LUXEMBOURG

The Luxembourg state apparatus lacks the critical mass to have an authoritative and competent policy advisory capacity. In most cases, the administration is fully occupied with daily operations and has neither personal advisory unit for ministers nor extra-governmental bodies to do strategic planning. The most outstanding exception is the Ministry of Social Security, which has a long tradition in medium- and long-term social programming, namely of the actuarial balance of the pension system. New capacities are developing in the recently created Ministry of Sustainable Development and Infrastructure.

A good example of the lack of planning capacity is the Hospital Plan. Some critics have pointed out that what is supposed to be a plan for the future does not go beyond a description of the current situation and the management of practical constraints.
The only major research facility in the socioeconomic field is the publicly financed Centre d’Etudes de Populations, de Pauvreté et de Politiques Socio-Economiques / International Network for Studies in Technology, Environment, Alternatives, Development (CEPS/INSTEAD), which, like the central statistics office STATEC, has no policy planning capacities.

Owing to the lack of domestic expertise, the government often turns to foreign institutes for opinion and advice (e.g., OECD, the International Labor Organization (ILO), universities or private study offices). The most notable example is Professor Lionel Fontagné (Paris School of Economics) who has advised the Ministry of Economic Affairs on the issue of competitiveness. Sometimes, nongovernmental organizations such as Ecological Movement (Mouvement écologique, MECO), an environmental organization, rely on foreign academic experts to oblige the government to change its ways. The recently established university has so far brought no change to this situation.
A good example is the reform of psychiatry. A Swiss health expert who had already participated in a 1993 report presented a so-called planning study, comprising an inventory and offering recommendations. In 2008 this study was transformed into a national reform plan. In 2008 the same expert evaluated the implementation of the recommendations of his own planning study (of 2005), which led to a 2009 law on the hospitalization of persons with mental disorders (Loi du 10 décembre 2009 sur le placement des personnes souffrant de troubles mentaux).

According to law, Luxembourg’s prime minister plays the role of a “primus inter pares” and as a consequence the Office of the Prime Minister (PMO) has no institutional resources to assess or control the activities of other ministries. Nevertheless, through informal contacts with line ministry civil servants a certain checking process is exercised and the respect of government priorities is enforced.
The PMO employs some 40 civil servants, and six of them can be considered senior officers (conseiller de gouvernement). Their number has doubled over recent years. Their background and training is primarily in law, economics or political science. Expertise in economics and finance is less well-represented. The number of diplomats working for the prime minister’s diplomatic cell has also been expanded, reflecting the increased role the prime minister plays in international affairs. As far as employee recruitment goes, partisan affiliation plays (or is supposed to play) a negligible role. But on the other hand membership in the prime minister’s party is not detrimental to recruitment.
The Inspectorate General of Finance (Inspection générale des finances, IGF) evaluates ministerial draft bills and participates in numerous interdepartmental committees. This can be considered part of the core government, especially as the prime minister was finance minister for a long period and remains treasury minister today.

In theory, the prime minister can of course reject policy proposals. There is some disagreement between experts if and how the prime minister uses this right. On the one hand, the current prime minister, Jean-Claude Juncker, overshadows the other members of government by his charisma and international recognition. This gives him a certain authority that, in these days of unaccustomed austerity, has proved essential for the cohesion, and perhaps even the survival, of the government coalition.
On the other hand the prime minister acts as a “primus inter pares” and it would seem that he is particularly reluctant to interfere in dossiers handled by ministries controlled by the coalition partner. Here too, technical expertise at the Office of the Prime Minister or the lack of it would seem to prevent the prime minister to become more active in the formulation of governmental policy. The arbitrage function is exerted if at all at the level of the numerous consultative bodies or interministerial organs and of course the Inspectorate General of Finance (Inspection générale des finances, IGF) affiliated to the budget ministry. That is where a genuine arbitrage role takes place, although limited most of the time to the financial or budgetary impact of policy measures.

Technically speaking, as there are no institutionalized mechanisms of coordination with line ministries, the Office of the Prime Minister has no capacity to become involved in the preparation of bills or proposals by line ministries and is not even legally entitled to do so. Line ministries are pretty much free to pursue policy initiatives provided that they are in accordance with the governmental and coalition programs and that they respect budgetary constraints. There is no unit dealing with policy assessment and evaluation. Informally, no proposal is presented to the Council of Ministers without being approved by the prime minister beforehand. Even though, since 2009, the prime minister no longer holds the very strategic finance portfolio, his central role in governance has not been weakened.

