The last remnant of the Holy Roman Empire, the pocket-sized Principality of Liechtenstein is a prosperous independent hereditary monarchy. Liechtenstein’s ruler of 51 years, until his death in November 1989, was His Highness Franz Joseph II. His son and heir, Prince Hans Adam (now His Highness Hans Adam II) was granted all the Regency’s executive powers in 1984. The country is united with Switzerland in a Customs Union and represented by Switzerland abroad. The population shares German-Swiss traditions, values, social courtesies and behavior, but remains proud of its independent status.
From 1928 until 1970, the Progressive Citizens’ Party (FPB) was the dominant political party in the country before the Fatherland Party (VU) took power in the 1970 election.
The VU won the next four Landtag elections, including the 1986 poll at which women (who had been debarred from voting until 1984) were able to participate for the first time. However, the FPB were returned to power at the most recent poll in February 2001 under the leadership of Otmar Hasler. As a member of the European Free Trade Association (EFTA), Liechtenstein has joined the European Economic Area (EEA), creating a free trade area from the combined membership of the European Union and EFTA. A referendum on the issue in December 1992 produced a 56 per cent vote in favor of the EEA; another referendum in April 1995 ratified the terms and Liechtenstein joined the EEA the following month.
In the last few years, the debate over relations with Europe has been been largely obscured by an increasingly bitter debate over the constitutional role of the royal family. While committed to a democratic system of government, Liechtensteiners are particularly devoted to their royals whom they associate strongly with their small country’s considerable prosperity. Prince Hans Adam has changed his position over time. In late 1993, he revised the
Hausgesetz (the ‘house code’ of the ruling family), conceding the right for the population constitutionally to depose him or even abolish the monarchy altogether if they so wished. However, in 2001, he made the first of several attempts to increase the powers of the monarchy. This produced a bitter clash with the Landtag, which was already unhappy with the prince’s reluctance to endorse investigations into alleged money-laundering in the principality. (In April the following year, this led to Liechtenstein being ‘named and shamed’ as one of seven countries worldwide which refused to introduce adequate anti-laundering measures.)
The prince had wanted powers to dismiss the government at will, control judicial appointments and enhance his veto over legislation. In March 2003, he made a further attempt to acquire them and threatened to depart the country for exile in Vienna if he did not get his way. That month, by a two-thirds majority, the electorate bowed to his demand, turning Liechtenstein into what opponents of the prince describe as a potential dictatorship. During the last five years, Prince Hans-Adam intimated several times that he would soon stand down in favor of his son, Prince Alois. Prince Alois was finally granted all the Regency's powers in August 2004.
GovernmentThe single-chamber assembly, the Landtag, has 25 members directly elected every four years by proportional representation. The sovereign, a hereditary monarch, is head of state with exceptional powers (see
History) over the Landtag, the government and the judiciary.
EconomyThe population of Liechtenstein is amongst the world’s most prosperous. Dairy and arable farming account for the bulk of agriculture. The manufacturing industry processes and recycles metals, producing machine tools and precision instruments.
Financial services are the main component of the economy: over 75,000 foreign corporations have taken advantage of the principality’s banking secrecy laws to establish nominee companies which pay low taxes on both income and profits. Fees from these companies provide about one-third of government revenues.
Since the mid 1990s, Liechtenstein has come under sustained pressure to deal with money laundering and other financial malpractice. In April 2002, Liechtenstein was strongly condemned by the Organization for Economic Co-operation and Development (the 24-strong club of industrialized nations) as one of seven countries worldwide which had refused to cooperate properly and continually faces economic sanctions.
With a very small domestic market, Liechtenstein has a large balance of payments surplus. The country has vital economic links with Switzerland, based upon a customs union, and uses the Swiss Franc as currency. Liechtenstein joined the European Free Trade Association (EFTA) in 1991 and the European Economic Area (EEA) in May 1995. Other than Switzerland, most of Liechtenstein’s trade is conducted with members of the EU.
Next Page »
