2004): 4.6%.
Type: Constitutional monarchy.
Branches: Executive--Grand Duke (head of
state, ceremonial), Prime Minister (head of
parliament (Chamber of Deputies with Council of
State serving as a consultative body).
Political parties: Christian Social Party (CSV),
Socialist Party (LSAP), Democratic (Liberal)
Party (DP), Green Party, Action Committee for
Democracy and Pension Rights (ADR).
Suffrage: Universal over age of 18.
Government budget (2004): 6,990 billion euros (EUR).
GDP (2004): $29.02 billion (23.5 billion EUR).
Annual growth rate (2004): 2.1%.
Per capita income (2004): 52,600 EUR.
Inflation rate (May 2005): 2.4%.
Natural resources: Iron ore.
Agriculture (0.5% of GNP): Products--dairy
products, corn, wine. Arable land--49%.
Services (2004): 88.9%.
Industry (16.3% of GNP): Types--chemicals,
Trade (2005): Exports--$10.138 billion:
steel, chemicals, plastics, rubber and processed
wood products. Major markets--Germany,
Belgium, France, and Asia. Imports--$16.597
billion: manufactured metals, minerals,
including iron ore, coal, and petroleum
products; mechanical and electrical equipment,
transportation equipment, scrap metal. Major
suppliers--other EU countries (esp. Belgium,
France, and Germany).
After 400 years of domination by various
European nations, Luxembourg was granted the
status of Grand Duchy by the Congress of Vienna
on June 9, 1815. Although Luxembourg considers
1835 (Treaty of London) to be its year of
independence, it was not granted political
autonomy until 1839 under King William I of the
Netherlands, who also was the Grand Duke of
Luxembourg. In 1867, Luxembourg was recognized
as independent and guaranteed perpetual
neutrality. After being occupied by Germany in
both World Wars, Luxembourg abandoned neutrality
and became a charter member of the North
Atlantic Treaty Organization (NATO) in 1949. It
is also one of the six original members of the
European Union, formed in 1951 as the European
Coal and Steel Community (ECSC).
The present sovereign, Grand Duke Henri,
succeeded his father, Grand Duke Jean, on
October 7, 2000. Grand Duke Jean announced his
decision to abdicate in December 1999, after a
The national language of Luxembourg is
Luxembourgish, a blend of Dutch, old German, and
Frankish elements. The official language of the
civil service, law, and parliament is French,
although criminal and legal debates are
conducted partly in Luxembourgish and police
case files are recorded in German. German is the
primary language of the press. French and German
are taught in the schools, with German spoken
mainly at the primary level and French at the
Luxembourg has a parliamentary form of
government with a constitutional monarchy by
inheritance. Under the constitution of 1868, as
amended, executive power is exercised by the
Grand Duke and the Council of Government
(cabinet), which includes the prime minister,
who serves as head of government. The prime
minister is the leader of the political party or
coalition of parties having the most seats in
parliament, known as the Chamber of Deputies.
Legislative power is vested in the Chamber of
Deputies, the members of which are elected
directly to 5-year terms. A second body, the "Conseil
d'État" (Council of State), composed of 21
ordinary citizens appointed by the Grand Duke,
advises the Chamber of Deputies in the drafting
of legislation. The Council’s opinions have no
binding effect, and the responsibilities of its
members are in addition to their normal
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
Head of State--Grand Duke Henri of Luxembourg
Prime Minister, Minister of State, Minister of
Finance--Jean-Claude Juncker (CSV)
Vice Prime Minister, Minister of Foreign Affairs
and Immigration--Jean Asselborn (LSAP)
Minister of Justice, Treasury and Budget, and
Defense--Luc Frieden (CSV)
Minister of Economy and Foreign Trade--Jeannot
Ambassador to the United States--Arlette
Ambassador to the United Nations--Jean-Marc
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.
Luxembourg’s political system has a strong local
focus. National politicians very often begin
their careers and establish their base serving
as mayors, and members of the Chamber of
Deputies are elected from one of four regions.
The political culture favors consensus, and the
parties coexist within the context of broad
agreement on key issues, including the value of
deep European integration.
Since the end of World War II, the Christian
Social Party (CSV) has almost continually been
the dominant partner in governing coalitions.
The CSV resembles Christian democratic parties
in other west European countries and enjoys
broad popular support. Its leader, Prime
Minister Jean Claude Juncker, is the most senior
head of government in the European Union.
The Socialist Party (LSAP) is a center-left
party similar to most social democratic parties
in Europe. Initially founded by a worker’s
movement and a main defender of universal
suffrage in 1919, the LSAP defends state
intervention in the economy and the
sustainability of the welfare system. Part of
the government from 1984 to 1999, it lost its
junior coalition status to the Democratic Party
but regained it in the 2004 elections. While in
the opposition, the LSAP voiced opposition to
U.S. action in Iraq.
The Democratic Party (DP) is a center-right
party, drawing support from civil servants, the
professions, 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 from 1984 to 1999,
the DP overcame the LSAP to claim the role of
junior partner in the government from 1999-2004.
It is currently again in the opposition. 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, but it
has shown some openness to peacekeeping
National elections are held at least every 5
years and municipal elections every 6 years. In
the June 2004 parliamentary elections, the CSV
won 24 seats, the DP 10, the LSAP 14, the ADR (a
single-issue party that emerged from the LSAP
focused on pension rights) 5, and the "Greens"
7. As a result, the DP ceded their junior
coalition position back to the LSAP, which had
been the junior coalition member from 1984 to
1999. Jean-Claude Juncker (CSV) has remained for
a third 5-year term as Prime Minister. In July
2004, Prime Minister Juncker announced the new
government and appointed Jean Asselborn (LSAP)
as the Vice Prime Minister and Minister of
Foreign Affairs and Immigration.
