Founded in 963, Luxembourg became a grand duchy in 1815 and an independent state under the Netherlands. It lost more than half of its territory to Belgium in 1839, but gained a larger measure of autonomy. Full independence was attained in 1867. Overrun by Germany in both World Wars, it ended its neutrality in 1948 when it entered into the Benelux Customs Union and when it joined NATO the following year. In 1957, Luxembourg became one of the six founding countries of the European Economic Community (later the European Union) and in 1999 it joined the euro currency area.

HISTORY
The language of Luxembourg is Luxembourgish, a blend of old German and Frankish elements. The official language of the civil service, law, and parliament is French, although criminal and legal debates are conducted partly in Luxembourgish and police case files are recorded in German. German is the primary language of the press. French and German are taught in the schools, with German spoken mainly at the primary level and French at the secondary level.

The present sovereign, Grand Duke Henri, succeeded his father, Grand Duke Jean on October 7, 2000. Grand Duke Jean announced his decision to abdicate in December 1999, after a 35 year reign.

GOVERNMENT
Luxembourg has a parliamentary form of government with a constitutional monarchy by inheritance. Under the constitution of 1868, as amended, executive power is exercised by the Grand Duke and the Council of Government (cabinet), which consists of a prime minister and several other ministers. The prime minister is the leader of the political party or coalition of parties having the most seats in parliament.

Legislative power is vested in the Chamber of Deputies, elected directly to 5-year terms. A second body, the "Conseil d'Etat" (Council of State), composed of 21 ordinary citizens appointed by the Grand Duke, advises the Chamber of Deputies in the drafting of legislation. The responsibilities of the members of the Conseil d'Etat are extracurricular to their normal professional duties.

Luxembourg law is a composite of local practice, legal tradition, and French, Belgian, and German systems. The apex of the judicial system is the superior court, whose judges are appointed by the Grand Duke.

POLITICAL CONDITIONS
Since the end of World War II, the Christian Social Party (CSV) has usually been the dominant partner in governing coalitions. The Roman Catholic-oriented CSV resembles Christian Democratic parties in other west European countries and enjoys broad popular support. However, in June 1999, national elections ushered in a new government. For the first time since 1974, the Socialist Party (LSAP) ceded its junior coalition position with the long-reigning CSV majority to the Liberal Democrat Party (DP).

ECONOMY
Although Luxembourg in tourist literature is aptly called the "Green Heart of Europe," its pastoral land coexists with a highly industrialized and export-intensive economy. Luxembourg enjoys a degree of economic prosperity almost unique among industrialized democracies.

U.S. RELATIONS
Bilateral relations between the United States and Luxembourg are excellent, both historically and through common membership in the Organization for Cooperation and Economic Development (OECD), OSCE, and NATO. More than 5,000 American soldiers, including Gen. George S. Patton, are buried at the American Military Cemetery near the capital.

Full country name: Grand Duchy of Luxembourg (Luxemburg, Letzeburg)
Area: 2586 sq km (999 sq mi)
Population: 430,000
Capital city: Luxembourg City (pop 90,000)
People: 70% nationals (Celtic stock, with French and German), 30% resident foreigners (mostly Belgian, French, German, Italian and Portuguese)
Language: Luxembourgish (Letzeburgesch), French, German
Religion: 97% Roman Catholic
Government: Constitutional monarchy
President: Grand Duke Henri
Prime Minister: Jean-Claude Juncker
DP: US$14 billion
GDP per head: US$32,700
Annual growth: 3%
Inflation: 1.5%
Major industries: Iron and steel, plastic and rubber, chemicals, mechanical and electrical equipment
Major trading partners: EU (esp. Belgium, France, Germany, UK, Netherlands)
Member of EU: yes
Euro zone participant: yes