In a strict sense there are no cabinet committees, and the cabinet has to rely entirely on the work of the different ministries or inter-ministerial groups, if more than one department is concerned. Generally cabinet meetings are well-organized and only bills that have been accepted informally are presented to the cabinet. Moreover, bills have to be scrutinized by experts at the finance ministry.

Senior officials play a very important role in the preparation of cabinet meetings. Appointed for life and generally remaining in the same ministry, senior officials represent continuity and over time they form an informal network with their peers from other ministries. Their power is also based on the fact that ministers are usually in charge of more than one portfolio and must rely on a trusted advisor, especially in small ministries that may not be their main focus or central to political debate. Senior officials heading such departments have a certain degree of autonomy.
Before the cabinet meeting, there is often a preparation meeting held at the senior official level.

Senior officials and interministerial committees are important in the coordination of policy proposals.

There are many occasions for informal contact and coordination between experts and administrative personnel. The fact that their numbers are in general small; that all actors are concentrated in the capital; and that within the capital the government district itself is intimate. Furthermore, there is much consultation between the two coalition parties.

Regulatory impact analysis, in the true sense of the concept, does not exist in Luxembourg. Nevertheless, as of 10 years ago, every new law or regulation has to be accompanied by a financial fact sheet listing direct expenses and revenues and an impact assessment form specifying administrative costs. The administrative costs are all the formalities and administrative obligations incumbent on businesses, citizens, administrations and ministries, directly or indirectly related to the legislation.
In late 2009, the impact assessment form was redesigned by the Committee for Administrative Simplification (Comité à la Simplification Administrative, CSA) to give new life to a poorly used tool.

Does not apply.

Does not apply.

Luxembourg is a consensus-oriented society. This includes some neo-corporatist features such as six professional chambers, three representing employers and three representing workers, which have to give their advice on any bills or regulations relating to their sphere of competence. These professional chambers also have the right to submit proposals to the government, so they play an active role in the legislative process. The Economic and Social Council (ESC) is an advisory body composed of representatives from business as well as from trade unions and government. It meets regularly, in contrast to the Tripartite Coordination Committee established in the wake of a crisis in the steel industry in 1978, which gathers only in urgent situations.
As its name indicates, the Tripartite Coordination Committee is composed of three parties with an equal number of government, trade union and business representatives. Intended as an exceptional response to an exceptional situation, it is called to life in economically difficult situations.
The tradition of some 60 years of consensual negotiation and dialogue with a high level of social stability is described as the “Luxembourg model” (Hirsch 2007).
However in spring 2010 the model came under pressure as the Tripartite Coordination Committee failed to agree on measures in response to the global financial crisis and its impact on Luxembourg’s economy. The focus of the meeting was set primarily on the competitiveness of the national economy, the situation of the labor market and the evolution of public finances. The challenge of drastic austerity measures in a country accustomed to wealth brings about a crucial test for the survival of this institution and the “Luxembourg model” in general.

Weekly press briefings held by the prime minister after cabinet meetings constitute the government’s main information channel. It is generally the prime minister who presents the major issues and responds to journalists’ questions. Revealing any dissent in the government or between coalition parties would go against the deeply rooted consensus tradition and is rare. Thus the government “speaks with one voice.” This unanimity is currently threatened, however, by the policy of austerity adopted in response to the financial crisis.

In general, the government is able to implement its strategic objectives, although this process often takes much longer than planned, given that policy based on consensus is often cumbersome. Projects are sometimes not only slowed down but delayed indefinitely, especially when powerful lobbies are involved.
This is particularly the case for major infrastructural or zoning projects, such as a tramway system for the city of Luxembourg, which has been under discussion since the 1990s. A law proposal that was already very far advanced was postponed before the 1999 election, as the CSV were afraid of the reactions of some local business lobbies. Since then, different variants have been discussed, studies have been carried out and it has been decided to go ahead with the tram in principle. The Alternative Democratic Reform Party (ADR) made its opposition to the project a key election issue in 2009, but it did not meet with the hoped-for response of voters. A final decision is subject to finance questions and is still pending.

Luxembourg’s electoral system, known as “panachage,” is a combination of the proportional representation of lists with the possibility for the voter to pick individual candidates by giving them preferential votes. Consequently, the voter, and not the party, decides the composition of parliament and even of the government, since those with the best results usually become ministers.
This system encourages politicians to take personal initiatives, but as they generally address small lobbies, they do not conflict with the government’s agenda.
A “go-it-alone” action of a CSV member of parliament and former minister has, however, caused a lot of attention, because it challenged one of the basic tenants of consensus within the political system, namely not to appeal to nationalism and xenophobia. This MP submitted a proposal for a law to change the Luxembourg national flag, without any prior consultation with the party establishment. Even if the purpose was folkloristic, a petition in favor of this initiative obtained a number of signatures corresponding to 12% of the electorate.
This personal initiative annoyed the CSV because it does not correspond to the modern image the party wants to convey. On the other hand, it contributed to attracting those in the electorate who fear being “swamped” by foreigners and being unable to compete with them on the labor market.

