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Andorra remained in 2004 on the list of "uncooperative tax-havens" maintained by the Organization for Economic Cooperation and Development (OECD). However, it is expected to follow a European Union (EU) directive that will most likely reduce investments in the country's offshore banking centers.
As a co-principality, Andorra has been ruled jointly for 716 years by the president of France and the Spanish bishop of Urgel, who, as of May 12, 2003, was Monsignor Joan Enric Vives Sicilia. The 1993 constitution modified this feudal system, keeping the titular heads of state but transforming the government into a parliamentary democracy. Andorra became a member of the United Nations in 1993 and a member of the Council of Europe in 1994.
In March 2001, the country held elections and returned Marc Forne of the conservative Liberal Party of Andorra (PLA) as head of the government. The PLA won an absolute majority with 15 out of the 28 seats in the Counsell General, while the Andorran Democratic Center Party (ADCP, formerly the Democratic Party) won 5 seats, the Socialist party (PS) captured 6 seats, and the Unio Laurediana party won 2 seats.
Tourism is the mainstay of the economy and accounts for 90 percent of its gross domestic product. In the 1990s, the country began attracting foreign investment with secret banking laws that are now under attack by the transparency initiatives championed by the OECD and the EU.
A new European Union directive passed in early 2003 threatens Andorra's status as a major tax-haven. The new directive calls for EU members with secret banking laws to impose a withholding tax on revenue from interest-bearing accounts. After negotiations with the EU, Andorra and other key non-EU countries have agreed to adopt similar measures. The country, which has no personal income tax and no value-added tax, relies a great deal on banking as a financial resource.
The OECD has also put additional pressure on the country's tax-haven status. During the OECD Global Forum on Taxation in Berlin in June 2004, most member countries agreed to participate in a number of actions to achieve the high standards of transparency sought by the organization. The OECD proposes to hold dialogues with uncooperative members and to review the transparency and information exchange practices applied by financial centers.
Andorrans can change their government democratically. More than 80 percent of eligible voters participated in elections in 2001 to choose the members of the Consell General, which then selects the Executive Council president, who is the head of government. Popular elections to the 28-member parliament are held every four years. Fourteen members are chosen in two-seat constituencies known as "parishes," and 14 are chosen by a national system of proportional representation. The people have a right to establish and join different political parties, and an opposition vote exists. However, more than 65 percent of the population consists of noncitizens, who have no right to vote and face a number of hurdles that bar them from becoming citizens. As a result, there is little participation by non-Andorrans in government and politics.
Because of a lack of available information, Transparency International did not review and rank Andorra in its 2004 Corruption Perceptions Index.
Freedom of speech and religion are respected across the country. There are two independent daily newspapers (Diari d'Andorra and El Peridico de Andorra), access to broadcasts from neighboring France and Spain, and unlimited Internet access.
Although Roman Catholicism is the predominant religion (90 percent of the whole population is Catholic) and the constitution recognizes a special relationship with the Roman Catholic Church, the state has ceased providing the Church with subsidies. There are no restrictions on proselytizing, and Mormons and members of Jehovah's Witnesses continue to do so, unimpeded. Despite the presence of close to 2,000 Muslims, there is no proper mosque in the country. The Muslim community's 2003 request to convert some public buildings into a mosque was turned down by the government. Similar requests t made to the Catholic Bishop to use a former church were not received well. Academic freedom is respected.
Freedom of assembly and association are generally respected. Although the government recognizes that both "workers and employers have the right to defend their own economic and social interests," there is neither an explicit right to strike nor legislation penalizing antiunion discrimination. A law regulating collective bargaining has been expected from parliament for some time. There have been few advances in labor rights in the country since the creation of a registry for associations in 2001, which has enabled trade unions to gain the legal recognition that they had lacked previously.
The country's judicial system, which is based on Spanish and French civil codes, does not have the power of judicial review of legislative acts. The country does not maintain a military force and depends on France and Spain for the defense of its borders. Prison conditions met international standards. However, the police can detain suspects for up to 48 hours without charging them with a crime.
The European Commission against Racism and Intolerance (ECRI) criticized Andorra in its 2003 report on the country for having restrictive naturalization criteria. Despite the fact that a majority of those living in Andorra are noncitizens, a person can become a citizen only by marrying an Andorran or by residing in the country for more than 25 years. Prospective citizens are also required to learn Catalan, the national language. Although noncitizens receive most of the social and economic benefits of citizens, they lack the right to vote.
Immigrant workers, primarily from North Africa, complain that they lack the same rights as citizens. Although the law gives legal status to 7,000 immigrants, many immigrants hold only "temporary work authorizations." Temporary workers are in a precarious position, as they have to leave the country when the job contract expires.
Citizens have the right to own property, but noncitizens can own only a 33 percent share of a company unless they have lived in the country for 20 years or more.
Women enjoy the same legal, political, social, and professional rights as men, although they are underrepresented in government. Today, only four women occupy seats in parliament. There are no specific laws addressing violence against women, which remains a problem across the country. There are no government departments for women's issues or government-run shelters for battered women.