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1. About Luxembourg

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.

Population

Nationality: Luxembourger(s).
Population (2007): 494.000,
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.
Religion: Historically and predominantly Roman Catholic. However, Luxembourgian law forbids the collection of data on religious practices.
Official languages: Luxembourgish, French, and German; English is widely spoken.

Governement

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’État" (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.

Currency

EUR (Euro) offical currency.

All major currencies (USD; GBP; CHF can be exchanged in any bank)

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 was headquartered in Luxembourg. In 2005, Arcelor acquired 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 Société Européenne 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 4.5%, 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.

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