At one time, the territory of Liechtenstein formed a part of the ancient
Roman province of
Raetia. For centuries this territory, geographically removed from European strategic interests, had little impact on the tide of European history. Prior to the reign of its current
dynasty, the region was
enfeoffed to a line of the counts of
Hohenems.
The
Liechtenstein dynasty, from which the principality takes its name (rather than vice-versa), comes from
Castle Liechtenstein in faraway Lower Austria, which the family possessed from at least 1140 to the thirteenth century, and from 1807 onward. Through the centuries, the dynasty acquired vast swathes of land, predominantly in
Moravia,
Lower Austria,
Silesia, and
Styria, though in all cases, these territories were held in
fief under other more senior feudal lords, particularly under various lines of the
Habsburg family, to whom several Liechtenstein princes served as close advisors. Thus, and without any territory held directly under the Imperial throne, the Liechtenstein dynasty was unable to meet a primary requirement to qualify for a seat in the Imperial diet, the
Reichstag.
The family yearned for the added power a seat in the Imperial government would bring, and therefore sought to acquire lands that would be unmittelbar, or held without any feudal personage other than the
Holy Roman Emperor himself having rights on the land. After some time, the family was able to arrange the purchase of the minuscule Herrschaft (”Lordship”) of
Schellenberg and countship of
Vaduz (in 1699 and 1712 respectively) from the Hohenems. Tiny Schellenberg and Vaduz possessed exactly the political status required; no feudal lord other than their
comital sovereign and the
suzerain Emperor.
Thereby, on
January 23,
1719, after purchase had been duly made,
Charles VI, Holy Roman Emperor, decreed Vaduz and Schellenberg were united, and raised to the dignity of Fürstentum (
principality) with the name “Liechtenstein” in honor of “[his] true servant,
Anton Florian of Liechtenstein“. It is on this date that Liechtenstein became a sovereign member state of the
Holy Roman Empire. As a testament to the pure political expediency of the purchases, the Princes of Liechtenstein did not set foot in their new principality for over 120 years.
Schloss Vaduz, overlooking the capital, is still home to the
prince of Liechtenstein
In 1806, most of the
Holy Roman Empire was invaded by
Napoleon I of the
First French Empire. This event had broad consequences for Liechtenstein: imperial, legal and political mechanisms broke down, while
Francis II, Holy Roman Emperor, abdicated the imperial throne and the Empire itself dissolved. As a result, Liechtenstein ceased to have any obligations to any feudal lord beyond its borders. Modern publications generally (although incorrectly) attribute Liechtenstein’s sovereignty to these events. In reality, its prince merely became
suzerain, as well as remaining sovereign lord. From
25 July 1806 when the
Confederation of the Rhine was founded, the prince of Liechtenstein was a member, in fact a vassal of its hegemon, styled protector, French Emperor Napoleon I, until the dissolution of the Confederation on
19 October 1813.
Soon afterward, Liechtenstein joined the
German Confederation (
20 June 1815 –
24 August 1866, which was presided over by the
Emperor of Austria).
Then, in 1818,
Johann I granted a constitution, although it was limited in its nature. 1818 also saw the first visit of a member of the house of Liechtenstein, Prince Alois; however, the first visit by a sovereign prince would not occur until 1842.
Liechtenstein also had many advances in the nineteenth century, as in 1836, the first factory was opened, making ceramics. In 1861, the Savings and Loans Bank was founded, as was the first cotton-weaving mill. Two bridges over the Rhine were built in 1868, and in 1872 a railway line across Liechtenstein was constructed.
When the
Austro-Prussian War broke out in 1866 new pressure was placed on Liechtenstein as, when peace was declared,
Prussia accused Liechtenstein of being the cause of the war through a miscount of the votes for war with Prussia. This led to Liechtenstein refusing to sign a peace treaty with Prussia and remained at war although no actual conflict ever occurred. This was one of the arguments that were suggested to justify a possible invasion of Liechtenstein in the late 1930s.
Until the end of
World War I, Liechtenstein first was closely tied to the
Austrian Empire and later to
Austria-Hungary; however, the economic devastation caused by WWI forced the country to conclude a customs and monetary union with its other neighbor
Switzerland. Liechtenstein’s Army was disbanded in 1868 for financial reasons. At the time of the dissolution of the
Austro-Hungarian Empire, it was argued that Liechtenstein as a fief of the
Holy Roman Empire was no longer bound to the emerging independent state
Austria, since the latter did not consider itself as the legal successor to the Empire. This is partly contradicted by the coeval Liechtenstein perception that the dethroned Austro-Hungarian Emperor still maintained an abstract heritage of the Holy Roman Empire, which was dissolved in 1806.
