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In 2008, Andorra faced mounting international pressure to increase its financial transparency and end its status as a tax haven. Among other reforms enacted during the year, the country eased foreign ownership restrictions for locally based companies.
As a co-principality, Andorra was ruled jointly for 715 years, from 1278 to 1993, by French and Spanish leaders; since 1607, this has involved the French head of state and the bishop of Seu d’Urgel, Spain. The 1993 constitution retained the titular co-princes but transformed the government into a parliamentary democracy. Andorra became a member of the United Nations that year and a member of the Council of Europe in 1994, but it is not a member of the European Union (EU).
In April 2005, the country held national elections, returning the Liberal Party of Andorra (PLA) to power with 42 percent of the vote and 14 out of the 28 seats in the Consell General (parliament). However, the PLA lost the absolute majority it had gained in the 2001 elections. The Social Democratic Party (PS) doubled its support, winning 12 seats. The remaining two seats were taken by CDA-S21, a union of the two center-right parties (Andorran Democratic Center Party, or CDA, and Century 21, or S21). PLA leader Marc Forne stepped down as cap de govern (executive council president) and was replaced by former foreign minister Albert Pintat Santolaria.
In 2004, Andorra had agreed to participate in the EU Savings Tax Directive, which provides a way to tax revenue from savings accounts held by EU citizens in a member state other than their country of residence or in certain non-EU countries; it took effect in July 2005. The Pintat government has continued to implement reforms required by the Organization for Economic Cooperation and Development (OECD) to remove the country from its list of uncooperative tax havens.
In October 2008, a group of 17 countries led by France and Germany demanded a renewed crackdown on tax havens, asking the OECD to expand its list of uncooperative countries and lay out possible penalties for continued failure to reform. However, Andorra was already taking some steps to open its economy. Legislation that took effect in November allowed foreign investors to own up to 49 percent of company capital in key sectors such as real estate and ski resorts, an increase from the previous 33 percent. It also allows investors to take full control of companies in 200 smaller sectors and plans to lift all foreign investment restrictions within six years. Earlier in the year, new rules began requiring local businesses to register with the government and file accounts according to international standards.
Andorra is an electoral democracy. About 80 percent of registered voters participated in 2005 elections for the Consell General, which selects the executive council (cabinet) president, or head of government. Popular elections to the 28-member Consell are held every four years. Half of the members are chosen in two-seat constituencies known as parishes, and the other half are chosen through a national system of proportional representation.
The people have the right to establish and join different political parties, and an opposition bloc exists. However, more than 60 percent of the population consists of noncitizens, who have no right to vote.
Transparency International did not review and rank Andorra in its 2008 Corruption Perceptions Index. However, the country implemented several financial reforms during the year in an attempt to open its economy.
Freedom of speech is respected across the country. There are two independent daily newspapers (Diari d’Andorra and El Periodic d’Andorra), and residents have access to broadcasts from neighboring France and Spain as well as unrestricted internet access.
Although the constitution recognizes the state’s special relationship with the Roman Catholic Church, the government no longer subsidizes the Church. Religious minorities like Mormons and Jehovah’s Witnesses are free to seek converts. Despite years of negotiations between the Muslim community and the government, a proper mosque for the country’s roughly 2,000 Muslims has still not been built, and requests to convert public buildings or a former church for the purpose have been turned down. The government does provide the Muslim community with public facilities for various religious functions. Academic freedom is respected.
Freedoms of assembly and association are generally respected, and domestic and international human rights organizations operate freely. 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 the parliament for some time. There have been few advances in labor rights since the creation of a registry for associations in 2001, which enabled trade unions to gain the legal recognition that they previously lacked.
The judicial system, which is based on Spanish and French civil codes, does not include the power of judicial review of legislative acts. Police can detain suspects for up to 48 hours without charging them. The country does not maintain a military force and depends on France and Spain for defense. Prison conditions meet international standards.
The European Commission against Racism and Intolerance criticized Andorra in 2003 for its restrictive naturalization criteria. A person can become a citizen only by marrying a resident Andorran or by living in the country for more than 25 years. Prospective citizens are also required to learn Catalan, the national language. Although they do not have the right to vote, noncitizen residents receive most of the social and economic benefits of citizenship.
Immigrant workers, primarily from North Africa, complain that they lack the rights of citizens. Although about 7,000 such immigrants have legal status, many hold only “temporary work authorizations.” Temporary workers are in a precarious position, as they must leave the country when their job contract expires.
Citizens have the right to own property, and legislation passed in November 2008 increased the percentage that noncitizens may own in companies in key sectors to 49 percent. All foreign investment restrictions are expected to be lifted within six years.
Women enjoy the same legal rights as men, although they are underrepresented in government. Today, only four women occupy seats in the parliament. There are no specific laws addressing violence against women, which remains a problem, though in October 2008 the country signed on to the Say No to Violence Against Women campaign run by the UN Development Fund for Women (UNIFEM). There are no government departments for women’s issues or government-run shelters for battered women. Abortion is illegal, except to save the life of the mother.