Freedom in the World
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Luxembourg’s government came into conflict with trade unions in 2007 over its policy of limiting wage increases to combat inflation. However, economic growth was strong during the year, and the government remained popular.
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 was occupied by Germany during both world wars, and it abandoned neutrality to join NATO in 1949. After forming 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; it adopted the euro currency in 1999. A former Luxembourg prime minister, Jacques Santer, served as president of the European Commission, the EU’s executive arm, from 1995 to 1999.
After falling in public opinion polls in 2003, the center-right Democratic Party (PD) did poorly in June 2004 general elections, losing 5 of its 15 seats in the parliament. The opposition Socialist Worker’s Party of Luxembourg (POSL) gained 1, taking 14 seats and replacing 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.
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. A draft EU 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, the constitutional process stalled despite his entreaties.
Juncker’s coalition government remained relatively popular in 2006, while the opposition PD chose a new parliamentary leader in an attempt to revive its fortunes. The government undertook economic measures including budget cuts and reforms of the system of wage indexation, in which nationwide wages increased automatically with prices, in order to fight inflation.
In 2007, recalculated budget numbers, based on higher-than-expected economic growth in 2006, made some of the recent reforms seem unnecessary, prompting labor unions to say that they had agreed to the changes based on false pretenses. Despite unions’ demand for renegotiation, however, the government stood by the deal, awarding one-time bonuses for 2007 and 2008, along with an extra day of vacation. The government nonetheless remained popular.
Juncker was again involved in high-profile diplomacy in 2007. The defeated EU constitutional treaty was reintroduced as a smaller “reform treaty” over his objections, and EU leaders signed the document in October. Juncker also took a public stand against new EU sanctions over Iran’s nuclear program, and tried to calm tensions between the United States and Russia over U.S. plans to base missile interceptors in Central Europe.
Luxembourg is an electoral democracy. The head of state is the unelected Grand Duke Henri, whose powers are largely ceremonial. The unicameral legislature, the Chamber of Deputies, consists of 60 members 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 over a third of Luxembourg’s population.
The political 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 did well in the 2004 elections (though a deputy left in 2006, reducing the party from official “party” to “group” status). There are three traditionally strong parties: the PCS, historically 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 12 out of 180 countries surveyed in Transparency International’s 2007 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 clergy 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. In 2007, the government agreed to give Muslim leaders the same recognition and financial 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 in “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.