12 Danielle Bossaert Luxembourg: Flexible and Pragmatic Adaptation

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12 Danielle Bossaert Luxembourg: flexible and pragmatic adaptation

Participating in European integration to strengthen national autonomy1 With 406,000 inhabitants and a surface area of 2.586 km2, Luxembourg is by far the smallest Member State of the European Union. The highly positive attitude of the Luxembourg people towards the Union, expressed, for example, in the Eurobarometer surveys which are carried out on a regular basis, can be explained not merely by Luxembourg’s history, but also by the specific characteristics related to its small size. In this sense, the European Union as a community of peace contributed substantially to both strengthening Luxembourg’s oft-challenged national autonomy2 and to compensating for the disadvantages of the small national market. As one of the founding states, Luxembourg has gained many advantages from membership of the Union which have quite significantly contributed to a strengthening of its own sovereignty. In particular, those elements of the Union’s ‘architecture’ which are based on the principle of suprana- tionality, which guarantee rights of participation and co-decision for the smaller states, have contributed considerably to ensuring that Luxembourg has an influence disproportionate to its size. Normally, an isolated state such as Luxembourg – which has no political weight to speak of, has few natural resources and is more than 95 per cent dependent on imports and exports – would hardly be noticed as a sovereign state in European and international circles. In this context, the other Member States now recognise and respect the Grand Duchy as a partner, not least because of the active presence and willingness to participate of Luxembourg politicians, diplomats and public servants in the European Council, the Council of Ministers and its related expert groups. This also helps Luxembourg to better protect and look after its own vital interests. Since the beginning of the integration process, political parties and interest groups consider EU membership an unquestionable necessity for reasons related to security policy and economy. In this context it is also interesting to note that in recent years the employees’ organisations have

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become aware of the advantages of better mutual consultation. Thus, in 1996 the two largest trade unions, the socialist OGBL (Onofhëngege Gewerkschaftsbond Lëtzëbuerg) and the Christian LCGB (Lëtzëbuerger Chrëschtleche Gewerkschaftsbond), established a joint office in order to better safeguard Luxembourg’s interests within the ETUC. Both parties in the government (the Christian Social Party and the Democratic Party) as well as the main opposition parties (the Socialist Party and the green parties) openly follow a course in favour of integration. Accordingly, the deepening of the European integration process is carried by a broad consensus. For instance, Luxembourg was one of the first states to ratify the Maastricht Treaty by a large majority, and thus openly demonstrated its deep commitment to the introduction of a single European currency, a CFSP and progress in the JHA area. However, even the smallest Member State is sometimes susceptible to reservations about the idea of integration. In particular, the concept of citizenship of the European Union, which was introduced by the Maastricht Treaty, according to which EU citizens have the right to vote and to stand as candidates in municipal and European elections through- out the Union, caused alarm about foreign domination among the Luxembourg population. It was feared that this might jeopardise the peaceful co-existence of the Luxembourg and foreign population and that this right could change the current political balance of power.3 Later, however, this concern, which was connected with the fear of losing national identity, proved to be unfounded, especially since only a few EU citizens exercised this right. As the smallest Member State, Luxembourg is quite sensitive on matters that directly affect its extremely vulnerable economic structure and its most important sectors such as finance, the iron and steel indus- try, etc. Luxembourg therefore does not support harmonisation efforts at any price in the field of taxes or the introduction of capital gains tax. Two other key national interests concern the question of the seats of the European institutions and the observance of the principle of equal rights as regards representation in these institutions. Nevertheless, despite these sensitivities, the strongly pro-European attitude of the Luxembourg population is primarily based on the view that its national interests are best looked after in a supranational community of solidarity and common values. Indicative of this is the fact that the ratification of the last two EU treaties (Maastricht in 1992, Amsterdam in 1997) did not encounter any insurmountable constitutional problems. Since 1956, the transfer of sovereign rights to a supranational community has been regulated by Article 49a of the Luxembourg Constitution, which stipulates that competences reserved for legislative, executive and judiciary powers can be temporarily transferred by treaty to institutions under international law. The right of EU citizens to vote and stand for election at municipal and

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European levels, as introduced by the Maastricht Treaty, was the only change requiring Articles 52 and 107 of the Constitution to be amended.

