Ladies and Gentlemen,
It is a great honor for me to be speaking to you in the beautiful and historical Riggs Library at Georgetown University. This is my second visit to the United States in my capacity as Prime Minister of Liechtenstein and I feel honored to have been invited to this distinguished environment. Georgetown University has produced many great leaders and minds and I appreciate very much to be a part of this prestigious institution today. I would like to thank Provost Dr. O’Donnell and his staff for all that they have done to make this event possible.
I would like to recognize the presence of H.E. Ambassador Blickenstorfer from Switzerland and H.E. Ambassador Catarino from Portugal. As you may know, Liechtenstein has very close relations with its neighbor Switzerland, we have many interests in common and enjoy an excellent cooperation on a multitude of levels.
My speech today comes at a time of great anguish in the United States. The images of the people and areas afflicted by Hurricane Katrina have touched all in Liechtenstein, as well as the greater global community. Our hearts and prayers go out to those who lost loved ones and the many who are faced with rebuilding their existences. Being fully aware that this process will be difficult and will take much time, commitment and patience, the Liechtenstein Government, besides contributing financially, will extend an invitation to a group of 10 children who have been traumatized by these events, to spend one week in Liechtenstein. We hope to be able to extend friendship, compassion and warmth to these children and to help them deal with their painful memories and losses.
What I would like to do in the next few minutes is to give you a brief overview of Liechtenstein’s history, its national economy including the industrial development and the role of Liechtenstein as a financial center.
Bordering Switzerland to the West and Austria to the East, the Principality of Liechtenstein is the sixth-smallest country in the world, with an area of 160 square kilometers which equals 60 square miles, the size of Washington DC. Its population is almost 35,000, some 34% of whom are foreigners, mainly Swiss, Austrian and German citizens. The entire foreign population residing in Liechtenstein is composed of people from about 90 different countries, including around 40 US citizens.
Liechtenstein gained its full sovereignty in 1806 when it was admitted to the Confederation of the Rhine and later to the German Confederation. It is the last remaining entity of the Holy Roman Empire. In 1868, Liechtenstein disbanded its armed forces and maintained neutrality during World Wars I and II. As an important part of its sovereignty, Liechtenstein pursues an independent and active foreign policy. It cultivates close bilateral relations with many States and engages in multilateral cooperation at the regional and global level, in particular through its membership in international organizations. Liechtenstein has been a full member of the Organization for Security and Cooperation in Europe (OSCE, formerly CSCE) since 1975 and of the Council of Europe since 1978. It joined the United Nations (UN) in 1990 and the World Trade Organization (WTO) in 1995.
Liechtenstein is a constitutional hereditary monarchy with a democratically elected parliament (the Diet) of 25 members. The Government is elected by the parliament and confirmed by the Prince. The consent of both the Prince and the parliament is needed to enact new legislation.
Since World War II, the Principality of Liechtenstein has enjoyed economic growth, fueled by its export industry, financial services and some location advantages. From a predominantly agricultural state, Liechtenstein has blossomed as export sales have taken off and developed into one of the most highly industrialized countries in the world (per capita). In addition to its competitive industry, Liechtenstein boasts a strong commercial sector and well-established financial service enterprises. Liechtenstein’s financial sector is well-regulated, and its laws to combat money laundering, organized crime and terrorism meet the standards set by international organizations.
Despite its small size and limited natural resources, Liechtenstein has developed into a prosperous, highly industrialized, free-enterprise economy with a vital financial service sector and living standards on a par with the urban areas of its large European neighbors. The Liechtenstein economy is widely diversified with a large number of small businesses.
The country is in a customs union with Switzerland and uses the Swiss franc as its national currency. Liechtenstein is not a member of the European Union but has been a member of the European Economic Area (a cooperation treaty serving as a bridge between the European Free Trade Association (EFTA) and the EU) since May 1995.
The export industry is the largest single element in the Liechtenstein industry. The manufacturing programs include instrumentation, electronic control devices, precision tools, vacuum, heating and lighting technology, dentistry and pharmaceutical products, foodstuffs etc. The per capita value of exports is about 10 times the corresponding value for Germany, Austria or Switzerland. The United States is Liechtenstein’s most important bilateral trading partner.
