Luxembourg Country Brief
Overview
Australia enjoys a constructive and positive bilateral relationship with Luxembourg. Official contact with the Government of Luxembourg is focused on multilateral issues including in the World Trade Organisation and international disarmament negotiations. The Australian Ambassador to Belgium has non-resident accreditation to Luxembourg.
Political Overview
System of Government
The Grand Duchy of Luxembourg is a hereditary constitutional monarchy ruled by the Grand Duke Henri of Luxembourg. Legislative power is exercised by the unicameral Chamber of Deputies with 60 members elected for five year terms. Some legislative functions are also entrusted to the advisory State Council, with 21 members appointed for life by the Grand Duke, although decisions made by this body can be overruled by the legislature. Executive power is vested in the Grand Duke, but is normally exercised by the Council of Ministers, led by the head of the government (Prime Minister). The Grand Duke appoints ministers, but they are responsible to the legislature.
Although Luxembourg is divided into 12 counties for administrative purposes, it is subdivided differently during general elections and for the purpose of local government. During elections, Luxembourg is subdivided into four electoral districts or constituencies: Center, East, North and South. In relation to local government, the Grand Duchy is subdivided into three administrative districts: Diekirch, Grevenmacher and Luxembourg. District Commissioners serve as intermediaries between the central Government and the 118 municipalities.
Major Parties
The main political parties are the Christian Social Party (CSV - Christian Democrats), and the Democratic Party (PDL - Liberals). Other political parties include the Socialist Workers' Party (LSAP), Action Committee for Democracy and Pensions Justice (since 1992, the ADR), the Green Party, the Left Party and the Communist Party. The CSV has consistently been the largest party and has provided the Prime Minister for 64 out of the last 69 years.
Political Developments
The political situation in Luxembourg is remarkably stable, dominated by the centre-right CSV with strong associations with the Catholic Church. The CSV has been in government either in its own right or in coalition since 1919, except for the period 1974-1979.
The 13 June 2004 elections resulted in the formation of a new Christian Democrat/Socialist government through a coalition between the Christian Social Party (the Christian Democrats) and the Socialist Worker's Party (LSAP). Mr Jean-Claude Juncker is Luxembourg’s prime minister. The next elections will be held in June 2009.
Foreign Relations
Luxembourg is a strong supporter of multinational organisations as they assist in the attainment of policy goals and increase its influence. Luxembourg is one of six founding members of the European Union. Luxembourg is a signatory to the Brussels Treaty providing for collective self defence between its members, a NATO member and a founding member of the Council of Europe. Most recently, Luxembourg held the Presidency of the EU from January to June 2005 and on 29 May 2008 Luxembourg voted by an overwhelming majority to approve the EU Treaty of Lisbon. Luxembourg plays host to several European institutions including the Secretariat-General of the European Parliament, the European Court of Justice and the European Investment Bank.
Economic Overview
Luxembourg has a relatively open and stable economy. Per capita GDP reached US$104,673 in 2007 making Luxembourg one of the richest countries in the world. Real GDP growth in 2007 was estimated at 5.4 per cent and is expected to moderate to 3.1 per cent in 2008 (IMF/EIU). Luxembourg has adopted the Euro as its currency.
Germany, France and Belgium, Luxembourg's nearest neighbours, account for most of its two-way trade. Since 1921, Luxembourg has been in economic union with Belgium - the Belgium-Luxembourg Economic Union (BLEU). BLEU forms the world's tenth largest trading entity in value terms, accounting for about 3.3 per cent of total world-wide trade.
Bilateral Relationship
High Level Visits
His Royal Highness Grand Duke Henri and Grand Duchess Maria Teresa visited Australia between 20 July and 2 August 2008 to attend World Youth Day which was hosted by Sydney.
Former Minister for Foreign Affairs, Alexander Downer, visited Luxembourg in February 2005 and met his counterpart Jean Asselborn, for Australia-EU consultations, during Luxembourg’s Presidency of the EU.
Bilateral Agreements
Australia has a number of bilateral agreements with Luxembourg covering such things as mutual assistance on criminal matters, extradition and visas.
Bilateral Economic and Trade Relationship
In 2007, Luxembourg ranked as Australia's 109th largest merchandise trading partner, with total trade valued at $24.5 million, heavily in Luxembourg’s favour. Australia’s major exports, worth A$1.2 million for the year, included live animals, measuring and controlling instruments, non-electrical machinery, tools and medical instruments. Key imports, worth A$23 million, were heating and cooling equipment, rubber tyres, rails of iron and steel and batteries.
Australian investment in Luxembourg was valued at A$4.0 billion in 2007. Luxembourg ranked 19th as an investment destination for Australia.
Luxembourg investment in Australia was valued at A$5.95 billion in 2007. Australia ranked 18th as an investment source for Luxembourg.
Last reviewed date: 10/11/2008