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In a July 2012 referendum, voters in Liechtenstein rejected a proposal to reduce the powers of the hereditary monarchy. Crown Prince Alois had threatened to abdicate if the measure were approved.
Liechtenstein was established as a principality in 1719 and gained its sovereignty in 1806. Since 1995, the country has been a member of the European Economic Area, a free-trade area that links the non–European Union (EU) members of Norway, Iceland, and Liechtenstein with the EU. From 1938 to 1997, it was governed by a coalition of the Progressive Citizens’ Party (FBP) and the Fatherland Union, now the Patriotic Union (VU). The latter party then ruled alone until the FBP won the 2001 elections.
In a 2003 referendum, voters approved a constitutional amendment that granted significantly more power to the hereditary monarch, Prince Hans-Adam II. In 2004, Hans-Adam handed his constitutional powers to his son, Prince Alois, though the elder prince retained his title as head of state. Following the 2005 parliamentary elections, the conservative FBP and the liberal VU formed a grand coalition.
In the February 2009 parliamentary elections, the VU won 13 seats and the FBP captured 11. The VU’s Klaus Tschütscher, who replaced the FBP’s Otmar Hasler as prime minister, maintained the coalition government with the FBP.
Liechtenstein, a leading offshore tax haven, has traditionally maintained tight bank secrecy laws. However, in 2009, the principality agreed to comply with transparency and tax information–sharing standards as outlined by the Organization for Economic Cooperation and Development (OECD). Following a 2009 agreement with the United Kingdom, Liechtenstein passed laws in July 2010 granting amnesty to those holding offshore accounts in the country if they declared their assets and paid 10 percent of taxes evaded since 1999. British officials in June 2012 said they had already collected ₤363 million (US$564 million) from 2,400 people through the disclosure agreement and expected to raise a total of ₤3 billion (US$4.6 billion) by 2016.
In a July 2012 referendum, 76 percent of voters rejected a proposal by pro-democracy advocates to prohibit the monarch from vetoing decisions made by the public in national referenda. Alois had threatened to abdicate if the proposal were approved.
Liechtenstein is an electoral democracy. However, the unelected monarch is the most politically powerful in Europe. The prince, as the hereditary head of state, appoints the prime minister on the recommendation of Parliament and possesses the power to veto legislation and dismiss the government. The unicameral Parliament (Landtag) consists of 25 deputies chosen by proportional representation every four years. Voting is compulsory.
Political parties can organize freely. The VU and the FBP have dominated politics over the last half-century.
Liechtenstein’s politics and society are largely free of corruption, and the country continues to work to prevent money laundering in its banking system. The OECD removed Liechtenstein from its list of uncooperative tax havens in 2009. The Group of States against Corruption in October 2012 released its first report on Liechtenstein, saying it was “in the early stages of implementing effective anti-corruption measures.”
The constitution guarantees freedoms of expression and the press, though the law prohibits public insults directed against a race or ethnic group. Liechtenstein has one private television station, one privately held radio station, and two main newspapers, which are roughly aligned with the major political parties. Internet access is not restricted.
The constitution protects religious freedom, and the criminal code prohibits any form of discrimination against any religion or its adherents. However, the constitution establishes Roman Catholicism as the state national religion. Catholic or Protestant religious education is mandatory in all primary schools, but exemptions are routinely granted. Islamic religious classes have been introduced in some primary schools since 2008. All religious groups are tax-exempt. The government respects academic freedom.
Freedoms of assembly and association are protected, and the principality has one small trade union. A 2008 law provides civil servants with the right to strike.
The judiciary is independent and impartial despite the appointment of judges by the hereditary monarch. Due process is respected, and prison conditions meet international standards. Switzerland is responsible for Liechtenstein’s customs and defense.
A third of the population is foreign born. Some native citizens have expressed concern over the growing number of immigrants from non-German-speaking countries, such as Turkey and Bosnia-Herzegovina. The government has responded by seeking to teach recent immigrants the language and culture of Liechtenstein in formal integration programs. Foreigners have occasionally been the target of violence by right-wing groups. The laws in Liechtenstein provide for the granting of asylum or refugee status. Prince Alois in August 2012 called for “prudent” immigration reform to attract more skilled workers, including naturalization for long-term residents.
Gender discrimination has continued to limit opportunities for women in fields traditionally dominated by men, and a gender salary gap persists, with women earning on average only 80 percent of men’s pay for equal work. Following a 2005 reform, abortion has been legal in the first 12 weeks of pregnancy, but only in cases where the mother’s life is in danger or she was under 14 when she became pregnant. A referendum on allowing the full legalization of abortion in the country was held in September 2011 but was rejected by more than 52 percent of voters. Prince Alois had already signaled his intention to veto the referendum had it passed. In March 2011, Parliament passed a law allowing same-sex registered partnerships; it was upheld in a June referendum by nearly 69 percent of voters and went into effect on September 1, 2011.