Luxembourg’s policy priorities in the Union: active deepening and discrete mediating Luxembourg’s policy regarding the Union shows an exceptionally high degree of continuity. Apart from some minor shifts of emphasis, which are mainly caused by the different personalities of the leading politicians, there has hardly been any difference between the principal European policies of the Christian Social governments under Pierre Werner (1959–74; 1979–84), Jacques Santer (1984–95) and Jean-Claude Juncker (since 1995), and those of Gaston Thorn’s Democratic government (1974–79). With their clearly pro-European attitudes, these governments have contributed considerably to strengthening and promoting further integration. For example, in the early 1990s, it was the proposal developed under the Luxembourg Presidency, which was strongly oriented towards political compromise between the United Kingdom and the other Member States, which prevailed over the far more idealistic Dutch plan and served as a basis for the formulation of the Maastricht Treaty. Prominent Luxembourg politicians such as Joseph Bech, in the early years, made great contributions to the further development of the European integration process as active co-developers or discrete media- tors. In this respect it is worth mentioning the three-stage plan to build EMU, developed in the 1970s under the leadership of Pierre Werner, as this played an important role in the field of financial policy. In the late 1990s, the negotiating skills of the Prime Minister Jean-Claude Juncker brought about German–French agreement at a time when the stability pact on budget deficits was being developed, and thus helped to further EMU. Luxembourg’s European policy focuses primarily on a deepening of the integration process while safeguarding vital national interests. During the 1996–97 IGC, the government supported first and foremost the consolidation of the Internal Market through the introduction of EMU and the reinforcement of the second and third pillars. However, it vigorously opposed both a Europe à la carte and any weakening of the European Commission. Jean-Claude Juncker has particularly favoured monetary union, to which he committed himself with great perseverance and which is considered in the Grand Duchy as an indispensable prelimi- nary stage for a CFSP. Of course, with respect to this close co-operation on monetary policy, we should not overlook the fact that the establishment of the ECB has given Luxembourg a considerably greater say in matters than it has ever had before, especially when considering that since its accession to the Belgian–Luxembourg Economic Union4 in 1921 it had given up part of its monetary sovereignty.5 In the Luxembourg government’s declaration on ratification of the Maastricht Treaty, former Prime

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Minister Jacques Santer stated that monetary union was significant for Luxembourg since it would now become a partner with equal rights in a Union managing a common currency and defining a common monetary policy.6 In contrast to larger countries such as Germany or France, which are characterised by extremely complex structures of domestic interests, the vital interests of a small state such as Luxembourg which, moreover, is spared from internal disputes as far as Luxembourg’s European policy is concerned, are less extensive. This of course has the advantage that in certain areas it may be more ready to compromise and can often act as mediator between conflicting interests. Looking to the future, a question that arises in particular for Luxembourg is that of its position within a European Union which will one day comprise twenty or more Member States, mostly from Central and Eastern Europe. In this context the Grand Duchy will of course be required to defend its position as an active founding member with the same rights and obligations as the large states. Consequently, during the 1996–97 IGC the government vehemently argued that – both now and in the future – all the Member States should be represented in all institutions (Council of Ministers, Commission, EP, ECJ, Court of Auditors, Presidency, etc.), so that they can actively participate in the decision- making process. Understandably, this topic is a high priority for the smallest Member State, all the more so since attempts were made in the run-up to the institutional reforms to reduce the disproportionately strong influence of small states. In this respect the Grand Duchy vigorously resists any attempts to marginalise its position, by unequivocally voicing its opinion on equal representation in the principal institutions. Hence, Luxembourg is not prepared to give up ‘its seat’ in the European Commission or its right to the rotating Presidency of the Council, while in essential areas such as treaty amendments, citizenship of the Union, taxes, accession, etc. it remains in favour of maintaining unanimity in the Council of Ministers. Another key element in Luxembourg’s European policy since the Juncker government came to power is the aim of achiev- ing better consultation with both Benelux partners, Belgium and the Netherlands, and to extend this to various policy areas in coming years.

