Optimism about reinforcement of democracy, transparency and efficiency

1. How does the future of the EU after the Irish ‘No’ look like?


The Luxembourg government is satisfied with the fact that the Lisbon Treaty is a quasi ‘copy and paste’ of the essentials of the former Constitutional Treaty it strongly supported, and which the Luxembourg people voted for in the referendum of 10 July 2005. Hence the Lisbon Treaty will contribute, according to the government, to reinforcing democracy, transparency and efficiency in the functioning of EU institutions. The government regrets that certain European symbols (like the European flag) have disappeared from the new text and that certain exceptions, like the one allowing the United Kingdom to maintain certain opt-out possibilities, the non-application of the Charter of Fundamental Rights of the European Union and the non-cooperation in the domain of politics, justice and internal affairs have made their entry in the Lisbon Treaty.[1]

The Luxembourg government strongly supports the application of the traditional ‘community method’ and the maintaining of the institutional equilibrium. The Luxembourg parliament may have ratified the Lisbon Treaty on 29 May 2008, but the Luxembourg government has to acknowledge the negative result of the Irish referendum on the treaty of 12 June. Anyway, the Luxembourg government is convinced that the Lisbon Treaty remains the basis for the future development of the EU in the sense that the process of ratification has to be implemented in all the member states which still have to fulfil their ratification obligations. The government is prepared to give Ireland enough time to find a solution to the problem. In a declaration in the Luxembourg parliament, Jean Asselborn, Luxembourg’s Minister of Foreign Affairs, recognised on 18 November 2008, that there were some fears among the Irish voters which may have contributed to the negative vote and “which are totally unjustified or simply false”[2]. These fears are: the fear of losing military neutrality, the sovereignty in fiscal questions, the fear of being obliged to abandon the interdiction of abortion, the fear of being incorporated in a ‘European army’, but also the concern to lose an Irish Commissioner. Asselborn pointed out that, on the other hand, recent studies and surveys have proved the consistent pro-European mood of the Irish people.

The position of the government in these matters was not criticized by the opposition parties in the Luxembourg parliament.

The upcoming European Parliament elections in June 2009

As the number of the Luxemburg deputies in the European Parliament (six MEP since 1989) does not differ neither from the Lisbon nor from the Nice Treaty, there is no discussion whatsoever on this point.

Ever since 1989 when the first direct elections of European Parliament were held, national elections have been scheduled on the same day in Luxembourg in order to save money. Traditionally, all political parties put their front runners and most popular political figures on their European list. Of course, the more popular politicians were candidates on their party’s local constituency’s lists for the national elections on the same day. The Luxembourg election system allows the voters to express their preference votes on one list or split their votes among the members of the lists of different political parties. The European elections in Luxembourg looked like a fake beauty contest, since the front runners like Jean-Claude Juncker, never thought for even one second about going to sit in the European Parliament. The elected political leaders left their newly won seats to the backbenchers or retired national politicians who took their place after the national political stars had withdrawn to become ministers. This ‘comedy’ has left many voters frustrated. Only the defeated party in the national elections would send a political star to the European Parliament when he or she lost the seat in the government since his or her party would be excluded from the ruling coalition.

As promised in the 2005 referendum campaign on the Treaty establishing a Constitution for Europe, the main political parties have decided to exclude double candidacies for the 2009 upcoming elections. In this way, the outcome of the European elections should be somewhat more unpredictable than in the previous elections.

The formation of the new Commission in autumn 2009

Most Luxembourg political leaders see the formation of the new Commission in autumn 2009 with mixed feelings. A strong Commission is essential in their eyes. The Luxembourg position on the European Council of December 2008 was coordinated together with its Benelux partners beforehand. Awaiting a French Presidency proposition, the three founding members of the European Community agreed upon a most sounding appeal “to maintain the equilibrium between the EU institutions”, said Asselborn.[3] Asselborn underlined, in accordance with his Benelux colleagues, that the Lisbon Treaty must not be altered: in the treaty, the “Commission was given important responsibilities”[4]. In the tradition of its founding father, Jean Monnet, Asselborn stresses that all members of the Commission have to be “independent and must defend the interests of all member states regardless of their size and importance”[5].

