Heralding the European Model

Luxembourg, the founding father of the EU, remains at the heart of the European construction process. It has transformed the Greater Region into a pioneering space for successful cross-border and interregional cooperation, which will be celebrated in myriad events throughout 2007 as Luxembourg serves as the European Capital of Culture. The Ambassador of the Grand Duchy of Luxembourg, Mr. Hubert Wurth, tells our readers how his country’s diplomatic vitality and solid financial and industrial situations have given it a strong voice on the European stage.

The Diplomatic Letter: Mr Ambassador, Luxembourg was chosen as the 2007 European Capital of Culture. The neighboring areas of Lorraine, Wallonia, Rhineland-Palatinate and Saarland are also partners in the project, with an aim to “reach beyond borders.” Will Luxembourg use this event to bolster its position as a key crossroads of culture in western Europe?

Mr Hubert Wurth: Luxembourg does lie, by no choice of its own, at a crossroads. Over the past sixty peace-filled years, Luxembourg has taken advantage of this purchase to develop in an independent manner while safeguarding its sovereignty. Being part of the European Union has been of considerable help. With numerous regional and international activity centers scattered around us – in Belgium, France and Germany – we are determined to remain just what we are: a distinctive and intermediary space. At the dawn of the 21st century, this space has become the driving force behind the economy of a wide region. As a geographic center, Luxembourg is eager to make this “Greater Region” both stronger and more cohesive. We have numerous tools that can help us do just that, including our cultural diversity, our excellent ties, and our respective experiences.

T.D.L.: Your country has played a key role in the European construction process from the start, especially when it comes to keeping the “French-German motor” from stalling. Has the enlargement of the EU prompted Luxembourg to redirect its diplomatic efforts towards different areas? What do you think of the goals Germany has laid out for its presidency of the EU? How would you describe Luxembourg’s role in the expanded Europe?

H.W. : The enlargement of the European Union from fifteen to twenty-seven members has not only put right an injustice and redressed an unjust order, it also offers an illustration of ever deepening European solidarity. Some people undeniably had reservations about the enlargements, or even rejected them. But the governments of our various countries made sure that generosity prevailed. This doesn’t mean that all the misapprehensions have disappeared, as witnessed by the painful problem of relocations. A tiny country like Luxembourg can try and smooth things over a bit, by keeping the wheels oiled and supporting the efforts of the President of the Council of Ministers. Others are doing the same, and working together we will be able to channel the biggest sources of tension. Thanks to our strength in numbers, coalitions, and diversity, we will be able to convince the most reluctant partners and citizens – in the largest countries and all the others – that this process is in their best interest. The people of Luxembourg have looked at the issue of enlargement from the outset as a new chance, as an opportunity we were right to seize.

T.D.L.: The Luxembourg and Spanish governments were behind the meeting held in Madrid on January 26th between the 18 EU member states that have ratified the stalled European Constitution. Two years after the failed referenda in France and the Netherlands, what can be done to salvage the Constitution?

H.W. : We needed to rekindle the debate, and let the voices of those who said “yes” be heard. Repeating “yes” over and over isn’t necessarily the only way to rekindle the constitutional project. The most important thing is to begin making practical improvements and thus heighten effectiveness, by boosting cooperation that respects the character of all those involved. For if the concepts of liberty and responsibility go hand-in-hand, as do rights and duties, then the same is no doubt true for the concepts of respect and cooperation. As the German author Erich Kaestner tells us: «es gibt nicht Gutes, ausser man tut es» (there are no good results, unless one makes them).

T.D.L.: The rejection of the Constitutional Treaty reflects growing unhappiness with European institutions, which can also be seen in the rise of the far right in several European countries and the disaffection with the euro. What can be done to build trust in the European Union, and instill a real sense of belonging in Europeans?

H.W. : Luxembourgers consider the euro an essential step forward. Unfortunately, we are in the habit of fighting the general trend in public opinion and representative democracy every now and again, which I find absolutely absurd. Representative democracy cannot afford to be out of touch with public opinion trends, neither with segments of the population that are politically active or those that chose to play a more low key role. And public opinion trends, expressed through the channels of civil society, must not confuse idealistic aspirations with what can actually be done. Perhaps public opinion and representative democracy should be more receptive to exchanging ideas and to learning from each other. Working to improve communication will bring a change, perhaps over a period of several years, which will in turn spark unrest. But isn’t that the price that must be paid for true communication between citizens and between European societies?

T.D.L.: In September 2006 Prime Minister Jean-Claude Juncker was reelected to serve as President of the Eurogroup through 2008. As the organization’s first permanent president, what is he doing to ensure that economic policies are coordinated more effectively within the euro zone? How do you feel about the recent criticism of the European Central Bank’s (ECB) monetary policy?