The national policy-cycle: pragmatic and flexible adaptation to the EU treaties Luxembourg is a unitary central state with only two administrative levels (national and municipal) (Figure 12.1). Unlike most EU Member States, it has no regional or intermediate authorities. Without exception, EU policy is prepared, decided on and implemented centrally. In the consensus oriented democracy of Luxembourg, great importance is attached not only to the mostly informal involvement of the parliament in the decision-

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making process, but also to consultation and provision of information to the relevant interest groups, employees’ organisations, etc. in order where possible to find consensual solutions. Another important characteristic of political life in Luxembourg is its small size, which is apparent from the fact that the total staff of the public administration does not exceed 11,800 civil servants. This structural feature is naturally a determining factor, which affects the organisational capacities as well as the co-ordination mechanisms of the Grand Duchy. Some of the most distinctive characteristics will be discussed below.7

Decision-making processes at national level Perhaps the most striking characteristic of political life in Luxembourg is the manageability of relations. In this sense, nearly all decision-makers who deal with EU policy know each other personally. This almost daily and direct contact, along with Luxembourg’s democracy which is based on compromise, is advantageous insofar as the degree of bureaucratisa- tion in the co-ordination of the various ministries is much lower than in the larger states and in that the flow of paperwork stays within reasonable limits. For instance, the result of these simplified channels of communication is that Luxembourg has relatively few permanent and regularly meeting co-ordination structures. And where such interministerial bodies do exist, they are characterised particularly by the fact that they are linked to a direct interest, as in the case of an IGC, and that they are usually only of a temporary nature. Another feature is that co-operation between the various administrations in Luxembourg is characterised by a low degree of competitive behaviour, which can also be put down not only to the frequent consultations, but also to the fact that there are so few internal ‘cleavages’. Therefore, political decision-makers usually agree in principle that it is better for the country’s interests for them to agree on a negotiating position rather than block a national decision unnecessarily by stirring up interministerial rivalries.

Dominance of decentralised decision-making processes Owing to the closeness of the relationships, the hierarchical decision- making processes in Luxembourg are considerably shorter and more flexible than in larger states. Usually, the officials who are in charge of a certain EU dossier have a large degree of independence in their field and, when working within their ministry, they will generally co-operate with their minister, with whom they have direct contact in person or by tele- phone. Of course, this considerable ‘room for manoeuvre’ gives officials an enormous sense of responsibility and requires considerable expertise in their own field, all the more so since, owing to the limited staff resources, they often have to manage several fields at the same time. The result of the visibly growing number of working groups, expert committees and other

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bodies at EU level is therefore that civil servants participate in various groups on account of their many different functions. What characterises ideal Luxembourg officials is not so much their marked expert knowledge but mainly their broad education and ability to quickly familiarise themselves with new fields of work. Personnel shortages as well as the consensual development of the democracy have a decisive influence on the working style of the different administrations. In view of the additional workload associated with the advancing process of European integration, one of the main challenges for Luxembourg is to ensure a smooth and satisfactory functioning as regards the preparation, decision-making and implementation of EU policy, without, however, having to make unnecessary additions to the staff.8 So far the government has solved this dilemma mainly by taking a pragmatic and flexible approach, characterised by a distribution and organisation of tasks which is targeted primarily at respective requirements and not so much at strict observance of areas of competence and the exact application of rules.9 A good example of this style of adaptation according to practical needs is the Presidency of the EU Council of Ministers, whose successful management in Luxembourg is not merely the result of a tightly structured and well-organised administrative machinery, but also, and chiefly, of the flexible working methods, the strong motivation and positive work attitude of officials as well as the availability of young college graduates or diplomats currently abroad. A consequence of this flexible approach is that the Luxembourg administration has so far proved to be extremely resistant to fundamental organisational and procedural restructuring, and that the institutionalisation of co-ordinating bodies is far less advanced than it is, for example, in federal states which often have extremely complicated co-ordination mechanisms.

The government and the administration European policy in the consensual democracy of Luxembourg is formu- lated by coalition governments, which are characterised by extraordinary stability and continuity. The Prime Minister Jean-Claude Juncker (Chrëschtlech-Sozial Vollëkspartei, CSV), can already look back on more than fifteen years of experience in government, while Pierre Werner (CSV) was able to make his mark on the country as Prime Minister for a total of twenty years and Jacques Poos (Lëtzëbuerger Sozialistesch Arbëchter Partei, LSAP) led the Ministry of Foreign Affairs for a long period as well. Besides many years of extensive experience at EU level, another characteristic of Luxembourg’s decision-makers is the fact that they usually manage several important ministries. A good example of this multi- functional approach of Luxembourg politicians is again Juncker, who in the previous legislative period was the Minister of Employment, Minister of Finance and Prime Minister at the same time, and represented