The employment figures in Liechtenstein are extraordinarily high. With a population of almost 35,000, there are more than 29,000 jobs. This is only possible because the number of cross-border commuters to Liechtenstein is many times higher than the number of cross-border commuters from Liechtenstein. About 13,000 individuals commute daily from the region (Austria, Switzerland and Germany) to their workplace in Liechtenstein. This is about 45 % of the total workforce. Jobs originate as follows: 53.9 % in commerce and services, 44.8 % in industry and manufacturing, and 1.3 % in agriculture and forestry. By international standards, the very low proportion of agriculture and forestry is striking, as is the relatively high proportion of the manufacturing sector.
Liechtenstein as an economic and financial centre has seen an enormous up-swing during the last 30 years of the 20th century. On the one hand, its export industry has achieved notable successes with top-quality products; on the other hand, the banks, in particular, have managed a significant expansion in their business volume. In recent years, Liechtenstein has paid particular attention to the fight against money laundering and the financing of terrorism, and has cooperated closely with the international community in this matter. These concerted efforts are the result of the resolve to maintain Liechtenstein’s position as a financial center that lives up to the highest international standards. Liechtenstein’s adequate and state of the art supervision is being optimized alongside with international developments, as e.g. the establishment of an integrated financial market supervision authority, to protect clients’ interests.
Terrorism in all its forms and manifestations has consistently been condemned by Liechtenstein, regardless of the reason that are invoked to justify it. Perpetrators of terrorist acts must be brought to justice, while addressing the root causes of terrorism is an important element in the prevention of terrorism. Liechtenstein has ratified all 12 international conventions relating to the fight against terrorism. Liechtenstein also fully supports the work of the Counter-Terrorism-Committee (CTC) established by the United Nations. The efforts of the Liechtenstein Government are clearly focused on effective measures to cut off criminals and terrorists from their financial resources.
Financial services are an important economic sector in Liechtenstein, but not the largest. 18 % of persons employed in Liechtenstein work in the financial services sector. The services offered include in particular private asset management, international asset structuring, investment funds as well as insurance and re-insurance business. In contrast to many other financial centers no differentiation is made in Liechtenstein between resident and non-resident clients in terms of market access to such financial services. The close treaty relationship with Switzerland, the introduction of the Swiss franc as legal currency and the passing of the 1926 Act on Persons and Companies, that allowed for a broad selection of company forms, as well as an investor friendly tax system are the foundations on which Liechtenstein’s financial center is built. The last 15 years have been a particularly dynamic period. The accession to the European Economic Area in 1995 acted as a catalyst for a series of fundamental changes and facilitated access to the markets of other countries. Since then the number of banks has increased from 3 to 16 and new fields of business have opened up in the funds and insurance sectors.
The globalization of the world economy has led to a close linking of the financial markets and to the liberalization of international financial flows which is facilitated by new information technologies. The far-reaching opportunities offered by technologies can, however, also be used for criminal purposes. As a globally oriented financial center, Liechtenstein has a vital interest in the worldwide enforcement of internationally recognized standards to prevent abuse of the financial markets. Liechtenstein’s foreign policy therefore pays great attention to the development and international enforcement of uniform rules to combat money laundering and the financing of terrorism. The relevant standards in Liechtenstein have been acknowledged by international bodies such as the International Monetary Fund.
Liechtenstein has for a long time enjoyed excellent relations with the United States and the cooperation in the common fight against money-laundering and terrorist financing is good. Three years ago, the Liechtenstein Embassy was established in Washington to further and broaden our relationship with the United States as well as with the Washington community. In today’s globalized world it is important also for small countries to be represented in Washington, to provide a direct point of contact and to be present to represent and defend their interests. Liechtenstein and the United States concluded a Mutual Legal Assistance Treaty in 2002.
I would like to conclude by expressing my hope that my remarks will entice those of you who have not visited Liechtenstein, to do so. I have not spoken about our beautiful mountains, the great hiking and skiing opportunities, the cultural and culinary attractions and the excellent wines that you are tasting today.
Thank you once again, Mr. Provost, Ladies and Gentlemen, for receiving me here today.