LUXEMBOURG

Grand Duchy of Luxembourg

[French] Grand-Duché de Luxembourg;
[German] Grossherzogtum Luxemburg

CAPITAL: Luxembourg

FLAG: The flag is a tricolor of red, white, and blue horizontal stripes.

ANTHEM: Ons Hémecht (Our Homeland).

MONETARY UNIT: The Luxembourg franc was replaced by the euro as official currency as of 2002. The euro is divided into 100 cents. There are coins in denominations of 1, 2, 5, 10, 20, and 50 cents and 1 euro and 2 euros. There are notes of 5, 10, 20, 50, 100, 200, and 500 euros. €1 euro = $1.25475 (or $1 = €0.79697) as of 2005.

WEIGHTS AND MEASURES: The metric system is the legal standard.

HOLIDAYS: New Year's Day, 1 January; Labor Day, 1 May; public celebration of the Grand Duke's Birthday, 23 June; Assumption, 15 August; All Saints' Day, 1 November; Christmas, 25–26 December. Movable religious holidays include Shrove Monday, Easter Monday, Ascension, and Pentecost Monday.

TIME: 1 pm = noon GMT.

LOCATION, SIZE, AND EXTENT

A landlocked country in Western Europe, Luxembourg has an area of 2,586 sq km (998 sq mi), with a length of 82 km (51 mi) n–s and a width of 57 km (35 mi) e–w. Comparatively, the area occupied by Luxembourg is slightly smaller than the state of Rhode Island. The eastern boundary with Germany is formed by the Our, Sûre (Sauer), and Moselle rivers. Luxembourg is bordered on the s by France and on the w and n by Belgium, with total border length of 359 km (223 mi).

Luxembourg's capital city, Luxembourg, is located in the south central part of the country.

TOPOGRAPHY

The country is divided into two distinct geographic regions: the rugged uplands (Oesling) of the Ardennes in the north, where the average elevation is 450 m (1,476 ft) with the highest point, Buurgplaatz, at 559 m (1,834 ft); and the fertile southern lowlands, called Bon Pays (Good Land), with an average altitude of 250 m (820 ft).

The entire area is crisscrossed by deep valleys, with most rivers draining eastward into the Sûre, which in turn flows into the Moselle on the eastern border. The northern region, comprising one-third of the country, is forested and has poor soil.

CLIMATE

Luxembourg's climate is temperate and mild. Summers are generally cool, with a mean temperature of about 17°c (63°f); winters are seldom severe, average temperature being about 0°c (32°f). The high peaks of the Ardennes in the north shelter the country from rigorous north winds, and the prevailing northwesterly winds have a cooling effect. Rainfall is plentiful in the extreme southwest; precipitation throughout the country averages about 75 cm (30 in) annually.

FLORA AND FAUNA

The principal trees are pine, chestnut, spruce, oak, linden, elm, and beech, along with fruit trees. There are many shrubs, such as blueberry and genista, and ferns; a multitude of lovely flowers; and many vineyards. Only a few wild animal species (deer, roe deer, and wild boar) remain, but birds are plentiful, and many varieties of fish are found in the rivers, including perch, carp, bream, trout, pike, and eel.

ENVIRONMENT

The Ministry of the Environment is the main environmental agency. Government statistics indicate considerable improvement in pollution control over the past few decades. Emissions of particles of sulfur dioxide declined substantially from 1972 to 1983. As of 1994, emissions of smoke, sulfur dioxide, nitrogen dioxide, and lead were well within EU acceptable limits. Luxembourg has about 0.2 cu mi of water. Luxembourg has produced an average of about 3.3 tons of particulate emissions and 22 tons of hydrocarbon emissions per year.

Forest reserves have been severely depleted since 1800, when three-fourths of the country was forest; today forest and woodland cover only one-fifth of Luxembourg. During World War II, German requisitions and heavy demands for fuel contributed to this depletion.

According to a 2006 report issued by the International Union for Conservation of Nature and Natural Resources (IUCN), threatened species included three types of mammals, three species of birds, two types of mollusks, and two species of other invertebrates. Threatened species include the spotted eagle, the southern damselfly, and the great snipe.

POPULATION

The population of Luxembourg in 2005 was estimated by the United Nations (UN) at 457,000, which placed it at number 163 in population among the 193 nations of the world. In 2005, approximately 14% of the population was over 65 years of age, with another 19% of the population under 15 years of age. There were 97 males for every 100 females in the country. According to the UN, the annual population rate of change for 2005–10 was expected to be 0.4%, a rate the government viewed as too low. The projected population for the year 2025 was 544,000. The population density was 176 per sq km (457 per sq mi).

The UN estimated that 91% of the population lived in urban areas in 2005, and that urban areas were growing at an annual rate of 1.42%. The capital city, Luxembourg, had a population of 77,000 in that year. The chief industrial city is Esch-sur-Alzette, with a population of 28,000. Other urban areas and their estimated populations include Differdange, 19,005; Dudelange, 17,000; and Schifflange, 8,084.

MIGRATION

During the 19th century, thousands of Luxembourgers emigrated, chiefly to the United States. In 1870, however, rich deposits of iron ore were uncovered in southern Luxembourg, and during the period of industrialization and prosperity that followed, many persons from neighboring countries migrated to Luxembourg.

Since the adoption of national asylum legislation in April 1996, there has been a significant increase in the number of asylum seekers. In 1997, 431 people applied for asylum. By 1998, 1,709 people applied. Between January and July 1999, as many as 2,404 people submitted asylum applications.

As of 12 August 1999, some 101 people had been evacuated from Macedonia to Luxembourg. Evacuees were given a six-month renewable residence permit, as well as work permits, social assistance, and the right to family reunification. As of 1999, none of the evacuees had returned. Also as of 1999, Luxembourg officials were in the process of adopting a law on temporary protection. In 2004 there were 1,590 refugees and no asylum seekers. The estimated net migration rate in 2005 was 8.86 migrants per 1,000 population.

ETHNIC GROUPS

The indigenous inhabitants of Luxembourg consider themselves a distinct nationality, with a specific ethnic character. A strong indication of that character is the national motto, "Mir woelle bleiwe wat mir sin" ("We want to remain what we are"), for despite a history of long foreign domination, Luxembourgers have retained their individuality as a nation. There are also native-born residents of Celtic, French, Belgian, or German ancestry, as well as a substantial immigrant population of Portuguese, Italian, and other Europeans (guest and worker residents).

LANGUAGES

Luxembourgers speak Luxembourgian, or Letzeburgesch, the original dialect of the country, as well as French and German. All three are official languages. Letzeburgesch is a Germanic dialect related to the Moselle Frankish language that was once spoken in western Germany. It rarely appears in written form.

Letzeburgesch, French, and German are all languages of instruction in primary schools, while French is the most common language of instruction in secondary schools. Government publications are generally in French. English is also spoken.

RELIGIONS

The country is historically Roman Catholic and it is estimated that over 90% of the population are nominally members of this church. The largest Protestant denominations are the Lutheran and Calvinist churches. About 6,000 people are Muslim, about 5,000 are Orthodox Christians (Greek, Serbian, Russian, and Romanian), and about 1,000 are Jewish. There are also small communities of the Baha'is, Mormons, Jehovah's Witnesses and members of the Universal Church. It is believed that the number of atheists is small, but growing.

The constitution provides for freedom of religion and this right is respected in practice. A special Concordat of 1801 allows certain religious groups to receive financial support. For instance, the state pays salaries for Roman Catholic and Greek and Russian Orthodox priests, Jewish rabbis, and pastors of some Protestant denominations. The state also supports some private religious schools. Certain Christian holidays are celebrated as national holidays.

TRANSPORTATION

Transportation facilities are excellent. The railways are consolidated into one organization, the Société Nationale des Chemins de Fers Luxembourgeois (CFL), with the government of Luxembourg controlling 51% of the stock and the remaining 49% divided between the French and Belgian governments. Railway lines, totaling 274 km (170 mi) in 2004, provide direct links with Belgium via Arlon, with France via Metz and Longwy, and with Germany via Trier. There is through-train service to Paris and various other points in France. In that same year, 242 km (150 mi) of railway were electrified.

In 2002 there were 5,210 km (3,241 mi) of state and local roads, all of which were paved, including 147 km (91 mi) of expressways. Direct roads connect all important towns, and the main arteries are suitable for heavy motor traffic. As of 2003 there were 287,245 cars and 35,904 commercial vehicles in use. In the 1990s, a program was underway to link Luxembourg's highways to those of Belgium, France, and Germany.

The only river available for industrial transport is the Moselle, which for 37 km (23 mi) allows navigation of barges of up to 1,500 tons. In 2005, the merchant fleet comprised 40 ships of 1,000 GRT or more, with a total of 652,454 GRT. There were two airports in 2004, only one of which had a paved runway. There was also a single heliport. The principal airport is Findel, located near the city of Luxembourg. Regular flights to other European cities are operated by Luxair, the national carrier, and by foreign airlines. Luxembourg's largest airline, Cargolux, ranks among Europe's top 10 cargo carriers. Luxembourg and the United States have shared open sky aviation rights since a 1995 agreement. In 2001 (the latest year for which data was available), 885,900 passengers were carried on scheduled airline flights.

HISTORY

The land now known as Luxembourg fell under the successive domination of the Celts, the Romans, and the Riparian Franks before its founding as the County of Luxembourg in 963 by Sigefroid, count of the Ardennes, who reconstructed a small ruined fortress called Lucilinburhuc (Little Burg) on the site of the present capital. The area tripled in size during the reign of Countess Ermesinde (1196–1247). John, count of Luxembourg (r. 1309–46) and king of Bohemia, became the national hero; although blind for many years, the inveterate knight-errant laid the foundations for a powerful dynasty before he fell in the Battle of Crécy, in northern France, during the Hundred Years' War. His son Charles (1316–78) was the second of four Luxembourg princes to become Holy Roman emperor. He made Luxembourg a duchy, but under his successors the country was ruined financially.

Luxembourg came under Burgundian rule in 1443 and remained in foreign hands for more than 400 years. Successively it passed to Spain (1506–1714, excepting 1684–97, when it was ruled by France), Austria (1714–95), and France (1795–1815). The Congress of Vienna in 1815 made Luxembourg a grand duchy and allotted it as an independent state to the king of the Netherlands, after ceding to Prussia its territory east of the Moselle, Sûre, and Our. Luxembourg lost more than half its territory to Belgium in 1839, but gained a larger measure of autonomy, although Dutch kings continued to rule as grand dukes. By the Treaty of London in 1867, Luxembourg was declared an independent and neutral state under the protection of the Great Powers, but was required to dismantle its mighty fortress. In 1890, the house of Nassau-Weilbourg, through the Grand Duke Adolphe (r. 1890–1905), became the ruling house of Luxembourg. The country was occupied by German troops in World War I. In 1919, Grand Duchess Charlotte succeeded to the throne, and on 28 September 1919, in a referendum held to decide the country's future, a plurality supported her. In 1921, Luxembourg formed an economic union with Brussels.

The Germans again invaded the country in May 1940, but the grand ducal family and most members of the government escaped to safety. Under the Nazi occupation, the people suffered severely, particularly when their revolt in 1942 protesting compulsory service in the German army was savagely repressed. Luxembourg was liberated by Allied forces in September 1944.

That year, while still in exile, the government agreed to form an economic union with Belgium and the Netherlands; the first phase, the Benelux Customs Union, was effected in 1948. In February 1958, a treaty of economic union, which became effective in 1960, was signed by representatives of the three countries. During the postwar decades, Luxembourg also became an active member of NATO and the EC.

In April 1963, Luxembourg celebrated its 1,000th anniversary as an independent state. On 12 November 1964, Grand Duchess Charlotte abdicated in favor of her son, Jean. The Grand Duke announced on Christmas Day 1999 that he planned to abdicate in favor of his eldest son Prince Henri in September 2000. (Prince Henri took the throne on 7 October 2000.) Jean's reign was marked by continued prosperity, as Luxembourg's economy shifted from dependence on steel to an emphasis on services, notably finance and telecommunications. Luxembourg is now among the world's top 10 financial centers and the financial sector employs approximately 10% of the workforce (20,000 people) and accounts for around 22% of national income. There is an industrial sector which initially was dominated by steel but has become increasingly diversified to include chemicals, rubber, and other products. Luxembourg had an incredibly high 2005 GDP per capita of us$58,900.

Different governments have played a key role in the diversification process and the development of a skilled workforce has been an important instrument. Equally important is the country's tax regime. Luxembourg's 0% withholding tax on crossborder savings acts as a magnet for investors. Its favorable tax law is at odds with the rest of the European Union and pressures for European-wide harmonization would diminish the sector's competitive advantage.

The country's growth rate has been among the highest in the European Union and averaged over 4% annually between 1994 and 2000. Luxembourg suffered due to the global economic down-turn and the turmoil in international stock markets that began in 2001, as its small, open economy specializes in financial services. Luxembourg joined the Economic and Monetary Union in 1999, and adopted the euro as its currency. Prime Minister Jean-Claude Juncker was considered for the presidency of the European Commission in 2005, however he promised to remain as prime minister if he won the election of 2003, and so stayed on in Luxembourg.

GOVERNMENT

Luxembourg is a constitutional monarchy, governed by the constitution of 1868 as revised in 1919 (when universal suffrage and proportional representation were introduced) and subsequently. The grand ducal crown is hereditary in the house of Nassau-Weilbourg. Legislative power is vested in the Chamber of Deputies, the 60 (prior to 1984, 64 members) members of which are elected for five-year terms. In addition, the Council of State, composed of 21 members appointed for life by the sovereign, acts as a consulting body in legislative, administrative, and judicial matters and has the right of suspensive veto.

Executive power rests jointly in the sovereign, who may initiate legislation, and a prime minister (president of the government), appointed by the monarch, who in turn selects a cabinet. The prime minister, together with the cabinet, must command a majority in the Chamber of Deputies. Voting is compulsory, and eligibility begins at age 18.

POLITICAL PARTIES

Since 1947, shifting coalitions among the three largest parties have governed the country. The Christian Social Party (Parti Chrétien Social—PCS) is a Catholic, promonarchist movement favoring progressive labor legislation and government protection for farmers and small business. Except for the period 1974–79, the PCS has been the dominant partner in all ruling coalitions since World War I. The Socialist Party (Parti Ouvrier Socialiste Luxembourgeois—POSL) supports improvement and extension of the present system of social welfare programs. The third major group, the Democratic Party (Parti Démocratique—PD), favors social reforms and minimal government activity in the economy. Other parties have included the Luxembourg Communist Party (Parti Communiste—PC), which has its main strength with steelworkers in the industrialized south, and the Social Democratic Party (Parti Social-Démocrate Luxembourgeois—PSDL), which split from the POSL in 1971. In addition, the ecologist Green Party has representation in parliament, as does the Action Committee for Democracy and Justice (ADR), a pensioners' party. The Marxist and Reformed Communist Party, known as "The Left," secured one seat in the Chamber of Deputies in 1999.

Following the June 1999 elections, the distribution of seats in the 60-member unicameral Chamber of Deputies was: PCS, 19; POSL, 13; PD, 15; and other groups, 13. The coalition of the PCS and POSL, which had governed for 15 years, was replaced by a coalition of the PCS and PD. Jean-Claude Juncker, leader of PCS, remained as prime minister. Following the June 2004 elections, distribution of seats was: PCS 24, POSL 14, PD 10, Green Party 7, ADR 5. The next elections were scheduled to be held in June 2009.

LOCAL GOVERNMENT

Luxembourg is divided into three districts (Luxembourg, Diekirch, and Grevenmacher) comprising 12 cantons, which in turn make up 118 communes. The districts are headed by commissioners—civil servants who are responsible to the central government. Each commune elects an autonomous communal council headed by a burgomaster; the councils elect government officials at the local level. Local elections are held every six years.

JUDICIAL SYSTEM

The legal system is similar to the French Napoleonic Code, except for the commercial and penal divisions, which are similar to their Belgian counterparts. Minor cases generally come before one of three justices of the peace. On a higher level are the two district courts, one in the city of Luxembourg and the other in Diekirch. The Superior Court of Justice is composed of the Court of Cassation, a Court of Appeal, and a department of public prosecution. The Court of Cassation comprises a bench of five judges, responsible for hearing cases that seek to overturn or set aside decisions given by the various benches of the Court of Appeal. The Court of Appeal consists of nine benches of three judges each, hearing civil, commercial, and criminal cases. Judges are appointed for life terms. New administrative courts began operations in 1997, after a 1995 decision by the European Court of Human Rights that Luxembourg's Council of State could no longer serve as both a legislative advisory body and an administrative court. The death penalty was abolished in 1979. The prosecutor as well as the defendant may appeal verdicts in criminal cases. An appeal results in a completely new judicial procedure with the possibility that a sentence may be increased or decreased.

Trade unions and striking are constitutionally guaranteed and news media is free to report without fear of retribution. There is a minority population of Bosnians who live in Luxembourg who face mild social racism.

Luxembourg is a member of the UN and is the site of the European Court of Justice.

ARMED FORCES

In 1967, Luxembourg abolished conscription and created a volunteer military force that is part of NATO. Responsibility for defense matters is vested in the Ministry of Public Force, which also controls the police and gendarmerie.

In 2005 the armed forces of Luxembourg consisted of the army with 900 active personnel and a gendarmerie of 612. NATO maintains 17 early warning aircraft with Luxembourg registration. Luxembourg maintains 23 personnel in the UN peacekeeping mission in Bosnia. Another nine are in Afghanistan and 26 in Serbia-Montenegro. More than 5,000 American soldiers, including Gen. George S. Patton, are buried at the American Military Cemetery near the capital. Budgeted defense expenditures in 2005 were $264 million.

INTERNATIONAL COOPERATION

Luxembourg is a founding member of the United Nations, having joined the organization on 24 October 1945, and participates in ECE and several nonregional specialized agencies, such as the FAO, IAEA, the World Bank, UNESCO, UNIDO, the ILO, IMF, and the WHO. Since 1921, it has been joined with Belgium in the Belgium-Luxembourg Economic Union (BLEU). It is also a partner with Belgium and the Netherlands in the Benelux Economic Union. Luxembourg is a member of the Council of Europe, the Asian Development Bank, NATO, OECD, OSCE, WTO, the Euro-Atlantic Partnership Council, the European Bank for Reconstruction and Development, the Western European Union, and the European Union. Luxembourg held the EU presidency for the first half of 2005. The country is the home site of the European Court of Justice, the European Court of Auditors, European Investment Bank, and other EU organizations. The Secretariat of the European Parliament is also located in Luxembourg.

Luxembourg belongs to the Australia Group, the Zangger Committee, the Nuclear Energy Agency, and the Nuclear Suppliers Group (London Group). In environmental cooperation, the country is part of the Basel Convention, Conventions on Biological Diversity and Air Pollution, Ramsar, CITES, the London Convention, International Tropical Timber Agreements, the Kyoto Protocol, the Montréal Protocol, MARPOL, the Nuclear Test Ban Treaty, and the UN Conventions on the Law of the Sea, Climate Change, and Desertification.

ECONOMY

In relation to its size and population, Luxembourg is one of the most highly industrialized countries in the world. Its standard of living rivals that of any country in Europe. Steelmaking, traditionally the most important industry, has seen its contribution to GDP decline from 21% in 1974 to 1.8% in 1996. Iron ore, formerly mined in limited quantities, is no longer produced because supplies have been exhausted. The country's lack of industrial fuels makes it completely dependent on imports of coke for steel production. In 2001, Luxembourg's steel producer, ARBED, merged with France's USINOR and Spain's ACERALA to create the world largest steel company, NewCo, in order to increase competitiveness. Other industries—plastics, rubber and chemicals and other light industries—have been successfully developed, and the service industries, most notably banking, have expanded rapidly. Services now contribute 69% to GDP (2000 estimate).

Agriculture is generally small-scale, with livestock and vineyards comprising the most important segment.

The worldwide recession of the early 1980s adversely affected Luxembourg's economy; between 1985 and 1992, however, GDP grew by 32%, or 4% per year. Growth for 1998 was 2.9%. Inflation, as high as 9.4% in 1982, was only 0.3% in 1986 and averaged 3.3% during 1988–92. Average inflation 1999 to 2001 was 2.3%. Total GDP, at $13.9 billion in 1998 (purchasing power parity) had risen over 38% to $19.2 billion by 2001. Per capita income in 2001 was $45,500, one of the highest in the world, with GDP growth reported at 8.3%.

Luxembourg is known for having one the lowest unemployment rates in Europe. The unemployment rate averaged just 1.4% between 1984 and 1991 and was 3% in 1998. In 2001, unemployment was at 2.7%, the range where it remained until registering a slight increase in 2004, to 4.3%.

Economic expansion continued at stately rates (similar to most other Western European countries), reaching 2.5% in 2002, 2.9% in 2003, and 4.5% in 2004; the GDP growth rate for 2005 was expected to be 3.6%. This expansion was mainly fueled by the country's up and coming financial and service oriented (especially media and communications) sectors. The steel sector, while being the subject of major restructurings in the past two decades, remained one of the backbones of the economy. Inflation remained stable at around 2%.

