Editor’s Note: Diplomacy Verbatim is a new column that features intimate conversations with top experts and envoys for their firsthand insights into the world of diplomacy and foreign affairs.
The Principality of Liechtenstein may be difficult to spell and pronounce, but at just 61 square miles, it’s an intriguing microstate in the heart of the Alps that is well worth getting to know.
Once an impoverished Habsburg backwater that Hitler chose not to invade, it is now, by some accounts, the world’s richest country on a per-capita basis. Known for its postage stamps and banks, Liechtenstein also attracts hikers, cyclists and skiers, not to mention travelers in search of an exotic passport stamp (which costs €2 at the Liechtenstein Center). It’s a country with no airport, no cities and no Starbucks. There are 11 municipalities, two medieval castles, more than 100 kilometers of breathtaking bike paths and just over 37,000 inhabitants.
Sandwiched between Austria and Switzerland, Liechtenstein became a sovereign state in 1806. The army was abolished in 1868, the Swiss Franc was adopted as the national currency in 1924 and the country joined the United Nations in 1990.
Crown Prince Alois, 47, has been the de facto head of state since his father, Prince Hans-Adam II, handed power to him in 2004. Ambassador Claudia Fritsche (pronounced FREE-chay) assumed her duties as the first resident ambassador of Liechtenstein in Washington in 2002, making her the second-longest-serving ambassador in D.C. She’s a career public servant who was the personal assistant to Liechtenstein’s prime minister in the early 1970s before joining the country’s Office for Foreign Affairs in 1978. Prior to taking up her duties in Washington, she was Liechtenstein’s permanent representative to the United Nations in New York from 1990 until 2002.
For the inaugural installment of “Diplomacy Verbatim,” a new series that offers firsthand insights into diplomacy and world affairs, we caught up with Ambassador Fritsche to find out more about her country’s fascinating history, its rags-to-riches economic miracle, the challenge posed by the immigration crisis in Europe and a host of other issues.
The Washington Diplomat: Is it a miracle that your country exists, that it was never invaded and conquered by Hitler or anyone else?
Ambassador Fritsche: It is and it isn’t. We have been surrounded throughout our history by peace-loving, neutral neighbors — I’m talking about Switzerland and Austria. Furthermore, I think we were very wisely guided by our political leaders, by our monarchs.
Also … for the longest time Liechtenstein was a very poor country that had farming and some textile industry. We only turned into an industrial and financial services center after World War II. For most of our history, we were, quite honestly, of no particular political or strategic or economic interest to any of our neighbors.
TWD: Your country’s transformation from a poor agricultural nation to a rich banking and financial services powerhouse has been quite a success story. These days, you have some 20,000 people a day from Switzerland and Austria coming into Liechtenstein to work each day, is that right?
Fritsche: I would make a slight correction to that. Our most important economic pillar is manufacturing and that is not widely known. Manufacturing accounts for close to 40 percent of our GDP; financial services is presently about 25 percent. Seven of our companies also have a presence in the U.S. — they employ close to 4,000 people. Ivoclar Vivadent is a leading producer of dental products. The Hilti Corporation is a global manufacturer of sophisticated fastening systems for the construction industry and employs 22,000 people worldwide. Our total population is a bit less than 38,000. The Hilcona Group is in the nutrition business and Ospelt is a producer of processed meats and pet foods.
TWD: Has this transformation of the economy been very gradual? When did it take off?
Fritsche: The industrialization started in the 1950s. Very soon afterward, the financial services industry began to take on a more important role.
TWD: Did the government put in place business-friendly policies or how did it attract so much investment?
Fritsche: The legal basis to facilitate economic development was already there before World War II. But after the war, it was partly through the initiatives of the monarch at the time, Prince Franz Joseph II. He attracted a couple of companies to come to Liechtenstein and that’s how it all started. The financial services industry emerged from within Liechtenstein. We had three banks then; today we have 15.
TWD: In 2008, Switzerland, Liechtenstein and a few other countries had to change their banking privacy laws, so the secrecy that once existed is no longer there. Did this have a detrimental impact on the economy there?
Fritsche: You can imagine if you change the legal framework in a country, it can temporarily become less attractive as a financial center to some people. So there was a time when assets were leaving the country and not as many new assets were coming into the country. But this phase is now over and we again enjoy the trust and confidence of clients who are interested in Liechtenstein predominantly as a place where we have people with good skills in wealth management.