In order to “relaunch the Lisbon Process”, the French President Sarkozy offered the Irish government a Commissioner in return for a positive referendum. If the Irish referendum turns negative again, the Nice Treaty will remain in place. The Taoiseach, Brian Cowen, considers this to be a strong signal for his fellow citizens. Jean-Claude Juncker believes that the Irish fears should be taken into account by this agreement.[6]

The Benelux countries had doubts over this issue. Jean Asselborn repeated his and his colleague’s well-known position after the break-through brokered by the French President: The principle of having one Commissioner per member state would have consequences in the future because it would then be very complex to ensure the smooth functioning of the Commission. But anyway, even for Asselborn, “it is most important that Ireland should approve the Lisbon Treaty”.[7] Luxembourg’s Communist newspaper editorialist is ironical about the offer made: “The Irish are obliged to consider a second vote […] . An Irish Commissioner in Brussels is no great asset for the Irish people”[8]. But Asselborn insists that the Commission is composed of distinguished members whose mandate is not to represent their own countries, but the “community as a whole” and to be the “guardians of the treaties”. The principle must be given up to satisfy Ireland’s demands, but this will end up harming the medium-sized and smaller member states.[9] The bigger nations will find ways to push through their genuine national interests. Luxembourg’s European commissioner Viviane Reding has a different point of view from the official one put forward by the Luxembourg government: “I don’t agree with Jean-Claude (Juncker) for once. Every country, especially a small country like Luxembourg, should have a commissioner of its own. Larger countries do have enough means to push through their interests even without a commissioner of their own whereas small countries risk to be cut of from the background information and the decision-making process on the European level if they are excluded – even temporary – from the European commission’s college .[…] A large commission must not be ineffective one. There is enough work to be done: different commissioners may for example work together in clusters and can do a better job than they do now. […] The Commission will not be downgraded if it has one commissioner per member state.”[10] Viviane Reding, who is a candidate on the Christian democrat list for the European parliament elections in June 2009, knows that she is well in phase with a large part of the Luxembourg public opinion. ADR[11] MP Jacques-Yves Henckes expresses the same opinion in a parliamentary debate on European and international policy.[12]

Prime Minister Juncker can not live with a Commission reduced to a mere secretariat of the rotating presidency. In Juncker’s eyes, “downgrading the role the Commission means weakening the EU as a whole”[13].

The appointment of the High Representative

The appointment of the High Representative for the Common Foreign and Security Policy does not play any role in the Luxembourg political discussion since no Luxembourg politician is involved. Before the negative outcome of the Irish referendum, Luxembourg’s Prime Minister Jean-Claude Juncker often appeared among the happy few to be eligible for the post as President of the European Council and to be nominated after the implementation of the Lisbon Treaty. Germany and other member states looked favourably on candidates such as Jean-Claude Juncker, but more policy makers now feel that the EU-presidency demands an occupant from a much bigger member state.[14] Juncker declared on TV that he will be Luxembourg’s next Prime Minister after June 2009, if the Luxembourg voters will not send his Christian Democratic Party[15] in the opposition.[16]

2. Transatlantic relations renewed after President Bush: top priorities


Transatlantic relations put to the test by economic crisis, Afghanistan and Middle East

“The hero” (“d’Lëtzebuerger Land”), President Barak Obama is everybody’s darling on the Luxembourg political stage: the Christian-Democrats,[17] Socialists,[18] Liberals[19] and the Greens[20] hail his election; even the Populists admire his capacity to bring about change. The editorialist of a left-of-centre newspaper, ”d’Lëtzebuerger Land” compares Obama’s election in 2008 to the 1981 election of François Mitterrand “whose Keynesian experiences are already history.”[21]

Foreign Minister Jean Asselborn’s reaction to Obama’s election, and the future of transatlantic relations, are three-fold: first may be mentioned an optimistic view on a real change in American society, combined with the hope that the election of an African American may well announce that minorities have at last gained the influence they deserve in the United States of America. Secondly, transatlantic relations have to be seen within the framework of realism: the financial and economic crisis will determine the activity of the new president. Foreign Affairs Minister Asselborn, considers that an evolution of the transatlantic relations on a multilateral basis to be “extremely important”.[22] The third implication of Obama’s election must be, in the eyes of Asselborn that “(the US policy concerning) NATO cannot be an alternative to (US administration’s positions taken within the framework of ) UNO”[23].