INCOME

The US Central Intelligence Agency (CIA) reports that in 2005 Luxembourg's gross domestic product (GDP) was estimated at $29.4 billion. The CIA defines GDP as the value of all final goods and services produced within a nation in a given year and computed on the basis of purchasing power parity (PPP) rather than value as measured on the basis of the rate of exchange based on current dollars. The per capita GDP was estimated at $62,700. The annual growth rate of GDP was estimated at 3.5%. The average inflation rate in 2005 was 2.6%. It was estimated that agriculture accounted for 0.5% of GDP, industry 16.3%, and services 83.1%.

Approximately 17% of household consumption was spent on food, 9% on fuel, 3% on health care, and 7% on education.

LABOR

In 2005, the labor force was estimated at 200,000, of whom 105,000 were foreign workers crossing the border from France, Belgium and Germany. Of those employed as of 2004, the services sector accounted for an estimated 86%, while 13% were in industry and 1% in agriculture. The estimated unemployment rate was 3.7% in 2005.

Labor relations have been generally peaceful since the 1930s. Foreign investors are attracted by the positive relationship which exists in Luxembourg between employers and the labor force. There is a strong trade union movement. About 50% of the labor force was organized into unions as of 2005. Although independent, the two largest labor organizations are associated with major political parties. Workers may strike only after their dispute is submitted to the National Conciliation Office and all mediation efforts have failed. Collective bargaining is widely practiced.

As of 2005, unskilled workers who are over 18 years of age with no dependents are entitled to a minimum wage of $1,390 per month, while the minimum for skilled workers was $1,475 per month. However, these totals were insufficient to provide a worker and family with a decent living standard. Most workers earned more than the minimum rate. Wage agreements are generally arrived at by industry-wide bargaining between labor and management. The maximum workweek is legally set at 40 hours. Overtime is paid at premium rates. Work on Sunday is restricted. Children under the age of 16 are prohibited from employment except in some special circumstances. The law mandates a safe working environment and this is effectively enforced by the Ministry of Labor.

AGRICULTURE

Over 27% of the work force and 50% of the land (126,629 hectares/312,900 acres) are devoted to agriculture and grazing; the majority of agricultural land consists of meadows and pastures. Farms are generally small and highly mechanized, although average farm size has been increasing. While the number of farms of 2 hectares (5 acres) or more fell from 10,570 in 1950 to 2,263 in 2002, the average holding increased from 13.16 to 57.18 hectares (from 32.52 to 141.3 acres) over the same period. Crop production in 2002 included (in tons): corn, 137,721; forage crops, 146,182; bread grains, 79,126; potatoes, 20,105; and pulses, 2,327.

Vineyards including Ehnen, Stadtbredmis, and Bech-Kleinmacher are located in the Moselle River Valley. In 2002/03, wine production totaled 15.39 million liters, consisting of rivaner, elbling, auxerrois, riesling, pinot blanc, and pinot gris. Wine and clover seeds are the important agricultural exports. In addition, millions of rosebushes, a major specialty crop, are exported annually. Chief fruits produced include apples, plums, and cherries.

ANIMAL HUSBANDRY

Livestock breeding is relatively important, particularly because of Luxembourg's dairy product exports. In 2005, livestock included 184,172 head of cattle, 75,000 pigs, 7,500 sheep, and 3,100 equines. A total of 48,615 tons of meat, and 272,000 tons of milk were produced in 2005.

FISHING

There is some commercial fishing for domestic consumption and much private fishing for sport. The rivers teem with perch, carp, trout, pike, eel, and bream.

FORESTRY

About 88,620 hectares (218,980 acres) were covered by forests in 2000, of which 53% was private forest. Forestry production in 2004 included 277,180 cu m (9.8 million cu ft) of roundwood, over 50% from broad-leaved trees. Chief commercial woods are spruce and oak. In 2004, forest product imports exceeded exports by $13.7 million.

MINING

In 2003, Luxembourg's mineral sector consisted primarily of raw materials processing, information systems, and mineral trading. Metals produced included crude and semi-manufactured steel, while industrial minerals consisted of hydraulic cement, crude gypsum and anhydrite, and Thomas slag phosphates. The iron and steel industry was the most important mineral industry sector, with steel products as the country's main export commodity. Mining in Luxembourg was represented by small industrial mineral operations that produced material for domestic construction, including cement manufacture. In 2003, Luxembourg produced 2.7 million metric tons of crude steel and 2.8 million metric tons of semi-manufactured steel. Hydraulic cement production in 2003 was estimated at 700,000 metric tons, with crude gypsum and anhydrite output estimated at 400 metric tons in that same year. Production of Thomas slag phosphates (by gross weight) totaled and estimated 475,000 metric tons in 2003. Luxembourg's traditional source of mineral wealth was iron ore, concentrated between Redange and Dudelange. Because of mine depletion, production declined from 2.08 million tons in 1976, to 429,000 in 1981, when the last iron mines were closed.

ENERGY AND POWER

Luxembourg imports all the petroleum products, natural gas and coal it requires, since it has no oil, natural gas or coal reserves.

In 2002, imports of petroleum products (all refined) averaged 52,290 barrels per day, while consumption for that year averaged 51,680 barrels per day. Natural gas imports and consumption in 2002 each totaled 42.06 billion cu ft. Coal imports that year consisted of hard coal and totaled 140,000 short tons.

Total electric generating capacity in 2002 was 128 MW, of which nearly 52% used fossil fuels, 31% was hydroelectric, and the remainder geothermal/other. Production of electrical energy in 2002 amounted to 2.526 billion kWh of which 92.2% was from fossil fuels, almost 8% from hydropower, and the rest from other renewable sources. Consumption of electricity in 2002 was 5.787 billion kWh. The steel industry consumes 80% of total industrial energy demand.

INDUSTRY

Massive restructuring of the steel industry and continuing diversification of the industrial base characterized the 1980s. Under the ongoing industrial diversification program, more than 80 new firms were launched between 1960 and 1985, providing jobs for 10,332 people. Chemicals, rubber, metal processing, glass, and aluminum became increasingly important, while some other industries, including construction, remained depressed; traditional light industries such as tanneries, glove-making plants, and textile mills were forced either to close down or to greatly reduce their scale of operations.

In 1997, steel was responsible for 29% of all exports. Production of steel was 2,613,000 tons in 1995 (5,462,000 tons in 1970); rolled steel products, 3,709,000 tons (4,252,000 tons in 1970). Luxembourg's blast furnaces and steel mills are located in the Bassin Minier of the southwest. Mergers have given ARBED, a private multinational firm with significant government shareholding, virtually complete control of the steel industry. A merger with France's USINOR and Spain's ACERALIA in 2001 made ARBED the world's largest steel producer; it was renamed "NEWCO" temporarily, and was searching for niche markets for highly specialized steel products.

In recent years, Luxembourg has diversified its industrial production away from steel, producing chemicals, medical products, rubber, tires, glass, and aluminum. The financial sector has compensated for the decline in steel production, and other service-sector growth areas in 2002 were cargo shipping, satellite transmission, and television and radio broadcasting.

In 2004, industry contributed to 16.3% of the GDP, and employed 13% of the labor force. The largest share of the economy went to the services sector, which made up 83.1% of the GDP, and employed 86% of the working force, with some 35% of the people working in Luxembourg representing cross-border labor from France, Belgium, and Germany. The industrial production growth rate, at 2.9%, was slightly smaller than the GDP growth rate, hinting to a more dynamic services sector in 2004.

SCIENCE AND TECHNOLOGY

The Grand Ducal Institute, the central learned society, includes medical and scientific sections. The Society of Luxembourg Naturalists, founded in 1890, had 575 members in 1996. Two public research centers conduct research on health and applied science. The University Center of Luxembourg, founded in 1969, has a sciences department. The Higher Institute of Technology, founded in 1979, offers courses in engineering and computing. Sociéte Européenne des Satellites at Betzdorf is the control center for a group of satellites important to Europe's broadcasting industry.

In 2000, Luxembourg had 3,757 researchers and 3,820 technicians engaged in research and development (R&D) per one million people. In that same year, the country spent $420.967 million or 1.71% of GDP on R&D, with the overwhelming majority of the expenditures, 90.7%, coming from business, with government accounting for 7.7% and foreign investors at 1.7%.

DOMESTIC TRADE

The commercial code is similar to that of Belgium and trade practices are nearly identical. The city of Luxembourg is the headquarters for the distribution of imported goods within the country and Antwerp in Belgium is the principal port of entry. Consequently, manufacturers' agents and importers maintain offices in one or both of those cities. The commercial laws and solid economic base are highly attractive to foreign investors. About 35% of the workforce is made up of foreign workers, many of whom are commuters from neighboring countries. French, German, and English are the languages of business correspondence. Advertising is extensive, particularly in newspapers and on Radio-Télé-Luxembourg.

Most shops and stores are open 9 am to 6 pm Monday through Friday. Banking hours are on weekdays, 9 am to 4:30 pm. Private business hours are usually from 8 am to 5 pm.

FOREIGN TRADE

Luxembourg remains dependent on foreign trade, even though domestic demand has become an increasingly important factor in fueling the economy. The nation's trade position has weakened with the decline of the steel industry: between 1974 and 1981, imports grew by 55% while exports rose only 7%, as the trade balance swung into deficit. Between 1985 and 1992, imports grew by 42% and exports rose only 24%.

Trade with European nations accounted for 88.6% of imports and 88.7% of exports in 2000. With 23% of the total export volume in 2000, Germany was Luxembourg's biggest customer. Luxembourg imported more goods from Belgium (35%) than any other country.

Unlike some of its Western European counterparts, Luxembourg continued to register a trade deficit in recent years. In 2003, exports totaled $13.4 billion (FOB—Free on Board), while imports rose to $16.3 billion (CIF—Cost and Freight). Principal export commodities included machinery and equipment, steel products, chemicals, rubber products, and glass, and mainly went to Germany (which in 2004 received 22.1% of Luxembourg's total exports), France (20.1%), Belgium (10.2%), United Kingdom (8.4%), Italy (7.3%), Spain (5.9%), and the Netherlands (4.3%). Imports included minerals, metals, foodstuffs, and quality consumer goods,

and chiefly came from Belgium (29.8%), Germany (22.6%), China (12.6%), France (12%), and the Netherlands (4.2%).

BALANCE OF PAYMENTS

Luxembourg enjoyed a favorable trade balance from 1951 until 1975, when rising energy costs and structural weakness in the steel industry led to deterioration in terms of trade. The overall balance of payments has, however, tended to show a surplus, mainly because of income from banking services. The levels of imports and exports remain relatively stable, with the level of imports fluctuating significantly only when large capital purchases are made in the aviation sector.

The US Central Intelligence Agency (CIA) reported that in 2000 the purchasing power parity of Luxembourg's exports was $7.85

billion while imports totaled $10.25 billion resulting in a trade deficit of $2.4 billion.

The International Monetary Fund (IMF) reported that in 2001 Luxembourg had exports of goods totaling $9 billion and imports totaling $11.4 billion. The services credit totaled $19.9 billion and debit $13.7 billion.

Exports of goods and services totaled $47 billion in 2004, up from $36 billion in 2003. Imports followed a similar trend, growing from $30 billion in 2003, to $39 billion in 2004. The resource balance was consequently positive, reaching $6 billion in 2003 and $8 billion in 2004. The current account balance improved from $2.2 billion in 2003, to $2.8 billion in 2004. National reserves (including gold) were insignificant at $331 million.

BANKING AND SECURITIES

Banking has been gaining in importance since the 1970s and has become the most significant part of the economy; by 1998, banking and insurance employed about 15% of the total workforce. The principal bank and the sole bank of issue is the International Bank of Luxembourg (Banque Internationale à Luxembourg ), founded in 1856. The Belgium-Luxembourg monetary agreement, as renewed for 10 years in 1991, provided for the establishment of the Luxembourg Monetary Institute to represent the nation at international monetary conferences and institutions. The banking sector has benefited from favorable laws governing holding companies. The European Investment Bank, the European Court of Auditors (both EU institutions), and the European Monetary Fund are headquartered in Luxembourg, as are all of the big six accounting firms. As a financial center, Luxembourg has the advantages of strict banking secrecy, a trained multilingual workforce, and a government that is sympathetic to the sector's needs. These last two factors are proving attractive to the developing cross-border insurance business. In addition, a strict 1992 law aimed at combating money laundering reinforces Luxembourg's reputation as a corrupt-free environment. The financial sector is currently active in three main areas: the Eurobond market, investment funds, and the developing cross-border life insurance market.

Faced with the impossibility of raising the capital for its steel industry alone, Luxembourg has always been open to the financial world. But its current success in the field owes more to legislation in neighboring countries and external economic factors than to any deliberate policy on the part of the government.

The Euro-markets have made Luxembourg the home of Cedel Bank, one of the two international clearing and settlement depositories. In 2001 this group recorded a consolidated gross operating income of 979.5 million euros and a pretax operating profit of 113.4 million euros. In 1999, Cedel and Deutsche Börse Clearing announced a merger. The new company is called Cedel International and will serve as a single European clearing organization.

Luxembourg controls about 90% of Europe's offshore investment funds, making it the fourth-largest world market. The International Monetary Fund reports that in 2001, currency and demand deposits—an aggregate commonly known as M1—were equal to $46.0 billion. In that same year, M2—an aggregate equal to M1 plus savings deposits, small scale time deposits, and money market mutual funds—was $139.4 billion.

The Luxembourg Bourse, founded in 1929 in the city of Luxembourg, primarily handles stocks and bonds issued by domestic companies, although it also lists Belgian securities. The exchange was closed down on 10 May 1940. Dealing resumed but was limited to domestic and German securities. The exchange was again closed down when the country was liberated and did not reopen until October 1945.

INSURANCE

Third-party liability insurance is compulsory for all automobile owners, as is insurance for nuclear operators, hunters, hotel operators, boats and aircraft, windsurfers and parachutists. Domestic insurance companies issue both life and nonlife policies. The Third European Life Directive has permitted life companies to operate in any European Union (EU) country while still being controlled by domestic regulations. As of 1996, there were 23 subsidiaries of leading European companies that had been set up in Luxembourg, attracted by the availability of skilled staff and the proximity to major European markets. Direct premiums written in 2003 totaled us$8.232 billion, with us$1.102 billion of the total comprised of nonlife premiums and us$7.130 comprised of life insurance premiums. In that same year, Luxembourg's top nonlife insurer had gross written nonlife premiums (including healthcare) of us$223.2 million, while the country's leading life insurer that same year was le Foyer with gross written life insurance premiums of us$223.2 million.

The Commissariat aux Assurances regulates insurance companies in Luxembourg.

PUBLIC FINANCE

The budget of the Luxembourg government is presented to the Chamber of Deputies late in each calendar year and becomes effective the following year. Government finances are generally strong, and budgets are usually in surplus.

The US Central Intelligence Agency (CIA) estimated that in 2005 Luxembourg's central government took in revenues of approximately $15.1 billion and had expenditures of $15.8 billion. Revenues minus expenditures totaled approximately -$690 million.

The International Monetary Fund (IMF) reported that in 2003, the most recent year for which it had data, central government revenues were €10,092 million and expenditures were €10,099 million. The value of revenues was us$11,391 million and expenditures us$11,242 million, based on a market exchange rate for 2003 of us$1 = €.8860 as reported by the IMF. Government outlays by function were as follows: general public services, 14.9%; defense, 0.8%; public order and safety, 2.4%; economic affairs, 9.1%; environmental protection, 1.4%; housing and community amenities, 0.8%; health, 12.6%; recreation, culture, and religion, 2.8%; education, 10.0%; and social protection, 45.2%.

TAXATION

Luxembourg has come under pressure to share information on the interest paid on the hither-to-secret savings accounts maintained by nonresidents. In June 2003, the EU Commissioners issued a directive that would allow Luxembourg (as well as Belgium and Austria) to apply increased withholding taxes in lieu of directly sharing information on the interest tax paid on these accounts. Withholding rates of 15–20% would be applied 2004 to 2007, rising to 25% 2007 to 2009, and to 35% after 2009. The US Bush administration stood opposed to these EU initiatives to deal with tax evasion on the grounds that they would eliminate useful "tax competition."

Luxembourg's corporate income tax (IRC) rates in 2004 ranged from 20–22%. In addition, there is a 4% employment fund surtax. Companies are also subject to municipal taxes that average 7.5%. Taken as a whole, the taxes produce an effective tax rate of 30.38% on profits. Since 2002 the municipal tax was no longer deductible for corporate tax purposes. Capital gains are taxed as ordinary income, although some capital gains are tax-exempt. Dividends paid to nonresidents are subject to 20% withholding unless the payments are to a parent company resident in the EU that owns at least 10% of the subsidiary paying dividends. Subsidiaries of foreign companies are considered resident companies ("capital societies") and are taxed at the same rate.

Personal income in Luxembourg is taxed according to a progressive schedule with a top rate of 38%. There is a 2.5% surtax for the employment fund. Social security taxes are separate for blue-and white-collar employees. Employer social security tax rates (in 2004) for blue- and white-collar employees are 13.01% and 10.76%, respectively. Employee tax rates are 12.90% and 10.65%, respectively. Other taxes include a wealth tax, gift taxes, local real estate taxes, registration taxes, subscription and net worth taxes.

The main indirect tax is Luxembourg's value-added tax (VAT), introduced 1 January 1970 with a standard rate of 8% and a reduced rate of 4%. Revisions as of 10 January 1992 instituted a standard rate of 15% with reduced rates of 3% and 6%, and a "parking" (intermediate) rate of 12% (applied to heating oil, intellectual services, advertising, wine and certain other services). The 3% rate is applied to foodstuffs, newspapers, books, and periodicals, medicines and medical equipment, medical and dental care, and other basic goods and services. The 6% rate is applied to gas and electricity.

CUSTOMS AND DUTIES

Tariff policies have been traditionally liberal. Luxembourg adheres to the trade regulations of the European Union. Luxembourg levies its own 15% value-added tax on imports if their final destination is Luxembourg. Nontariff barriers exist also in the form of health, safety, and packaging regulations.

FOREIGN INVESTMENT

Foreign capital investment in Luxembourg has traditionally been small. In recent years, however, US investments have risen substantially, with the value of direct investments in manufacturing alone in excess of $1 billion in 1993. Moderate-sized investments by Luxembourg firms have been made in Germany, France, Belgium, and South American countries. To encourage private investment from abroad, the government grants tax relief for up to 10 years in certain cases. Profits from investment may be transferred out of the country and invested capital may be repatriated with a minimum of regulation. Statistics on Luxembourg's inward and outward foreign investment are calculated and published in conjunction with Belgium's.

Presently, Luxembourg is one of the main actors (in conjunction with the United Kingdom and France) in terms of FDI outflows external to the EU. In 2003, Luxembourg was the EU's second-largest investor outside the boundaries of the union, with capital outflows of $37 billion. At the same time, due to its new role in the financial intermediation sector, Luxembourg has become the biggest recipient of FDI in the EU, with capital inflows reaching around $46 billion (49% of the EU25 total). It was followed at a distance by Ireland, with FDI inflows of $6 billion. Financial intermediation, whose receiving and sending actors almost always reside outside Luxembourg, accounted for 94% of outflows and 98% of inflows.

ECONOMIC DEVELOPMENT

The keystone of the economic system is free enterprise, and the government has attempted to promote the well-being of private industry by every means short of direct interference. The full-employment policy pursued by every postwar government has produced a high ratio of economically active population to total population. Not only is the population economically active, it is also highly skilled, a fact not overlooked by foreign companies seeking to invest. The government encourages the diversification of industry by tax concessions and other means. Luxembourg's successful economy continues to attract immigrants; the immigrant population comprises over one-third of the Grand Duchy's total.

Banking has become an important sector of the economy, compensating for a decline in the steel industry. Successive governments have taken steps to encourage foreign investment, and investment incentives cover taxes, construction, and plant equipment. Government priorities in 2002 included balancing the budget, keeping spending growth in line with GDP growth, and running a general government surplus. The government was enacting tax cuts in 2002, and increased spending in infrastructure, research and development, education, and pension benefits. Obstacles were removed to part-time employment, more flexible working time arrangements were made, and child care facilities were expanded.

Today, Luxembourg is one of the most developed countries in the world (it actually has the highest income per capita in the world—approximately $55,000), and offers a welcoming and dynamic business environment. Its investment fund sector is second only to the one in Paris, and in 2004 it managed assets of over $1.027 trillion. The country is also home to one of Europe's biggest and most successful media conglomerates—RTL Group. Its location within the heart of Europe, its highly educated labor force, a stable tax system, and low business costs, make it a very attractive market for investors, and a reputable competitor for other developed economies.

SOCIAL DEVELOPMENT

An extensive system of social insurance covers virtually all employees and their families. Sickness, maternity, old age, disability, and survivors' benefits are paid, with both employee and employer contributing and the government absorbing part of the cost. Retirement is set at age 65 for both men and women. Birth, maternity, child and education allowances are also provided to all residents. There is a choice for medical service providers. Parental leave and child-rearing allowances are available as well. The government covers the total cost for family allowances. Work injury laws were first instituted in 1902.

Women are well represented in politics and the professions. Although legally entitled to equal pay for equal work, in practice women's salaries are somewhat lower than men's for comparable work. However, the number of women in the workplace increased in 2004. The Ministry for the Promotion of Women is charged with ensuring equal opportunities for women. Violence against women is taken seriously by the authorities, and most abusers are prosecuted. Children's rights are fully protected and the government amply funds systems providing education and health care.

Human rights are fully respected in Luxembourg.