While Luxembourg is aptly described as the
"Green Heart of Europe" in tourist literature,
its pastoral land coexists with a highly
industrialized and export-intensive economy.
Luxembourg enjoys a degree of economic
prosperity almost unique among industrialized
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.
In 2001, Arbed merged with Aceralia and Usinor
to form Arcelor, the world’s second-largest
steel producer, which is headquartered in
Luxembourg. The iron and steel industry
comprises a little less than 10.6% of the
There has been a relative decline in the
steel sector, offset by Luxembourg's emergence
as a financial center. The financial sector in
2004 made up 28.9% of Luxembourg’s economy,
while other services such as health, public
administration, and education comprised 16.4%.
Banking is especially important. In May 2005,
there were 161 banks in Luxembourg, with 22,711
employees. Political stability, good
communications, easy access to other European
centers, skilled multilingual staff, and a
tradition of banking secrecy have contributed to
the growth of the financial sector. Germany
accounts for the largest single grouping of
banks, with Belgian, French, Swiss, and major
U.S. banks also heavily represented. Total
banking assets exceeded $725 billion in April
2005. Approximately 13,569 holding companies
with 36.4 billion EUR in capital are established
Government policies promote the development
of Luxembourg as an audiovisual and
Radio-Television-Luxembourg is Europe's premier
private radio and television broadcaster. The
government-backed Luxembourg satellite company
Société Européenne 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
12 satellites. ASTRA 1H is an advanced satellite
with a return channel capacity in the Ka band
frequency range enabling two-way satellite
communications directly to users’ terminals.
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. The
recent European Union (EU) directive on services
supplied electronically has caused a number of
companies to look to Luxembourg, with its
relatively low value-added tax (VAT) rates, as a
possible location for directing their European
operations. 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 Department of Commerce's Bureau
of Economic Analysis reports that total U.S.
direct investment in Luxembourg (on a historical
cost basis) was nearly $67 billion at the end of
2003. Foreign direct investment (FDI) data for
Luxembourg must be interpreted cautiously,
however, because of Luxembourg's role in
financial intermediation, particularly involving
Luxembourg-based holding companies.
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 2004 was
4.2% but rose to 4.6% in April 2005.
Luxembourg's small but productive agricultural
sector provides employment for less than 1.3% of
the work force. Most farmers are engaged in
dairy and meat production. Vineyards in the
Moselle Valley annually produce about 12.3
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 (-36772
million EUR in 2004), 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. The government recently announced a
71.2 million-euro budget surplus for 2004.
Luxembourg has long been a prominent supporter
of European political and economic integration.
In efforts foreshadowing European integration,
Luxembourg and Belgium in 1921 formed the
Belgium-Luxembourg Economic Union (BLEU) to
create an inter-exchangeable currency and a
common customs regime. Luxembourg is a member of
the Benelux Economic Union and was one of the
founding members of the European Economic
Community (now the European Union). It also
participates in the Schengen Group, whose goal
is the free movement of citizens among member
states. At the same time, Luxembourgers have
consistently recognized that European unity
makes sense only in the context of a dynamic,
transatlantic relationship and have
traditionally pursued a pro-NATO, pro-U.S.
Luxembourg is the site of the European Court
of Justice, the European Court of Auditors,
European Investment Bank, and other vital EU
organs. The Secretariat of the European
Parliament is located in Luxembourg, but the
Parliament usually meets in nearby Strasbourg.
Luxembourg held the EU Presidency in the first
half of 2005.
The Luxembourg Army is under civilian control.
The country has no navy or air force. A 1967 law
made the army an all-volunteer force with
current strength of approximately 430
professional soldiers, about 340 enlisted
recruits, and 110 civilians. A 2002 law now
allows EU citizens, under certain conditions, to
join the Luxembourg Army.
Responsibility for defense matters is vested
in the Minister who is also the Minister of
Budget and Treasury, Minister of Justice, and
the Minister in charge of the police. This
grouping of portfolios in the government formed
in 2004 was meant to facilitate Luxembourg’s
efforts in combating terrorism and defining a
niche role in NATO and the EU’s defenses and
security intitiatives. Defense had a budget of
$252,142,300 in 2004. Luxembourg has
participated in the European Corps (EUROCORPS)
since 1994 and has contributed troops to the
UNPROFOR, IFOR, and KFOR missions in the former
Yugoslavia. It has also participated with a
small contingent in the NATO SFOR mission in
Bosnia and currently participates in the NATO
ISAF mission in Afghanistan. Luxembourg
financially supported international peacekeeping
missions during the 1991 Gulf War and in Rwanda
and Albania and has provided humanitarian aid to
Iraq. The army also has participated in
humanitarian relief missions such as setting up
refugee camps for Kurds and providing emergency
supplies to Albania.
Luxemburgers are deeply appreciative of the
sacrifices made by Americans, leading to the
country’s liberation in the two World Wars of
the 20th century. More than 5,000
American soldiers, including Gen. George S.
Patton, are buried at the American Military
Cemetery near the capital, and there are
monuments in many towns to American liberators.
The strong U.S.-Luxembourg relationship is
expressed both bilaterally and through common
membership in NATO, the Organization for
Economic Cooperation and Development (OECD), and
the Organization for Security and Cooperation in
Principal U.S. Officials
Deputy Chief of Mission--Daniel Piccuta
Political/Economic Chief--Daniel Foote
Economic Officer--Lorelei Snyder
Commercial Assistant--Carla Rosen-Vacher
Management Officer--Daniel Foote
Vice Consul--Caroline Savage
Public Diplomacy--Matthew Long
Embassy in Luxembourg is located at 22
Boulevard Emmanuel Servais, L-2535 Luxembourg
City (tel. 352-460-123).