Many commentators, although they welcome Obama’s election, nevertheless foresee trouble rising in transatlantic relations. They are linked to the elected president’s commitment to reinforce NATO‘s military presence in Afghanistan.[24] Europeans will have straight talks with the new American President on these matters, as they cannot ignore the rising annoyance among the public opinion with the lasting presence of NATO troops on the Hindu Kush.[25]

Concerning the most recent Middle East crisis, the ‘hyperactive’ French EU-Presidency, the German Foreign Affairs Minister or the new Czech EU-Presidency, have tried in vain to broker a deal in the bloody Israeli-Palestinian conflict. Again, the lack of European influence in this region has seemed to be obvious. The persisting silence of the newly-elected president concerning the Israeli attack on the Hamas fighters in the Gaza Strip ended as soon as inauguration day had passed. Barack Obama will have no time to lose before making acceptable propositions to both sides.

3. Financial crisis and challenges of global governance: the EU response


Common actions within the EU needed but no economic government

A European response to the financial crisis and challenges of global governance makes sense to all politically and economically relevant actors in Luxembourg. As a very small country, whose economy is almost totally dependent on foreign trade relations and whose present prosperity is largely tributary to its financial services exports, Luxembourg is primarily hit by the financial crisis. But not for even one second can the Luxembourg government and parliament imagine reacting on their own behalf to the crisis. They can only act in cooperation with Luxembourg’s neighbours, within the Euro group, or in all EU coordinated actions. As Luxembourg’s Prime Minister and Minister of Finance, Jean-Claude Juncker is the current President of the Eurogroup, Luxembourg’s voice in this matter is most audible through the declarations of its Prime Minister.

As President of the Eurozone and as Luxembourg’s Minister of Finance, Jean-Claude Juncker wants a strong political message to be sent which should take in to account a global approach. The answer has to be decided on within a short term and must be limited in time. These measures must work within the framework of the Stability and Growth Pact decided during the Luxembourg Presidency in 2005.[26] But Juncker is well aware that “the new year is bringing serious tests to the economic framework of the European Union and the European currency zone”.[27] According to Juncker’s personal predictions, positive growth will be seen again in 2011 only.[28]

The French President, Nicolas Sarkozy, who was holding the EU-Presidency in the second half of 2008, pushed forward the proposition of an ‘economic government’ for the Eurozone: regular meetings of heads of state and government of the member states of the Eurozone – similar to those that had been hosted by the French President under the extraordinary circumstances of the financial crisis and that has pushed Europe’s banking sector to the verge of total collapse. In the European Parliament, Sarkozy declared that this new forum could serve as a form of Eurozone ‘economic government’. Luxembourg’s Minister of Finance, Juncker, was not amused and declared that this idea was not new and that Sarkozy had argued in favour of it “on a number of occasions before” and “most members did not agree with that idea” of an economic government.[29] Juncker’s stand is supported not only by the German cabinet members, but also by the Czech government holding the EU-Presidency in the first half of 2009, which feels offended because of the fact that the Czech Republic is not a member of the Eurogroup.[30]

Juncker made several propositions within the framework of the European stability pact amended and reformed under the Luxembourg Council Presidency in 2005. This pact provides for flexible regulations for economic situations like the one “we are unfortunately in right now”.[31] Increasing deficits will be allowed temporarily. After an economic recovery it is essential, according to Juncker, to return to the strict course of budget consolidation. Countries now taking exaggerated austerity measures in order to fulfil some of the stability pact criteria would run the risk of suffocating their economies. Juncker argues that budget measures taken beyond the three percent deficit limit should be strictly confined to the area of public investment and specific tax cuts, where they seem to be appropriate: e.g. further spending on research and development. “At the end of the day we will see that the stability pact has reasonably adapted to the situation”[32].

Juncker called for EU treasury to bolster up the Eurozone. He could imagine the creation of a European agency able to emit ‘Euro-bonds’. Of course Juncker knows very well that Germany would lose today’s advantages under such an arrangement because it enjoys a higher level of confidence than that of other member states in the Eurozone. But in Juncker’s view, this would not be the case after two or three years[33].

Evaluation of EU’s performance in the financial crisis so far

The role of the European Commission in the present financial crisis was criticised in Luxembourg, with the European Commission reacting too slow and timid. The 200-billion Euro package proposed by the President of the European Commission José Manuel Barroso to relaunch the European economy was not accepted by everybody. Juncker called it a guideline.[34] Not every member state can really spend 1.5 percent of its Gross Domestic Product. Some will spend less. For Luxembourg’s Communist newspaper “Zeitung vum Lëtzebuerger Vollek”, those 200 billion Euros are merely taxpayers’ gifts to the big European corporations.[35] Even the independent newspaper “Quotidien” reflects a far-spread opinion: “The Barroso relaunch plan is not ambitious enough”, whereas the Luxembourg-based European Investment Bank’s idea of a 31 billions loan on a two-years basis for 2009 and 2010 finds strong support.[36]

Shifts in the international power constellation expected?