H.W. : The first president of the Eurogroup have the advantage of a long tenure will no doubt be pleased to see wider recognition of the great feat embodied by the creation of the euro and its positive impact in protecting the daily functioning of European economies. Beyond that, his own point of view is surely the only thing that counts. It is up to him to express his own views, if he so chooses, about coordinating economic policies within the euro zone and ECB monetary policy.

T.D.L.: Your country was the cradle of the European Coal and Steel Community. It has since transformed its economy by building a strong financial sector, which has spurred steady growth for the past three years. The economy grew by 5.5% in 2006. Is the government taking measures to bolster this dynamic trend? What is it doing to foster the development of other activity sectors, along with the finance sector and steel industry?

H.W. : In a relatively small and fragile economy, which is laid open to the four winds, it is absolutely vital that all the economic actors remain ever vigilant. It would be impossible to maintain this vigilance without being ready to question habits that are often deeply ingrained, maintaining a certain flexibility, and carefully observing others in order to learn from their experiences and to think things over carefully before moving forward. It is easier for a small-sized community to come up with a way to renew and to diversify itself. That said, no one is immune to lethargy or self-importance.

T.D.L.: Your country is creating more and more jobs, and yet the unemployment rate has continued to rise, especially among Luxembourg residents. What is the government doing to rectify the imbalances on the national labor market?

H.W. : The unemployment in our country is caused by specific factors that the government is studying in cooperation with international experts, such as OECD officials. Technical improvements are steadily emerging from this. Dealing with the human problems caused by the distress that arises from unemployment requires a well targeted strategy. A state, no matter how prosperous, cannot allow entire segments of the population to fall out of active society. Our approach refuses to accept this as inevitable, by focusing primarily on training.

T.D.L.: Luxembourg’s prime minister has singled out foreign investments as a key factor in job creation. What regulatory and economic advantages does your country have to offer in this area?

H.W. : Luxembourg’s economy ministers have been working very hard in this area for several decades, from the 1960s to be exact. We have seen several waves of foreign investment roll in over this time. We also realized, of course, that certain situations that were advantageous in the past were developing into a disagreeable rigidness. It became vital to reexamine them, which has been done in successive waves. We will keep moving forward in this same direction. We should note that wage-related fringe expenses have been very low in our country for several years now. One of our biggest challenges will be ensuring that we don’t lose this asset. Among our other advantages, we should also mention our ability to move quickly and to make our own laws, as well as Luxembourg's strong social cohesiveness.

T.D.L.: Luxembourg is a founding member of the Financial Action Task Force (FATF). Could you tell us about the headway made by your country in the battle against money laundering? Would you describe how Luxembourg and the international community are assisting each other in the legal arena? How can your country help to neutralize terrorist financing systems? Does it have any technical suggestions for making the measures taken by the international community even more effective?

H.W. : Luxembourg has been involved in all the efforts aimed at curbing criminal and terrorist financing systems, both inside the European Union and at the international level. This judicial mutual assistance is working well. Better understanding, mutual appreciation of constraints, and improved cooperation in order to get a better grasp of specific situations, will make the measures taken at the international level all the more effective.

T.D.L.: Your country confirmed its commitment to the European Security and Defense Policy by taking part in the 2003 Concordia military operation in the Former Yugoslav Republic of Macedonia (FYROM). You served as Luxembourg Ambassador on Special Mission for the former Yugoslavia from 1996 to 1998. Given the uncertainty over the future status of Kosovo and the rise of the far right in Serbia, do you think the Balkans will be stabilized anytime soon?

H.W. : Luxembourg has fallen victim to international conflicts in the past. It is keenly interested at this time in fostering the emergence of a true common European security and defense policy. We cannot focus our attention solely on international actions for all that. It should not be forgotten that most conflicts originate internally. All the different actors, both large and small, can help to explain the great urgency and to draw into the political arena those conflicts that risk escalating and ending in violence and bloodshed. Let us not forsake populations that are in a state of heightened emotion that could easily boil over. It is clearly Europe’s responsibility to do its utmost to stabilize countries that lie inside Europe, such as those in the Balkans, as well as those that lie beyond its borders. That said, there can be no doubt that this matter concerns the international community as a whole.

T.D.L.: Your country became a full member of the European Space Agency on 30 June 2005. Could you tell our readers why Luxembourg joined the ESA? What is it doing to help lay out the EU space policy?

H.W. : Both our economic and scientific actors are determined to take part in research activities in the space industry, especially in programs launched by the ESA, which led Luxembourg to join the ESA. This move also reflects our desire to be involved in European cooperation all across the board. The example of the European Satellite Company (SES) offers ample proof that Luxembourg firms are both highly active and successful in the space industry.

T.D.L.: After the rift spurred by differences over the Iraq crisis, transatlantic ties were rekindled under the Luxembourg presidency of the EU. How would you describe the dialogue between Washington and the EU since President George W. Bush’s visit to Brussels in February 2005?