The Prince of Liechtenstein owns vineyards in Vaduz (in the foreground)
In the spring of 1938, just after the annexation of Austria into Greater Germany, eighty-four year-old
Prince Franz I abdicated, naming his thirty-one year-old third cousin,
Prince Franz Joseph, as his successor. While Prince Franz I claimed that old age was his reason for abdicating, it is believed that he had no desire to be on the throne if Germany gobbled up its new neighbor, Liechtenstein. His wife, whom he married in 1929, was a wealthy Jewish woman from Vienna, and local Liechtenstein Nazis had already singled her out as their anti-Semitic “problem”. Although Liechtenstein had no official Nazi party, a Nazi sympathy movement had been simmering for years within its National Union party.
[1]
During
World War II, Liechtenstein remained neutral, while family treasures within the war zone were brought to Liechtenstein (and
London) for safekeeping. At the close of the conflict,
Czechoslovakia and
Poland, acting to seize what they considered to be German possessions, expropriated the entirety of the Liechtenstein dynasty’s hereditary lands and possessions in
Bohemia,
Moravia, and
Silesia — the princes of Liechtenstein lived in
Vienna until the
Anschluss of 1938. The expropriations (subject to modern legal dispute at the
World Court) included over 1,600 square kilometres (600
mi.²) of agricultural and forest land, also including several family castles and palaces. Citizens of Liechtenstein were also forbidden from entering Czechoslovakia during the
Cold War. Liechtenstein gave asylum to approximately five hundred soldiers of the
First Russian National Army (a collaborationist Russian force within the German
Wehrmacht) at the close of World War II; this is commemorated by a
monument at the border town of
Hinterschellenberg which is marked on the country’s
tourist map. The act of granting asylum was no small matter as the country was poor and had difficulty feeding and caring for such a large group of refugees. Eventually, Argentina agreed to permanently resettle the asylum seekers. In contrast,
the British repatriated the Russians who fought on the side of Germany to the USSR, and they all perished in the
GULAG.
In dire financial straits following the war, the Liechtenstein dynasty often resorted to selling family artistic treasures, including for instance the priceless portrait “
Ginevra de’ Benci” by Leonardo da Vinci, which was purchased by the
National Gallery of Art of the
United States in 1967. Liechtenstein prospered, however, during the decades following, as its economy modernized with the advantage of low corporate tax rates which drew many companies to the country.
The
Prince of Liechtenstein is the world’s sixth wealthiest leader with an estimated wealth of
$4 billion. The country’s population enjoys one of the world’s highest standards of living.
Despite its small geographic area and limited natural resources, Liechtenstein currently is one of the few countries in the world with more registered companies than citizens; it has developed into a prosperous, highly industrialized, free-enterprise economy, and boasts a financial service sector as well as a living standard which compares favourably to those of the urban areas of Liechtenstein’s large European neighbours. Relatively low business taxes—the maximum tax rate is 18%—as well as easy
Rules of Incorporation have induced about 73,700 holding (or so-called ‘letter box’) companies to establish nominal offices in Liechtenstein. Such processes provide about 30% of Liechtenstein’s state revenue. Liechtenstein also generates revenue from the establishment of stiftungs or foundations, which are financial entities created to increase the privacy of nonresident foreigners’ financial holdings. The foundation is registered in the name of a Liechtensteiner, often a lawyer.
Recently, Liechtenstein has shown strong determination to prosecute any international money-laundering and worked to promote the country’s image as a legitimate financing center.[
citation needed] In February 2008 the country’s
LGT Bank was implicated in a tax-fraud scandal in Germany, which strained the ruling family’s relationship with the German government. Crown Prince Alois has accused the German government of trafficking in stolen goods for its $7.3 million purchase of private banking information illegally offered by a former employee of LGT Group.
[4][5]
Liechtenstein participates in a
customs union with
Switzerland and employs the
Swiss franc as national currency. The country imports more than 90% of its energy requirements. Liechtenstein has been a member of the
European Economic Area (an organization serving as a bridge between the
European Free Trade Association (EFTA) and the
European Union) since May 1995 . The government is working to harmonize its economic policies with those of an integrated Europe. Since 2002, Liechtenstein’s rate of unemployment has doubled, although it stood at only 2.2% in the third quarter of 2004. Currently, there is only one hospital in Liechtenstein, the Liechtensteinisches Landesspital in
Vaduz. The GDP (PPP) is $1.786 billion
[6] and $25,000 per person.
Liechtenstein’s most recognizable international company and largest employer is
Hilti, a manufacturer of concrete fastening systems. Liechtenstein also is the home of the
Curta calculator and the principality produces a large portion of the world’s false teeth. (Ivoclar Vivadent,
Schaan)