HEALTH

Luxembourg has an advanced national health service, supervised by the Ministry of Public Health. Public health facilities are available to physicians and treatment of patients is on a private basis. Hospitals are operated either by the state or by the Roman Catholic Church.

In 2004, there were an estimated 255 physicians, 74 pharmacists, 64 dentists, and 39 midwives per 100,000 people. There were 32 hospitals with 4,438 beds. Public health officials have waged efficient national campaigns against contagious diseases and infant mortality has been reduced from 56.8 per 1,000 live births in 1948 to an estimated 4.81 as of 2005.

It was estimated that 80% of the country's children were immunized against measles. As of 2002, the crude birth rate and overall mortality rate were estimated at, respectively, 12 and 8.8 per 1,000 people. The fertility rate was one of the lowest in the world. The average woman living through her childbearing years had 1.5 children. Average life expectancy was estimated at 78.74 years in 2005. Leading causes of death are circulatory/heart diseases, cancer, road accidents, and suicide. The HIV/AIDS prevalence was 0.20 per 100 adults in 2003. As of 2004, there were approximately 500 people living with HIV/AIDS in the country. There were an estimated 100 deaths from AIDS in 2003.

HOUSING

The immediate post-World War II housing shortage created by the considerable war damage has been alleviated by substantial construction of private homes and apartment buildings. The government has helped by making home loans at low interest rates available to buyers. In 1981 there were 128,281 private households in Luxembourg. In 2001, there were about 171,953 private households. About 169,198 households were living in single-family units. Of these, 67% were living in owner-occupied dwellings. Housing satisfaction is one of the highest in the European Union.

EDUCATION

School attendance is compulsory between the ages of 6 and 15. Pupils attend primary schools for six years and then enter a general secondary or technical school for a period of up to seven years. The school year runs from October to July. The primary languages of instruction are French and German. In 2001, about 84% of children between the ages of three and five were enrolled in some type of preschool program. Primary school enrollment in 2003 was estimated at about 90% of age-eligible students. The same year, secondary school enrollment was about 80% of age-eligible students; 77% for boys and 83% for girls. It is estimated that about 86.5% of all students complete their primary education. The student-to-teacher ratio for primary school was at about 12:1 in 2003; the ratio for secondary school was about 11:1.

Postsecondary institutions in Luxembourg include the Central University of Luxembourg (founded in 1969), Superior Institute of Technology, and teacher training schools. However, most advanced students attend institutions of higher learning in Belgium and France. In 2003, about 12% of the tertiary age population were enrolled in some type of higher education program. The adult literacy rate for 2002 was estimated at about 100%.

As of 2003, public expenditure on education was estimated at 3.6% of GDP, or 8.5% of total government expenditures.

LIBRARIES AND MUSEUMS

The National Library in Luxembourg is the largest in the country, with over 650,000 volumes. Other major libraries belong to the Centre Universitaire (120,000 volumes), the European Community Court of Justice (120,000), the Abbey of St. Maurice at Clervaux (100,000), the Seminary of Luxembourg (110,000), and the European Parliament (150,000). The Grand Ducal Institute maintains a few specialized collections in the city of Luxembourg, as does the government. In Esch-sur-Alzette the public library has close to 66,000 volumes and features a special collection of Luxembourgensia.

The National Museum of History and Art (founded in 1845) exhibits fine arts as well as the history of Luxembourg. The city of Luxembourg also hosts the Museum of Natural History, founded in 1988 and moved to a new building in 1996, the year that the Museum of the History of Luxembourg opened in the same city. The home where the 19th-century French writer Victor Hugo lived as an exile is in Vianden, and there is a museum of wine in Ehren.

MEDIA

Direct-dial telephone service is in use throughout the country, and includes efficient international service. In 2002, there were 355,400 mainline phones and 473,000 mobile phones in use nationwide. Telegraph service is also widely available.

Radio-Télé-Luxembourg broadcasts on five radio channels (in Letzeburgesch, French, German, English, and Dutch) and two television channels (Letzeburgesch and French). The powerful commercial network reaches not only the domestic audience but millions of French, Germans, and other Europeans. The country is home to the Societe Europeenne des Satellites, the largest satellite operator in Europe. In 1999 there were 2 AM and 9 FM radio stations and 5 television stations. In 1997, there were 285,000 radios and about 285,000 television sets. In 2002, there were 165,000 Internet subscribers in the country.

As of 2001, there are six daily and two weekly newspapers. The daily press is small in circulation but has high standards. Luxembourg does not have an independent news agency of its own but relies on foreign news agencies for information. The most popular dailies in 2002 were the Luxemburger Wort (German and French, circulation 87,777); Tageblatt (German and French) (29,469); and La Républicaine Lorraine (French) (15,000). The weekly Telecran had a 2002 circulation of 45,000.

The law provides for freedom of speech and the press, and the government is said to uphold these provisions in practice.

ORGANIZATIONS

The principal agricultural organization is Centrale Paysanne Luxembourgeoise, under which are grouped all producer cooperatives and other farmers' societies. Organizations promoting the interests of industry include federations of artisans, manufacturers, merchants, and winegrowers. The Luxembourg Chamber of Commerce is active in representing local business interests. The Luxembourg Confederation of Christian Trade Unions promotes worker's rights for all.

Several professional associations are active in supporting a wide variety of occupations and fields. The Association of Doctors and Dentists serves as a professional networking organization while also promoting research and education on health issues and working to establish common policies and standards in healthcare. There are several other associations dedicated to research and education for specific fields of medicine and particular diseases and conditions.

The Christian Social Women organization promotes women's rights and encourages political participation. Scouting programs are active for youth. There are also several sports associations active within the country, including the multinational European Table Tennis Union.

Kiwanis and Lions clubs also have programs in the country. International organizations with active chapters include the Red Cross, Amnesty International, UNICEF, and Greenpeace.

TOURISM, TRAVEL, AND RECREATION

Picturesque Luxembourg, with approximately 130 castles, has long been a tourist attraction. Among the points of greatest attraction are Vianden; Clervaux, with its castle of the De Lannoi family, forebears of Franklin Delano Roosevelt; the famous abbey of Clervaux; Echternach, an ancient religious center; the Moselle region; and the fortifications of the capital. Popular sports for both residents and visitors include fishing, rowing, swimming, hiking, rock climbing, cycling, and golf. More than 5,000 American soldiers are buried at the American Military Cemetery near the capital, including Gen. George S. Patton.

Visitors from Canada, Australia, the United States, and most of the Western European and South American countries require a passport. No visas are necessary for stays of less than three months. There were 581,450 visitors who arrived in Luxembourg in 2003, many of whom came from Belgium and the Netherlands. Hotel rooms numbered 7,626 with 14,620 beds and an occupancy rate of 25%. The average length of stay that year was two nights. Tourist expenditure receipts totaled $2.9 billion.

In 2005, the US Department of State estimated the daily cost of traveling in Luxembourg at $301.

FAMOUS LUXEMBOURGERS

Count Sigefroid founded the nation in 963, and Countess Ermesinde (r.1196–1247) tripled the extent of the country. Other outstanding historical personages are Henry VII of Luxembourg (c.1275–1313), who became Holy Roman emperor in 1308; his son John the Blind (1296–1346), count of Luxembourg (1309–46) and king of Bohemia (1310–46), a national hero; and the latter's son Charles (1316–78), who became Holy Roman emperor as Charles IV (1346–78). Grand duke from 1890 to 1905 was Adolphe (1817–1905), one-time duke of Nassau (1839–66) and the founder of the present dynasty, the house of Nassau-Weilbourg, whose origins go back to 1059.

Joseph Bech (1887–1975), prime minister from 1926 to 1937 and from 1953 to 1958, served as foreign minister for 33 years. Luxembourg-born Robert Schuman (1886–1963), French premier (1947–48) and foreign minister (1948–53), was a key figure in the postwar movement for West European integration. Grand Duchess Charlotte (1896–1985) abdicated in 1964 in favor of her son Grand Duke Jean (b.1921), ruled from 1964–2000. The current ruler is his son Grand Duke Henri (b.1955).

An artist of note was painter Joseph Kutter (1894–1941). Gabriel Lippmann (1845–1921) was awarded the Nobel Prize in physics (1908) for his pioneering work in color photography.

DEPENDENCIES

Luxembourg has no territories or colonies.

BIBLIOGRAPHY

Annesley, Claire (ed.). A Political and Economic Dictionary of Western Europe. Philadelphia: Routledge/Taylor and Francis, 2005.

Clark, Peter. Luxembourg. New York: Routledge, 1994.

D and B's Export Guide to Luxembourg. Parsippany, N.J.: Dun and Bradstreet, 1999.

Kelly, Mary, Gianpietro Mazzoleni, and Denis McQuail (eds.). The Media in Europe. 3rd ed. Thousand Oaks, Calif.: Sage, 2004.

Newcomer, James. The Grand Duchy of Luxembourg: The Evolution of Nationhood. Luxembourg: Editions Emile Borschette, 1995.

Wessels, Wolfgang, Andreas Maurer, and Jürgan Mittag (eds.). Fifteen into One?: the European Union and Its Member States. New York: Palgrave, 2003.

LUXEMBOURG

Grand Duchy of Luxembourg

Grand-Duché de Luxembourg

Grossherzogtum Luxemburg

COUNTRY OVERVIEW

LOCATION AND SIZE.

Luxembourg is a landlocked nation in Western Europe, at the intersection of Belgium, France, and Germany. It is one of the smallest nations in the world with an area of 2,586 square kilometers (998 square miles), which makes it slightly smaller than Rhode Island. The nation has 359 kilometers (223 miles) of borders, including 148 kilometers (92 miles) with Belgium, 73 kilometers (45 miles) with France, and 138 kilometers (86 miles) with Germany. Luxembourg, the capital, is in the southern region of the country. The nation's second and third largest cities, Esch-Alzette and Differ-dange, are in the southwest.

POPULATION.

In July of 2000, the population of Luxembourg was estimated to be 437,389. While the overall fertility rate is below replacement levels (1.7 children per woman, or 12.45 births per 1,000 people), the population continues to grow because of immigration . There were 9.21 immigrants per 1,000 inhabitants in 2000. The death rate was 8.91 deaths per 1,000. In 2000, the population growth rate was 1.27 percent because of the influx of refugees and immigrant workers.

Immigration has been encouraged because of the need for workers. As much as 35 percent of the population is foreign, which gives the nation a higher proportion of foreigners than any other European country. The government has implemented different programs to integrate foreign residents into society. For instance, foreigners with resident status have the right to vote and run for office in municipal elections and may be employed in public sector jobs. Given the aging population, the need for workers continues. About 14 percent of Luxembourgers are over the age of 65, while 19 percent are 14 or younger. Average life expectancy is 73.8 years for males and 80.6 years for women. Besides guest workers , Luxembourg has also opened its borders to refugees. In 1998, there were 4,548 refugees in the nation, making up just over 1 percent of the population. Many of these refugees came from the former Yugoslavia. As the conflicts in the Balkans subside and refugees return home, population growth is expected to stabilize. However, the continuing need for workers will bring a corresponding growth in the population, which is expected to reach 700,000 by 2025.

Most Luxembourgers are descended from Celtic stock, with German and French influences. The largest minority group is the Portuguese, who account for 13 percent of the population. There are also significant numbers of Italians and other southern Europeans. Most people live in the southwest, and two-thirds of the population are urban. During the 20th century there was increasing migration from the countryside to urban areas. The population of the capital is 76,440, while 24,255 live in the second largest city, Esch-Alzette. To maintain the declining rural population, the government has relocated some industries to the countryside. The Luxembourg language is an amalgamation of German and French, with French also used for official purposes and German— which is commonly spoken—as the language of the press. English is also widely used.

OVERVIEW OF ECONOMY

Since World War II, the economy of Luxembourg has been marked by high income levels and low unemployment. For most of this period, the iron and steel industry dominated the economy, accounting for as much as 80 percent of the nation's wealth during the 1960s. Banking and financial services are now the main considerations in the economy. In 1999, the unemployment rate was the lowest in Europe at 2.9 percent, and the inflation rate was only 1.1 percent. Meanwhile, the nation's GDP has grown about 5 percent per year since 1985.

Luxembourg's economic success has been due to its adaptability and the skills of its people. As the steel industry declined, the economy shifted to other enterprises, and current prosperity is based on a combination of industry, a small agricultural sector, and a growing import-export economy based on financial services. Economic diversification has resulted in the expansion of small to medium-sized companies.

The nation has one of the world's most educated labor forces , and the multilingual ability of most of the population is an incentive for foreign companies to invest or relocate there. While there are no 4-year universities in Luxembourg, there are 6 major universities in the region and 500 laboratories, and the government subsidizes those students who go abroad to complete their education. The nation's superb infrastructure also adds to its attractiveness, as do the sound relations between labor and industry.

As the steel industry declined in the 1970s, Luxembourg restructured its steel producers into a single entity, ARBED, a multinational group which is among the most important steelmakers in the world. Steel still accounts for 29 percent of the exports, 1.8 percent of the GDP, and 3.9 percent of employment. The government owns just under one-third of ARBED, and since 1974, it has set up reforms and modernization initiatives and assumed parts of the group's debt. The company is the second largest steel producer in Europe and one of the most productive in the world.

With the decline of the steel industry in the 1970s, the government undertook several programs to diversify the economy. A significant aspect of this diversification effort was the promotion of the financial sector. By the 1980s, the nation emerged as one of the world's premier banking centers, and by 1996 there were 222 banks in the country with 21,458 employees (9.5 percent of the workforce). Total assets exceed US$200 billion, with 81 percent of funds in foreign currencies. U.S. dollars and German marks are the primary denominations held in Luxembourg banks. Luxembourg's attractiveness as a financial center has prompted companies, such as Goodyear, Du Pont, and General Motors, to build factories there. The nation's investment fund sector is the second largest in the world (behind the United States) and accounts for 20 percent of Europe's total investments. This sector is at the forefront of new services, such as e-commerce . There are also more than 9,000 foreign holding companies in Luxembourg, and the European Investment Bank, the main financial institution of the European Union (EU), is located there.

Successive governments have enacted policies and adopted many programs to encourage foreign investment and attract foreign businesses. Examples of such policies include cuts in company tax, abolition of corporate capital gains tax, and tax credits for new products and services. Administrative reforms have reduced bureaucratic impediments to business, with relevant agencies and bureaus placed under one coordinating body. This arrangement hastens paperwork and permits, making it easier for new companies to establish themselves. The nation's banking secrecy laws also appeal to foreign investors, but problems with money laundering have led to efforts to compromise between privacy and the need to prevent criminal activity. The laws continue to allow Luxembourg to remain a tax haven for foreign investors. These government programs have been successful. For instance, outside of North America, Luxembourg has the largest U.S. foreign direct investment on a per capita basis.

The government has encouraged the development of audio-visual and communications sectors, and media services have become the second most significant sector in the diversification program. The government-backed company, Société Européenne des Satellites (SES), operates 5 satellites, and Radio-Television Luxembourg is 1 of the continent's leading private radio and television broadcasters.

A continuing problem for the economy of Luxembourg is energy. The nation has few sources of energy other than timber, and 95 percent of electricity is imported. The country chooses not to construct nuclear energy plants. Oil, coal, and natural gas fuels are imported. Thus, Luxembourg is dependent on foreign sources of fuel.

Luxembourg has been a strong supporter of economic integration. For 80 years, Luxembourg and Belgium have been joined under the Belgian-Luxembourg Economic Union (BLEU) which provides for an interchangeable currency and a joint customs union. Along with the Netherlands, these 2 nations also form the Benelux Economic Union which integrates cross-border trade. The most significant aspect of Luxembourg's pro-integration policies has been the nation's support for the European Union (EU). The EU has eliminated trade barriers, such as tariffs , among its member states (numbering 15 in 2000), and helped to coordinate external trade practices. Luxembourg also supports the European Monetary Union (EMU), which will replace the national currencies of the EU with a common currency, the euro.

Luxembourg is a net donor of foreign aid, to which it contributed US$160 million in 1999.

POLITICS, GOVERNMENT, AND TAXATION

Luxembourg is a constitutional monarchy, known formally as the Grand Duchy of Luxembourg. The nation's head of state is the grand duke, a position based on heredity. Since October 2000 the country has been led by Grand Duke Henri. The grand duke's powers are mainly formal and ceremonial, with real power resting in the hands of the prime minister, whom he appoints from among the leading party members in the elected Chamber of Deputies. The prime minister appoints a cabinet known as the Council of Ministers. There is a unicameral (single house) legislative body, the Chamber of Deputies, which has 60 members elected by direct popular vote every 5 years. Voting is compulsory. There is also a 21-member Council of State whose members are appointed for life and whose main purpose is to advise the Chamber of Deputies and the grand duke on issues such as judicial appointees. The nation's government is based on the constitution of 1868 and its subsequent amendments. Local government consists of 3 districts, which are subdivided into smaller cantons and communes. These bodies are responsible for public works, health care, and education.

The country is a member of the North Atlantic Treaty Organization (NATO). In 1998, the government spent US$131 million on defense. Luxembourg has an army, but no navy or air force. The 500-member military force is made up entirely of volunteers and its troops have served in NATO peacekeeping operations in the former Yugoslavia.

The Grand Duchy has been one of the most stable democracies in Europe. There are 3 main parties (the Christian Socialists, the Socialists, and the Democratic Party), and governments are usually formed from a coalition of 2 of the major parties. All parties, including the Socialists, have supported pro-business policies.

There is a close relationship between the nation's government and business and workers. Before legislation is passed, 1 of 3 advisory bodies is consulted. Labor legislation is discussed before 6 confederations, representing business, guilds, farmers, unions, and civil servants. The Social and Economic Council examines broad economic policies, and the Immigration Council advises the government on issues such as immigration or housing.

A strict fiscal and monetary policy has delivered a yearly budget surplus . In 2000 government revenues were US$4.73 billion, while expenditures were US$4.71 billion, making for a strong economy that allows Luxembourg to avoid significant debt while providing generous social policies. Luxembourgers enjoy the highest standard of living in the EU. Medical fees are low, and the national social security system covers sickness and maternity benefits, retirement pensions, family allowances, and accident and unemployment insurance. Each category of coverage is overseen by public institutions independent of the government and supervised by an elected board of representatives. There have been shortages of housing for immigrant workers, but government programs have been implemented to increase affordable homes.

Government policies are pro-business and favor tax reductions. In 1998, the total tax rate was 37.45, composed of a 30 percent corporate tax and municipal business tax. This system included a personal income tax , a corporate tax, a corporate capital gains tax, and municipal business taxes. Later, the government eliminated the corporate capital gains tax, decreased personal income tax by 15 percent, and plans to reduce the company tax to 35 percent by January 2002. A potential problem for Luxembourg involves EU policy that calls for the standardization of national taxes and economic policies. If adopted, these measures would force Luxembourg to levy corporate taxes that it previously did not impose. Furthermore, the Grand Duchy has already agreed to repeal laws on banking secrecy, which may lessen its attractiveness as an international banking center.

Conversely, continued EU integration offers advantages to Luxembourg. The country has supported the establishment of a common retirement fund for all EU member states and, because of its financial status, would be the likely beneficiary of such a policy. The government also advocates increased use of the Internet for business purposes and financial transactions. It has championed EU efforts to promote the World Wide Web, offering tax incentives for the creation of new Internet companies. Luxembourg was the first EU nation to meet the standards for adopting the euro, the common European currency that will make currency conversions unnecessary between member nations and result in less complicated financial transactions.

INFRASTRUCTURE, POWER, AND COMMUNICATIONS

Luxembourg has an excellent road system, communications network, and power supply system. The government spends a higher percentage of its GDP on infrastructure than any other European nation. There are 5,166 kilometers (3,210 miles) of paved roads, including 166 kilometers (103 miles) of expressways. The nation's railways are fully electrified, and the government is spending 12 billion francs on further improvements to the system. Railroads provide a main method to transport goods to and from Luxembourg. The Moselle River has canals which link it to the Rhine River. This waterway provides links between Luxembourg and ports on the North Sea. The Grand Duchy has a small merchant marine fleet with 56 commercial vessels. The nation's main port is the river port of Mertert, which, along with the smaller port of Bech-Kleinmacher, handled 1,868,230 tons of freight in 1994.

Findel Airport is the nation's only international airport, but it has become a major air terminal. The airport is 5 miles from the capital. The government has engaged in a continuing effort to expand the airport's capacity. Luxembourg has an open-skies agreement with the other EU members and with the United States that allows unrestricted flights between the nations. The Grand Duchy's largest airline, Cargolux, is among Europe's top 10 air cargo carriers. The state-owned airline provides 3 percent of the government's annual revenue. Luxair is the national passenger airline and transports over 1 million people annually.

The Grand Duchy has also engaged in a broad effort to improve its already superior communications network. This effort, known as E-Luxembourg, significantly increases the financial resources devoted to expanding Internet access and the use of information technology. Half the households have personal computers, and 1 in 3 Luxembourgers have access to the Internet. Currently, 40 percent of elementary schools and all secondary schools have Internet access. There are 5 communications satellites owned by Luxembourg and 2 more will be in orbit by 2002.

The communications infrastructure is among the best in the world which has aided the growth of the financial and banking sectors. The government is privatizing the telecommunications sector. The telephone system is extensive and half of Luxembourgers have mobile phones. Most of the power and telephone lines are underground, as are the nation's petroleum pipelines. Although most of the nation's electricity and power is imported, 1 percent of its energy is produced by local hydroelectric plants. The nation consumes 5.9 billion kilowatt hours (kWh) of electric power per year.

