Freedom in the World
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Luxembourg’s coalition government, which remained popular in 2006, proposed some modest measures to cut the budget deficit and took steps to rein in inflation.
The Grand Duchy of Luxembourg was established in 1815, after the Napoleonic wars. Following a brief merger with Belgium, it acquired its current borders in 1839. The country has always faced the possibility of domination by its neighbors—it was occupied by Germany during both world wars—and it abandoned neutrality in favor of joining NATO in 1949. After joining an economic union with Belgium and the Netherlands in 1948, Luxembourg became one of the six founding members of the European Community (now the European Union [EU]) in 1957. Because it has a small, open economy, Luxembourg’s relationship with the EU is highly important to its politics; it adopted the euro as its currency in 1999. A former prime minister, Jacques Santer, served as president of the European Commission, the EU’s executive arm, from 1995 to 1999.
Over the course of 2003, the opinion-poll ratings of the ruling center-right Democratic Party (PD) fell, while those of the opposition Socialist Worker’s Party of Luxembourg (POSL) rose. The PD did poorly in the general elections of June 2004, losing 5 of its 15 seats in Parliament. The POSL gained 1, taking 14 seats and replaced the PD as the junior coalition partner of Prime Minister Jean-Claude Juncker’s Christian Social Party (PCS), which captured 24 seats. The Green Party won 7 seats, and the Action Committee for Democracy and Pension Justice (ADR) took 5 seats.
In 2004, the 25 member states of the EU finalized a new draft constitution for the bloc and simultaneously chose a new president for the European Commission. Juncker’s name was often mentioned as a candidate for that job, but he kept his promise to remain prime minister if his party won the 2004 elections.
For the first six months of 2005, Luxembourg held the EU’s rotating presidency, which is responsible for guiding new policy initiatives. The term was extremely difficult for integrationist countries such as Luxembourg, however. The draft constitution failed decisively in referendums in both France and the Netherlands, two founding EU members. Juncker continued to push the referendum process, saying that other countries should ratify the charter while some way was found to seek French and Dutch approval in later referendums. However, though Luxembourg itself voted yes on the constitution in a July 10 referendum, many other countries delayed the ratification process indefinitely, leaving the constitution effectively dead.
In 2006, Juncker’s coalition government remained relatively popular, while the opposition PD chose a new parliamentary leader in an attempt to reinvigorate its fortunes. The government introduced modest economic reforms in May. These included measures to cut the budget deficit and to battle inflation by reforming the system of wage indexation, in which wages increase automatically as prices increase. While critics of the system said it created a vicious circle, with the wage hikes driving further price increases, the reform package was criticized by employers as too timid.
Luxembourg is an electoral democracy. The head of state is the unelected Grand Duke Henri, whose powers are largely ceremonial. The unicameral legislature consists of 60 deputies elected by proportional representation to five-year terms. The legislature chooses the prime minister. Voting is compulsory for all who are registered. Citizens of EU countries may vote after six years’ residency but are not obliged to do so; residents from non-EU countries may not vote. Foreigners constitute a third of Luxembourg’s population.
The political party system is open to the rise of new parties, as demonstrated by the growth of the ADR; originally a one-issue party focusing on higher pensions, it first had deputies elected in 1989 and is now a significant party. There are three traditionally strong parties in Luxembourg’s politics: the PCS, traditionally aligned with the Catholic Church; the PD, which favors free-market economic policies and a smaller welfare state; and the POSL, a formerly radical but now center-left party representing the working class. The current government, elected in 2004, is a coalition of the PCS, which has taken part in almost all governments in Luxembourg’s modern history, and the POSL.
The government is largely free from corruption. Luxembourg was ranked 11 out of 163 countries surveyed in Transparency International’s 2006 Corruption Perceptions Index.
Freedom of expression is guaranteed by the constitution, and Luxembourg has a vibrant media environment. A single conglomerate, RTL, dominates the broadcast radio and television market, and its programming is popular in neighboring countries. Newspapers represent a broad range of opinion. Internet access is unrestricted.
Roman Catholicism is the dominant religion, but there is no state religion, and the state pays the salaries of ministers from a variety of sects. Students may choose to study either the Roman Catholic religion or ethics; most choose the former. Protestant education is available on demand. Academic freedom is respected.
Freedoms of assembly and association are protected. Civic groups and nongovernmental organizations operate freely. Luxembourgers may organize in trade unions, and a large proportion of the workforce does so. The right to strike is constitutionally guaranteed.
The judiciary is independent, but judges are appointed by the grand duke. Detainees are treated humanely in police stations and prisons.
Luxembourg’s Muslim minority, mainly of Bosnian origin, faces no official hostility but does experience some mild social discrimination. Muslim clerics have applied to receive the same government support enjoyed by religious leaders of other faiths.
In part because of Luxembourg’s conservative social mores, women comprise just under 40 percent of the labor force, and there remains a significant gap between men’s and women’s wages. Though abortion law does not technically provide for abortion on demand, a woman who has had an abortion while under “distress” is considered not to have violated the law, and “distress” is interpreted liberally. Women are underrepresented in the highest levels of government; 13 of 60 members of Parliament, and three of 14 cabinet members, are women.