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Luxembourg in these capacities in several important EU Councils of Ministers. This strong presence naturally gave him a deep insight into key decision-making processes. Despite the enormous workload, this combi- nation of key functions in a single person can be advantageous in that energy-consuming and decision-blocking rivalries and disputes over competences between these key ministries can be avoided. Nevertheless, Luxembourg has not been completely exempt from the question of competence in European policy in recent years. For instance, the coalition partner (LSAP) which held the post of Minister for Foreign Affairs, particularly criticised the Prime Minister’s overly strong interfer- ence in EU policy, arguing that he was overstepping his limits as primus inter pares. However, since the formation of the coalition government between the Christian Social Party (CSV) and the Democratic Party (Demokratesch Partei, DP) in June 1999, this question has again been pushed into the background. As a result of Luxembourg’s specific structural characteristics, the administration is characterised by a marked decentralisation and considerable autonomy on the part of the individual ministries. However, in 1993, with the appointment of a European Correspondent in all ministries, a first step seems to have been made towards better more formalised co-ordination in the implementation of EU law and a more efficient treatment of the European dossiers. Besides keeping track of major European issues, the responsibilities of European Correspondents also include monitoring the correct application of EU law. Most of the responsibility for preparing, deciding on and implementing EU dossiers rests with the competent ministries, while co-ordination lies within the scope of responsibility of the Ministry of Foreign Affairs.10 Although this ministry cannot exert control over other ministries, its role as a ‘go-between’ – scouting Luxembourg’s policy interests between the Permanent Representation in Brussels and the national administration – should not be underestimated. Important communications between the ‘technical’ ministries and the EU bodies usually go through the Ministry of Foreign Affairs. Commission proposals for EU legislation are sent to the competent ministry (or ministries) to be worked on. After the latter have added their comments to the dossier, the content of which now represents the official negotiating position of Luxembourg, sometimes including a special report from the Ministry of Foreign Affairs, it is passed on to the Permanent Representation. Where there are varying points of view between the ‘technical’ ministries, the Ministry of Foreign Affairs can call on an interministerial advisory body of senior civil servants, which is formed on an ad hoc basis, and which will then try to define a strategy. If agreement still cannot be reached or if the dossier in question is of such vital importance that it affects the national interest, the government’s Council of Ministers may become involved, which will then decide

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on Luxembourg’s position. Besides the weekly Council of Ministers meeting, the Union Committee (Comité de l’Union), which meets every two weeks under the chairmanship of the Ministry of Foreign Affairs, is the most important co-ordinating body in Luxembourg. At the meetings of this body, attended by ministers and their colleagues concerned with an item on the agenda, all topical issues (institutional questions, Agenda 2000, etc.) are discussed. In Luxembourg’s consensual democracy, interest groups affected by a directive on the Union’s rolling agenda are also consulted in the preparatory and decision-making phases. A new trend in recent years has been the improved consultation and co-ordination regarding Luxembourg’s national position as a result of increased informal consultation with the two Benelux partners. With regard to the 2000 IGC, the three partner states again wanted to lay out their common proposals in a memorandum concerning the further development of the Union. Their aim, of course, is not least to be able to better protect the interests of smaller countries within the institutional structure. In the decision-making phase, the national officials dealing with a dossier usually participate in the relevant working groups at European level with each official covering about two–three groups. The Ministry of Foreign Affairs sends about thirty-five of its total staff members11 to meetings in Brussels. The implementation of EU directives is a matter for the ministries in whose area of competence the contents of a directive or any other EU legal act fall. In accordance with the internal rules on the management of dossiers requiring implementing measures12 laid down by the Ministry of Foreign Affairs, the respective ministries are urged to ensure both that the act in question is correctly implemented and that time limits laid out in a directive are observed. According to the statistics, the Grand Duchy, with its implementation rate of 94.4 per cent, is now twelfth within the Union.13 This small distance behind its partners is partially due to a shortage of staff in the administrations, which has become particularly apparent during the Luxembourg Presidencies. Such a responsible and prestigious task demands so much of the administrative machinery of a small country that the entire routine legislative process relating to domestic policy slows down considerably during this time. In the case of actions for infringement of the EC Treaty,14 Luxembourg was sixth15 in 1998 with a total of eight cases, while in the period between 1953 and 1998 it was taken to court in eighty-six cases.16 So far, the new Treaties (Maastricht and Amsterdam) have given rise to some small organisational and institutional adjustments in Luxembourg. Judging from the coalition agreement of the new CSV–DP government,17 it is to be assumed that some additional adjustments will be made in the coming years, for example as regards interministerial co-ordination, co- operation between parliament and government, information and communications policy, etc.