ECONOMIC SECTORS

Since the Industrial Revolution of the 1800s, agriculture has been in decline in Luxembourg, and most farms are small, family-owned operations. Most foodstuffs consumed in Luxembourg are imported, while many of the country's agricultural products are exported. Only a small percentage of the population remains engaged in agriculture and the number of farms continues to decline. In 2000 agriculture contributed just 1 percent of the nation's GDP, and in 1998 it employed 2.5 percent of the workforce.

For most of the 20th century, industry provided the nation's wealth, with steel production forming the core of Luxembourg's economy. However, during the 1970s, it became difficult for local steel manufacturers to compete with companies from around the world who were producing steel more cheaply. This difficulty led to a period of restructuring and reform, during which smaller companies were consolidated into a single major steel group, ARBED, which is a highly productive steel maker. Thus, despite declining, the steel industry remains a major feature in the Grand Duchy's economy.

Efforts at diversification in industry have had some success. Major chemical and rubber manufacturing companies have built plants in Luxembourg. Significantly, these include foreign-owned companies, such as DuPont Chemicals, Goodyear Tire, and the Guardian Glass Company. Industry contributed 30 percent of the GDP in 2000 and employed 14.3 percent of the workforce in 1998.

The real growth in Luxembourg's economy has been in the services sector, especially in banking and financial services, which have experienced dramatic growth, making the nation one of Europe's top financial centers. Information services have also grown dramatically, making the nation one of the world's largest satellite service providers, while its development as a major Internet service provider continues to grow quickly. The services sector contributed 69 percent to the GDP in 2000 and employed 83.2 percent of the workforce in 1998.

AGRICULTURE

The main agricultural areas are situated around the flood plain of the Moselle River, but having suffered a marked decline, agriculture accounts for only a small percentage of the Grand Duchy's economy—just 1 percent in 2000. While the climate is conducive to several crops, poor or marginal soil limits production in many areas. The main agricultural products are barley, oats, potatoes, wheat, fruits, and grapes for wine production. Approximately 42 percent of the land is arable, with 1 percent used for permanent crops. About 10 square kilometers of the nation is irrigated, and about three-quarters of the nation's farms are smaller than 200 acres (50 hectares).

Extensive livestock production accounts for 80 percent of agricultural profits, resulting in many farmers raising crops and livestock. Meat production exceeds 15,000 tons annually. Because the nation produces 40 percent more beef than it consumes, meat is one of the few agricultural products in which Luxembourg is self-sufficient. Although farming cattle has increased in importance and profitability, sheep and pig farming have declined. About 70 percent of farms had pigs in 1970, but by 1993, this number had dropped to 15 percent. The growth of the cattle industry has led to an increase in dairy products and to the production of corn as livestock feed. The dairy industry in Luxembourg is organized differently from other agricultural enterprises, being in the hands of 2 major, and 6 minor, dairies. The dairy industry contributes approximately 55 percent of agricultural profits.

There are also 788 small vineyards along the Moselle River, covering 1 percent of agricultural land (1,200 hectares). These vineyards produce 15 million liters of wine annually. Almost four-fifths of the wine produced is consumed by Belgium and the Netherlands, with most of the remainder exported to France and Germany. Luxembourg imports 3 times as much wine as it exports. Vineyards have been the recipients of significant government aid. There are 6 independent breweries in the country, who use much of the locally grown grain in the production of their beer. There is a small tobacco firm employing 350 people, but their cigarettes are made from imported tobacco.

Forestry plays only a tiny part in the economy and accounts for 0.2 percent of the GDP. The annual production of rough timber is approximately 330,000 cubic meters. Furthermore, while wood exports amount to 980 million francs per year, imports exceed 2.8 billion francs.

INDUSTRY

From the Industrial Revolution through the 1970s, the steel industry was the backbone of the Grand Duchy's economy. In 1974 the nation produced 19 tons of steel for each inhabitant, and metal exports accounted for two-thirds of exports. However, lower demand and the energy crises of the 1970s caused a dramatic decline in the industry. By 1992, steel exports made up only one-third of Luxembourg's exports.

The government-supported conglomerate ARBED, formed to combat the steel crisis in the 1970s, shifted from producing general bulk steel to manufacturing high-quality specialized products such as galvanized metal sheet and metal wire, resulting in the replacement of older blast furnaces with sophisticated electric furnaces. In 1970, there were 30 blast furnaces; by 2000, there were none, but there were 3 electric furnaces. Reforms continue, and ARBED has set aside an 18 billion-franc investment fund for continuing modernization. Despite reductions in the industry, ARBED is the largest private employer in Luxembourg with 7,300 employees. The company remains the fourth largest producer of steel in the world and exported 22 million tons of steel products in 1999.

The Luxembourg government has aggressively tried to diversify and attract other industries. Goodyear has built several plants to produce tires and has become the second largest private employer in the nation with 3,500 employees. Many chemical companies have also built factories in Luxembourg. The Du Pont company has 1,160 workers at plants which produce polyester filaments (mylar) and another 150 workers at a plant which manufactures photographic film. Other major chemical or plastics companies in Luxembourg are Rubbermaid, T.D.K., and Recording Media Europe. The rubber, chemical, and plastics industry accounts for 10 percent of total employment in the Grand Duchy.

SERVICES

The backbone of Luxembourg's economy is the services sector. Financial services, communications, and media services form the core of this sector. Currently home to over 200 banks and 9,000 holding companies, Luxembourg has experienced the biggest growth in recent years in this sector. Employing 20,000 people, the banking sector accounts for 15 percent of the nation's GDP, while the services sector overall contributed 69 percent of the GDP in 2000.

During the 1970s, Germany and Switzerland adopted legislation that made it difficult for non-residents to deposit money in their national banks. However, Luxembourg maintained laws that encouraged foreign investment, and these led to its emergence as a banking center where foreign individuals and companies could easily deposit funds. In the 1980s, this trend accelerated as the country's banks diversified into a wide array of other financial services. By 1994, the banking sector was worth over 17.6 trillion francs. The largest banking group is Cedel, which had an operating income of US$587.6 million and returned profits of US$92.1 million in 1999.

Well into the 1980s, the insurance business in Luxembourg was concentrated on local markets, but EU economic integration opened the markets of other nations to companies in the Grand Duchy. This led to a doubling of the insurance companies by 1993. Besides life and other personal insurance, Luxembourg's companies have gained a place for themselves in maritime insurance, which now accounts for 39 percent of non-life-insurance policies. Including independent insurance brokers, there are as of 2001 approximately 6,200 people employed in insurance.

COMMUNICATIONS.

With a superb communications infrastructure providing a strong platform for new information technologies, Luxembourg is a major communications center. The company, Europe-Online, was an early Internet service in Europe. The company offers multimedia services to consumers throughout Europe. The government has adopted new regulations, including rules for online shopping, to protect consumers who do business on the Internet.

With support from the government, the communications company, SES, operates ASTRA satellites. The first satellite, launched in 1991, provided television programming for 32 million homes in Europe. The launch of 8 subsequent satellites expanded the coverage to over 74 million homes, bringing a corresponding expansion of television broadcasts. The satellites also transmit 39 different radio programs. By 1999, the ASTRA satellites had captured 83.4 percent of Europe's satellite and cable market. Profits from SES exceed 4 billion francs annually.

The government began several investment incentives to promote the audiovisual sector, leading to rapid expansion in the field, which now employs 750 people in production companies. However, the real growth in this sector has been the commercial broadcasting company, CLT. From 1989 to 1994, the revenue of CLT tripled to 82 billion francs per year, and revenues have continued to increase by over 20 percent per year. The CLT group owns 12 television channels and 12 radio stations, and employs 3,089 people. A 1999 merger between CLT and the German media giant, Bertelsmann, created Europe's largest television and radio group, CLT-UFA. The combined company has also created an alliance with the Walt Disney Corporation.

RETAIL.

There are 5,300 trade and retail sales enterprises in Luxembourg, employing 31,000 people. Retail businesses have taken advantage of the Grand Duchy's lower tax rate to attract buyers from neighboring countries. There are 2 major chain stores, Cactus and Match, and 60 other supermarkets.

TOURISM.

Luxembourg has 2,350 hotels and restaurants, employing 11,000 people. Hotels declined by 70 in the 1990s, but total room numbers increased by 328 as hotel chains have built larger units. About 2 million tourists visit Luxembourg annually. But about half of these stay at campsites around the nation. The largest number of visitors come from the Netherlands, followed by Belgium, Germany, France, and the United Kingdom.

INTERNATIONAL TRADE

While Luxembourg has had a trade deficit since the 1980s, the strength of the financial sector has meant that the Grand Duchy maintains a surplus in earnings. Although the nation had trade deficits of 84 billion francs in 1997, 81.4 billion francs in 1998, and 106 billion francs in 1999, it had account surpluses of 86 billion francs in 1997, 84 billion francs in 1998, and 59 billion francs in 1999. The overwhelming majority of the nation's trade has been with its EU partners. The 3 main trading partners are Germany, Belgium, and France. EU nations received 75 percent of Luxembourg's exports and provided 81 percent of its imports in 1999. In 1999, Germany received 25 percent of Luxembourg's exports, France 21 percent, Belgium 12 percent, the United Kingdom 8 percent, Italy 6 percent, the Netherlands 5 percent, and 4 percent went to the United States. Meanwhile, 35 percent of Luxembourg's imports came from Belgium, 26 percent from Germany, 12 percent from France, 9 percent from the United States, and 4 percent from the Netherlands. In 2000 exports totaled US$7.6 billion while imports totaled US$10 billion.

The country has traditionally imported most of its consumer goods and exported industrial products (steel). The Grand Duchy continues to import manufactured consumer products, but its exports have become more diversified. Besides steel, exports now include chemical and rubber products, and finished glass, but the most profitable export is financial services. The nation remains dependent on energy imports.

While Luxembourg's economy is traditionally geared toward its immediate neighbors, the government is supportive of free trade. About 90 percent of the nation's GDP is related to foreign trade. To expand internationally, successive governments have supported regional economic integration and worldwide efforts to promote free trade. Beginning with currency integration with Belgium in 1921, Luxembourg has looked for participation in regional bodies. It was a founding member of the European Community (later the EU), and its EU membership has opened markets for itself in other member states. The population of the EU is currently 370 million, and Luxembourg hopes increasingly to market its financial services to EU citizens. The adoption of common trade rules and practices has eased the ability to conduct foreign trade. Within the EU, Luxembourg coordinates with Belgium and the Netherlands to promote their national interests and to bolster the Grand Duchy's standing within the EU. Luxembourg is also a member of the Schengen Group, which promotes the free movement of citizens within the EU. With greater freedom of movement, the government of Luxembourg hopes to continue encouraging the influx of workers necessary to maintain the economy.

MONEY

Linking of its currency to that of Belgium in 1921 has helped Luxembourg maintain its financial stability. Despite the demand for labor, the government managed to keep inflation low through the 1990s. However, the Luxembourg franc has declined in relation to the U.S. dollar but has maintained its value against major European currencies. In 1995, 1 U.S. dollar was equal to 29.48 francs, but by 1999, 1 dollar equaled 34.77 francs. In 1999 Luxembourg joined the EU which created a single currency, the euro, for the EU nations. The exchange rate is fixed at a rate of 40.3399 francs per euro. Since its introduction, the euro has been weak against the dollar. In 2000, 1 U.S. dollar equaled 0.9867 euros.

Luxembourg's 200-plus national and international banks place few restrictions on operations and lend money to consumers and businesses around the world. There are no regulations on the transfer of funds or profits. Bank confidentiality, prompt payment of interest, and the Grand Duchy's political stability have combined to make Luxembourg a banking haven.

The Luxembourg Stock Market has also performed well since the 1980s. It lists over 15,000 international securities. In 1999, the total volume of trade was 1 trillion francs. By 1994, investment companies in the Grand Duchy had assets of over 100 trillion francs. Luxembourg

ranks fourth in the world for asset management and second in Europe.

POVERTY AND WEALTH

Luxembourgers enjoy one of the highest standards of living in the world. The UN Human Development Report 2000 ranks Luxembourg number 17 in the world in its human development index. Luxembourg has the world's highest per capita income of US$46,591 per person. (Figured at purchasing power parity , Luxembourg still led the world with a per capita income in 2000 of US$36,400.) This figure reflects the growth in the nation's economy, as the nation has overtaken the economies of Japan and Switzerland since 1990.

Low unemployment and the need for workers have prevented poverty. Generous social benefits also contribute to this healthy situation. Laws prohibit discrimination against women, ethnic minorities, and people with disabilities, and women enjoy equal rights, including property rights, with men. However, there are differences in pay because of gender, with women often earning between 9 and 25 percent less than men in comparable jobs. Companies with more than 25 employees have a quota for hiring the disabled. According to the U.S. State Department's Country Reports on Human Rights Practices,

2000: Luxembourg, the government pays subsidies to companies that construct "disabled-friendly" buildings. The government also provides support for programs that integrate foreign residents into the mainstream of society.

Luxembourg has a first-rate education system and a literacy rate of 100 percent. School is mandatory until the age of 16, although students may continue their education in post-secondary schools (with some government financial support). The well-educated workforce of the nation has contributed to its attractiveness to foreign companies and investors.

WORKING CONDITIONS

In 1999 the unemployment rate was estimated at 2.7 percent, the lowest in Europe. Efforts to attract foreign businesses have been aided by the good labor relations in the country. Since the 1930s, there has been little labor unrest. About 57 percent of workers belong to unions, with membership highest among industrial workers. The 2 largest unions have links to political parties, but maintain their independence. Businesses with more than 15 employees must allow their workers to organize. The constitution allows employees the right to strike, except the police, army, and hospital workers. Labor negotiations are conducted cooperatively between government, business, and unions.

National laws prohibit children under the age of 16 from working, and employees under the age of 18 have special limits on overtime and the total amount of time worked. There are minimum wage laws that vary with age. For those over 18, the minimum wage is 278 francs (US$7.32) per hour. The working week is limited to 40 hours, and employers must pay special overtime rates. Most employees cannot be made to work on Sunday, except those in the steel, chemical, and glass manufacturing industries, and security personnel. Workers receive a minimum of 5 weeks of vacation.

COUNTRY HISTORY AND ECONOMIC DEVELOPMENT

450 B.C. Luxembourg is settled by 2 Belgic tribes, the Treveri and the Mediomatrici.

53 B.C. The Romans conquer the territory.

963. Luxembourg gains independence under Siegfried, the Count d'Ardennes.

1354. Luxembourg is made a duchy by the Holy Roman Emperor, Charles IV.

1555-56. The Duchy is incorporated into the Spanish Netherlands.

1618-48. During the Thirty Years War, the territory of Luxembourg is devastated by warfare, famine, and disease.

1684. France conquers Luxembourg but returns the Duchy to Spain in 1697.

1714. Luxembourg is ceded to Austria and undergoes an economic boom, especially after 1735.

1795. The Duchy is again conquered by France.

1815. At the end of the Napoleonic Wars, Luxembourg becomes a Grand Duchy under the king of the Netherlands, William I.

1830. William's heavy taxation leads the people of Luxembourg to support a Belgian revolution against his rule, and the French-speaking areas of the nation become part of Belgium.

1842. Luxembourg joins a Prussian-led customs union.

1867. Luxembourg gains full independence, with its neutrality guaranteed by the great European powers.

1879. The introduction of new methods of steel production leads to the rapid expansion of the steel industry.

1914. Germany invades Luxembourg at the start of World War I.

1919. All adults are granted the right to vote.

1922. The Belgium-Luxembourg Economic Union (BLEU) is formed.

1929. The government introduces legislation encouraging holding companies to relocate to Luxembourg.

1940. Germany occupies the Grand Duchy during World War II.

1947. Luxembourg joins the Benelux Economic Union, formed between Belgium, the Netherlands, and the Grand Duchy.

1949. The nation joins NATO.

1951. A Goodyear tire plant is built near Colmar-Berg.

1952. Luxembourg joins the European Coal and Steel Community.

1957. The Grand Duchy becomes a founding member of the European Community.

1965. Du Pont opens a chemical plant in Contern.

1974. The nation's steel industry is consolidated into a single company group, ARBED.

1986. The government-backed satellite company, SES, is created.

1991. The first ASTRA satellite is launched, marking the emergence of SES as Europe's most prominent satellite and cable television provider.

1999. Luxembourg is the first nation to meet the requirements for entry into the European Monetary Union, which it joins in January.

FUTURE TRENDS

Luxembourg is well positioned to continue its economic transformation from an industrial to a diversified economy with financial services as the base of the country's wealth. The close relationship between government and corporations and the pro-business stances of major political parties ensure that there will be little economic instability in the coming years. The continued economic integration of the EU will open new markets for the Grand Duchy's financial services, especially for pension plans.

The main danger facing the economy of Luxembourg is the possibility of labor wage inflation caused by a shortage of labor. However, the continuing momentum toward open borders and the free movement of people within the EU should ensure a steady supply of new workers. A second danger is that the harmonization of EU banking and tax laws may mean that the Grand Duchy will lose its special status as a tax haven. The concentration of banking and financial services may compensate for this trend, especially if U.S. companies and financiers continue to invest in the nation.

DEPENDENCIES

Luxembourg has no territories or colonies.

BIBLIOGRAPHY

Barteau, Harry. Historical Dictionary of Luxembourg. Lanham, MD: Scarecrow, 1996.

Clark, Peter. Luxembourg. New York: Routledge, 1994.

Economist Intelligence Unit. Country Profile: Luxembourg. London: Economist Intelligence Unit, 2001.

"Luxembourg: An Economic Portrait." STATEC. <http://www.statec.lu/html_en/statistiques/portrait_economique/index.html>. Accessed September 2001.

Organization for Economic Cooperation and Development (OECD). OECD Economic Surveys: Belgium-Luxembourg, 1998/99. Paris: OECD, 1999.

Permanent Mission of the Grand Duchy of Luxembourg to the United Nations. <http://www.un.int/luxembourg>. Accessed September 2001.

U.S. Central Intelligence Agency. World Factbook 2001. <http://www.odci.gov/cia/publications/factbook/index.html>. Accessed September 2001.

U.S. Department of State. Background Notes: Luxembourg, July 2000. <http://www.state.gov/www/background_notes/luxemb_0007_bgn.html>. Accessed October 2001.

U.S. Department of State. FY 2001 Country Commercial Guide: Luxembourg. <http://www.state.gov/www/about_state/business/com_guides/2001/europe/index.html>. Accessed October 2001.

U.S. Department of State. 1999 Country Reports on Human Rights Practices: Luxembourg. <http://www.state.gov/www/global/human_rights/1999_hrp_report/luxembou.html>. Accessed October 2001.

—Tom Lansford

CAPITAL:

Luxembourg.

MONETARY UNIT:

Luxembourg franc (LUF). One franc equals 100 centimes. There are coins of 25 and 50 centimes and 1, 5, 10, and 20 francs. There are notes of 50 and 100 francs. Belgian currency is also legal tender in Luxembourg, and bills of 500, 1,000, and 5,000 Belgian francs also circulate. On 1 January 1999 the European Union began using the euro for non-currency financial transactions, and euro-denominated coins and notes will replace the franc as the currency in 2002.

CHIEF EXPORTS:

Machinery and equipment, steel products, chemicals, rubber products, glass.

CHIEF IMPORTS:

Minerals, metals, foodstuffs, quality consumer goods.

GROSS DOMESTIC PRODUCT:

US$15.9 billion (purchasing power parity, 2000 est.).

BALANCE OF TRADE:

Exports: US$7.6 billion (f.o.b., 2000). Imports: US$10 billion (c.i.f., 2000).

Luxembourg

History & Background

The Grand Duchy of Luxembourg, bordered by France, Germany, and Belgium in Western Europe, became an independent country in 1890. Although a relatively new nation, Luxembourg has a very ancient history that can be traced back to the time of Julius Caesar when the Romans in 54 and 51 B.C.E defeated the Treveri people, the original inhabitants of modern Luxembourg. The country's history was influenced by the competing needs of the Roman Catholic Church and the ruling dynasties of the Holy Roman Empire and Imperial Germany with those of royal and republican France for the population's souls and land.

Christianity was introduced into Luxembourg in the seventh century B.C.E., when the Roman Catholic Church founded a group of Benedictine monasteries between 633 and 721. The feudal County of Luxembourg was awarded in 963, to Siegfried, a relative of Wigerik, a Palace Count serving Charles the Simple, a member of the Carolingian Dynasty that governed France. For two centuries the descendants of Wigerik and Siegfried of the House of Ardennes, governed the region that would become modern Luxembourg in fealty to Saxon and Salian Holy Roman Emperors. The first dynasty Luxembourg counts became extinct in 1136. The title and lands were awarded to Henry IV of Namur, who founded Luxembourg's second dynasty. With the arrival of political stability Luxembourg became home to the Benedictine, Cistercian, Dominican, Franciscan, and the Penitents monastic orders and the Knights Templar and the Teutonic Knights.