There is no formal monitoring by the Office of the Prime Minister as no institutional resources exist to carry it out. However, the small size of the government administration fosters a high level of transparency without the necessity of explicit monitoring tools. In case of conflict, the prime minister acts as conciliator.

Executive agencies lack the autonomy to pursue a course of action independent of the guidelines issued by the ministries that control them. Sometimes, the strong personality of agency heads leads to some conflicts. But, if and when these become known in public, the views of the minister or his key collaborators prevail.
At least the domain of social security has a department dedicated to monitor the executive agencies, namely the Social Services Authority (Inspection Générale de la Sécurité Sociale, IGSS). The Ministry of Finance also has a department to monitor the financial management of all governmental agencies, namely the Inspectorate General of Finance (Inspection générale des finances, IGF).

Owing to the country’s small size, Luxembourg contains no subnational entities, with the exception of its 116 municipalities. Two-thirds of municipalities have fewer than 3,000 inhabitants, which is thought to be too small to cope with political, administrative and technical demands. Therefore a process of territorial reform has been initiated, which will be accelerated after the municipal elections of 2011 and completed with the elections for the newly merged communities in 2017. No municipality shall have fewer than 3,000 inhabitants or more than 100 square kilometers.
Municipalities have no fiscal autonomy and frequently complain that funding from the central government is insufficient. The past decade was, however, marked by a decentralization of cultural infrastructure, resulting in operational costs that are perceived as excessive by many citizens confronted with an austerity unknown until this point. When the Tripartite considered finding savings at the municipal level, the Union of Luxembourg Towns and Municipalities (Syndicat des Villes et Communes Luxembourgeoises, SYVICOL) protested, placing particular emphasis on its non-representation within this body.

Local government depends increasingly on transfers from the central government. The land-use regulation was centralized in the most recent legislative period and a first conflict between local interests and the rules of the integrated traffic and land use plan (Integrierte Verkehrs- und Landesplanung, IVL) occurred when the construction of a business center with 129 shops in a rural region near the capital was not authorized.
With the reform of the education system the municipalities have lost one of their major prerogatives, the autonomous management of teaching staff in primary school (involving pupils from four to 12 years of age).
In return, the government program promises more autonomy as a result of the territorial reform, especially more financial autonomy and the backing of municipal finance by regional funds.
This increased financial autonomy and backing of municipal finance was part of the governmental program in 2009 but has not progressed to date.

The Ministry of Interior ensures control of the local administrations. As part of the territorial reform, the administration responsible for monitoring the municipalities’ finances will be integrated within the existing national Auditing Court.

Luxembourg has made significant progress in implementing European legislation. Its implementation deficit reduced from 2.8% in December 2007 to 1.4% in November 2009. Due to the improved performance of most member states, Luxembourg still ranks 26 out of 27 and its implementation delay remains considerably high (15 months compared to an average of 9 months), however the quality of its implementation is satisfactory, as it ranks 5 out of 27.
The government has announced as part of its program an analysis of the current implementation system to identify potential problems, with a simplification of interplay of parliament and states council under consideration. So far no draft legislation has been submitted.

Luxembourg is mainly involved in international reform initiatives in the context of the European Union. As a founding member and through its senior ministers who have a better understanding of how the system works than their colleagues, it plays a certain role that is only noticed by public opinion if it is reported in the news, for instance, during discussions on bank secrecy. This occurred in spring 2009, when it succeeded alongside Austria and Belgium in gaining exceptions in information exchange in the context of the European Savings Tax Directive.
Sometimes Luxembourg can play a more dynamic role and seize opportunities. The regulation of investment funds throughout the European Union, known as the Undertakings for Collective Investment in Transferable Securities (UCITS), is a convincing example. UCITS refers to a series of European Union directives that established a common regulatory regime for marketing collective investment vehicles throughout Europe. Luxembourg was the first country to pass the UCITS legislation into national law in 1988, granting itself a competitive advantage not lost since then, and confirmed during the transition to UCITS III in December 2002. This alertness has contributed to making Luxembourg a major center for investment funds. At the moment, lobbies are maneuvering to speedily implement UCITS IV, adopted in January 2009 into national law and their think-tanks are already looking beyond this to UCITS V.

