Ambassadors Archive 1

Liechtenstein: The Unknown Heart of Europe

By Hugh S. Galford

Cradled high in the Alps between Austria and Switzerland, the Principality of Liechtenstein has created a fairytale existence for itself. A population of 34,000, high income, peaceful relations with its neighbors and unspoiled countryside provide an idyllic environment. The last vestige of the German-speaking Holy Roman Empire, Liechtenstein has managed to avoid breakup for 300 years. Its continuing independence at the heart of Europe is itself the stuff of legend.

A modern constitutional monarchy, Liechtenstein's prince and his family live in a storybook castle overlooking Vaduz, the capital city. A major industrial center, its rugged Alpine beauty remains nearly unspoiled. And with one-third of its population foreign-born, Liechtenstein's modern history is free of racial or religious tension. Ms. Claudia Fritsche, Liechtenstein's first Ambassador to the United States, is justifiably proud of her country.

The Embassy, opened in October 2002, is one of only two missions the country has outside of Europe, the Ambassador says, the other being the Permanent Mission to the UN in New York. Prior to last October, the Swiss Embassy served as Liechtenstein's Interests Section, an indication of the close historical ties between the two countries. "This is the first time Liechtenstein has opened an Embassy in a country it does not border, or that houses an organization Liechtenstein is a member of," the Ambassador says.

The Embassy was opened, she says, because Liechtenstein "wants to put relations with the US on a different level. Here we can defend our interests directly and quickly." Those interests are mainly economic. Being a financial center, there is close cooperation with the United States in the fight against money-laundering and the financing of terrorism. The US is Liechtenstein's largest export partner; the country exports more to the US than to its neighbors. Given this situation, the government came to the conclusion that it had to be present in Washington.

Prior to Washington, Ambassador Fritsche served as the Permanent Representative to the United Nations for 12 years. She joined the Office for Foreign Affairs in 1978, and has represented Liechtenstein at the Council of Europe in Strasbourg, the European Committee on Equality between Women and Men, the European Free Trade Association, and Liechtenstein's Embassies in Vienna and Bern.

Liechtenstein, the Ambassador notes, was not involved in World War II. "We were a neutral country, " she says. "Neutrality is not embedded in our constitution as it is in Switzerland, but we have historically practiced neutrality." This is in part due to the fact that Liechtenstein has not had an army for almost 150 years. "That was a decision made when we were a poor, largely agricultural society. We were too small and not in a position to support an army." World War II did not have serious effects on the country, causing only minor food shortages.

Following the war, given the industrious nature of its people, Liechtenstein gradually developed into a prosperous country. Due to its size and geographical location, Liechtenstein has no natural resources, and has had to rely on its main capital, its people.

"We are one of the most industrialized countries in the world," Ambassador Fritsche says. There are approximately 2,000 active companies in Liechtenstein, an amazing number given the country's population of 34,000. Liechtenstein's industries specialize in high-quality, capital- intensive, high-tech products for niche markets. The five largest companies produce tools for the construction industry, dental materials and artificial teeth, high-end fashion jewelry and gift items made of Austrian cut crystal, components for semiconductors and cam shafts for the automobile industry.

In addition to manufacturing, Liechtenstein has a solid service industry. The country is also a growing European financial center. Liechtenstein has only 17 banks, but its financial sector produces 29 percent of the country's GDP, compared with 40 percent from the manufacturing sector. The financial sector came under scrutiny following the events of Sept. 11, 2001. Liechtenstein was accused of not cooperating with questions regarding money-laundering. These accusations, the Ambassador says, "were much exaggerated, but taken seriously." The country analyzed what was wrong with the system, which did have certain shortcomings, mainly in the area of lax enforcement of oversight. Changes have since been made.

"Compared with other financial centers, we are now at, or near, the top of international standards," Ambassador Fritsche says. "We doubled the number of prosecutors, concluded a bilateral treaty with the US for legal assistance on this matter, and directly interact with the US Department of State, leading to faster responses. This has been a big step in intensifying our cooperation with the US."

Just as Liechtenstein's economic development can be traced to the end of World War II, so can its national identity. Prior to the war, Liechtenstein's princes lived outside of the country, usually in Vienna or their properties in what is now the Czech Republic and Slovakia. It was only in 1938 that Prince Franz Joseph took up residence in the country as "a commitment to be with the people during a time of difficulty." Liechtensteiners, according to the Ambassador, "are not very different from their Austrian or Swiss neighbors. Our mentality is that of an Alpine Alemannic country."

World War II also had an important influence on Liechtenstein's relations with her European neighbors and with the rest of the world. Following the war Liechtenstein, with other nations, realized the importance of European unity to the future peace of the continent. Liechtenstein has not joined the European Union, but is a part of the European Economic Area. The EEA treaty allows Liechtenstein to participate in many of the EU's freedoms: movement of goods, services and access to the EU market.