In the fourteenth century, the Counts of Luxembourg increased the dynasty's international prestige by advantageous political marriages and battlefield heroics as allies of France's kings in territorial and religious wars in Europe and Africa. The feudal alliances paid off with the election of Henry of Luxembourg as Holy Roman Emperor in 1308. Although reigning only five years before succumbing to a fever, Henry represented the highest ideals of feudal Europe's chivalric code. For the next four generations, Henry's male descendants ruled as Kings of Bohemia. Two great-grandsons, Wenceslas and Sigismund, were elected Holy Roman Emperors. Henry's bloodline entered the royal houses of France and Burgundy when his granddaughter Bonne married King John the Good of France. In the sixteenth century the County of Luxembourg was incorporated into the Burgundy inheritance awarded Charles V, King of Spain, Holy Roman Emperor, and Duke of Luxembourg, as the Spanish Netherlands.

During the Middle Ages education in Luxembourg was under the clerical control of the Benedictine Order at Munster Abbey, founded in 1083. Educational authority was temporarily transferred to the suburb of Grund during the Counterreformation period, but was restored to the Roman Catholic Church in the seventeenth century when a Jesuit College was built in Luxembourg in 1603. The Capuchin Fathers came to Luxembourg in 1621 and offered education to garrisoned soldiers. In 1627, the Congregation of Notre Dame from Lorraine founded a chapter in Luxembourg and assumed responsibility for the education of girls. The Sisters of Notre Dame continue to staff and administer Luxembourg's private girls schools.

From the seventeenth to the nineteenth centuries, Luxembourg was fought over in dynastic wars by either the French Bourbon or Bonaparte dynasties with the Austrian Habsburgs. French King Louis XIV won Luxembourg on the battlefield and governed it until 1713, when the Treaty of Utrecht awarded Luxembourg to the Habsburgs as part of the Austrian Netherlands. During the reign of Napoleon Bonaparte, Luxembourg was once again incorporated into France. The Congress of Vienna in 1815 ceded the Duchy of Luxembourg in personal union to the King of the Netherlands, the head of the House of Nassau-Orange. The United Netherlands of Catholics and Calvinists barely lasted fifteen years before Catholic Flemish-speaking and Walloon (Frenchspeaking) citizens in the southern part of the country rebelled against the Calvinist Dutch in the north, gaining independence in 1830 as the new country of Belgium. By treaty in 1830, Luxembourg was split into a Walloon section that merged with modern Belgium, while the predominately German-speaking section remained a sovereign grand duchy in personal union with the King of the Netherlands, but a member state within German economic and political organizations.

Constitutional & Legal Foundations

Luxembourg became an independent grand duchy in 1890 when the male line of the royal house of Nassau-Orange came to an end with the death Dutch King William III, leaving only his daughter, Wilhelmina, to succeed him. In accordance with Article Three of the Luxembourg Constitution, the Crown was hereditary in the Nassau Family in the male line and excluded female descent. The Crown of the Grand Duchy of Luxembourg passed to the senior branch of the Nassau family, Adolphe of Nassau-Weilbourg, who became Grand Duke Adolphe I of Luxembourg. Ironically, the male line of the Weilbourg branch of the Nassau family ended in 1912, with the death of Grand Duke William IV. Anticipating this political crisis, the Constitution of Luxembourg was changed in 1907, to permit one of William IV's six daughters to succeed him.

The Grand Duchy of Luxembourg is a constitutional monarchy with executive authority placed in the hands of the Grand Duke Henri since 2000, ensuring the laws of the nation are carried into effect and order maintained. Legislative power is shared between the Grand Duke and an elected Chamber of Deputies. All legislation must be signed by the Grand Duke to become law. Judicial authority is invested in the courts of law. The Constitution of Luxembourg guarantees the rights of citizens. Among these public rights as stated in Article Twenty-Three of the Constitution is the right that education be compulsory and provided free of charge by the state. The Constitution further stipulates that the state must organize free vocational training courses, secondary educational establishments, and the necessary courses in higher education. The law requires the state to finance education and share supervisory authority with the communes (municipalities). The Government is responsible for regulating all educational matters and creating a fund to educate the exceptionally gifted. Each Luxembourger is free to pursue studies in the Grand Duchy or abroad and to attend universities of choice subject to the provisions of the law relating to admission to employment and career choice.

Educational System—Overview

The Luxembourg State organizes and controls the educational system. Compulsory education covers a total of eleven years, two years of preprimary education, six years of primary education, and three years of secondary education. Public education in Luxembourg is free. The costs are paid by the public budget making education one of the largest expenditures in the state budget. Municipalities pay for textbooks and equipment at the primary level. By the Act of 14 July 1986, school children are now paid an allowance. School transport is free. Financial assistance and scholarships are granted to students in higher education based on parental income and academic success.

Private schools are usually Catholic. There are few private schools at the primary and post-primary education levels. They are strictly regulated by the Ministry of Education, which must approve a private school's charter, curricula, graduation certificates, teaching methods, the professional qualifications of the private school's director and staff, and the overall educational environment. Private schools are free to select their director and staff and to determine their fee structure.

Luxembourg is a multilingual nation with three official languages: French, German, and Letzeburgesch (Luxemburgish). The cabinet level Ministry of Education makes the important decisions regarding education in the Grand Duchy. The curricula for the different types of schools are decided by the Ministry, as are the budgets for education and educational institutions, and the management and the survey of all secondary schools. Financial responsibility for preprimary and primary education is divided between the municipal governments and the national government. Vocational education, private education, school inspections, textbook selection, and curricula are the exclusive domain of the Ministry of Education. The Service de Coordination de la Recherche et de l'Innovation Pédagogiques et Technologiques (SCRIPT), a department within the Ministry of Education, has jurisdiction over research and innovation in the various teaching fields, including the integration of information and communication technologies in teaching and analysis and evaluation of the entire educational system in Luxembourg. The Centre de Psychologie et d'Orientation Scolaires (CPOS) has the obligation to provide students and parents with information about the school system in Luxembourg, career and professional options, and psycho-pedagogic guidance. This department informs students about higher education choices within Luxembourg and abroad, guides graduates into the work place, provides financial assistance, and works with public and private institutions as students make the transition from school to the work place. Public research is regulated by the Act of March 9, 1987, which organizes and encourages technological development and the transfer of technology between public and private sectors through one of three public centers, Centre de RecherchéPublics (CRP): Centre Universitaire de Luxembourg for literature, history, natural sciences, mathematics, and physics, the CRP "Henri Tudor," Institut Supérieur de Technologie for automation in industrial production, and the CRP Santé (Health), Laboratoire National de Santé for health research. The Recherché and Développement Department within the Ministry of Education coordinates the activities of the CRPs and offers financial assistance to people undertaking research. Additional departments within the Ministry of Education include Administrative Organization and Staff, Preschool Education and Primary Education, Secondary Education, Technical Secondary Education, Vocational Training, Higher Education, Adult Training, Special Education, Statistics, Publications, Budget, School Buildings, School Sports, the Department of European and International Affairs, the Eurydice Information Unit, and Scientific research.

Educational responsibility for preschool and primary school education rests with the municipalities and is confined to the financial and administrative management of the schools. Local political authority for education is delegated to the Commission Scolaire, which includes the mayor or his delegate, a church representative, and three to five members from the community chosen by the town council.

Preprimary & Primary Education

Preprimary education is compulsory at the age of four by the Grand Ducal Regulation of September 2, 1992. The Ministry of Education, which provides twothirds of the financial expenses, controls preprimary schools. Administration and maintenance of preprimary institutions is the responsibility of the municipality. No more than one percent of preprimary schools are private and those that are, are usually attached to a private primary school. Two years of preprimary school is compulsory, but no formal teaching is given to the children. Preprimary schooling fosters physical, intellectual, and social development of the children and prepares the children for entrance into a primary school. For the academic years 1998-1999, there were 10,349 students enrolled in Luxembourg's public preprimary schools. Of these, 62.5 percent were native Luxembourg citizens. The rest were Portuguese (20.2 percent), Yugoslavian (3.8 percent), Italian (3 percent), French (2.9 percent), Belgian (2 percent), and German (1 percent), with the remaining 4.6 percent distributed among a variety of nationalities. There were 654 students enrolled in private preprimary institutions in 1998-1999.

Primary schooling is mandated by the law of August 10, 1912, and covers a period of six years. Fees are charged only by private primary schools. Primary curricula are determined by the Ministry of Education and standardized throughout the country. Students are taught reading, writing, arithmetic, artistic and physical activities, local environment, development of social behavior, and computer sciences. All three national languages are used for instructional purposes. Letzeburgesch is usually the language of the home and is the one first used in primary school. German becomes the second teaching language for all subjects in the primary school with French introduced during the second primary year. All three languages are in common use in primary school instruction. Students are given thirty lessons per week. Promotion is teacher judged based on grades, homework, and oral participation. Special classes are offered for students with unique learning needs and for children of immigrants. The public school student population at the primary grade levels for the years 1998-1999, totaled 29,533 pupils of whom 65 percent were Luxembourgers, 18.6 percent Portuguese, 3.2 percent Yugoslavian, 3.2 percent Italian, 2.5 percent French, 1.7 percent Belgian, 1.2 percent German, and 4.7 percent from among other nationalities. The number of Luxembourg students enrolled in private Catholic and private non-Catholic schools was 2,096.

Secondary Education

Students are required to attend secondary school for at least three years after completing six years of primary education. This covers the years when a student is twelve to fifteen years of age. There are two secondary education tracks available for vocational education and a separate track for university entrance. The régime préparatoire is designed to provide a broader qualification for young people interested in a technical secondary education who are academically weak, but could become eligible for further training at a technical secondary school or vocational training center. The second track is Technical Secondary Education offered at fifteen schools called lycée techniques, in specialized programs of study that include hotel catering and management and agriculture. The first stage (cycle inférieur ) lasts three years and completes the mandatory state requirement of three years of secondary education. The curriculum includes languages, mathematics, natural sciences, human sciences, artistic, and musical and physical education. Qualified graduates of the technical secondary education can pursue additional postsecondary education at intermediate and upper stages in either a vocational section offering an apprenticeship, technician's training, or a technical section.

At the apprenticeship vocational section students study one program from among agriculture, arts and crafts, commerce, tourism and hotel catering, industry, and domestic sciences. Training at this level is a partnership between the school and a business with the student workweek divided between an on-the-job apprenticeship while simultaneously learning theoretical principles in the classroom. This program of study can last from two to four years with graduates earning a Certificat d'Initiation Technique et Professionnelle (CITP). The Technician Training Program is designed to educate students for highly skilled jobs in industry and it may also last from two to four years. Graduates receive a diplome de technicien (technical degree at the end of the secondary education program), which grants either a professional career or entrance into higher education. Programs of study include administration and commerce, agriculture, electronics, mechanics, art and crafts, chemistry, building science, hotel catering and tourism, and computer science. The Technical Section lasts four years and graduates earn a technical secondary completion diploma. This course of study centers on theoretical and general subjects. Graduates can either enter a university or are qualified for entry into the job market in the fields of administration, commerce and business management, ancillary medical and social studies, or general technology. Enrolled students in Secondary Technical Schools are more than double the number of students in college preparatory programs. For the academic years 1998-1999, 20,763 students were enrolled at 21 Secondary Technical Schools ethnically distributed among Luxembourgers (63.3 percent), Portuguese (22.8 percent), Italians (4.1 percent), French (1.5 percent), Belgians (0.8 percent), Germans (0.8 percent), Yugoslavians (0.4 percent), and the remaining 4.4 percent distributed among other nationalities. Three Catholic private schools and four non-Catholic private schools enrolled 2,742 students in 1998-1999.

General Secondary Education was reorganized in 1968 by lycées (general secondary schools) and is for students planning to attend a university. The lower stage covers three years of education and completes the state requirement for secondary education. There is an upper stage divided into two, two-year segments. The first year is called the classe d'orientation, which allows students to adjust to secondary education environment. At the end of the first year students must select from either the classical education program that mandates Latin as a third language or the modern education program with English as the third language. The basic program is the same and a year later students in the classical program must also learn English. At the upper stage students must again select from two programs of study, literary or scientific. Mathematical difficulty is the primary distinction between the two programs. Specialization comes in the final two years and includes two optional courses of study in either languages and human sciences, human and social sciences, fine arts and crafts, music for the literary program and mathematics and physics, natural sciences and mathematics, or economics and mathematics for the scientific orientation. Graduates earn the diplome de fin d'études secondaires (high school diploma) and are qualified for university entrance provided they pass the final examination. Students enrolled in nine General Secondary Schools and three schools exclusively for the lower stages of General Secondary Education with college-based curricula totaled 9,471 students of whom 87.4 percent were Luxembourgers, 4.5 percent Portuguese, 1.7 percent Italian, 1.2 percent Belgian, 1.2 percent German, 1.1 percent French, 0.4 percent Yugoslavian, and the remaining 2.6 percent were distributed among other nationalities. The number of students enrolled in two private Catholic General Secondary Schools earning a degree leading to a university education was 2,948.

Higher Education

A recent act for higher education reform has three main objectives, to qualify educational institutions within Luxembourg to teach higher education, designate greater autonomy to the Centre Universitaire and the Institut Supérieur de Technologie for administrative and financial management and in pedagogy, and the right of the Centre Universitaire to organize final university degrees in cooperation with foreign universities. The reforms do not create a complete university within Luxembourg but work for closer integration with university systems in other countries.

Higher education options in Luxembourg include the (1) Cours Universitaires offered at the Centre Universitaire for the first year of university study, (2) the Institut Universitaire International which organizes seminars at postgraduate levels, (3) an accelerated two-year course of study called the cycle court d'études supérieur engestion, (4) a four-year course for industrial engineers, (5) the training of preprimary and primary school teachers, (6) the training for graduated educators for secondary levels, and (7) higher technical training courses at lycées techniques (technical secondary schools).

Enrollment at the Centre Universitaire de Luxembourg is a one-year program of study in law and economics, arts and humanities, or the sciences. Successful graduates are awarded a certificate of graduation, which qualifies them for admission to a second year of studies at universities in Austria, Belgium, Great Britain, Germany, or France. Third-year students of law must go to a Belgian university. The Institut Universitaire International offers post-graduate degrees and diplomas in law, political economy, or political science. The Cycle Court d'études Supérieures en Gestion enrolls graduates from the Centre Universitaire who plan to enter private firms in banking, insurance, and industry. The curriculum specializes in computer science applied to economics and business management and administration. The Institut Supérieur de Technologie offers programs of study in mechanics, electrical engineering, civil engineering, and computer science. The Institut Supérieur d'études et de Recherches Pédagogiques is a teacher's college for primary and elementary school teachers. The three-year program of study is centered on practical study and theory. The Institut d'études Educatives et Sociales trains educators for higher education, vocational training, and the instruction of handicapped students. It is a three-year program of study. The Higher Technicien Training offers programs of study in secretarial studies, accounting and business management, marketing and international commerce, and creating motion pictures.

Nonformal Education

Adult education in Luxembourg is primarily vocational and is supervised by the Ministry of Education for adult workers who desire to increase knowledge or to learn the new technology in their field of specialty. Vocational education allows both unemployed and employed residents the opportunity to earn a diploma in secondary education. Most courses are taught in the evening. Specialized adult education courses focus on technology, economics, the fine arts, and handicrafts.

Summary

Education is Luxembourg's number one priority. The largest expenditure in the national budget is for education. Luxembourg's emphasis on education directs students to a variety of careers with more students graduating from Secondary Technical Schools than from General Secondary Schools. Students seeking higher education are subsidized by the national government, which regulates most aspects of education including curricula, teacher qualifications, salaries, school budgets, and textbook selection. The Ministry of Education strictly governs private education, except for the selection of headmaster and teachers and the types of fees charged. Luxembourg is a small country. The country's future depends on a well-educated population to survive. Luxembourg's population, regardless of nationality, is educationally thriving in a technology and information driven era.

Bibliography

Facts about Luxembourg. Luxembourg: Luxembourg Press and Information Service, 1975.

Harsch, Raymond. Education in the Grand Duchy of Luxembourg. Luxembourg: Ministère de l'Education Nationale et de la Formation Professionnelle, 1997.

Levy, Jerome. L'Enseignement Secondaire General 1998/1999, Statistiques Globales & Analyse des Resultats Scolaires. Luxembourg: Ministère de l'Education Nationale, 2000.

——. L'Enseignement Secondaire Technique, 1998/1999, Statistiques Generales & Analyse de la Promotion des Eleves. Luxembourg: Ministère de l'Education Nationale et de la Formation Professsionnelle, 2000.

——. Examen de Fin d'Etudes Secondaires, Comparisons et Analyse. Luxembourg: Ministère de L'Education, 2000.

The Luxembourg Grand Ducal Family. Luxembourg: Press and Information Service, 1975.

Majerus, Pierre. The Institutions of the Grand Duchy of Luxembourg. Luxembourg: Press and Information Service, 1973.

Margue, Paul. A Short History of Luxembourg. Luxembourg: Information and Press Department, 1974.

—William A. Paquette

LUXEMBOURG

Grand Duchy of Luxembourg

Major City:
Luxembourg

Other Cities:
Clervaux, Diekirch, Differdange, Dudelange, Echternach, Esch-sur-alzette, Vianden

EDITOR'S NOTE

This chapter was adapted from the Department of State Post Report 2000 for Luxembourg. Supplemental material has been added to increase coverage of minor cities, facts have been updated, and some material has been condensed. Readers are encouraged to visit the Department of State's web site at http://travel.state.gov/ for the most recent information available on travel to this country.

INTRODUCTION

It would be easy to overlook tiny Luxembourg in a European itinerary, but you'd be missing out on a very charming experience. Squeezed into a pocket of land about one-fiftieth the size of England, it is Europe in a miniature, complete with wine country, abbey towns, a cosmopolitan city, hiking trails, restored castles, lovely river valleys, and a multilingual populace.

Luxembourg has been influenced at one time or another by the Spanish, Belgians, French, Germans and Austrians. But perhaps the most influential of all were the Romans, who ruled the land for nearly 500 years. They left behind an excellent network of roads and bridges that, in addition to unifying the nation physically, linked the people psychologically.

Positioned between two major historical world powers (and having been conquered at times by both of them), Luxembourg takes a good deal of its identity from its neighbors' contributions. This shows itself both in the generally amicable relationship between the countries and their citizens and in their shared linguistic traits. Multilingualism is universal among Luxembourgers, and both the German and French languages are used in the press, in politics, and in daily life. French is most common in government and schools, though Luxembourgish is the language you will hear most frequently on the street. English is widely understood in tourist areas.

Luxembourg's location in the heart of Europe made it a desirable territory for the continent's abundance of expansion-minded rulers. So it built itself into one of the most powerful fortresses in the world. Most of the fortifications were dismantled in the mid-19th century, and fortresses were converted into parks-too soon, as it turned out. Luxembourg was invaded and occupied in both World Wars by its neighbors to the east and sustained terrible damage in World War II at the Battle of the Bulge. The damage has since been repaired, and Luxembourgers, grateful for the U.S. role in liberating their country, have been particularly friendly to travelers from the U.S. ever since.

Geographically, the country is surprisingly varied, considering its small size. The northern area has the best scenery, particularly in the heavily forested area of the Ardennes, whereas the southern area is more industrial and urbanized. The eastern region, along the Sauer and Moselle Rivers, has lovely vineyards and wineries.

Luxembourg offers the advantage of life in a medium-sized Western European city coupled with many of the social and cultural aspects of a modern capital.

MAJOR CITY

Luxembourg City

Luxembourg City is situated in central, southern Luxembourg. The city is the formal residence of the Grand Duke and the seat of government. The Court of Justice of the European Communities, the EU Court of Auditors, the general secretariat of the EU European Parliament, the European Investment Bank, the EU Office of Statistics, and many other community services are also found here.

In 1963, the city celebrated its 1,000th anniversary. For centuries, Luxembourg was one of the most powerful fortresses in the world, earning the name of "Gibraltar of the North." Although the fortress was dismantled during the years 1867-83, the many remnants of these ancient fortifications, the medieval towers and ramparts, are of great interest. The casemates are a 23-kilometer network of underground passages, hewn from solid rock. The Grand Ducal Palace, built during the 16th and 18th centuries, is located among the narrow, winding streets of the old city.

Within the Cathedral Notre Dame are the Grand Ducal Mausoleum and the tomb of Luxembourg's national hero, John the Blind, who was killed in 1346 at the Battle of Crecy. The European Center on the Kirchberg Plateau commands an impressive view of the entire city. Built on ridges overlooking the confluence of the Alzette and Petrusse Rivers, the city has attractive park areas along both streams. The Place d'Armes, in the center of the city, is the site of numerous band concerts during the spring and summer months.

Food

Most foodstuffs, including many American products, are available in Luxembourg. Prices are higher than in the U.S. for many foods, such as meat. Uncooked fruit and vegetables are safe, and the quality is high. Beef is lower in quality than in the U.S., but the quality of pork is higher. American cuts cannot be obtained locally. High quality poultry is available. Excellent-quality fish and seafood are available.

Water is potable, but it has a high calcium content, making it hard for washing purposes. Bottled water is available at reasonable prices.

Clothing

Clothing is similar to that worn in the northern U.S. Average annual rainfall is heavy, so raincoats, umbrellas, and waterproof footwear are needed. Extremely cold weather is not prolonged, but it is often chilly and damp. Bring warm suits, coats, overshoes or other warm footwear, and a good supply of sweaters. Summer weather is also cool and unpredictable. Most summer-weight clothes can be worn for only a limited time. Sports clothing and heavy shoes are useful for walking, shooting, fishing, and other outdoor activities.

Men: Ready-made European-style suits are available locally. Workmanship of these suits is good, but costly. Much available haberdashery is imported, and prices are higher than in the U.S. Good shoes from England, Switzerland, Germany, and Italy are available.

