Articles - December 2019

Present at the Creation: TINY NATION HAS A BIG PROFILE

Diplomatic Connections Interviews Ambassador Gaston Stronck of Luxembourg to the United States
Roland Flamini

“We are comfortably embedded between Germany, France and Belgium.” This is how Luxembourg’s Ambassador Gaston Stronck describes his tiny country’s geographical position in the heart of Europe. But Luxembourg (pop: 600,000) has long punched well above its size and weight. It is one of the six signatory countries of the 1957 Treaty of Rome that eventually led to the creation of the European Union, and one of the founding nations of the North Atlantic Treaty Organization, NATO (it has a small, but highly trained and well-equipped military). It is one of the founding members of the European Monetary Union and the Schengen Area, and is home to the European Court of Justice, and the European Parliament Secretariat. Not surprisingly, therefore, Luxembourgers are among the strongest supporters of EU membership (87 percent consider membership a positive thing, according to recent polls); and as Ambassador Stronck suggested in an interview with Diplomatic Connections, Luxembourgers favor even closer integration.

Luxembourg is a tri-lingual country (Luxembourgish, German, and French) and is almost as much of a cultural melting pot at the United States. Only half its population is native Luxembourgers; the other half is a multi-layered confection of European and other groups. For example, 16 percent of the population is of Portuguese origin. In addition, 400,000 commuters mainly from Germany, France, and Belgium, cross into the city state every day to work. Yet the ambassador maintained that his country manages to cling to its identity and independence. He describes his country’s government as a constitutional monarchy, except that the Luxembourg “monarch” is not a king, but a grand duke. As with the other European monarchical systems, the political power lies with the elected government whose gay prime minister, Xavier Bettel heads a coalition of Socialists, Democrats and Greens.

With the interview held days before the British election, the outcome and its impact on Brexit were major concerns. Luxembourg and the United Kingdom are close in some specific ways. For example, Luxembourg and the City, London’s financial sector, have complimentary roles in the financial services business, which, after Brexit, faces an uncertain future. Also, male members of the Luxembourg royal family have strong ties with the British military. The late Grand Duke Jean was a graduate of Sandhurst, the British Military Academy, and an honorary general in the British Army. The current Grand Duke, Henri, and, most recently, the Crown Prince, Sebastien also went to Sandhurst. On the political level, Ambassador Stronck suggested that smaller EU countries like Luxembourg, the Netherlands, and Belgium would miss the UK as a buffer to counter the dominant powers, Germany and France.

The ambassador admitted that the richest country in Europe (per capita GDP of more than 80,000 euros) had a bad reputation as a tax haven, but batted aside such allegations, arguing that Luxembourg had followed recommendations from the OECD (Organization for Economic Co-operation and Development) and halted tax concessions to multinationals, and furthermore insisted that EU tax regulations were now so tight that there was no longer room to maneuver as a tax haven.

A career diplomat, Ambassador Stronck was most recently Secretary General of the Luxembourg Foreign Ministry, the most senior post in his country’s diplomatic service. His earlier assignments included Brexit coordinator, and successively ambassador in Delhi, Moscow, and Copenhagen – and an officer in the Luxembourg Army.

Diplomatic Connections: Do you find that there’s a difference between your Washington posting and your previous ambassadorial postings?

Ambassador Stronck:  Oh yes, all postings are fundamentally different. The countries, the relations are different, as is the work. There are different objectives. The cultural environment is different: I say to my younger colleagues, every time it’s like having a new job. Washington is a very privileged posting, it’s prestigious, and one of the most important posts in the diplomatic service.

Diplomatic Connections:  In terms of bi-lateral relations with the United States, what would you like to see the Americans do that they are not already doing?

Ambassador Stronck:  I think it would be helpful if they were to understand the European Union much better, getting away from this cliché of what the European Union is. Even at high levels – at the academic level, for example – I meet people who do not understand what the European Union is today, and how it works.

Diplomatic Connections:  What is your response to this perception?

Ambassador Stronck:  The EU is much more consolidated than Americans seem to think. It will not disappear, and certainly not because of Brexit, or because we have had problems with Greece or within the euro zone. It’s much more stable than you would expect. We don’t talk much about the internal market, or the four freedoms. But neither will disappear just because one element of the EU isn’t in the best shape.

Diplomatic Connections:  What you’re saying is that the U.S. view of the European Union tends to be that it is more fragile than it is in reality…

Ambassador Stronck:  Yes. And with or without the Brits, the EU at 27 (member states) is still more than 400,000 citizens, and a very strong union able to act, to produce legislation and standards – it’s able to be a global player.

Diplomatic Connections:  How does the Trump administration’s current use of tariffs as an economic weapon impact on your country’s trade?

Ambassador Stronck:  We are NATO allies since 70 years -  an important, stable alliance that gave us freedom, wealth, and prosperity. I think the EU and the US are perfectly able to find solutions, and having tariffs before we negotiate is damaging to the U.S. as well as to the European Union. We need free trade; we need the level playing field.