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In the context of the establishment of EMU the conversion of the Luxembourg Monetary Institute (Institut monétaire luxembourgeois) into a Central Bank with the same competences and the same legal status as equivalent institutions in the other Member States, has been of paramount importance. The Monetary Institute in existence up to that point did not have all the competences of a central bank owing to Luxembourg’s monetary union with Belgium. All decisions concerning EMU fall within the jurisdiction of the Ministry of Finance, which also deals with tax policy in general and EU tax harmonisation in particular. In the Ministry of Foreign Affairs, the further development of a common foreign and security policy through the Treaty of Maastricht led to a limited expansion in order to cover the twenty-five working groups of the European Council. A very recent adjustment, which is not due to the increasing influence of European integration on the national level, but rather to the dissolution of the Ministry of Defence after the formation of the new government, concerns the transfer of the competence for defence policy from the Ministry of Defence to the Ministry of Foreign Affairs in order to do justice to the increasing importance of the defence policy dimension within the Union. Another adjustment brought about by the Maastricht Treaty was the transfer of the asylum and immigration policy from the Ministry of Foreign Affairs to the Ministry of Interior. However, as regards matters covered by pillar three and Schengen, for example, the Maastricht Treaty did not bring any major changes, and so these remained within the Ministry of Justice, according to the principle that the ministries covering a certain field of expertise at national level will be responsible for the same area at European level.

The Permanent Representation The Permanent Representation in Brussels has a key role when it comes to the formulation of Luxembourg’s European policy. Not only does it hold a high position within the Luxembourg administration, but the weight of its opinions also has considerable influence in the development of Luxembourg’s negotiating positions. With an average length of service of ten–fifteen years, most of the accredited diplomats in the Belgian capital have a thorough knowledge and considerable experience in the field of European affairs. The great value attached to the Permanent Representation by the Luxembourg government is also clear from its constant expansion and the considerable investments made in it.18 Since 1997 the Representation has a better infrastructure, as it has a seat in the House of Luxembourg19 near the EU institutions. Parallel to this development in terms of space, its staff has increased from approximately five diplomats in 1995 to a current total of twelve. All officials come from the Ministry of Foreign Affairs with the exception of a representative from the Ministry of Finance, a representative from the Ministry of

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Employment and Social Affairs, who deals exclusively with social affairs and labour market policy, a representative from the Ministry of Justice, who is responsible for the third pillar and a representative from the Ministry of Economic Affairs, whose work area covers all financial and fiscal affairs. During the presidencies, which are extremely labour-intensive for a small state, the limited number of staff must be supplemented with young academics and temporarily seconded diplomats. Without these, the smooth organisation and coordination of around 1,600 meetings at ministerial, ambassador and expert level during the last presidency in 1997 could hardly have been achieved. The manageable size of the Representation also means that in its routine tasks Luxembourg concen- trates primarily on those areas which are of direct importance to protecting its interests. For instance, it is more than reasonable to assume that the small Luxembourg administrative machinery would not have the same expertise on all technical issues as, for example, a bureaucracy which is the size of those in France or Germany. In this respect, the shortage of staff and material resources is linked to a certain selectiveness in working methods. In its relations with the most important EU institutions – the Council of Ministers, Commission and Parliament – Luxembourg is also characterised by this selective approach, in which respect it attaches special importance to its close contacts with the Council Secretariat and the Commission. This is, of course, all the more important as Luxembourg cannot be represented in all working groups and is therefore dependent on the availability of reliable information. On the other hand, its relations with the EP are not as close and its contact is less frequent.