Women: Because of the cool, damp climate and the tendency to under heat houses, women wear more suits and sweaters throughout the year than in most parts of the U.S. Competent, but expensive, dressmakers are available. Hats, gloves, and other accessories are available, and there are several good, but expensive, women's wear shops. "A" width or narrower shoes are scarce, and local shoes are generally expensive.

Good-quality furs are priced lower than in the U.S. Mending, glazing, and alteration of furs are done well and more cheaply than at home.

Children: Children's clothes, including winter clothing, are similar to those worn in the northern U.S. and are readily available in Luxembourg, though they are more expensive than in the U.S. Due to the damp climate, children need warm boots and extra shoes.

Supplies and Services

General living needs are sold locally and at Bitburg/Spangdahlem. Internationally known cosmetics and toiletries are available locally.

Bring a supply of any favorite or special cosmetics.

A wide variety of good-quality fabrics is available locally.

A wide range of personal services is available in Luxembourg, including shoe repair, laundry, drycleaning, hairdressing, clothing alterations. Photographic equipment is readily available, and developing is satisfactory, but much more expensive than in the U.S.

Domestic Help

Full-time domestic help, especially a competent housekeeper, is extremely difficult to find. It is somewhat easier to find cleaning personnel who work by the hour. Persons who employ domestic help for at least 4 consecutive hours a week must register with the "Office des Assurances Sociales" The employer must contribute to the worker's social security. This tax is about 25% of the worker's salary and includes medical and retirement. The typical expense per week for a full-time (40 hours) maid runs about 15,000 FLux. Part-time help, e.g., 6 hours a week, costs approximately 1,800 FLux. Extra help is available for dinners and receptions. A commercial supplier charges 2,500 FLux per waiter for an evening.

Cleaning help can also be obtained from several companies who supply their own staff and equipment. The client pays these companies a flat hourly rate and they take care of all insurance. Some American students at the Miami University European Study Center take odd jobs, such as helping in the house, working in the garden, and babysitting. They may be contacted through the university.

Religious Activities

The local population is predominantly Roman Catholic. Although many church services are held in German, services in English, French, or Luxembourgish are available. Sermons are frequently given in a different language from the service. A Lutheran church with services in German and a synagogue are also located in Luxembourg City.

The English-speaking Catholic Community of Luxembourg offers services in English. The Protestant Anglican Chaplaincy and Christian Community Church also hold services in English. A number of American residents in Luxembourg attend Christian services at Bitburg AFB and English-speaking churches in the area around Bitburg.

Education

Primary and secondary public education in Luxembourg is operated by the Ministry of National Education. Tuition is free and foreign students are accepted. The curriculum is roughly the same as in the other European schools. Languages of instruction are Luxembourgish, German, and French. American students, unless fluent in German or French, may experience considerable difficulty. English is taught only as a second (fourth) language. Religious instruction is conducted in all schools by Roman Catholic clergy, but students are exempted if the parents so request.

The International School of Luxembourg , which offers a full American curriculum in grades kindergarten through 12. ISL is fully accredited by both the European Council of International Schools (ECIS) and the Middle States Association in the U.S. It is overseen by a predominantly American board of directors under the aegis of the Luxembourg Ministry of Education, which subsidizes ISUs operation. The total student body numbers 424, with 257 in pre-K through grade 6, and 167 in grades 7 through 12. Americans make up the largest single block of students with 28%; Scandinavians are next with 15%; altogether among the students there are 27 nationalities from five continents. The Upper School offers advanced placement and honors classes in most key subjects. Small classes provide each student with a good deal of personal attention.

In addition to its formal curriculum, ISL offers a wide variety of supplementary and elective opportunities, including vocal music, instrumental music, art, computer science, theater, debate, etc. With its relatively new gymnasium and extensive contact with other American and international schools in the region, ISL conducts an active sports program, both intramural and interscholastic.

The European School in Luxembourg (kindergarten through grade 12) is for children of employees of the European Community who are working in Luxembourg. Instruction is in English, French, German, Dutch, Italian, Portuguese, or Spanish. Each section has teachers accredited by the board of education in the respective countries. First choice, however, is given to families belonging to the European Union countries.

An English-speaking International Kindergarten is also located in Luxembourg.

Miami University (Oxford, Ohio) European Study Center was opened in Luxembourg in 1968. About 100 American undergraduates come there from Ohio to study for one or two academic terms under a faculty of 12, including 4 American professors. Students wishing to attend the center must request approval from Miami University in Ohio.

Sacred Heart University (Fair-field, CT) is also established in Luxembourg and offers an MBA program as well as certificate in various fields of management.

Luxembourg has no full-curriculum university of its own. Luxembourgers must go to France, Belgium, Germany, Switzerland, or elsewhere for their higher education.

Special Educational Opportunities

Several language schools are located in Luxembourg. Private tutors are available for French, German, and most other school subjects. The Luxembourg Board of Education arranges courses in Luxembourgish for foreigners as part of its adult education program. Luxembourg City also makes available, cost free, courses in French, German, and Luxembourgish. Foreign women's clubs have also organized language courses.

A number of dancing schools and gymnastics classes are available in Luxembourg. There are also ballroom dancing classes for adults.

Some professional schools in Luxembourg allow amateurs to study pottery-making, drawing, etc. During the summer, special classes called Beaux Arts are held for about 6 weeks.

Sports

The Grand Ducal Golf Club has an excellent 18-hole course and a small, attractive clubhouse where meals are available. The course, considered to be among the most challenging and beautiful in Europe, attracts golfers from all over Europe. Instructors and caddies are available. Membership is not inexpensive, nor necessarily available to all.

A permit from the Ministry of Justice is required to possess a hunting weapon. Hunters and fishermen also must purchase an annual license. Wild boar, deer, and pheasant hunting are excellent and popular in Luxembourg. Many wooded streams provide fine fishing. However, hunting and fishing rights are privately owned, so you are usually dependent on invitations from Luxembourgers.

Gym classes for men and women are available. The more popular spectator sports are basketball, soccer, rugby, bicycling, handball, and volleyball. Team membership in these sports and activities such as karate and judo are open to everyone.

The city has several swimming pools; the Olympic Swimming Pool in the suburb of Kirchberg is a world-class facility. Pool memberships are also available at the Hotel Intercontinental and Royal Hotel.

River bathing is possible in several places. Water skiing is popular on the Moselle, and scuba diving may be done in Lake Esch-sur-Sure. Sailing, kayaking, and canoeing are also possible, but you sometimes have to provide your own equipment.

Membership is possible in several private tennis clubs, and a few well-kept municipal courts are available. Indoor tennis courts are also available for hire by the hour or on a seasonal basis. About 4 miles outside the city is an indoor ice skating rink that can be enjoyed year round. Two riding academies offer riding lessons, and many riding trails are located in the surrounding countryside. A new squash club is also available. There are several lovely bicycle paths, both from the city and out in the countryside.

Touring and Outdoor Activities

The Luxembourg countryside is beautiful in the spring, summer, and early fall. There are hundreds of kilometers of well-groomed hiking trails throughout the country. Tourists and hikers from all over Europe enjoy the unspoiled natural attractions of "Little Switzerland," the Sure and Moselle Valleys, and the thick forests of the Ardennes Mountains. Over 130 old castles dot the country, including Vianden, Clervaux, Bourscheid, Beaufort, and Esch-sur-Sure. Grape and wine festivals and tastings are held in towns and villages along the Moselle in the fall and spring when the grapes are gathered and the wine is bottled.

Trier, a former provincial capital of the Roman Empire and an important German town in medieval days, is 30 miles from Luxembourg City and an interesting day's excursion. North from Trier along the German Moselle, a series of picturesque wine towns and ruined castles extends to Koblenz where the Moselle joins the Rhine.

To the south near Luxembourg, the Verdun Battlefield in France is well worth a visit. Paris and Brussels are fun for a weekend visit. Reims, Cologne, Aachen, and Strasbourg are within easy reach of the Grand Duchy. Spring trips to Holland's tulip fields also are popular.

Entertainment

Luxembourg has several motion picture theaters. American, English, French, German, Italian, and other films are shown. American films are usually 6-12 months old, but are ordinarily presented in their original English-language version.

Luxembourg City's cultural center is the Municipal Theater, which opened in April 1964. It offers opera, drama, symphonic concerts, and solo recitals and otherwise enriches the country's

cultural life. In the winter, the Municipal Theater presents two series of plays, one in French and one in German, by excellent touring companies. Touring companies also perform operatic and ballet series each season. Luxembourg has an excellent philharmonic orchestra. Luxembourg's New Theater Club presents two or three plays in English during the season. The "Old Theater" on the Rue des Capucins has been revived and presents very interesting plays by professional and amateur actors.

The French, Italian, and German cultural centers have interesting programs. Luxembourg City has a number of small nightclubs.

In the summer, music may be found everywhere. Groups from all over Europe, Canada, and the U.S. perform in the Place d'Armes. Concerts are also held in the Municipal Theater, the " Cercle Municipal," churches, and various other places in and around Luxembourg City. The annual Open Air Theater and Music Festival at Wiltz Castle in northern Luxembourg provides a well-rounded selection of musical events, theater, and ballet, as does the Echternach Festival. The U.S. Air Force bands have concerts several times a year.

During 3 weeks in May, pilgrimages are made from all parts of the country to the Cathedral, culminating in a procession of the statue of "Our Lady of Luxembourg" through the city streets. The "Schueberfouer" comes to town at he end of August, following an almost unbroken tradition of over 450 years. this annual fair has all the usual attractions loved by children-bumper cars, carousels, shooting ranges-plus many temporary restaurants and two dance calls.

Social Activities

An American Chamber of Commerce, an American Business association of Luxembourg, and an American Women's Club operate here. Small scouting groups are provided for both boys and girls. Luxembourg has an active American-Luxembourg Society.

OTHER CITIES

CLERVAUX is a tourist center with 1,000 residents, 35 miles northwest of Diekirch in northern Luxembourg. This medieval town lies on the eastern bank of the Clerf River, in a colorful, twisting valley. Noteworthy buildings here include the Abbey of the Benedictines of St. Maurice, the Chapel of Notre Dame of Lorette, and the castle, built in the 10th century by Gerard of Clervaux. The castle was badly damaged during the Ardennes offensive of World War II, but is being restored. Clervaux has several hotels, a youth-hostel, and official campgrounds.

DIEKIRCH , a town of 5,000 in the west-central part of Luxembourg, near the border with West Germany, dates to 1260. A brewery is located here.

DIFFERDANGE is 12 miles southwest of Luxembourg-Ville. With a population of 16,000, it is a center for the production of iron and steel. North of Differdange, near the Belgian border, is Pétange, with a population close to 12,000.

DUDELANGE , on the French border, 10 miles south of Luxembourg-Ville, has a population of about 14,000. It is an industrial commune that produces iron, steel, and aluminum.

ECHTERNACH , an ancient town which was one of the earliest centers of Christianity in Europe, lies northeast of Luxembourg-Ville. St. Willibrord, an English Benedictine missionary, is buried in the abbey he founded here in 698. Each year on Whit Tuesday, a famous festival, La Procession Dansante, is held in Echternach. This small town of fewer than 5,000 residents figured in the Battle of the Bulge during World War II.

ESCH-SUR-ALZETTE , an industrial center and rail junction, is located on the French border about 10 miles southwest of Luxembourg-Ville. The country's second largest city, with a population of 23,700, Esch-sur-Alzette is situated in a coal mining region, and manufactures iron, steel, cement, tar products, and fertilizer.

Situated in northeastern Luxembourg, VIANDEN is the city were Victor Hugo (1802-1885), the French literary figure, spent his voluntary exile in 1871. The city is surrounded by magnificent landscape. There are modern campgrounds, pleasant hotels, and comfortable cottages, as well as a number of sports and leisure facilities. Vianden's narrow, winding streets and its castle create a medieval atmosphere. Europe's most powerful hydroelectric pumping-station is located here. Vianden's population is about 1,500.

COUNTRY PROFILE

Geography and Climate

Luxembourg, located in Western Europe, is bordered by France, Germany, and Belgium. The country is 50 miles long and 36 miles wide, covering 999 square miles, or slightly less than the area of Rhode Island.

Geographically, the Grand Duchy is divided into two sections. The forested and hilly northern half of the country is a continuation of the Belgian Ardennes. In the south, the Lorraine Plateau extends from France, creating an open, rolling countryside with an average elevation of 1,000 feet. The Our, Sure, and Moselle Rivers flow north-south along the frontier between Luxembourg and Germany.

Temperatures range from 5°F (-15°C) to 90°F (32°C), with an annual mean temperature of 49°F (9°C). Summer temperatures average 60°F (15°C) and winters are mild with an average low of 29°F (-1.7°C). July and August are the warmest months; May and June are the sunniest; and January and February are the coldest months. Luxembourg has a climate much like that of the U.S. Pacific Northwest-cool, temperate, and rainy. The northwesterly winds that traverse the western, lower portion of the Belgian Ardennes cause abundant clouds, fog, and rain. Average annual rainfall is 30 inches; some rain falls 50% of the year.

Population

The Grand Duchy has a population of approximately 440,000 (2000 est.).

The densest population is in the industrial southwest region and around the capital city, with a population of 78,300. Of the entire population, 34% are aliens, most from other European countries (12% Portuguese). The European Union Institutions located here employ many citizens of the different member states.

The native population is at least bilingual, often trilingual. Luxembourgish is the native language spoken in the majority of homes. German is the language of instruction beginning in first grade; French begins shortly thereafter as a foreign language. Luxembourgish and French are the official languages of the country. French is used in diplomatic exchanges, in drafting decrees and legislation, and in the upper courts.

Local newspapers are usually published in German, and German is used in the lower courts. French is the most common second language used in stores within the city, but German is often more useful in the northern part of the country. Luxembourgers invariably speak Luxembourgish among themselves. Related to the old Moselle Frankish language of Western Germany, Luxembourgish is basically a Germanic language enriched by French and Flemish words and expressions. This language is rarely written and varies from region to region. English is also taught in the schools.

While there is no state religion, Luxembourg is predominantly Roman Catholic. Protestant and Jewish communities also exist, and all faiths are welcome.

Public Institutions

Luxembourg has a parliamentary form of government with a constitutional monarchy. Under the Constitution of 1868, as amended, the Grand Duke is the Chief of State. Executive power is exercised by the Grand Duke and the Council of Government (Cabinet), which consists of a dozen members led by the President of the Government (Prime Minister). The Prime Minister is the leader of the political party or coalition of parties that has the most seats in the Parliament.

Legislative power is vested in the Chamber of Deputies, elected directly to 5-year terms. A second body, the Council of State, exercises some of the functions of an upper house, but can be overridden by the Chamber of Deputies. It is composed largely of ordinary citizens appointed in part by the Grand Duke, in part by the Council of Government.

The law is codified, as in France and Belgium, and is a composite of local practice, legal tradition, and foreign systems (French, Belgian, and German). The apex of the judicial system is the Superior Court, whose judges are appointed by the Grand Duke.

Under the Constitution of 1868, as amended, Luxembourg is a parliamentary democracy. A coalition of two of the three major parties-the Christian Social Party (CSV), the Socialist Party (LSAP), and the Democratic (or Liberal) Party (DP) have formed the government in recent years.

Arts, Science, and Education

Over the ages, the cultural influences upon Luxembourg life have been extremely varied. Until the 19th century, Luxembourg was dominated by the various European powers: France, Spain, Prussia, Austria, and the Netherlands. The strongest influences have been those of its immediate neighbors: France, Belgium, and Germany. Luxembourg's technology is primarily German-influenced. While many Luxembourg engineering students train in Germany, others take higher education in Belgium or France. The French and, to a lesser degree, the Belgians, are the strongest cultural influences. However, Luxembourgers are appreciative of many other cultures as well, including those of Great Britain, Italy, and the U.S.

Commerce and Industry

Luxembourg is aptly described in tourist literature as the "Green Heart of Europe." The open rolling countryside is accentuated by Luxembourg's small but productive agricultural sector, which concentrates on animal husbandry. Its principal products are meat and dairy products. Vineyards along the Luxembourg side of the Moselle River annually produce almost 4 million gallons of high-quality dry white wine, almost half of which is consumed locally.

Luxembourg's standard of living and per capita income are the highest in the European Union. The Grand Duchy's currency is linked to Belgium's, and the two countries share customs facilities and are partners in the Belgium-Luxembourg Economic Union (BLEU). The economy is stable and prosperous, enjoying modest growth, low inflation, and low unemployment (2.9%; 1999 est.). Steel production, financial services, and light industry are the primary sectors. The industrial sector, until recently dominated entirely by steel, is increasingly diversified.

American investment has played a large role. Goodyear, DuPont, Guardian, General Motors, Commercial Intertech, and Delphi Automotive Systems are among the American firms with industrial facilities in Luxembourg. The financial sector's rapid growth over the past two decades has more than compensated for the long-term decline of the steel industry, which now contributes only 1.8% of GDP.

Services, especially banking, account for a growing proportion of the economy. Luxembourg's 210 banks now employ over 9 percent of the working population (20,557).

Luxembourg's dependence on exports of goods and services has made it favorable to open borders and commercial activity generally. Most trade is with Luxembourg's immediate neighbors. The U.S. accounts for only 3% of Luxembourg's trade. Steel exports to the U.S. dominate our trade relations. Although the country usually registers a trade deficit, a surplus in earnings from financial services contributes a very large current account surplus.

GDP growth in 1999 was 7.6%, the highest in recent years. Inflation was 1.4%. Unemployment, at 3.3%, remains the lowest in the European Union.

Government finances are conservatively managed. Government budgets usually record surpluses. In order to prevent these surpluses from growing even larger, the government introduced tax cuts in both 1997 and 1998.

Transportation

Automobiles

Luxembourg has excellent paved highways and secondary roads. Driving in Luxembourg is on the right side of the road with "priority to the right" (the driver from the right normally has the right of way and exercises it).

Rental cars are available through car rental agencies locally or at nearby U.S. military bases. Gasoline quality is comparable to American grades, with an occasional slightly lower octane rating. Unleaded gasoline and diesel is commonly provided by most gas stations in Luxembourg and neighboring countries.

Many people prefer small American or European cars. However, no restrictions apply to the type of car brought into the country.

Repairs and spare parts are not readily available for American automobiles in Luxembourg, and prices are higher than in the U.S.

Some cars need minor modifications to pass a safety inspection required for all vehicles registered in Luxembourg. Regulations on tire tread are strict.

Within 3 months of establishing residence, you must register your car in Luxembourg. Automobile registration costs about $45. A valid U.S. drivers license is sufficient for a tour of duty not exceeding 1 year. After 1 year, you must apply for a local driver's license. Before registration can be completed, the car must pass inspection by the Ministry of Transport. The law requires that all cars registered in Luxembourg be insured with a Luxembourg firm for third-party liability insurance. The insurance "green card" proves that your automobile insurance is valid in Europe and is obtained from the Luxembourg insurance company with which you have third-party liability coverage. The cost of third-party insurance is based on engine displacement.

Local insurance companies' premiums are based on the value of your car when purchased, not the present value. Payment on claims, however, is based on the present value. A letter from your American (or present) insurance company stating that you have been driving "X" number of years without a claim against them, will cause the local insurance company to deduct 5% for each year (up to 45%) from the prices listed above on comprehensive insurance. Comprehensive insurance may be obtained outside Luxembourg (i.e., Clements in Washington, USAA).

The not-for-profit Automobile Club of Luxembourg provides travel information, maps, emergency, assistance, and many other services for a modest membership fee. With the purchase of a carnet d'assistance, members have access to services from automobile clubs throughout Europe and in North Africa. (Automobile Club, 54 Route de Longwy, L-8007 Helfenterbruck, Telephone: 45-00-45.)

Local

In the city, buses are inexpensive. Schedules are geared to students as well as Luxembourg shopping and office hours. Taxicabs are plentiful. Taxis do not cruise the city; they must be phoned, but they come quickly.

Regional

Luxembourg's central location is a definite advantage; all of Europe is easily accessible from Luxembourg. Paris is 4 hours away by car; Brussels 2 hours; Le Havre 10 hours; Frankfurt 4 hours; and Amsterdam 6 hours.

Bus or rail connections can be made between Luxembourg City and most other towns in the Grand Duchy. The schedules, however, are primarily geared to workers and students.

Trains stop at Luxembourg's Central Station en route to Paris, Brussels, Cologne, Amsterdam, Milan, and the south of France.

First class, round-trip fares by train are as follows:

Paris: FLux4,648, US$126

Bonn: FLux 3,852, US$104

Frankfurt: FLux 5,024, US$136

Amsterdam: FLux 4,900, US$132

Basel: FLux 4,172, US$113

Strasbourg: FLux 2,904, US$78

Brussels: FLux 1,995, US$54

Second class is generally clean and pleasant. A modern airport (Findel) is located only 4 miles outside Luxembourg City. The passenger terminal was opened in November 1975. Luxembourg has daily air service to Brussels, Paris, London, Frankfurt, and Amsterdam. Other major European cities are also served but not by daily flights. Limited tourist flights are scheduled to most major vacation areas. Attractive package tours to some 30 destinations from Algarve to Zurich are offered by Luxair, the Grand Duchy's passenger airline.

A wide variety of connecting flights to other points in Europe is available in Amsterdam, Paris, Brussels, London, and Frankfurt.