In the absence of systematic monitoring of institutional arrangements, the government mainly relies on international expertise. This includes, for instance, the 2007 OECD Country Report on Research and Innovation that led to the creation of a higher research and innovation committee and the more recent 2009 ERAWATCH assessment of research systems and policies.
An example for best practice is the 2006 Council of Europe Report entitled “Profile of the Luxembourgish educational linguistic policy,” which was conducted through a two-year long discussion process involving national stakeholders and had a real influence on policy-making, as it led to a reform of language teaching in 2009.
The audit performed by the OECD on the labor market administration (Administration de l’emploi, ADEM), has meanwhile resulted in a draft bill that is scheduled for June 2010. Critical voices say that these reports, regardless of their actual quality, cannot replace local expertise.

The Ministry for Public Service and Administrative Reform created in 1995 is not among the most dynamic and effective departments, but has over time reached a modest but steady pace of reforms. The 2009 government program foresees a series of administrative reforms. One of the most ambitious, the general opening of the civil service to citizens of the European Union, with the exception of some positions relating to the exercise of national sovereignty, has already been voted through and came into effect on January 1, 2010.
Most other reforms are in the domain of e-government, such as the planned implementation of electronic internal and external document exchange, or the following developments of the past two years:

1) LuxTrust, a certification authority based on a public-private partnership between the Luxembourg government and major private sector actors in Luxembourg, in particular the financial sector, which issues and manages electronic certificates.
2) Guichet.lu, Luxembourg’s Citizen & Business portal, a unified on-line office targeting both citizens and businesses for dealing with administrative formalities, and offering the possibility of on-line income tax submission for individuals.
3) The year 2009 has seen many new Web presences among various administrations: Luxembourg.lu for general information and national branding; “Luxembourg for ICT” to promote Luxembourg as a center for online and ICT business and as central gateway to European markets, with the same concept as the older “Luxembourg for finance” and “Luxembourg for business” websites; and more specialized portals for health services and volunteering.

The first “Master Plan of Electronic Governance” was dated 2002, but its implementation has taken much time. It was accelerated by a presentation charter and project tailoring definitions, known as the “new normalization reference” in 2007. Since then evolution has been very positive.

There is some difference between native Luxembourgers and foreign nationals. The latter (42.9% of the population on January 1, 2010) do not really participate in political life, as they have restricted voting rights and about half of them do not speak Luxembourgish, the language in which political debate takes place. Two new free daily newspapers published in French and particularly popular among young adults may improve awareness of national politics among this population.
The parliament has its own television channel, called ChamberTV, which broadcasts public sessions and a modest one-hour per week magazine is repeated in loop. Even if its audience is small (5.2%), the impact of this program is probably greater than that of the parliamentary newspaper, called Chamber-bliettchen, which consists mainly of verbatim transcripts of the proceedings, and is distributed free of charge to every household in Luxembourg.

Each legislator can ask the government for information or for documents, and ministries generally respond positively to these demands. Thus, information flows freely between the Chamber of Deputies and the government. Even with respect to sensitive issues such as national security, few restrictions exist. Being open with information is in the government’s best interest, as this helps ensure parliamentary approval of its initiatives.

Interaction between the parliament and the executive is generally straightforward, even in relation to controversial issues, such as the so called Bombing Affair (Bommeleeër-Affair). This is one of the most sensitive files in Luxembourg’s legal history, going back to a series of bombings in the 1980s, which have still not been solved and which, it appears today, were staged by the police’s own special forces. To investigate this hypothesis the parliamentary commission for justice invited the justice minister and the prosecuting attorney to discuss the issue before them. Even if the commission did not contribute to solving the case, it is an example of the parliament’s power to get information.

Parliamentary committees are able to summon government or nongovernmental experts to testify. They are invited to committee meetings or, in exceptional cases, when issues become a matter of significant public interest, to meetings open to the public. In October 2009 three environmental organizations were invited to a public hearing about the national plan on CO2 reduction.

The tasks areas of parliamentary committees do not match the task area of ministries in total. Sometimes control responsibilities are split because of developments within the government. An example in the 2009 government is that the minister for agriculture, viticulture and rural development is also minister for sports and deputy minister for social economy. The Ministry for Agriculture has a committee of its own, while sports issues are amalgamated with education, and social economy is combined with economy and foreign trade.
With the creation of the super-ministry for sustainable development, the parliamentary committee has also been redefined to correspond to its new responsibilities.
Joint meetings of two or more committees take place if the subject topic requires it.