Diplomatic Connections:  Luxembourg is one of the signatories of the Treaty of Rome, and as such one of the founders of the European Union. How much does Luxembourg subscribe to the idea of EU enlargement, as spelled out in the preamble of the Treaty of Rome in the phrase an “ever closer union.”

Ambassador Stronck:  We stick to the phrase “ever closer union” and its interpretation. This phrase caused a lot of problems in the United Kingdom and was one of the key elements leading to the unfortunate referendum. But Luxembourg has been a reliable supporter of European integration, constantly supporting enlargement, which is about sharing sovereignty, not giving it up. When you share sovereignty you are stronger than if you were acting alone. The 27 member states, they are small countries, even Germany and France. And if we are not united we can not be a global player.

Diplomatic Connections:  It has been reported that in the Brexit negotiations, Luxembourg had one of the toughest positions against making concessions to the United Kingdom. True?

Ambassador Stronck:  It may have seemed that way, but when Brexit does come we will have lost a very important ally in a number of areas. The British are free traders, so we are like minded. The British and Luxembourg had a very good cooperation on financial services, Luxembourg is well known for the back office tasks, and the City of London would do the front office business. If you look at different evaluations, who would be most hurt by Brexit, you have obviously the Irish, you probably have the Netherlands and Belgium, and you will have Luxembourg. We will lose with the Brits a reliable ally on many issues.

Diplomatic Connections:  Given that Luxembourg is squeezed between Germany and France, if the Germans and the French are on opposite sides of a particular EU issue, which side is Luxembourg most likely to support?

Ambassador Stronck:  We are the package brokers, and we’ve been that many, many times in such situations. Squeezed between Germany and France it would not be wise to take a radical position favoring Berlin or Paris. When the euro was born at the European Council in Dublin, there were tough, last minute fights between Paris and Berlin, and (Luxembourg) produced the compromise. We are well positioned to make these compromises because we will speak in French to the French and in German to the Germans, and being at the cultural crossroads of these two powerful European states, we understand both of them very well.

Diplomatic Connections:  Luxembourg went from a failing, steel-based economy to one of the world’s great economic success stories – per capita GDP of more than 80,000 euros, an average growth rate of 3 percent. So walk us through this highly successful change.

Ambassador Stronck:  We have been very successful, and very lucky.  This transition was made possible by membership of the European Union, having access to the internal market, and then we add the specific Luxembourg ingredients, stable governments, extremely fast political decision making, early positioning in key developments, the first to move in a number of areas…

Diplomatic Connections:  For example?

Ambassador Stronck:  Luxembourg is a stakeholder in Space resources. One of the most important space companies, SES Global, is headquartered in Luxembourg. With the United States, I think we are the only country that has a law on the exploration and use of Space resources, looking ahead 20 to 30 years when technology will allow us to exploit resources in Space. We’re a player on Space in the United Nations and within the European Union. Our Space agency and NASA published a joint statement recently at the International Astronautical Conference in Washington, and we have attracted a lot of companies involved with Space development and research. It’s an amazing success.

Diplomatic Connections:  Would you like to comment on the fact that Luxembourg is also criticized as being a tax haven, which is not allowed by the EU.

Ambassador Stronck:  That’s true, but we are not a tax haven. We were a first to move when the OECD proposed measures to eliminate BAPS (Base Erosion and Profit Shifting, whereby multinationals shift profits from high-taxation countries to low-taxation countries). I think the days are gone when an EU member state could be qualified as a tax haven. The regulatory system today is so dense and so developed that it’s not possible.

Diplomatic Connections:  Are Luxembourgers threatened by what is widely perceived as Russia’s increasing aggressiveness?

Ambassador Stronck:  We are founding members of NATO. We would most probably not be an independent country today, and the EU as such would not exist if U.S. troops had not in June 1944 brought freedom back to Western Europe. So we are part of this occidental security system. We are comfortably embedded between Germany and France and Belgium and today we don’t have an immediate security threat. Of course, we have terrorism and within the alliance we contribute, as best as we can, to the common defense, and to the interests of the alliance. Now Russia. I served as ambassador to Russia. I know that if the Russians hadn’t been active on the Eastern Front, losing 25 million people the Second World War, the American and Western success on the Western front would not have been possible. So we are perfectly aware that we owe the victory of 8 May, 1945, to the West, but also to the former Soviet Union.

Diplomatic Connections:  So you would say that Luxembourg relations with Russia are normal?

Ambassador Stronck:  They were pretty normal until the Russians decided to invade Ukraine, and annex Crimea. That brought a shift in western European politics towards Russia. Still, I believe that the big threat today is probably not Russia. (U.S. Secretary of State Mike) Pompeo clearly stated in a speech a few weeks ago that China is a very strong power and to defend our interests we have to carefully look at what China is doing, and how it is acting in the world. China is active in the Chinese South Seas, they have a strong presence globally in all the continents, they are not free traders; they protect their market in a quite defensive way; they do not respect the rules on intellectual property.

Diplomatic Connections:  Presumably, though, your relations with China are encased in the EU relations, are they not?