This situation suits Liechtenstein at the moment, the Ambassador believes. "The EU is a big structure not suited to accommodate small entities." The EU's structures may well change, she says, with the new EU constitution under consideration, and with several small countries (including Malta and Cyprus) joining the Union. The proposed constitution would most likely change the conditions for small countries. Changes to the current structure include reform of the voting process so that small countries cannot alone block decisions, and would establish an elected multi-year presidency. Once approved by the European Parliament, the constitution would still need to be ratified by every member nation.

Pondering the question of future membership, she says, "At the moment the EU is too big for us and we're too small for them. Several countries still are not members. In five to ten years, who knows? The situation may be different and we may wish to reconsider membership." The EEA treaty "is a very good solution for us," the Ambassador says.

While a party to European unity, Liechtenstein's world view extends beyond the continent. During World War II, refugees from surrounding areas transited the country and it was partly to serve these refugees that the Liechtenstein Red Cross was founded. The country's humanitarian work continues unabated today.

The Ambassador explains: "Although Liechtenstein is part of Europe, we are very aware of the rest of the world. We know how fortunate we are to be prosperous, untouched by many outside problems, and to have an intact natural environment. We have a privileged status, but we are nevertheless aware of the many disadvantaged people in the world."

Liechtenstein is involved in humanitarian work, participating in the UNHCR, among other organizations. Throughout the post-war period, the country has welcomed refugees. In the 1950s, Liechtenstein took in Hungarians, in the 1970s, several dozen refugees from Laos and Vietnam arrived. More recently, about 20 Tibetans have taken up residence. Liechtenstein also took in about 700 refugees during the Bosnian conflict. While these numbers are small, the Ambassador is quick to point out that the 700 refugees from the former Yugoslavia equaled two percent of Liechtenstein's population. "The numbers appear small, but if you extrapolate percentages to other countries, they're huge."

An active member of the UN, the Ambassador says that her country "has great trust in the UN and its agencies." Liechtenstein has a small national organization for development cooperation. Many of the relevant projects have been led by Liechtensteiners.

This is important, Ambassador Fritsche says, because with an area the size of Washington, DC, "most Liechtensteiners know someone who has led a project financed by the Liechtenstein Development Cooperation organization. The work of our Development Cooperation organization is thus personalized for the population." The Ambassador believes that in the UN context small projects such as trickle-up programs and microloans hold great promise for the developing world. Having spent 12 years at the UN before her appointment as Ambassador to Washington, Ms. Fritsche believes there is "very fine work" being done by the United Nations.

Ambassador Fritsche's main goals for her new Embassy are to put Liechtenstein on the American map and to correct stereotypes by providing better information about her country. Few Americans, she says, are aware of Liechtenstein's industrial sector. She also hopes that by increasing knowledge of Liechtenstein, she can increase its popularity and give a boost to tourism. Tourism development is independent of the government. Most tourists come from neighboring Austria and Switzerland and other European countries, or are American and Japanese tour groups passing through the country.

"Many American tourists spend only two to three hours in Liechtenstein and then continue elsewhere," she says. "We would like them to stay longer and get to know us better."

At the heart of the AmbassadorÕs mission in Washington is also the promotion of Liechtenstein's culture, which, apart from spectacular scenery, is one of the countryÕs great secrets.

Though small, Liechtenstein has much to offer the visitor. The Princely art collection is rich in Rubens' paintings and the works of renowned Flemish painters. The contemporary structure of the Art Museum is a striking addition to the small number of museums. The country boasts a number of five-star restaurants along with a healthy viniculture. The mountains offer a myriad of outdoor activities. The country also provides a convenient base for day trips to neighboring countries. "Given the distances," the Ambassador says, "it is not uncommon for Liechtensteiners to spend an evening out in three different countries."

Furthermore, the Ambassador wants to promote the exchange of students through the development of scholarships. Without major universities of their own, most Liechtensteiners attend university in Switzerland, Austria or Germany, thanks to long-standing agreements with institutions there. It is clear, though, that Ambassador Fritsche wants to expand students' opportunities for study abroad:

"We need to develop interlocutors – the young people. They are the future."

This is particularly important as almost all students return to Liechtenstein when they finish their studies. "Liechtenstein is a very attractive place to live," the Ambassador says. "We offer high salaries, though with a high cost of living, and great job opportunities." Unemployment runs at about 1.5 percent. Government is small and transparent. While global problems such as drug use and AIDS have not bypassed Liechtenstein, the country's size means that they occur on a small scale. "This makes it easier for us to immediately deal with them," the Ambassador says.

Asked her preference between New York and Washington, she notes the major differences between the two cities. She relishes the space that Washington provides her and enjoys her garden, a luxury she missed in New York. New York, though, offered more opportunity to interact with her peers.

"At the UN, we all worked together, we socialized together, we interacted on a daily basis. Here, for obvious reasons – every Embassy is busy with its own agenda vis-á-vis the host country - ambassadors spend much less time with each other." Nevertheless, Ambassador Fritsche looks forward to the challenges – and promises – of her new position and the role of bearing the good news about a tiny country with a unique history of independence, fortitude and rich culture.