Round-trip, economy fares by plane to various points of interest are as follows:

Paris: FLux 15,700, US$424

Frankfurt: FLux 11,450, US$309

London: FLux 19,360, US$523

Nice: FLux 20,420, US$552

Palma: FLux 18,760, US$507

Vienna: FLux 31,390, US$848

Madrid: FLux 26,260, US$710

Rome: FLux 33,980, US$918

Communications

Telephone and Telegraph

Telephone and telegraph service in Luxembourg is excellent. Telephone installation costs about $70. Calls within the Grand Duchy cost 5 francs for each 4 minutes. You can dial directly to subscribers in most Western European countries and in the U.S. A 3-minute person-to-person call from Luxembourg to New York costs $2.50. Telegraph or cable rates between Luxembourg and New York are FLux 1,900, including 40 words.

Radio and TV

Radio reception in Luxembourg is adequate to receive stations throughout Western Europe, including the BBC, VOA and the American Forces Network from Germany. In some areas, however, an aerial may be necessary.

Radio FM and television programs from Western Germany, Belgium, and France are received in Luxembourg. Radio Tele Luxembourg also has daily television programs in French and German. In many areas, a large antenna is essential for reception. If your antenna is good, or, if you have subscribed to cable TV, you can receive three German channels, six French channels, Belgium's two French-language channels, and Radio T616 Luxembourg (when hooked up to cable TV; in addition, you can get several satellite programs, including some English-language channels). All channels are in color. An American TV, however, cannot be converted to receive Belgian,

French, German, or Luxembourgish programs. It is recommended that newcomers to Luxembourg buy multisystem TV's and videorecorders (available at Bitburg, Spangdahlem and other bases) in order to enjoy all available channels and/or programs in Luxembourg. Luxembourg does not tax owners of televisions and radios.

Newspapers, Magazines, and Technical Journals

The leading newspapers of Luxembourg are in German, with the exception of the French-language Republicain Lorraine, published in France. The main newsstands in Luxembourg carry a wide section of Europe newspapers as well as French, Belgian, and German magazines.

The International Herald Tribune is also available at local newsstands or by subscription. It is possible to obtain American magazines in Luxembourg, but the selection is limited.

About 1,500 English and American books of the former USIS library have been donated to the National Library of Luxembourg. The University of Miami and the British Ladies Club maintain good reading libraries in Luxembourg. Some American books are sold in shops, but prices are high.

Health and Medicine

Medical Facilities

Medical and surgical attention in Luxembourg is good, although in view of the small community served, the depth of a coverage in some specialities might not be as great as, for instance, in the U.S. All Luxembourg physicians and surgeons receive their medical education abroad. Several local doctors, including pediatricians, have trained in the U.S. The hospitals, including maternity hospitals, are clean and well kept and are usually well staffed by Catholic nursing sisters.

Competent dentists practice in Luxembourg, and Americans are usually satisfied with routine dental work done locally. As with medical care described above, there may be areas of special dentistry where the size of the community does not support the fullest facilities.

Local ophthalmologists and opticians are dependable.

Pharmacies in Luxembourg are well supplied with most general medicines.

Community Health

Luxembourg enjoys a high standard of living. Public health standards compare well with those in the U.S. Sewage and garbage disposal are not a problem. The public water supply is potable.

Preventive Measures

Prevalence of disease is comparable to that in the New England states, except for a slightly higher incidence of tuberculosis and respiratory diseases. Several outbreaks of typhoid, influenza, and infantile paralysis have occurred since World War II; none has assumed serious proportions, and statistics reflect a steady downward curve. The last recorded case of infantile paralysis was in 1963. Ordinary colds and bronchial coughs from the damp climate are the most common ailments. Humidity increases sinus trouble, rheumatism, arthritis, catarrh, and asthma.

Pasteurized milk sold in cartons is considered. Glass-bottled or plastic bagged milk is pasteurized but does not meet U.S. sanitary standards. No special treatment is required for water or fresh vegetables.

While potable, the local water supply is very hard. Many people drink mineral water or use a softener available at Bitburg or locally. In all new buildings and houses, a softener is automatically included at the input of water supply.

NOTES FOR TRAVELERS

Passage, Customs and Duties

Most travelers arrive by air via London, Brussels, Paris, or Frankfurt. Some flights into Luxembourg are via short stopovers, but you do not need large amounts of currency for these cities. All airports have exchange facilities for changing small amounts of currency.

Flying time from New York to Luxembourg is about 12 hours, including a stopover at an intermediate airport. Unaccompanied airfreight from the U.S. usually arrives within 7 days. Surface freight takes a minimum of 1 month.

A passport is required. A visa is not required for American citizens for business or tourist stays of up to 90 days. For further information concerning entry requirements for Luxembourg, travelers can contact the Embassy of Luxembourg at 2200 Massachusetts Avenue, N.W., Washington, D.C. 20008, Tel. (202) 265-4171/72, or the Luxembourg consulates general in New York or San Francisco

Americans living in or visiting Luxembourg are encouraged to register with the Consular Section of the U.S. Embassy in Luxembourg to obtain updated information on travel and security within Luxembourg. The U.S. Embassy is located at 22 Boulevard Emmanuel Servais in Luxembourg City, Tel: (352) 46-01-23 or Fax: (352) 46-19-39. The Embassy website address is http://www.amembassy.lu.

For specific information concerning Luxembourg driver's permits, vehicle inspection, road tax and mandatory insurance, contact the Luxembourg National Tourist Office in New York at 212-935-8888, or via the Internet at http://www.visitluxembourg.com. For international driving permits, contact AAA or the American Automobile Touring Alliance at http://www.aa.com

Pets

No special formalities are observed in connection with the importation of pets, nor do any special rules or limits affecting clearance of particular items apply. Pets should be inoculated against rabies and should have had the parvo vaccine. Pet owners should obtain a Certificate of Good Health from their veterinarian before coming to Luxembourg. Upon arrival, dogs should be licensed in Luxembourg.

Firearms and Ammunition

The following quantities and types of nonautomatic firearms and ammunition may be brought to Luxembourg:

Pistols and revolvers, 2; Rifles, 4; Shotguns, 4; Ammunition1,000 rounds.

Currency, Banking, and Weights and Measures

As a member of the European Community, the monetary unit Luxembourg is the Euro, which is divided into 100 cent. Coins in circulation are 1, 2, 5, 10, 20, 50 cent and 1 & 2 Euro. Bank notes are 5, 10, 20, 50, 100, 200 and 500 euros. The exchange rate approximates 1.15 euro to $1 US.

The metric system is used for weights and measures.

LOCAL HOLIDAYS

Jan. 1 …New Year's Day

Feb/Mar.…Shrove Monday^*

Feb/Mar.…Shrove Tuesday (Mardi Gras)^*

Mar/Apr.…Easter^*

Mar/Apr.…Easter Monday^*

May 1…Luxembourg Labor Day

May/June…Ascension Day^*

May/June…Pentecost^*

May/June…Pentecost (Whit) Monday^*

May/June (Tues after Pentecost) …St. Willobord Dancing Processsion in Echternach^*

June 23 …Grand Duke's Birthday

Aug. 15…Assumption Day

Nov. 1…All Saints' Day

Nov. 2…All Souls' Day

Dec. 25 …Christmas Day

Dec. 26 …St. Stephen's Day

^*variable

RECOMMENDED READING

The following titles are provided as a general indication of the material published on this country:

A great deal of bibliographic material on Luxembourg is available in English. In addition to Fodor and Blue Guides on Belgium and Luxembourg, many tourist pamphlets in English can be obtained from the Luxembourg Embassy in Washington or the Luxembourg Consulate General in New York. The good general books are " Living in Luxembourg" available from the American Women's Club, and " Luxembourg Yesterday and Today" by Joseph Petit, director of the Luxembourg Government Information Service.

The latest edition of the "Political Handbook of the World," published by the Council of Foreign Relations, contains a brief resume of useful information on political affairs, party program and leaders, and the press of Luxembourg. Attic in Luxembourg, written in 1956 by Beryl Miles and published by John Murray, gives a great deal of historical and background information about the Grand Duchy and its customs and ceremonies.

In French, a brief but excellent general study of Luxembourg is " Le Benelux, " published by the Editions Ode of Paris. Two books by Pierre Majerus of the Luxembourg Ministry of Foreign Affairs, "Manuel de Droit Constitutionnel et de Droit Administratif Luxembourgeois" and " Le Luxembourg Independant: Essai d'Histoire Politique Contemporaine et de Droit International Public, " are highly recommended for their scholarly excellence and useful historical information. " All the Best in Belgium and Luxembourg" by Sydney Clark (Dodd, 1956) is also recommended reading. "Le Luxembourg" edited by Charles Dessart, and " Nature et Tourisme an Luxembourg, " published by the Touring Club Luxembourgeois, present pictorial evidence of the Grand Duchy's scenic and historical attractions. Finally, " Le Luxembourg: Livre du Centenaire, " originally published in 1939 under the auspices of the Luxembourg Government and subsequently updated, is an exhaustive analysis of every aspect of life in Luxembourg, past and present.

Luxembourg

Compiled from the January 2008 Background Note and supplemented with additional information from the State Department and the editors of this volume. See the introduction to this set for explanatory notes.

Official Name:

Grand Duchy of Luxembourg

PROFILE

Geography

Area: 2,586 sq. km. (999 sq. mi.; about the size of Rhode Island).

Cities: Capital—Luxembourg City (pop. 83,800). Other cities—Esch-sur-Alzette (pop. 29,100), Differdange (pop. 20,100), Dudelange (pop. 18,000). (2007 figures from STATEC.)

Terrain: Continuation of Belgian Ardennes in the north, heavily forested and slightly mountainous; extension of French Lorraine plateau in the south, with open, rolling countryside.

Climate: Modified continental, rainy, with mild summers and moderate snowfall in winter.

People

Nationality: Noun—Luxembourger(s). Adjective—Luxembourgian, Luxembourgish.

Population: (2007) 480,222.

Annual growth rate: (2007) 1.2%.

Ethnic groups: Celtic base with French and German blend; large communities of ethnic Portuguese, Italians, French, Belgians, and Germans.

Religions: Historically and predominantly Roman Catholic. However, Luxembourgian law forbids the collection of data on religious practices.

Languages: Luxembourgish, French, and German; English is widely spoken.

Education: Years compulsory—9. Attendance—100%. Literacy—99%.

Health: Life expectancy (2007)— Avg. 79.03 years; males 75.76 years; females 82.52 years. Infant mortality rate (2007)—4.68/1,000.

Work force: (2006) 203,000, of which 121,600 commute from neighboring countries. European Union institutions employ 8,300. Services: (non-financial)—53%, (financial)—11%; commerce—14%; industrial and manufacturing—11%; construction—10%; agriculture—1%.

Unemployment rate: (2006) 4.1%, up from 3.9% in 2004 (but down from 4.2% in 2005).

Government

Type: Constitutional monarchy.

Independence: 1839.

Constitution: 1868.

Government branches: Executive—Grand Duke (head of state, ceremonial), Prime Minister (head of government). Legislative—unicameral parliament (Chamber of Deputies with Council of State serving as a consultative body). Judicial—Superior Court.

Political parties: Christian Social Union (CSV), Socialist Workers’ Party (LSAP), Democratic Party (DP), Green Party, Alternative Democratic Reform Party (ADR).

Suffrage: Universal over age of 18.

Budget: (2006) $19.07 billion

Economy

GDP: (2006) $33.87 billion (purchasing power parity); $34.53 billion (official exchange rate).

Currency: euro (€). Exchange rate (August 8, 2007) €1 = $1.3736.

Annual growth rate: (2006) 6.2%.

Per capita income: (2006) $71,400.

Inflation rate: (2006) 2.6%.

Natural resources: Iron ore, timber.

Agriculture: (2005: 0.4% of GDP) Dairy, wine, forestry, animal feed crops. Arable land—24%; forested land—21%.

Services: (2005: 83.3% of GDP) Banking and financial services predominate.

Industry: (2005: 16.3% of GDP) Steel, chemicals.

Trade: (2006) Exports—$24.22 billion: steel and other metallic products, chemicals, processed wood products, machinery and other manufactured equipment. Major markets—other European Union countries (esp. Germany, France, and Belgium). Imports—$24.22 billion: Machinery and other manufactured equipment, raw materials, chemicals, food products. Major suppliers—other European Union countries (esp. Belgium, Germany, and France).

HISTORY

After 400 years of domination by various European nations, Luxembourg was granted the status of Grand Duchy by the Congress of Vienna on June 9, 1815. Although Luxembourg considers 1835 (Treaty of London) to be its year of independence, it was not granted political autonomy until 1839 under King William I of the Netherlands, who also was the Grand Duke of Luxembourg. In 1867, Luxembourg was recognized as independent and guaranteed perpetual neutrality. After being occupied by Germany in both World Wars, Luxembourg abandoned neutrality and became a charter member of the North Atlantic Treaty Organization (NATO) in 1949. It is also one of the six original members of the European Union, formed in 1951 as the European Coal and Steel Community (ECSC).

The present sovereign, Grand Duke Henri, succeeded his father, Grand Duke Jean, on October 7, 2000. Grand Duke Jean announced his decision to abdicate in December 1999, after a 35-year reign.

The national language of Luxembourg is Luxembourgish, a blend of Dutch, old German, and Frankish elements. The official language of the civil service, law, and parliament is French, although criminal and legal debates are conducted partly in Luxembourgish and police case files are recorded in German. German is the primary language of the press. French and German are taught in the schools, with German spoken mainly at the primary level and French at the secondary level. In addition, English is taught in the local high schools. Most Luxembourgers, as a result, speak English with some level of fluency.

GOVERNMENT

Luxembourg has a parliamentary form of government with a constitutional monarchy by inheritance. Under the constitution of 1868, as amended, executive power is exercised by the Grand Duke and the Council of Government (cabinet), which includes the prime minister, who serves as head of government. The prime minister is the leader of the political party or coalition of parties having the most seats in parliament, known as the Chamber of Deputies.

Legislative power is vested in the Chamber of Deputies, the members of which are elected directly to 5-year terms. A second body, the “Conseil d’Etat” (Council of State), composed of 21 ordinary citizens appointed by the Grand Duke, advises the Chamber of Deputies in the drafting of legislation. The Council's opinions have no binding effect, and the responsibilities of its members are in addition to their normal professional duties.

Luxembourg law is a composite of local practice, legal tradition, and French, Belgian, and German systems. The apex of the judicial system is the Superior Court, whose judges are appointed by the Grand Duke.

Principal Government Officials

Last Updated: 2/1/2008

Grand Duke: HENRI

Prime Min.: Jean-Claude JUNCKER

Dep. Prime Min.: Jean ASSELBORN

Min. of Agriculture, Viticulture, & Rural Development: Fernand BODEN

Min. for Communications: Jean-Louis SCHILTZ

Min. of Culture, Higher Education, & Research: Francois BILTGEN

Min. of Defense: Jean-Louis SCHILTZ

Min. for Development Cooperation & Humanitarian Affairs: Jean-Louis SCHILTZ

Min. of Economy & Foreign Trade: Jeannot KRECKE

Min. of Environment: Lucien LUX

Min. of Equality of Opportunity: Marie-Josee JACOBS

Min. of Family & Integration: Marie-Josee JACOBS

Min. of Finance: Jean-Claude JUNCKER

Min. of Foreign Affairs & Immigration: Jean ASSELBORN

Min. of Health & of Social Security: Mars DI BARTOLOMEO

Min. of Interior & of Land Management: Jean-Marie HALSDORF

Min. of Justice: Luc FRIEDEN

Min. of Labor & Employment: Francois BILTGEN

Min. of the Middle Class, of Tourism, & of Housing: Fernand BODEN

Min. of National Education & Professional Training: Mady DELVAUX-STEHRES

Min. of Civil Service & of Admin. Reform: Claude WISELER

Min. of Public Works: Claude WISELER

Min. of Religious Sects: Francois BILTGEN

Min. of Sports: Jeannot KRECKE

Min. of State: Jean-Claude JUNCKER

Min. of Transportation: Lucien LUX

Min. of Treasury & the Budget: Luc FRIEDEN

Min.-Del. for Foreign Affairs & Immigration: Nicolas SCHMIT

Sec. of State for Agriculture, Viticulture, & Rural Development: Octavie MODERT

Sec. of State for Culture, Higher Education, & Research: Octavie MODERT

Sec. of State for Relations With Parliament: Octavie MODERT

Chmn., Luxembourg Central Bank: Yves MERSCH

Ambassador to the US: Joseph WEYLAND

Permanent Representative to the UN, New York: Jean-Marc HOSCHEIT

The Embassy of the Grand Duchy of Luxembourg in the United States is located at 2200 Massachusetts Avenue NW, Washington, DC 20008 (tel. 202-265-4171), www.luxembourg-usa.org.

Consulates of Luxembourg are located in Atlanta, Boston, Chicago, Cleveland, Dallas, Detroit, Fort Worth, Indianapolis, Kansas City, Los Angeles, Miami, New Orleans, New York, Portland, San Francisco, Seattle, and St. Paul.

POLITICAL CONDITIONS

Luxembourg's political system has a strong local focus. National politicians very often begin their careers and establish their base serving as mayors, and members of the Chamber of Deputies are elected from one of four regions. The political culture favors consensus, and the parties coexist within the context of broad agreement on key issues, including the value of deep European integration.

Since the end of World War II the Christian Social Union (CSV) has been part of the governing coalitions and usually the dominant party. The only exception was from 1974-1979 when the CSV was in opposition to a governing coalition led by the Democratic Party (DP). The CSV resembles Christian democratic parties in other west European countries and enjoys broad popular support. Its leader, Prime Minister Jean-Claude Juncker, in power since 1995, is the longest serving head of government in the European Union.

The Socialist Party (LSAP) is a center-left party similar to most social democratic parties in Europe. Initially founded by a worker's movement and a main defender of universal suffrage in 1919, the LSAP defends state intervention in the economy and the sustainability of the welfare system. Part of the government from 1984 to 1999, it lost its junior coalition status to the Democratic Party but regained it in the 2004 elections. While in the opposition, the LSAP voiced opposition to U.S. action in Iraq.

The Democratic Party (DP) is a center-right party, drawing support from civil servants, the professions, and urban middle class. Like other west European liberal parties, it advocates both social legislation and minimum government involvement in the economy. It also is strongly pro-NATO. In the opposition from 1984 to 1999, the DP overcame the LSAP to claim the role of junior partner in the government from 1999-2004. It is currently again in the opposition. The Green Party has received growing support since it was officially formed in 1983. It opposes both nuclear weapons and nuclear power and supports environmental and ecological preservation measures. This party generally opposes Luxembourg's military policies, but it has shown some openness to peacekeeping missions. National elections are held at least every five years and municipal elections every six years. In the June 2004 parliamentary elections the CSV won 24 seats, the LSAP 14, the DP 10, the Greens 7, and the ADR 5. The ADR (Alternative Democratic Reform Party) when elected was known as the Action Committee for Democracy and Pension Rights. It now has only four members in the parliament after one member recently left the party and declared himself an independent.

ECONOMY

While Luxembourg is aptly described as the “Green Heart of Europe” in tourist literature, its pastoral land coexists with a highly industrialized and export-intensive economy. Luxembourg enjoys a degree of economic prosperity almost unique among industrialized democracies.

In 1876, English metallurgist Sidney Thomas invented a refining process that led to the development of the steel industry in Luxembourg and the founding of the Arbed company in 1911. In 2001, Arbed merged with Aceralia and Usinor to form Arcelor, which is headquartered in Luxembourg. Five years later, the company announced the acquisition of Canada's largest steel manufacturer, Dofasco. In June 2006, Arcelor merged with Mittal Steel to become Arcelor-Mittal, the largest steelmaker in the world. The company now produces 10% of the world's steel output. The iron and steel industry in Luxembourg comprises approximately 11% of the overall economy.

During the past few decades there has been a relative decline in the steel sector, offset by Luxembourg's emergence as a major financial services center. The overall services sector in 2005 comprised 83.3% of Luxembourg's GDP with it employing, in terms of percentage of workers, 78% of the labor force. The financial sector in 2005 continued to grow and made up 11% of Luxembourg's total labor force making it identical in size to the industrial labor force. In 2006 there were 156 banks in Luxembourg employing 24,752 people. Political stability, good communications, easy access to other European financial centers, skilled multilingual staff, and a tradition of banking secrecy have contributed to the growth of the financial sector. German banks represent the largest number, with Italian, French, Swiss, Belgian, American, and Japanese banks also heavily represented. Total banking assets in 2005 were $1 trillion. The funds industry is the second largest in the world after the U.S. with $2.158 trillion in domiciled funds.

Government policies promote the development of Luxembourg as an audiovisual and communications center. Radio-Television-Luxembourg is Europe's premier private radio and television broadcaster. The government-backed Luxembourg satellite company Societe Europeenne des Satellites (SES) was created in 1986 to install and operate a satellite telecommunications system for transmission of television programs throughout Europe. The first SES “ASTRA” satellite, a 16-channel RCA 4000, was launched by Ariane rocket in December 1988. SES presently operates 12 satellites. ASTRA 1H is an advanced satellite with a return channel capacity in the Ka band frequency range enabling two-way satellite communications directly to users’ terminals.