H.W. : The dialogue between the United States of America and the European Union is moving forward in a positive direction. There is a feeling of greater mutual trust. We cannot help but see that these two major international actors have shared destinies. We must, all the same, make a constant effort to listen to each other and to cooperate.

T.D.L.: Luxembourg foreign policy has sought to widen its field of action by putting more emphasis on development assistance. Could you outline the principles and priorities behind this move? As Luxembourg’s Representative to the OECD, could you assess the challenges of the North-South dialogue for our readers, as well as the economic impact of climate change?

H.W. : The urgent need for development is being recognized ever more widely, but also within the different opinion groups across Europe. The impact of development on the climate, and vice versa, was confirmed at the recent Paris Conference on the Environment. But Luxembourg didn’t only just discover these problems. It served as the spokesman for European Union countries (it held the presidency of the Council of Ministers at the time) at the Kyoto Conference, and was very deeply involved there, along with all the other the European countries. As regards development assistance, in 2000, after a long hiatus, we became the first country to earmark 0.7% of its growth national income for development assistance. That figure has since risen to 0.88% (initial estimate for 2006). In Paris, the OECD and UNESCO are addressing the problem of development very effectively. Luxembourg is cooperating closely with both organizations. The challenges of the North-South dialogue are key to our future. The developed countries simply cannot fail to recognize that this important international duty falls to them. Their very survival depends upon it, as does ours.

T.D.L.: Luxembourg has initiated an original form of cross-border cooperation within the Greater Region, as exemplified by successful security cooperation. Could you summarize the concrete results of this police cooperation? How can it be stepped up even further? Have these cross-borders exchanges helped the Luxembourg economy by spurring job creation?

H.W. : These cross-border exchanges have already reached unprecedented levels, and continue to grow. The most amazing thing in all this is the total number of cross-border workers, which now stands around 115,000 (in 2005). This has only naturally spurred a whole string of cooperation projects in the technological and administrative arenas. Cooperation in security matters and law enforcement have clearly taken on great symbolic importance, at a time when our people are focused exclusively on these problems. We are fully aware that the economies of Luxembourg and its neighboring regions are inextricably interdependent, and that all these difference types of cooperation should be developed and expanded.

T.D.L.: The East European TGV linking Paris and Luxembourg is set to begin running this coming June. Do you expect this new infrastructure to have a large socioeconomic impact? In what activity sectors could France and Luxembourg strengthen their economic ties?

H.W. : Thanks to the East European TGV, which will link Luxembourg to Paris and vice versa, it will be possible to go from downtown to downtown in just over two hours. A brand-new situation will emerge after the summer of 2007, as no other major capital will be as close to Luxembourg. Yes, Brussels is also a two-hour drive from Luxembourg, but only for those who choose to travel by car. The TGV will undoubtedly be a big success, even if the price of a ticket goes up. On a broader level, there will no doubt be a stronger foothold between Luxembourg and France and the French-speaking community. Because Luxembourg and France can, of course, strengthen their economic ties even further, but we have already seen very positive changes over the past few years. It should be noted that France is now our second leading economic partner.

T.D.L.: France and Luxembourg have very close ties, with the two states’ top leaders holding frequent meetings. In light of the upcoming elections in France, where do you see bilateral relations headed in the future? Prime Minister Jean-Claude Juncker and President Jacques Chirac have both been in office since 1995. Could you summarize their key achievements in the bilateral arena, and tell us how they’ve helped advance the European construction process?

H.W. : European history owes a great deal to France and to its creativeness in political affairs. Luxembourg has clearly never forgotten that the idea to build a united European came from France, on 9 May 1950, with the initiative put forward by Robert Schuman, the French Foreign Minister at the time, who was working closely with Jean Monnet.
Our country immediately embraced the proposal put forward by this great Frenchman, with whom we are very familiar, as he was born in Luxembourg. Cooperation between France and Luxembourg on European construction is only natural, and goes back many years. In fact, we can be so bold as to say that it dates back to the Middle Ages. Several Luxembourg sovereigns struck alliances with France, including emperors Henry VII and Charles IV of Luxembourg, and John the Blind, who died fighting alongside the French in Crecy.
President Jacques Chirac and our Prime Minister Jean-Claude Juncker have, of course, have continued to trod this same historical path. Over the past decade, they have worked hand-in-hand to promote the European cause on issues that were sometimes highly technical, and at other times carried great symbolic weight. The introduction of the euro certainly counts as one of their great successes. But don’t hold it against me for not attempting to take stock of them all here.
Europe is still a work in progress. The work accomplished in the 1990s and at the start of the 21st century has been absolutely vital. The future is bound to be built on the results of these efforts. I am convinced that a few years from now, we will be in a better position to understand the true value of these efforts. But we already know this much: France and Luxembourg will continue to cooperate and will strengthen their ties even further after the summer of 2007.