Luxembourg country brief

Overview

Australia enjoys a constructive and positive bilateral relationship with Luxembourg, primarily focused on multilateral issues including in the United Nations, the World Trade Organization 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: Centre, 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 People’s Party (CSV), the Luxembourg Socialist Workers’ Party (LSAP), and the Democratic Party (DP). Other political parties include the Alternative Democratic Reform Party (ADR), the Greens Party and the Left Party. Parliamentary elections are held every five years.

Political developments

The political situation in Luxembourg has been traditionally stable, with the CSV party having been in government either in its own right or in coalition since 1919, except for the period 1974-1979 and 2013-now. From 1995 to 2013 the Prime Minister was Mr Jean-Claude Juncker of the ruling CSV thereby making him the EU's longest-serving democratically-elected European leader in recent times. In November 2014, Mr Juncker was elected President of the European Commission.

Following elections in October 2013, a Coalition Government (sworn in on 4 December 2013) comprises the Democratic Party, Socialist Workers Party and the Greens Party. The Prime Minister is Mr Xavier Bettel, and Deputy Prime Minister is Mr Etienne Schneider. Mr Jean Asselborn retained his portfolio of Minister for Foreign Affairs.

Foreign relations

Luxembourg is a strong supporter of multilateral organisations. 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. On 29 May 2008 Luxembourg's Parliament voted by an overwhelming majority to approve the Lisbon (EU Reform) Treaty. 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. Luxembourg served alongside Australia as a non-permanent member of the UN Security Council for the period 2013-14.

Economic overview

Luxembourg has a relatively open and stable economy with one of the highest GDP per capita levels in the world (US$101,994(2015)).

Germany, France and Belgium, Luxembourg's nearest neighbours, account for over half of its two-way trade. Since 1921, Luxembourg has been in economic union with Belgium – the Belgium-Luxembourg Economic Union (BLEU). In 2015 Luxembourg was the first country outside the Asia region to become a founding member of the Asia Infrastructure Investment Bank.

Bilateral relationship

Australia has a number of bilateral agreements with Luxembourg, covering issues such as mutual assistance on criminal matters, extradition and visas.

High level visits

Former Minister for Foreign Affairs, Senator the Hon Bob Carr visited Luxembourg in April 2013 to participate in an Informal Meeting on Syria hosted by Luxembourg and the International Peace Institute.

Bilateral economic and trade relationship

Luxembourg's investment in Australia was valued at A$58.3 billion in 2015. Australian investment in Luxembourg was valued at A$17.9 billion in 2015. In 2015, total two-way trade with Luxembourg was valued at A$101 million The commercial relationship was advanced in 2014 through a visit to Perth, Canberra and Sydney by a Luxembourg Chamber of Commerce group.

Last Updated: 7 July 2016