The Chamber of Deputies The Chamber of Deputies comprises sixty delegates, most of whom also have a job in addition to having a seat in parliament. For this position they receive a compensation as well as, at a later stage, an addition to their regular pension. Members of Parliament have only a very limited administrative and scientific staff, which means that whenever there is a great deal of work it is often difficult for them to familiarise themselves with each specific field in their subject area. This also applies to technical questions on EU matters; the result is that systematic consideration of all proposals from Brussels is not possible.20 Furthermore, the fact that Luxembourg Members of Parliament are elected at national level has not always increased their willingness to take initiatives regarding EU affairs. The main share of the work of the Luxembourg parliament takes place in twenty-three committees with eleven members each on average, while responsibility for European policy lies with the Committee for Foreign and European Affairs, which consists of thirteen members. So far, repeated attempts to create a specific advisory body dealing only with

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European affairs have failed. One of these plans was aimed at creating a consultative committee comprising the six members of the national parliament and six MEPs. The reason why none of these plans could be realised is connected, on the one hand, with the fact that the establishment of another body would have further increased the workload of individual Members of Parliament and, on the other hand, that it would have been difficult to demarcate the area of competence between this committee and the Committee for Foreign and European Affairs.21 The involvement of the Chamber of Deputies in preparing, deciding on and implementing EU policy has developed only to a limited extent in Luxembourg and, according to the new coalition agreement between the CSV and the DP, is likely to expand in the future. The first concrete proposal for stronger parliamentary involvement in the European legislative process aims at involving the Committee for Foreign and European Affairs, which is responsible for European policy, at an earlier stage in the decision-making process by informing it of the government’s initial official position regarding important proposals for a directive. Until now, relations between the government and the legislature in the area of information and consultation have developed without the parliament having been actively involved in the law-making process. The progress made mainly concerns the improved provision of information by the government and the regular briefing of parliament before and after summit meetings, during the IGC or in the case of important decisions taken by the Minister for Foreign Affairs. These meetings always end with a parliamentary debate. Another form of this provision of information is the sending of all relevant EU documents such as white papers, green papers, etc., to the Chamber of Deputies. However, with a view to the increasing extension of EU competences to new fields and with the transfer of national competences to European level, the Chamber of Deputies has become somewhat more active in relation to Europe since the Amsterdam Treaty. In order to integrate EU policy more efficiently into the work of the committees, it was decided that, in European matters, the individual committees would be given the responsibility for those sectors for which they are also responsible at national level. As a result, many of the existing committees set up their own sub-committees which deal exclusively with EU topics. The desire for a stronger and more efficient involvement of the Chamber of Deputies in EU policy, which has grown more acute particularly in recent years, was not limited only to the parliament. An important initiative came from the government in 1996 when it put the Luxembourg MEP Charles Goerens in charge of writing a report on the future role of national parliaments in the Union. In Goerens’ opinion, a charter should be incorporated into the Treaty which, on the one hand, ensured that governments imposed minimum obligations on national parliaments and,

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on the other hand, strengthened the obligations of the EU institutions towards the EP. Some of his proposals, which also concerned Luxembourg, aimed to improve co-operation between MEPs and national Members of Parliament, for example through the participation of MEPs in thematically relevant meetings of national committees, through the right of MEPs to ask questions of the competent ministers, and through the closer involvement of MEPs in the national committee for Foreign and European Affairs. The fact that, in the future, changes will be made in the co-ordination between government and parliament in Luxembourg is also underlined by the new government programme which envisages stronger participation of the Chamber of Deputies in the EU decision-making process.

The regional level For a small state like Luxembourg, which as regards its size is compara- ble to the smallest German Bundesland (Saarland), it would be a luxury and surely also too expensive to have an intermediate or regional level of government with its own competences and administration. Below the central state level, the Grand Duchy is composed of three districts and 118 local communities. In each district, a senior civil servant, appointed by the Grand Duke, supervises the implementation of laws, regulations, etc. as well as the administrative management of local finance. This centralist, unitary state structure without powerful regional players naturally facili- tates the government’s pro-integrationist course towards European integration which reflects more or less the interests of the whole population.

Conclusion: Luxembourg – condemned to a pro-active integration strategy In the smallest EU Member State, active and committed co-operation with the European institutions is considered a necessity which increases Luxembourg’s visibility and strengthens the protection of its interests in Europe and in the world. From this viewpoint, the Treaties of Maastricht and Amsterdam were considered by the public as quite far-reaching, although the expansion of matters dealt with by the EU has not led to fundamental feelings of resentment at the further loss of sovereign rights. The existing consensus among the political elite that national interests can best be safeguarded in a supranational community has not been shaken. As regards the Amsterdam Treaty, it was even suggested that the commu- nitisation of some fields, such as common foreign and security policy and asylum and immigration policy, would not go far enough to solve current problems. The uncomplicated attitude of the Luxembourg people towards the

