Luxembourg

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LUXEMBOURG.

World War I affected Luxembourg at a time when the nation-building process was far from complete. The small grand duchy (2,586 square kilometers, about 260,000 inhabitants in 1914) opted for an ambiguous policy between 1914 and 1918. With the country occupied by German troops, the government, led by Paul Eyschen, chose to remain neutral. This strategy had been elaborated with the approval of Marie-Adélaïde, grand duchess of Luxembourg. Although continuity prevailed on the political level, the war caused social upheaval, which laid the foundation for the first trade union in Luxembourg.

The end of the occupation in November 1918 squared with a time of uncertainty on the international as well as the national level. The victorious Allies disapproved of the choices made by the local elites, and some Belgian politicians even demanded the integration of the country into a greater Belgium. Within Luxembourg a strong minority asked for the instauration of a republic. In the end, the grand duchy remained a monarchy but was led by a new head of state, Charlotte. In 1921 it entered into an economic and monetary union with Belgium, the Union É conomique Belgo-Luxembourgeoise (UEBL). During most of the twentieth century, however, Germany remained its most important economic partner.

The introduction of universal suffrage for men and women favored the Rechtspartei (party of the Right), which played the dominant role in the government throughout the twentieth century, with the exception of 1925–1926 and 1974–1979, when the two other important parties, the Liberal and the Social Democratic, formed a coalition. The success of the resulting party was due partly to the support of the church—the population was more than 90 percent Catholic—and of its newspaper, the Luxemburger Wort.

On the international level, the interwar period was characterized by an attempt to put Luxembourg on the map. Especially under Joseph Bech, head of the Department of Foreign Affairs, the country participated more actively in several international organizations, in order to ensure its autonomy. On the economic level, the 1920s and the 1930s saw the decline of the agricultural sector in favor of industry, but above all of the service sector. The proportion of the active population in this last sector rose from 18 percent in 1907 to 31 percent in 1935.

The invasion of Luxembourg by German troops on 10 May 1940 was the beginning of a four-year period of occupation. Even though the country was not de jure integrated into the Reich, de facto the German Zivilverwaltung (civil administration) under the direction of Gustav Simon considered and treated Luxembourg as a part of the Third Reich. This policy reached a peak with the forced enlistment of 10,200 Luxembourgers in the Wehrmacht from September 1942 on. In Luxembourger historiography, World War II is generally perceived as the end of the nation-building process. The legitimacy of the state was indeed no longer questioned in 1944. On one hand, the government and Charlotte, grand duchess of Luxembourg, achieved important results from their lobbying activities during the four years they spent in exile (London and Montreal). On the other, the opposition to the German occupation found its expression within the country in several resistance movements. The power of the collaboration was not strong enough to make these two pillars tremble. World War II remains an important period in the legitimization of the nation, as illustrated by the many commemorations and the frequent references to it in official speeches.

Encouraged by the contacts established with the Dutch and Belgian governments in exile, Luxembourg pursued a policy of presence in international organizations. It was one of the six founding members of the European Coal and Steel Community in 1952 (ECSC) and of the European Economic Community (EEC) in 1957. In the context of the Cold War, Luxembourg clearly opted for the West by joining the North Atlantic Treaty Organization (NATO) in 1949, thus renouncing its traditional neutrality, which had determined its international policy since the founding of the state. Engagement in European construction was rarely questioned subsequently, either by politicians or by the greater population. Despite its small proportions, Luxembourg often played an intermediary role between larger countries. This role of mediator, especially between the two large and often bellicose nations of Germany and France, was considered one of the main characteristics of national identity, allowing the Luxembourger not to have to choose between one of these two neighbors. The country also hosted a large number of European institutions such as the European Court of Justice. Luxembourg's small size no longer seemed to be a challenge to the existence of the country, and the creation of the Banque Centrale du Luxembourg (1998) and of the University of Luxembourg (2003) was evidence of the continuing desire to become a "real" nation. The decision in 1985 to declare Lëtzebuergesch (Luxembourgian) the national language was also a step in the affirmation of the country's independence. In fact, the linguistic situation in Luxembourg was characterized by trilinguilism: Lëtzebuergesch was the spoken everyday language, German the written language, in which Luxembourgers were most fluent, and French the language of official letters and law.

In the early twenty-first century, the internal political situation was characterized by a great stability. The government was predominantly led by the Christian Democrats. They provided some important statesmen, such as Pierre Werner and Jean-Claude Juncker. Although the Communist Party, which obtained 11 percent of the vote in 1945, became insignificant, two other parties succeeded in imposing their presence beginning in the 1990s: Déi Greng, which sprang from the ecological movements, and the Committee for Democracy and Justice (ADR), a right-wing and populist party.

Between 1945 and 2005, the economic structure of Luxembourg changed significantly. The crisis of the metallurgy sector, which began in the mid-1970s and lasted till the late 1980s, nearly pushed the country into economic recession, given the monolithic dominance of that sector. The Tripartite Coordination Committee, consisting of members of the government, management representatives, and trade union leaders, succeeded in preventing major social unrest during those years, thus creating the myth of a "Luxembourg model" characterized by social peace. Although in the early years of the twenty-first century Luxembourg enjoyed one of the highest GNP per capita in the world, this was mainly due to the strength of its financial standing, which gained importance at the end of the 1960s. Thirty-five years later, one-third of the tax proceeds originated from that sector. The harmonization of the tax system across Europe could, however, seriously undermine the financial situation of the grand duchy.

In this small country, immigration played an important role in supporting economic development. Beginning in the 1930s, a large number of Italians worked in metallurgy. In the 1970s, the Portuguese became the most important group. The strong economic growth in the late 1990s and in the early years of the twenty-first century, and the presence of some important European institutions, explain why 38 percent of the total population of 450,000 was composed of foreigners in 2005; they even represented more than half the active population.

See alsoBelgium .