Luxemburg, Europe’s bridge builders with ulterior motives

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“As a small nation, we’re bridge builders by nature.” This was how Xavier Bettel lately summarised the best way Luxembourg sees itself in terms of European coverage. Not way back he needed to step down because the Liberal head of the Luxembourg authorities, a put up he had held for ten years, however in his new place of Minister of Overseas Affairs he continues to domesticate the nation’s picture as a passionate advocate of European solidarity – and in so doing can be positioning himself fairly aggressively as a candidate for the workplace of President of the Council of the EU.

What Bettel and different senior Luxembourg politicians not often say, nonetheless, is that their nation has historically performed an ambivalent function inside the EU. In lots of areas the tiny Grand Duchy within the coronary heart of Europe is certainly dedicated to EU progress. European integration is a part of  the nation’s raison d’être and isn’t politically controversial. This doesn’t imply, nonetheless, that Luxembourg doesn’t pursue its personal agenda on the EU degree.

Taxation is a key coverage space the place the cross-party Europhilia breaks down, and it is usually largely absent from public debate. Behind the scenes, Luxembourg’s governments defend their nationwide pursuits discreetly, persistently and – because of the veto on EU taxation points – typically efficiently. As former Minister of Overseas Affairs Jean Asselborn as soon as put it in an interview for Reporter.lu, “We’re not altar boys. We have now our ulterior motives too”.

It’s subsequently no surprise that Luxembourg’s dangerous picture as a tax haven nonetheless persists within the eyes of a few of its companions. But this tiny nation with its outsize monetary centre has modified significantly, albeit not essentially from conviction. Moderately, it has needed to give approach to worldwide strain (not least from its highly effective neighbours, Germany and France) to change a few of its “aggressive tax avoidance” practices, because the EU Fee nonetheless calls them.

There has by no means been a radical rethink of them, nonetheless. The nation’s financial dynamism stays extremely depending on attracting huge quantities of overseas capital. Its funding fund trade is flourishing and is now second solely to the US within the worth of the funding property it manages.

Gasoline and tobacco tourism – supported by tax dumping – add billions of euros to the state coffers. The infamous letterbox corporations with their very restricted financial substance proceed to be politically tolerated. Or, to cite Jean Asselborn once more: “As a small nation we don’t have room for a lot of buildings, that’s why we have now so many letterboxes.”