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new treaties is also reflected in the pragmatic adaptations of the national institutions to the extended European agenda. Even after the latest treaty modifications, the internal co-ordination of EU policy is still characterised by a small degree of institutionalisation of co-ordination bodies, while the various ministries and the individual officials in particular have considerable decision-making power and autonomy, and interministerial conflicts are kept within limits. The restructuring of the administration has, up to now, been rather a flexible adjustment to acute requirements, as for example in the case of the introduction of the European correspondents. However, as set out in the new government’s coalition agreement, some adjustments are expected in the future. Besides more efficient interministerial co-ordination and improved bilateral relations, the policy on information and communication between the institutions and between the state and the citizens should also be improved. These reforms aim in particular to strengthen the coherence of Luxembourg’s EU policy and to defend its national interests more effectively in a Europe which is becoming increasingly complex. For instance, in the course of the enlargement of the Union to the east, the smallest Member State must pay particular attention to ways of increasing its visibility and its room to manoeuvre within an enlarged Union by developing contacts with its neighbours and its traditional allies. In this context it is also interesting to note that the employees’ organisations have become aware of the advantages of better mutual consultation. Thus, in 1996 the two largest trade unions established a joint office in order to better safeguard Luxembourg’s interests within the ETUC. With the growing importance of the European level an increased need for co-ordination and co-operation between the national institutions has also arisen in Luxembourg. However, while on the one hand, this need has not developed in the same way as in large states, on account of the small size of the country and the simpler communication channels, on the other hand the growing complexity and abundance of subjects to be dealt with also requires certain adjustments to be made, such as, for example, a better distribution of tasks and a clearer organisational structure.22 This is, of course, not always so simple for an administration the size of that of a city, particularly since it will never have access to the same specialised and technical expertise as an administration the size of Germany or France. The individual official in Luxembourg often has to deal with a whole range of special issues which in other states are spread over several departments. With the further deepening of the Union, the responsibility and workload of the individual official is likely to increase rather than decrease, especially since it will not be possible to increase the number of staff accordingly owing to high costs. However, this specific problem of small size is not expected to become

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acute in the near future because Luxembourg has fewer national key interests than large states and because it can specialise mainly in these key areas. However, owing to the limited capacity of its small administration as well as its very small size, it will in the future still have to rely on competent politicians with a strong personality who will look after both national interests and Community interests. A great challenge for the Grand Duchy will therefore continue to be that of compensating for its small size and the associated structural disadvantages through active and committed co-operation in the European integration process. Furthermore, with regard to Luxembourg’s ability domestically to deal with the deepening of the European integration process, it should be emphasised that the small size of the country’s administration with its highly informal communication structures and the predominance of generalists rather than specialists, has until now had many advantages (little need for institutionalised co-ordination structures, a pragmatic and flexible approach towards European integration, etc.). On the other hand, however, it should be pointed out that owing to the increasing complexity and specialisation of the working areas, it is very difficult to make prognoses for the future. In this context and without questioning the strategy of flexible and pragmatic adaptation, we can only conclude in a very general way that Luxembourg is increasingly becoming aware of the need for better co-ordination and communication structures,23 as can be seen, for instance, in the coalition agreement of June 1999. A development in that direction would therefore be considered as an indication of the stronger influence of the European level on the national level.

Notes 1 I would like to thank Marc Ungeheuer, Deputy Permanent Representative of Luxembourg to the European Union and Victor Weitzel, Press Attaché of Jacques Poos, the former Ministry of Foreign Affairs, for their valuable support with regard to this chapter. 2 In the more than 150 years of the state’s existence, its national independence was challenged several times by Belgian, German and French ‘Annexionsversuche’. 3 This should chiefly be considered against the backdrop of the fact that in some municipalities the majority of the population consists of foreigners. 4 The economic union with Belgium, established in 1921, also meant a currency union with a common currency (the Belgian franc), the predominance of the Belgian National Bank (Banque Nationale de Belgique) and a common commercial policy. 5 A striking example is the 8.5 per cent devaluation of the Belgian franc in February 1982 by the Belgian government without prior consultation of the Luxembourg government. 6 See the declaration by Prime Minister Jacques Santer on the ratification of