Since 1999, the Court of Auditors has controlled the financial management of the instruments, administrations and services of the state in an absolutely independent way and transmits a general report to parliament each year.
Moreover, the court can present its findings and recommendations on specific areas of financial management in a special report at any time, either at the request of the parliament or on its own initiative. These special reports are also submitted to parliament.
During the revision period, the court presented a special report on the computerization of ticketing in public transport and on the planning and construction of the museum of the fortress of Luxembourg.

The ombudsman, at the head of an institution created in 2004, has become a well-accepted and respected mediator between citizens and state authorities. His responsibilities have recently been broadened by a new function, the inspection of detention centers (in the context of the United Nations’ Optional Protocol to the Convention against Torture (OPCAT) convention).
The number of complaints to the ombudsman has been stable (between 900 and 950) for the past three years, as has the rate of rulings in favor of complainants’ correction rate (about 80%). These high figures show both the efficiency and the necessity of this institution.

Apart from some local stations, Luxembourg has only one television program that meets professional standards. This program, broadcast by RTL, consists of a core broadcast of one hour, comprised of a 30-minute news magazine with some additional features (e.g., sports, youth items), and is repeated throughout the day. Though privately owned and oriented mainly toward ”infotainment,” a convention with the government imposes a minimum standard, especially with regard to national information services. Recently a five-minute news flash in French was added, while the main news has been broadcast in Luxembourgish with French and German subtitles since 2007.

Radio broadcasting is still dominated by RTL but has diversified. Its small competitors include a public radio station (Radio 100.7), which has about a 10% share of the audience among Luxembourgers over the age of 18.

Parliament has its own channel, called ChamberTV, to broadcast public sessions, and a very modest television program (one hour per week repeated in loop). Even if its audience is modest (5.2%), the impact of this media presence is probably more significant than that of the parliamentary newspaper, entitled “Chamber-bliettchen,” which consists mainly of the verbatim transcripts of the proceedings, and is distributed free of charge to every household in Luxembourg.

The four major parties propose plausible programs in the sense that they involve no excessive or extravagant proposals. Luxembourg political culture is based on a form of consensus and pragmatism that converges on conservatism. Vested rights and social achievement are respected by all parties. The Christian Social People’s Party is probably the most socialist party of Europe within the Christian democratic party family; the social democrats, who still call themselves the Socialist Workers’ Party (LSAP), is the party of the economics minister, who travels the world to attract new companies to Luxembourg; the Democratic Party (DP) criticizes the government’s austerity and present themselves as the defender of families, the middle class and civil servants. The Green Party holds positions on the city councils of the two major cities. In the capital, they are the junior partner of the Democratic Party and in the second largest city they are the partner of the LSAP.
The panachage system reinforces the tendency toward immobility, as candidates rely on personalized votes. A proposal that is not “plausible” to voters means a candidate will gain no votes. Given that different, sometimes contradictory, categorical interests have to be taken into account, electoral programs sometimes lack coherence. Strategic plans and innovative policy proposals are not fostered by this voting system.

Employers’ associations, business associations and trade unions are involved through the aforementioned neo-corporatist institutions in policy-making, namely the Economic and Social Council (Conseil économique et social, CES), which regularly publishes studies of great interest, for instance a yearly report on the economic, social and financial evolution of the country. The government commissioned the CES, alongside the Council for Sustainable Development (Conseil supérieur pour un développement durable, CSDD), to study an alternative measure of wealth and well-being independent of GNP (inspired by the Stiglitz Commission on the Measurement of Economic Performance and Social Progress).

Various NGOs have considerable recognition in Luxembourg and provide a significant contribution to public debate.
The Ecological Movement (Movement écologique, MECO), which sees itself as a lobbyist for the environment and sustainable development, denounces low gasoline prices, among other things. Its internet site, Mecoskop, monitors the implementation of the government’s program commitments.
The “Cercle de cooperation,” an umbrella organization of development NGOs, caused a lot of turmoil with a study on the financial sector, accusing Luxembourg of siphoning off considerable amounts of money from developing countries through illegal or at least illegitimate means. The banking association (Association des Banques et Banquiers Luxembourgeois, ABBL) refuted the conclusions and showed numerous factual errors.
The Catholic Church, which could once be considered the opinion leader in a conservative and rural country, has greatly lost its influence, even if it still owns the major newspaper. In contrast, Caritas, the Catholic charity organization, recently attracted attention with its socially progressive views and its commitment to asylum seekers. The Caritas Yearbook has been published since 2007 to foster “the dialogue between political leaders, civil society and business.”