Under the Microscope: Liechtenstein
By Sven Stumbauer
The continent of Europe is home to a hodgepodge of nations with incredible diversity, not just in aspects such as culture, but in size as well. From the giant that is Russia to the small Vatican City, nations across this body of land are vastly different in terms of the territory that make them up. However, despite a nation’s size, one can still be an economic, political, or cultural force of nature on the world stage, and the second nation that will be featured on Under the Microscope is no different. As the fourth smallest nation on the continent and comprising just 160 square kilometers (62 square miles for the freedom loving patriots in America), the nation of Liechtenstein is one of the most geographically, culturally, and economically plentiful nations in Europe. Nudged by Switzerland to the west and south and Austria to the east and north, Liechtenstein is the smallest nation to be bordered by two countries and is also one of the few doubly landlocked nations in the world. Doubly landlocked essentially meaning that a nation is landlocked by other landlocked nations. Despite its borders, Liechtenstein was a notable tax haven, like the previous nation, Monaco, and currently possesses a notable blend of Swiss, Austrian, and German culture. These, and many more aspects of this small yet intangibly massive nation will be discussed in this edition of Under the Microscope.
History and Political Structure
The territory that comprises modern day Liechtenstein has experienced human activity since around 5300 BC during the middle Paleolithic Era when the oldest farming settlements were established in the area. During the Iron Age at around 450 BC, civilizations and cultures such as the Helvetii, Hallstatt, La Tene, and Etruscans. During 58 BC, however, the Alpine tribes in the area were run out by the Romans with the entire area being conquered around 15 BC. The Romans’ hold across Liechtenstein ultimately got occupied and taken over by the Alemanni tribe of Germanic origin, and eventually became part of the Frankish Empire in the sixth century. The area that later encompassed the nation remained under Frankish control until the Treaty of Verdun in 843 divided the empire, causing Liechtenstein to become part of East Francia until its reunification with Middle Francia under the Holy Roman Empire in 1100 AD. At this time, the German language slowly started to replace Romansch as the predominant language in the territory. By the thirteenth century, the Alpine Plateau was controlled by various houses, such as that of Savoy, Zaehringer, Habsburg, and Kyburg, with the Habsburgs gaining control of the territory including Liechtenstein when the Kyburg dynasty fell. The control of Liechtenstein was entrusted to the Counts of Hohenems until Liechtenstein’s independence in 1699. In 1719, after lands had been purchased by the Liechtenstein family, Charles VI declared the nation as a sovereign member state of the Holy Roman Empire. By the nineteenth century, Liechtenstein was ceded to the Confederation of the Rhine created by Napoleon after the Holy Roman Empire’s dissolution. The formation of this confederation caused Liechtenstein to cease owing any obligation to feudal lords or any ruler beyond their own borders, essentially marking the beginning of their sovereignty as a nation. The twentieth century saw Liechtenstein align themselves with Austria-Hungary during WWI, but not participate militarily, while refraining and aligning with Switzerland during WWII. However, the nations of Czechoslovakia and Poland seized holdings of Liechtenstein’s dynastic rulers, resulting in diplomatic relations between the former nation being reestablished in 2009 for the Czech Republic, and Slovakia later that year.
Like nations such as the United Kingdom or Monaco, Liechtenstein has a monarch as the head of state along with an elected parliament that enacts upon the law and passes legislation. Furthermore, the nation is a direct democracy that allows voters to propose constitutional amendments and legislation independent of the legislature. The current constitution of Liechtenstein was created in 2003, replacing the one ratified in 1921 which established the nation as a constitutional monarchy, despite the prince of Liechtenstein having a substantial amount of political authority. The reigning prince of Liechtenstein, who is Prince Hans-Adam II, serves as the head of state of the nation, representing the nation in international affairs, despite having most of them being carried out by their neighbor, Switzerland. Furthermore, much like the president of the USA, the prince is allowed to veto legislation adopted by parliament while also being able to call referendums, propose new legislation, and even dissolve parliament. However, the latter power may be subject to a referendum, serving as a way to limit the prince’s power. Executive power is vested upon a small group called the Landesauchsschus formed by the prime minister, Daniel Risch, along with four others to serve as ministers who are elected by parliament. Moreover, the constitution states that at least two government members must be selected from one of the nation’s two regions, being the Oberland (upper country) or Unterland (under country) in order to achieve proper representation from the whole country. The body that deals with legislative matters is the parliament, locally referred to as the Landtag, and comprises 15 members from the Oberland and 10 from the Unterland. Judicial authority is vested upon the Regional Court at Vaduz, the Princely High Court of Appeal at Vaduz, the Princely Supreme Court, the Administrative Court, and the State Court, the latter of which rules on the conformity of Liechtenstein’s laws and has five members whom are elected by the Landtag.
