Liechtenstein

Liechtenstein was recently a constitutional monarchy governed by hereditary princes. The present monarch is Prince Hans-Adam II; his heir is Prince Alois (born 1968). In a contentious referendum held in March 2003, the populace acceded to the demands of the monarch in voting back an absolute monarchy. The king now has the power to dismiss the government. According to the constitution of 1921, legislative power is exercised by the unicameral parliament (Landtag), made up of 25 members elected to four-year terms by universal adult suffrage. On the recommendation of parliament, the prince appoints a chief of government and four councillors who form the government. Most governments since 1938 have been coalitions of the Fatherland Union (VU; Vaterländische Union) and the Progressive Citizens’ Party (FBP; Fortschrittliche Bürgerpartei in Liechtenstein). Switzerland has represented Liechtenstein diplomatically since 1919.

The modern history of Liechtenstein dates from 1719, when the country formally acquired its present name and ruling family with the consolidation of the counties of Vaduz and Schellenberg under the House of Liechtenstein. During the 18th and 19th centuries, as an independent principality of the Holy Roman Empire, it was economically and politically allied with the Habsburg monarchy of Austria. When that monarchy was abolished after World War I, Liechtenstein formed its present connection with Switzerland. Prince Franz Joseph II, who became sovereign in 1938, yielded executive authority in 1984 to his son, Crown Prince Hans-Adam, who succeeded his father in 1989. Also in 1984, a referendum granted women the right to vote in national elections.

Liechtenstein joined the UN in 1990 and the European Free Trade Association (EFTA) in September 1991. In December 1992 voters approved Liechtenstein’s membership of the European Economic Area (EEA). The election of October 1993 resulted in the formation of a coalition government headed by the Patriotic Union. Mario Frick was named head of government. Although participation in the EEA was approved by referendum in 1992, Switzerland, with which Liechtenstein had a customs union, had opposed the plan. Negotiations on participation in the EEA were envisaged in 1994. Participation in the EEA was approved by referendum in April 1995 and the country joined the World Trade Organization that same year. The ruling coalition retained control of the government in a general election held in January and February 1997. The coalition of the Patriotic Union (VU) and the Progressive Citizens’ Party (FBP) collapsed in March, however, losing power for the first time since 1938. A new, all-VU government was formed in April.

In 2000 reports by the Group of Eight, or G-8, and the OECD criticized Liechtenstein for failing to cooperate in the fight against international money-laundering. As a result, Liechtenstein changed its banking laws so that customers opening bank accounts may now no longer remain anonymous. However, in early 2002 the country failed to adopt further OECD proposals for reform.

In April 2001, Otmar Hasler of the FBP was sworn in as prime minister. Prince Hans-Adam controversially called for a referendum to alter the constitution, and after a majority vote of 64 per cent in March 2003 he was able to push through proposals that give him absolute powers in the country. In August he announced the move to hand over power to his son Alois in August 2004, while remaining head of state himself. The 2005 general election was won by the FBP with 12 seats; Otmar Hasler remained as prime minister for a second term.