Ambassador Stronck:  Yes, obviously, but we also have good bi-lateral relations - for the moment. We have a very strong presence of Chinese banks in Luxembourg, and we have Chinese investments. Within the EU we have installed a kind of investment screening because we understand that you cannot sit down and look passively at what the Chinese are doing.

Diplomatic Connections:  So said your prime minister Xavier Bettel, “I’m of Polish and Russian origin, with Catholic, Jewish, Orthodox, and atheist grandparents. I’m gay and I’m married [that is, to his partner]. I represent the minority of minorities, and yet I have been able to become prime minister. Could it have happened on any other continent?” Leaving aside other continents, is that the Luxembourg you know?

Ambassador Stronck:  Luxembourg is multi-cultural, open, free, it’s an amazing place, and it’s a melting pot, first of all of Latin, French, and German cultures, and over the years, additional layers of culture have been added. We had the Italian immigration a 100 years ago, so today you have a lot of Italians who are fully integrated. We have a strong Portuguese population  - one out of six Luxembourgers is of Portuguese origin or about 100,000 Portuguese. Following the collapse of Yugoslavia we had a lot of people from there; now we have Syrians, North Africans, Venezuelans. I think we have 170 nationalities in Luxembourg. We speak Luxembourgish, German, French, Italian, Portuguese, English. You will also hear Spanish, Russian – it’s a truly international place. About 48 percent of non-Luxembourgers live in Luxembourg; we have 200,000 daily commuters from France, Germany, and Belgium: 100,000 from France, 50,000 each from Germany and Belgium. And still we are Luxembourgers. It’s amazing to see how many of these commuters become integrated very fast, how many learn the language, and how many learn our traditions and become Luxembourgers.

Diplomatic Connections:  Someone said Luxembourg’s suburbs were in other countries. What percentage of your country’s work force commutes from to and from your neighbors?

Ambassador Stronck:  It must be about 40 percent of the work force. In a certain sense, we are victims of our own success. We have the highest per capita GDP in Europe, a prosperous society, wonderful living conditions, a perfect social security net, but we have also traffic jams – worse than Washington, and real estate prices are very high, and these are problems we have to tackle.

Diplomatic Connections:  What languages are taught in the education system?

Ambassador Stronck:  Most Luxembourgers, at the end of their high-school education speak four languages. We speak Luxembourgish at home. But nobody else speaks Luxembourgish, so we have to learn the languages of our neighbors. In school, we start with German. At seven years old, we add French. Then at 12 years, we add English. Those who go on to higher education probably add an additional two more. So knowing five or six languages is not rare.

Diplomatic Connections:  President Macron’s lamentation that NATO was “brain dead” was widely interpreted as a European lack of confidence in President Trump’s support for the Alliance, particularly the commitment under Article 5 of the Atlantic Treaty, which states that an attack on one NATO member is an attack on the whole Alliance?

Ambassador Stronck:  We need the NATO alliance today more than ever, and Article 5 is the cornerstone of the treaty. Of course, the geostrategic environment has changed since 1949, when NATO was created. But still, if Article 5 is invoked, all member states have to deliver – and they will, and Luxembourg will. The difficulty is the new situations, where nobody thought in 1949 that Article 5 would be invoked. There are gray zones, such as the (recent) Turkish invasion of Syria.

Diplomatic Connections:  Recently, Grand Duke Jean died, having abdicated in 2000 in favor of his son, Grand Duke Henri, after a long reign of almost 36 years. What is the role of the Grand Duke in your country’s government?

Ambassador Stronck:  We are a parliamentary monarchy, and the Grand Duke today is essentially the representative head of state. The power is with the elected government within the constitutional setting.

Diplomatic Connections:  In other words, like the queen of England, and indeed all European monarchs today.

Ambassador Stronck:  Yes, a constitutional expert will point out differences between the Belgian, Danish, Norwegian, or Dutch constitution and the British situation, but they are marginal and modern monarchies have essentially the similar representative status.

Diplomatic Connections:  What are your pastimes?

Ambassador Stronck:  Hiking. I live in Spring Valley, and I go down Battery Park to the C&O Channel, and I go to as far as the Old Angler’s Inn, which is 13 miles there and back. There are beautiful hiking trails in Washington and around. We go hiking in the Shenandoah. The cultural offerings are wonderful; the Kennedy Center has wonderful programs, and I like Opera Lafayette, which is one of the smaller institutions with a niche in Baroque music.

Diplomatic Connections:  Is there a Luxembourg diaspora?

Ambassador Stronck:  Of course. We estimate the diaspora at about 350,000 American Luxembourgers, more than we have native Luxembourgers left at home. Mainly, they came between 1860 and 1880, and they chose to settle in Illinois, Wisconsin, and Iowa, so the Midwest is a Luxembourg area. We keep the ties: I will be in Iowa for the 150th anniversary of the arrival of the first Luxembourgers, and I will be at a Luxembourg celebration in Belgium, Wisconsin. It’s called Belgium: I don’t know why. But it’s Luxembourg. I think I have more family members in the U.S. than I do in Luxembourg.

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