Liechtenstein’s economy is incredibly diverse despite the nation’s small size. Notable industries include electronics, textiles, precision instruments, metal manufacturing, power tools, pharmaceuticals and food products. The most well known company based in Liechtenstein is Hilti, which is a manager of direct-fastening systems and caters to end-users in the manufacturing and construction industries. Moreover, the nation also has more registered companies within it than citizens and boasts a remarkable free-enterprise economy with a financial sector and quality of living that rivals other nations around it. The nation’s currency is the Swiss Franc and it actively participates in a customs union with Switzerland as well. Since 1995, Liechtenstein has also been a member of the European Economic Area (EEA), which aims to bridge the gap between the European Free Trade Association (EFTA) and the European Union. In addition to that, the country has a fairly high tax rate despite having a fairly low income tax at around 1.2%. This is due to the fact that communes around Liechtenstein impose an additional tax alongside the federal mandate, meaning that the combined income tax can reach a rate of 17.82%. To add even more insult to injury, the income tax is increased for those enrolled in the country’s social security by 4.3% and if one is self employed, this rate is increased to a whopping 11%, meaning that the maximum possible income tax is around 29%. This is actually done in order to combat corporations and individuals who have tried to utilize Liechtenstein’s status as a micro-nation to get away with incredibly low tax rates. Furthermore, investigations by foreign countries have garnered results that show that various organizations and people have in fact evaded high taxation by using trusts and banks in Liechtenstein, meaning that in order to establish themselves as a legitimate financial sector, the nation has had to put their foot down by introducing these measures to curb financial corruption.
Switzerland or Austria?
Naturally, Liechtenstein has a fairly stable relationship with its two neighboring nations, Switzerland and Austria. However, nowadays, the nation prefers to side itself with Switzerland instead of its eastern and northern neighbor. This most likely stems from Liechtenstein aligning itself with Austria during WWI and later, Austria-Hungary as a whole conglomerate. With the Central Powers’ defeat during this conflict, Austria-Hungary was dissolved and hampered economically, causing Liechtenstein to suffer as a result. However, the nation of Switzerland, who famously remained neutral in the war, agreed with Liechtenstein to formulate a customs and monetary union, which is a trade bloc composed of a free trade area with imposed tariffs in order to strengthen the political and economic bonds between countries. This agreement has held firm and is still in place today. To further emphasize the incredibly close bond with Switzerland and Liechtenstein, Switzerland also represents Liechtenstein in international affairs when the nation is not given a seat at the table or unless the nation chooses otherwise and is able to sign treaties and agreements on the nation’s behalf, usually in subjects such as customs duties. The bond between these two nations is so close that during accidents in the Swiss Army’s routine training regiments, both countries often shrug it off as a plain accident and pay compensation for any potential damages. For example, in 1968, five Swiss artillery shells hit a ski resort in Liechtenstein by accident. However, the only recorded damage was to a couple chairs outside of the resort itself. As a result, it is safe to say that despite Liechtenstein’s Austrian ties being incredibly strong, its true brothers lie within those of Swiss nationality.
Notable Sites and Aspects of Liechtenstein
Despite its incredibly small size, Liechtenstein, much like Monaco, packs a massive punch in regards to the activities and sites that it has to offer to the average tourist. The capital, Vaduz, is one of the most picturesque capitals on the entire continent and offers sites such as Rathaus, the town hall of the city, the Neo-Gothic cathedral of Pfarrkirche, and the Vaduz Castle, which although is not open to the public as it is the residency of the monarch, is still a beautiful building that you can still snap a photo of. Along with that, the Schatzkammer Liechtenstein is one of the premier destinations in the city as well, as it consists of artifacts and pieces from the royal family’s over 400 year old collection. To further add upon the array of sites Vaduz offers, the Kunstmuseum and the Liechtenstein National Museum offer the tourist a cornucopia of different experiences which will cater to any specific preference a visitor may have. Outside of Vaduz, however, the towns of Nendeln, Eschen, and Schaan offer a great variety of towns to visit to fully immerse oneself in the alpine landscape that Liechtenstein is composed of. To satisfy one’s culinary desires, the village of Triesenberg is known for its food festival, the Triesenberger Wochen, while also having a palate and dialect of German distinct to the Walser region. Due to its location which is nudged completely in the Alps, Liechtenstein is also a winter sports destination, offering sports such as skiing and snowboarding when the weather gets colder. All in all, the vast variety that Liechtenstein offers make it a must see destination for those passing by it when in Europe, even if the stay within the nation is a brief one.
To sum it all up, the nation of Liechtenstein is an incredible place with an even more diverse array of things to see and do. From its rich history as a crossroads of many empires, both ancient and modern, to its brotherly relationship with Switzerland, Liechtenstein has truly withstood the test of time and has emerged as one of the most well hidden gems on the European continent. Whether it’s appreciating the vast arrays of art on display, marveling at the Schatzkammer of the royal family, or enjoying the food at the Triesenberger Wochen, the average tourist will truly have a once of a kind experience visiting this small yet culturally massive country. Furthermore, the landscape of the Alps that completely encompasses Liechtenstein’s borders make it the only nation in the world that has such a distinction. The changing seasons serve as a wake up call for all lovers of winter sports such as skiing and snowboarding as adrenaline seekers and thrill-goers will enjoy the steep Alpine slopes of this country that few others can offer or even rival. In conclusion, the nation of Liechtenstein shows that not all treasure is located on the coastline or nestled in a hard to reach nook or cranny, but instead, can be found right under the noses of various cultural, economic, and political giants that make up Europe.