Luxembourg offers a favorable climate to foreign investment. Successive governments have effectively attracted new investment in medium, light, and high-tech industry. Incentives cover taxes, construction, and plant equipment. The recent European Union (EU) directive on services supplied electronically has caused a number of companies to look to Luxembourg, with its relatively low value-added tax (VAT) rates, as a possible location for directing their European operations. U.S. firms are among the most prominent foreign investors, producing tires (Goodyear), chemicals (Dupont), glass (Guardian Industries), and a wide range of industrial equipment. The Department of Commerce's Bureau of Economic Analysis reports that total U.S. direct investment in Luxembourg (on a historical cost basis) was nearly $72 billion at the end of 2005. Foreign direct investment (FDI) data for Luxembourg must be interpreted cautiously, however, because of Luxembourg's role in financial intermediation, particularly involving Luxembourg-based holding companies. Labor relations have been peaceful since the 1930s. Most industrial workers are organized by unions linked to one of the major political parties. Representatives of business, unions, and government participate in the conduct of major labor negotiations. Unemployment in 2006 was 4.1%, up from 3.9% two years earlier. Luxembourg's small but productive agricultural sector employs 1% of the total labor force, a typical figure for a highly developed country. Most farms produce milk, meat, and foraging crops. Timber is another important sector. Luxembourg, being a part of the Moselle region, produces outstanding white wines.

Due to its powerful services sector, Luxembourg maintains a favorable current account balance, with a $4.63 billion surplus in 2006. Government finances have deteriorated over the past few years, with a 2006 budget deficit of $552 million.

FOREIGN RELATIONS

Luxembourg has long been a prominent supporter of European political and economic integration. In efforts foreshadowing European integration, Luxembourg and Belgium in 1921 formed the Belgium-Luxembourg Economic Union (BLEU) to create an inter-exchangeable currency and a common customs regime. Luxembourg is a member of the Benelux Economic Union and was one of the founding members of the European Economic Community (now the European Union). It also participates in the Schengen Group, whose goal is the free movement of citizens among member states. At the same time, Luxembourgers have consistently recognized that European unity

makes sense only in the context of a dynamic, transatlantic relationship and have traditionally pursued a pro-NATO, pro-U.S. foreign policy.

Luxembourg is the site of the European Court of Justice, the European Court of Auditors, European Investment Bank, and other vital EU organs. The Secretariat of the European Parliament is located in Luxembourg, but the Parliament usually meets in nearby Strasbourg. Luxembourg held the EU Presidency in the first half of 2005. Luxembourg budgeted $291 million for official development assistance (ODA) in 2007, or about 0.84% of its GNI. This places Luxembourg among the top three donor nations in the world, if calculated by percentage of GNI; Luxembourg has stated that it has a goal of eventually reaching 1% of GNI for its ODA.

DEFENSE

The Luxembourg Army is under civilian control. The country has no navy or air force. A 1967 law made the army an all-volunteer force with current strength of approximately 430 professional soldiers, about 340 enlisted recruits, and 110 civilians. A 2002 law now allows EU citizens, under certain conditions, to join the Luxembourg Army.

In 2005 Luxembourg spent approximately $310 million on defense, or about 0.85% of GDP. Luxembourg has participated in the European Corps (EUROCORPS) since 1994 and has contributed troops to UNPROFOR, IFOR, SFOR, and KFOR missions in the former Yugoslavia. Presently Luxembourg has one officer serving in Bosnia-Herzegovina with the European Union's ALTHEA mission and, until May 2007, a 26-person reconnaissance platoon deployed in Kosovo as its contribution to KFOR. Luxembourg also has nine soldiers in Afghanistan integrated into the Belgian forces deployed there. Luxembourg continues to take part in EU and NATO sponsored missions in Africa. Luxembourg has committed to sending a team of de-mining experts to participate in UNIFIL in Lebanon. Luxembourg has participated in the European Corps (EUROCORPS) since 1994 and has contributed troops to the UNPROFOR, IFOR, and KFOR missions in the former Yugoslavia. It has also participated with a small contingent in the NATO SFOR mission in Bosnia and currently participates in the NATO ISAF mission in Afghanistan. Luxembourg financially supported international peacekeeping missions during the 1991 Gulf War and in Rwanda and Albania and has provided humanitarian aid to Iraq. The army also has participated in humanitarian relief missions such as setting up refugee camps for Kurds and providing emergency supplies to Albania.

U.S. RELATIONS

Luxembourgers are deeply appreciative of the sacrifices made by Americans, leading to the country's liberation in the two World Wars of the 20th century. More than 5,000 American soldiers, including Gen. George S. Patton, are buried at the American Military Cemetery near the capital, and there are monuments in many towns to American liberators. The strong U.S.-Luxembourg relationship is expressed both bilaterally and through common membership in NATO, the Organization for Economic Cooperation and Development (OECD), and the Organization for Security and Cooperation in Europe (OSCE).

Principal U.S. Embassy Officials

Last Updated: 2/19/2008

LUXEMBOURG (E) 22 Blvd. Emmanuel Servais, APO/FPO Unit 1410, APO, AE09126-1410, (352) 460-123, Fax +352-461-401, INMARSAT Tel 881631437351 (Iridium), Work-week: M-F 0830-1730, Website: http://luxembourg.usembassy.gov.

TRAVEL

Consular Information Sheet

October 3, 2007

Country Description: Luxembourg is a highly developed, stable constitutional monarchy and parliamentary democracy. Tourist facilities are widely available.

Entry Requirements: A passport is required. A visa is not required for American citizens for business or tourist stays of up to 90 days. That period begins when you enter any of the Schengen group of countries: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Iceland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, and Sweden. Luxembourg is a member of the Schengen group within the European Union. No immunization is necessary. For further information concerning entry requirements for Luxembourg, travelers may contact the Embassy of Luxembourg at 2200 Massachusetts Ave. NW, Washington, DC 20008, phone: (202) 265-4171 or 4172, or the Luxembourg Consulate General in New York, phone: (212) 888-6664 or in San Francisco, phone: (415) 788-0816. Visit the Embassy of Luxembourg web site at http://www.luxembourg-usa.org for the most current visa information.

Note: Although European Union regulations require that non-EU visitors obtain a stamp in their passport upon initial entry to a Schengen country, many borders are not staffed with officers carrying out this function. If an American citizen wishes to ensure that his or her entry is properly documented, it may be necessary to request a stamp at an official point of entry. Under local law, travelers without a stamp in their passport may be questioned and asked to document the length of their stay in Schengen countries at the time of departure or at any other point during their visit, and could face possible fines or other repercussions if unable to do so.”

Safety and Security: Terrorist incidents are rare in Luxembourg. However, like other countries in the Schengen area, Luxembourg's open borders with its Western European neighbors could allow the possibility of terrorist groups to enter/exit the country unnoticed.

Prior police approval is required for public demonstrations in Luxembourg, and police oversight is routinely provided to ensure adequate security for participants and passersby. Nonetheless, situations may develop which could pose a threat to public safety. U.S. citizens are advised to avoid areas where public demonstrations are taking place.

For the latest security information, Americans traveling abroad should regularly monitor the Department of State, Bureau of Consular Affair's Internet site at http://travel.state.gov, where the current Travel Warnings and Travel Alerts, including the Worldwide Caution Travel Alert, can be found. Up-to-date information on safety and security can also be obtained by calling 1-888-407-4747 toll free in the U.S. and Canada, or for callers outside the U.S. and Canada, a regular toll-line at 1-202-501-4444.

Crime: The crime rate in Luxembourg is moderate when compared to other European countries. The predominant form of crime in Luxembourg is the non-violent theft of valuables through snatching of purses/bags or more sophisticated breaking and entering of unoccupied homes. Travelers should take commonsense precautions while in Luxembourg. In particular, travelers should be especially cautious while in public areas, the airport and train terminals, where pickpockets can be a problem. Luxembourg has many public parks that are safe during the daylight hours, though the volume of low-level drug dealing has increased in some of the city parks. Tourists should, however, avoid these parks after dark due to the higher risk at night. During the summer season, Americans should be particularly alert to purse snatchings and confidence scams targeting tourists.

Information for Victims of Crime: The loss or theft abroad of a U.S. passport should be reported immediately to the local police and the nearest U.S. Embassy or Consulate. If you are the victim of a crime while overseas, in addition to reporting to local police, please contact the nearest U.S. Embassy or Consulate for assistance. The Embassy/Consulate staff can, for example, assist you to find appropriate medical care, contact family members or friends and explain how funds could be transferred. Although the investigation and prosecution of the crime is solely the responsibility of local authorities, consular officers can help you to understand the local criminal justice process and to find an attorney if needed. Luxembourg judicial authorities provide information, legal advice and psychological counseling at no charge to victims of crime (adults and children). Address: Service d'aide aux victimes, Parquet Général, Galerie Kons, 24-26, place de la Gare, L-1616 Luxembourg. Phone: (352) 475821, extension 625, 627 or 628 Monday-Friday 8am-12pm and 2pm-6pm, in an emergency call (352) 621326595 Monday-Friday 8am-7pm.

Medical Facilities and Health Information: Medical facilities are widely available. In an emergency, dial 112 for an ambulance or in case of fire; dial 113 for the police. Hospitals in Luxembourg operate on a 24-hour rotation system. The on-call emergency room can be determined by calling 112. Patients may self-refer to any clinic Monday-Friday between 8am-5pm. In Luxembourg City, three major hospitals offer comprehensive general medical and surgical treatment, as well as specialized care in orthopedics, cardiology and psychiatry. In addition, there are two pediatric clinics and two obstetric clinics in Luxembourg City. Hospitals also exist in the south of the country (Esch-sur-Alzette) and in the north (Wiltz). For more specialized care, including major burns, transfer to a regional burn center in Belgium or France is necessary.

Most drugstores are located in the city of Luxembourg but can also be found throughout the country in all major communes. Drugstores operate on a 24-hour rotation system for after-hours services, including emergency prescriptions. The on-call pharmacy is listed daily in the local newspaper or can be determined by calling 112. A doctor's prescription is sometimes necessary for drugs that are sold over the counter in the United States.

Information on vaccinations and other health precautions, such as safe food and water precautions and insect bite protection, may be obtained from the Centers for Disease Control and Prevention's hotline for international travelers at 1-877-FYI-TRIP (1-877-394-8747) or via the CDC's website at http://wwwn.cdc.gov/travel. For information about outbreaks of infectious diseases abroad consult the World Health Organization's (WHO) web site at http://www.who.int/en. Further health information for travelers is available at http://www.who.int/ith/en.

Medical Insurance: The Department of State strongly urges Americans to consult with their medical insurance company prior to traveling abroad to confirm whether their policy applies overseas and whether it will cover emergency expenses such as a medical evacuation.

Traffic Safety and Road Conditions: While in a foreign country, U.S. citizens may encounter road conditions that differ significantly from those in the United States. The information below concerning Luxembourg is provided for general reference only, and may not be totally accurate in a particular location or circumstance.

Luxembourg has a modern, well-maintained system of highways and secondary roads. Road signs and markings are clear and, as applicable, worded in French. Streets in the city, construction sites and crossroads are well illuminated at night. On highways, a digital alert system warns drivers of incidents or detours. Roads leading into and out of Luxembourg City are congested during the morning and evening rush hour. Visitors should drive defensively in highvolume commuter traffic. During the fall and winter, fog and ice can cause sudden slowdowns on highways and secondary roads.

In case of a car accident involving injury or dispute, it is advisable for a foreigner to call the police at 113. The police will make an official assessment of the accident's circumstances that can consequently be used if further legal action becomes necessary.

The daily mix of drivers from Luxembourg and its three neighboring countries results in a variety of driving practices and courtesies. While most drivers respect speed limits, traffic signals, and rules, others do not. Vehicle maintenance for cars registered in Luxembourg is controlled by the mandatory yearly car inspection; police can perform random road checks at any time. The possibility of encountering an intoxicated driver increases on weekends, especially during the late evening hours. Driving while intoxicated may result in penalties including imprisonment from 8 days up to two years plus a fine of 251 to 5000 Euros (approximately US$300 to US$6,000).

Public transportation throughout the country, including bus services and taxis, is highly developed and is considered very safe. Emergency road services in Luxembourg are excellent. For breakdown and towing service call the ACL (Automobile Club Luxembourg) at 26000 or see the web site at www.acl.lu. In case of an accident, call 112 for a medical emergency and 113 for the police. Visit the web site of the Luxembourg's national tourist office at www.ont.lu and the Luxembourg police at www.police.public.lu.

Aviation Safety Oversight: The U.S. Federal Aviation Administration (FAA) has assessed the Government of Luxembourg's Civil Aviation Authority as being in compliance with International Civil Aviation Organization (ICAO) aviation safety standards for oversight of Luxembourg's air carrier operations. For more information, travelers may visit the FAA's web site at http://www.faa.gov.

Special Circumstances: Luxembourg customs authorities may enforce strict regulations concerning temporary importation into or export from Luxembourg of items such as live animals, plants, endangered species, medication (except for personal use), firearms and ammunition, cultural artifacts, alcoholic beverages, and tobacco products. It is advisable to contact the Embassy of Luxembourg in Washington or one of Luxembourg consulates in the United States for specific information regarding customs requirements. The amount of imported currency is not limited. The Euro is the official currency in Luxembourg, and at the same time the valid currency in several other European countries. Luxembourg does not allow dual nationality. When obtaining Luxembourg nationality either through option or naturalization, the former nationality must be renounced.

Criminal Penalties: While in a foreign country, a U.S. citizen is subject to that country's laws and regulations, which sometimes differ significantly from those in the United States and may not afford the protections available to the individual under U.S. law. Penalties for breaking the law can be more severe than in the United States for similar offenses.

Persons violating Luxembourg's laws, even unknowingly, may be expelled, arrested or imprisoned. Penalties for possession, use, or trafficking in illegal drugs in Luxembourg are severe, and convicted offenders can expect long jail sentences and heavy fines. Engaging in sexual conduct with children or using or disseminating child pornography in a foreign country is a crime, prosecutable in the United States.

Children's Issues: For information on international adoption of children and international parental child abduction, see the Office of Children's Issues website at http://travel.state.gov/family.

Registration and Embassy Locations: Americans living or traveling in Luxembourg are encouraged to register with the nearest U.S. Embassy or Consulate through the State Department's travel registration web site so that they can obtain updated information on travel and security within Luxembourg. Americans without Internet access may register directly with the nearest U.S. Embassy or Consulate.

By registering, American citizens make it easier for the Embassy or Consulate to contact them in case of emergency. The U.S. Embassy is located at 22, Blvd Emmanuel Servais, L-2535 Luxembourg City, phone: (352) 46 01 23 (available 24/7), fax: (352) 46 14 01. Consular Section phone: (352) 46 01 23 -22 13, Consular Section fax: (352) 46 19 39, email: LuxembourgConsular@state.gov.

The U.S. Embassy's Internet home page is http://luxembourg.usembassy.gov.

International Adoption

July 2006

The information in this section has been edited from a report of the State Department Bureau of Consular Affairs, Office of Overseas Citizens Services.

For more information, please read the International Adoption section of this book and review current reports online at http://travel.state.gov/family.

Disclaimer: The information in this flyer relating to the legal requirements of specific foreign countries is based on public sources and current understanding. Questions involving foreign and U.S. immigration laws and legal interpretation should be addressed respectively to qualified foreign or U.S. legal counsel.

Please Note: Few children are adopted from Luxembourg. This flyer contains information on how to adopt from third countries if residing in Luxembourg.

Patterns of Immigration: Please review current reports online at http://travel.state.gov/family.

Adoption Authority: The government authority which oversees intercountry adoption in Luxembourg is:

Ministry of Family and Integration
Department of Adoption and Foster
Care
12-14 avenue Emile Reuter
L-2420 Luxembourg
Tel: +352 478 6566
Fax: +352 24 18 87
Email: Jacques.kuntziger@fm.etat.lu
(Head of Department)

Eligibility Requirements for Adoptive Parents: Only married couples can adopt. One parent must be at least 25 years of age and the other at least 21. The parents must be at least 15 years older than the child (except in the case of adoption of a stepchild by the spouse, only 10 years’ difference is required) and the child must not be older than 16. Both parents need to provide a medical certificate stating that neither of them nor anyone in the household suffers from a medical or mental condition that could negatively affect the child. A child of 16 or older can still be adopted, but it will only be a'simple’ adoption as explained below. However, the child will not qualify for U.S. immigrant visa.

Residency Requirements: According to article 370 of the law on adoption from June 13, 1989 adoption is open to Luxembourg citizens and foreigners. Foreign prospective parents have to fulfill the requirements for adoption as prescribed by the laws of their country. The Luxembourgish court presiding over the adoption will in fact verify that the parents fulfill all requirements for adoption in their own country and that the laws in the country of the child are respected.

In order for a Luxembourg court to decide on an adoption case, either the child or the prospective adoptive parents must reside in Luxembourg. There is no minimum period for this residency requirement. If the parents are not Luxembourg citizens, they must fulfill the requirements of their native country and demonstrate that they are eligible to adopt. If the parents do not have the same nationality and neither of them has Luxembourg nationality but are resident in Luxembourg, Luxembourg law will be applied.

Time Frame: It usually takes about two years to complete an adoption, from the moment the parents start gathering the paperwork to be approved until they adopt a child.

Adoption Agencies and Attorneys: Adoption agencies must be licensed by the Luxembourg Government. Parents must use licensed agencies in order to get a residence permit for the child when he/she arrives from the country of origin. Please see the Hague Permanent Bureau web site for a list of accredited agencies for Luxembourg http://www.hcch.net.

Adoption Fees: The total fee for adoption covers is around 10,000 Euros; this covers the entire process, including medical expenses, adoption agency fees and notarials. The Luxembourg government subsidizes half of this total so prospective parents pay about 5.000 Euros.

Domestic adoption in Luxembourg: An adoption can only take place if it is considered to be in the best interest of the child. There are two types of adoption in Luxembourg, “pléniére” (plenary) and “simple”. In a plenary adoption, the adopted child loses all ties to his or her biological parents and receives the same hereditary rights as any children born to the adoptive parents. This form of adoption is irrevocable. In the case of'simple’ adoption the child usually lives with the adopted family and takes the name of the adopted family. But the child keeps his/her hereditary rights and is still entitled to any child support or alimony paid to the biological family. The child sometimes keeps his/her original nationality. This form of adoption can be revoked if it is considered to be in the best interest of the child.

Intercountry Adoption to Luxembourg: Prospective adoptive parents first contact the adoption agency dealing with the country from which they wish to adopt a child. The agency then compiles a file on the aptitude and eligibility of the parents, and assembles all the required documentation.

For adoptions from countries not party to the Hague Adoption Convention, the case file is sent to the country of origin of the child. The Luxembourgish court deciding on the adoption will only make its decision once the parents have returned to Luxembourg with the child and after examining the child's original birth certificate, the adoption decree from the country of origin and the letter of consent/abandonment from the biological parents. There is no guarantee that the Luxembourg court will make a favorable decision on the adoption.

For an adoption from a country party to the Hague Adoption Convention, the adoption agency will compile a report, which the parents submit along with the rest of the file to the Luxembourg court deciding in the case. For adoptions from countries party to the Hague Adoption Convention, the Luxembourgish court only intervenes in the process of finding the parents eligible for adoption.

The Luxembourgish court accepts the judgment from the country of origin of the child and the adoption is recorded with the civil authorities. If the agency does not find the prospective adoptive parents eligible for adoption it can refuse to compile a report. If the court finds the parents eligible, the parents can contact the Ministry of Family for transmittal of the case file to the appropriate authorities of the country they wish to adopt from. All files concerning adoptions in countries party to the Hague Convention must go through the Ministry of Family.

Required Documents: The list of documents to be submitted varies from country to country. The following documents must be submitted if the parents wish to adopt a Luxembourgish child:

• Police record (Extrait de casier judiciaire). This is required even if the record is negative.
• Certificate of voter registration; or consular affidavit of nationality; or certified copy of passport or national ID card.
• Birth certificate of prospective adoptive parents.
• Medical certificate, less than three months old, certifying that neither of the parents nor anyone in their household suffers from a medical or mental condition that could harm the child.
• Marriage license.
• Medical certificate of the prospective adoptive child, less than three months old, certifying that there are no health-related reasons for which he/she should not be adopted.
• Proof of residence for the adoptive parents and proof of residency for the child.

Embassy of the Grand-Duchy of Luxembourg
2200 Massachusetts Avenue,
NW, Washington, DC 20006
Tel. 202-265-4171
Fax: (202) 328-8270
Email: washington.info@mae.etat.lu
http://www.luxembourg-usa.org

U.S. Immigration Requirements: Prospective adoptive parents are strongly encouraged to consult USCIS publication M-249, The Immigration of Adopted and Prospective Adoptive Children, as well as the Department of State publication, International Adoptions.

Please see the International Adoption section of this book for more details and review current reports online at http://travel.state.gov/family.

U.S. Embassy 22, Boulevard E. Servais
L-2535 Luxembourg
Phone: +352-460123
/ 2213 Fax: +352-461939
http://luxembourg.usembassy.gov

Additional Information: Specific questions about adoption in Luxembourg may be addressed to the U.S. Embassy in Luxembourg. General questions regarding intercountry adoption may be addressed to the Office of Children's Issues, U.S. Department of State, CA/OCS/CI, SA-29, 4th Floor, 2201 C Street, NW, Washington, D.C. 20520-4818, toll-free Tel: 1-888-407-4747.