The shifts in the international power constellation caused by financial and economic crises are difficult to predict. They may have serious consequences on the internal cohesion of the EU according to Jean-Claude Juncker, because the Southern states of Eurozone and Ireland cause problems. Differences in the interest rates suggested by the different member states of the Eurozone may well lead to internal tensions. Juncker has already called for the emission of ‘Euro-bonds’. The wages evolution and the fiscal policies of several Eurozone countries strive into opposite directions and cause rising problems to the European Central Bank.[37]




[1] Ministère des Affaires étrangères: Rapport sur la politique européenne du gouvernement du Luxembourg, Luxembourg, 10 October 2008.
[2] Déclaration de politique européenne et étrangère présentée par M. Jean Asselborn, Vice-Prime Ministre, Ministre des Affaires étrangères et de l’Immigration, in: Chambre des Députés: Compte-rendu des séances publiques, 18 November 2008.
[3] Le Jeudi: Trois casse-tête pour les Vingt-sept, 11 December 2008.
[4] Tageblatt: Benelux –Länder besorgt über die Zukunft des Lissabon-Vertrages, 9 December 2008.
[5] Ibid.
[6] Tageblatt: Garantien für Irland, 13 December 2008.
[7] Europolitics: European Council: Irish guarantees via Croatia’s accession treaty, 15 December 2008.
[8] Zeitung vum Lëtzebuerger Vollek: EU-Kurs gegen Volkswillen, 16 December 2008.
[9] Süddeutsche Zeitung: Die irische Erpressung, 23 December 2008.
[10] Commissioner Viviane Reding in a statement made at a workshop meeting with the author and other scholars in Brussels, 3 March 2009.
[11] ADR Alternativ demokratech Reformpartei
[12] Chambre des Députés: Compte-rendu des séances publiques, 19 November 2008.
[13] Financial Times Deutschland: Juncker warnt vor Sarkozys Plänen, 15 December 2008.
[14] Financial Times: Blair appears as choice to be EU president, 12 January 2009.
[15] Chrëschtlech Sozial Vollekspartei.
[16] RTL TV Luxembourg language service: Spezial, 31 December 2008.
[17] Chrëschtlech Sozial Vollekspartei.
[18] Lëtzebuerger Sozialistesch Aarbechterpartei.
[19] Demokratesch Partei.
[20] Déi Gréng.
[21] D’Lëtzebuerger Land: Der Held, 7 November 2008.
[22] Réponse de M. Asselborn relative aux implications de l’élection d’un nouveau président des Etats-Unis à une question de M. Fayot, in: Chambre des Députés: Compte-rendu des séances publiques, 11 November 2008.
[23] Ibid. Asselborn’s third point is very difficult to understand, it has been made as clear as possible.
[24] Tageblatt: Die Europäer und Obama, 12 November 2008.
[25] Tageblatt: Notre Amérique, 6 November 2008.
[26] Luxemburger Wort: EU–Gipfel im Zeichen der Finanzkrise, 11 December 2008.
[27] Dow Jones Newswires: Juncker on EU, 8 January 2009.
[28] Luxemburger Wort: Wirtschaftskrise dauert bis 2011, 10 December 2008.
[29] Euobserver.com: Juncker rejects Sarkozy’s “economic government” for Eurozone, 4 November 2008.
[30] Global Insight Daily Analysis: French government to hold Financial Summit after EU presidency, 20 November 2008.
[31] Deutschlandfunk: Luxembourg premier on German role in European economic stimulus plans, radio interview, 9 December 2008.
[32] Ibid.
[33] The Daily Telegraph: Luxembourg calls for EU treasury to bolster Euro zone, 5 January 2009.
[34] Luxemburger Wort: Prognose von Premierminister Juncker vor dem EU-Gipfel, 10 December 2008.
[35] Zeitung vum Lëtzebuerger Vollek: 1200 Milliarden Euro für die Konzerne de EU, 3 December 2008.
[36] Le Quotidien: Le plan de relance soutenu timidement, 3 December 2008.
[37] Süddeutsche Zeitung: Europa driftet auseinander, 21 January 2009.