Freedom in the World 2004 - Liechtenstein

Political Rights: 1
Civil Liberties: 1
Status: Free
Population: 40,000
GNI/Capita: $25,000
Life Expectancy: 0
Religious Groups: Roman Catholic (76.2 percent), Protestant (7 percent), unknown (10.6 percent), other (6.2 percent)
Ethnic Groups: Alemannic (86 percent), other [including Italian and Turkish] (14 percent)
Capital: Vaduz

Overview

Liechtenstein underwent a major constitutional reform in March 2003 that strengthened the monarch's powers considerably, giving the Council of Europe reason to consider placing the quality of its democracy under monitoring. However, the council decided against monitoring, and there is no evidence yet that the prince plans to use the full extent of his constitutional powers to undermine Liechtenstein's democracy.

Liechtenstein was established in its present form in 1719 after being purchased by Austria's Liechtenstein family. Native residents of the state are primarily descendants of the Germanic Alemanni tribe, and the local language is a German dialect. From 1938 to 1997, the principality was governed by a coalition of the Progressive Citizens' Party (FBP) and the Fatherland Union (VU). The FBP was the senior coalition partner for most of this period. Otmar Hasler of the FBP became leader of his party and prime minister after the FBP won a majority of seats in parliament in February 2001 elections.

Liechtenstein's traditional banking secrecy laws have been relaxed in the face of international scrutiny. In 2000, the Organization for Economic Cooperation and Development's Financial Action Task Force labeled the principality "noncooperative" on money laundering thanks to its secrecy laws. Under pressure, Liechtenstein passed a law ending anonymity for account holders. It was removed from the noncooperative list in June 2001, but after the terrorist attacks in the United States on September 11, 2001, concerns reemerged that Islamic terrorists could be laundering money there. The IMF reported in September 2003 that Liechtenstein had made progress updating its banking regulations, but worried that there might not be enough staff to enforce regulations fully.

An amendment legislating a major constitutional reform was passed by a referendum in March 2003, with just over 64 percent of voters approving. It concentrated a good deal more power in the hands of the monarch, currently Prince Hans-Adam II. The prince had threatened to leave Liechtenstein for Austria if the measure was not passed.

The new law gives the prince the power to dismiss the government, veto legislation, and appoint judges. However, it removed the prince's right to rule by emergency decree. The Council of Europe, which monitors democracy among its member countries, expressed concern and considered placing the democratic standards of Liechtenstein's political system under formal monitoring. It decided against doing so (probably thanks in part to extensive lobbying from the principality). Though the measure makes Hans-Adam possibly the most powerful monarch in Europe, there is no sign yet that the prince plans to abuse his powers. He has announced that he will hand over his governmental power to his son and heir, Prince Alois, in August 2004 while remaining head of state.

Political Rights and Civil Liberties

The people of Liechtenstein can change their government democratically, but the unelected monarch won greater powers in 2003, making him perhaps the most powerful in Europe. He has the power to dismiss the government, veto legislation and appoint judges. These powers were granted to him democratically by a solid majority of Liechtenstein's citizens in the March 2003 referendum. The legislature consists of 25 deputies chosen in fair elections carried out under proportional representation.

Parties are able to organize freely, and two have dominated Liechtenstein's politics over the last half-century. There are a few independents in the legislature. Switzerland and Austria, the two countries that surround Liechtenstein, have a good measure of influence on the tiny principality, and Liechtenstein is a member of the European Economic Area, a free-trade area of countries that are not members of the European Union. Its currency is the Swiss franc. Freely elected representatives determine the policies of the government, but the monarch can now theoretically veto policies and threaten the government with dismissal.

The constitution guarantees freedom of expression and of the media. There is one private television station competing with the state broadcaster, and the only radio station is in private hands. The two daily newspapers are aligned roughly with the two major political parties. Austria's and Switzerland's broadcasts are available and popular in the country. Internet access is unfettered.

The constitution establishes Roman Catholicism as the state religion but protects freedom of belief. Catholic or Protestant religious education is mandatory, but exceptions are routinely granted. All religious groups are tax exempt. The government respects academic freedom.

The right of association is protected, and the principality has one small trade union.

Judges are appointed by the prince. Due process is respected, and conditions in prisons are acceptable. After the controversy over the monarch's new powers, the Council of Europe's secretary-general sought to reassure those concerned about democracy that "Liechtenstein's status as a law-based state is unarguable." The IMF rated the financial-services regulators, important to a country so reliant on banking, as capable but too few to police all banks and account holders fully.

The abortion law is restrictive, allowing the procedure only when the life or health (including mental health) of the woman is threatened.