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the Maastricht Treaty of 22 April 1992 in the Chamber of Deputies. 7 See Martine Nies-Berchem, ‘L’administration luxembourgeoise et les débuts de l’administration européenne’, in: Gilbert Trausch and Edmée Croisé- Schirtz (eds), Le Luxembourg face à la construction européenne (Luxembourg: Saint-Paul, 1996), pp. 147–160; Jean-Marc Hoscheit and Malou Weyrich, Luxembourg, La mise en oeuvre des directives communau- taires’, in: Heinrich Siedentopf and Jaques Ziller (eds), Making European Policies Work, Vol. II (Maastricht: EIPA, 1988), pp. 521–569. 8 At present, about one in three employees in Luxembourg works for the state, while the industrial sector and the services sector increasingly have to rely on foreigners to meet their staff needs. 9 See Simone Merten-Beissel, ‘Administration luxembourgeoise et l’intégration européenne’, in: Charles Debbasch (ed.), Administrations nationales et l’in- tégration européenne. Proceedings of the colloquium in Aix in October 1986 (Paris: Presses du CNRS, 1987); Editions du Centre national de la Recherche Scientifique, p. 49 et seq. 10 See Marc Bichler, ‘The case of Luxembourg’, in: Spyros A. Pappas (ed.), National Administrative Procedures for the Preparation and Implementation of Community Decisions (Maastricht: EIPA, 1994), pp. 371–386. 11 More than one-third of total staff (120) of the Ministry of Foreign Affairs. 12 See Bichler, 1994, op. cit., p. 382. 13 See Implementation Report, May 1998. In this context, it should be pointed out that the differences between the first position and the twelfth position are small. 14 The following statistics concern Articles 169, 170, 171, 225 of the ECT, Articles 141, 142, 143 of the EAEC Treaty and Article 88 of the ECSC Treaty. 15 Belgium and France were last with twenty-two cases, while Denmark, Finland, Sweden and the United Kingdom were the ‘model pupils’ with only one case. 16 Belgium, on the other hand, had the most cases: a total of 225. 17 See Déclaration gouvernementale, declaration by Prime Minister Jean- Claude Juncker, of 12 August 1999 in the Chamber of Deputies, pp. 4–5, 8–9. 18 These investments are the most significant the state of Luxembourg has ever made abroad. 19 The ‘House of Luxembourg’ also accommodates the Luxembourg Embassy in Belgium, the Consulate and the Representation to the WEU. 20 See Gaston Stronck, ‘Luxembourg’, in: Roger Morgan and Clare Tame (eds), Parliaments and Parties (London: Macmillan, 1996), p. 171. 21 See ibid, p. 169. 22 In the context of administrative reform, improvements in the organisational structure are planned, as well as a more specific distribution of tasks in general. 23 See Déclaration gouvernementale, declaration by Prime Minister Jean- Claude Juncker, of 12 August 1999 in the Chamber of Deputies, p. 9.

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Select bibliography The text (English translation) of the constitution of Luxembourg can be found at the University of Richmond’s constitution finder at http://confinder.richmond.edu/. Further sources on government and parliament of Luxembourg can be found at Government www.gov.lu/ or at Parliament www.chd.lu/.

Calmes, Christian and Bossaert, Danielle (1996) Geschichte des Grossherzogtums Luxemburg von 1815 bis heute (Luxembourg: Saint-Paul). Clesse, Armand (1998) ‘Les petits pays et l‘intégration européenne’, in: Les petits pays et le processus d‘intégration européenne, Colloquium 18 février 1998, Institut Royal supérieur de défense (Bruxelles 1998). Kirt, Romain and Meisch, Adrien (1993) Innovation – Intégration, Mélanges pour Pierre Werner (Luxembourg: Saint-Paul). Lepszy, Norbert and Woyke, Wichard (1985) Belgien, Niederlande, Luxemburg. Politik – Gesellschaft – Wirtschaft (Opladen: Leske & Budrich). Merten-Beissel, Simone (1997) ‘L‘administration luxembourgeoise et l‘intégration européenne’, in: Charles Debbasch (ed.), Administrations nationales et intégra- tion européenne (Paris: Presses du CNRS). Stronck, Gaston (1996) ‘Luxembourg’, in: Roger Morgan and Clare Tame (eds), Parliaments and Parties (London: Macmillan). Trausch, Gilbert, Croisé-Schirtz, Edmée and Nies-Berchem, Martine (1996) Le Luxembourg face à la construction européenne, Centre d‘études et de recherches européennes Robert Schuman (Luxembourg, 1996).

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