TWD: Much like the Swiss, you have a kind of direct democracy, where voters get to weigh in directly on many issues via referendum. Voters can even approve or deny individual requests for Liechtenstein citizenship.
Fritsche: It is similar to the Swiss system but we don’t vote quite as often as our Swiss neighbors. Liechtenstein is a direct democracy in terms of involving the people directly in decisions. Also, there are a low number of signatures needed if a citizen wants to propose a public referendum on a topic that is important to him or her. It is not only the Parliament who can propose a referendum to create or revoke a law.
TWD: Diplomats from many small countries find it difficult to secure meetings with key officials from the U.S. and other big countries. How do you try to navigate this problem?
Fritsche: The challenge is similar but not quite the same in New York as in Washington. In New York, the issue is most pronounced during the two or three weeks of the U.N. General Assembly. In Washington, you can plan a bit differently. If a minister absolutely needs an appointment with a member of the executive branch in Washington, as a small country, you just have to accept that you are given a particular date, and then the minister has to accommodate that. This is the way things work.
In the General Assembly, the problem applies not just to small countries but medium-size ones as well that have a problem getting appointments with officials from the big, powerful nations. But it makes a big difference if you know your colleagues well and you interact with them on a friendly basis throughout the year — they will make a special effort to accommodate you.
TWD: I visited your country in August, for your National Day celebration, and Albert Frick, the president of Liechtenstein’s Parliament, stated in his speech that immigration was one of the biggest challenges the country faced in the years to come. But your country hasn’t received thousands of asylum seekers as others have this year, has it?
Fritsche: I think the main reason for this is that we are not as well known as, for example, Germany, Austria and other European countries. Liechtenstein is not a full member of the European Union, but we are a member of the European Economic Area and we are a member of the Schengen Area and Dublin agreement. Iceland, Norway and Liechtenstein decided some years ago not to pursue full membership in the European Union, but we needed access to the markets in the European Union. So we negotiated a separate treaty that gives us (trade) access to the 28 countries of the EU, and we implement many EU acts, so we are deeply integrated into EU markets but we are not a member.
TWD: I asked the crown prince at the National Day reception about the immigration issue. He said that as a member of the European community, Liechtenstein had to take its fair share of refugees and asylum seekers but he also said the country had to protect its culture. How do you achieve that balance?
Fritsche: I think our geographic location mostly takes care of that. (Liechtenstein is one of just two double-landlocked countries in the world.) Regarding this huge flow of refugees coming into Europe, Liechtenstein is not very much on the radar screen as a desired destination. But even before this crisis, we agreed to take in five Syrian families of some 22 to 25 people. Because we are a member of the Schengen and Dublin agreements and because we want to demonstrate solidarity at the European level as well, our government has agreed to be part of the two EU relocation programs that will bring another 50 to 60 people to Liechtenstein.
We have agreed to take our share just like every other European country. If you look at our total number of refugees, it may be eventually only about 200 people, but that is a large number for such a small country. If it were 150 more, that would be 1 percent of our population. Right now it is still manageable. There is public discussion and debate regarding some of the difficulties (of absorbing migrants) but I think so far we are managing quite well.
TWD: I noticed that the princely family pays for the reception at the National Day, where there is free food and beer for everyone, along with a chance to meet the crown prince in the castle garden.
Fritsche: Yes, he is very approachable.
TWD: He didn’t have much security either. We walked right up to him. I don’t think you could walk right up to President Obama like that.
Fritsche: I’m afraid that’s not quite a valid comparison! Whoever wants to attend this event can go. The princely family, unlike many other royal families around the world, does not spend taxpayer dollars. They get a very small amount from the Parliament to cover their representational duties but this is immediately donated to charities. The princely family does not live off of one single taxpayer franc.
TWD: Coming back to some of my impressions about your country, someone once said that you can tell a lot about how developed a country is by the state of its public bathrooms. I was floored by the temporary bathrooms set up at the National Day in Vaduz. Not only were they spotless, there were bathroom attendants cleaning up after people.
Fritsche: We live in a country where expectations are very high when it comes to cleanliness and people are very environmentally conscious. Keeping a clean environment even applies to toilets. On our National Day, we have public toilets set up. For one day, you can easily make a special effort for them to be nice.
TWD: Also, I used the public buses and could hardly believe how punctual they are. If the schedule says they will arrive at 10:18, that is exactly what time they arrive. Is it easier to keep things running smoothly in a small country like Liechtenstein compared to a big country?
Fritsche: Being in a small environment allows you to be more efficient.
TWD: I was told that in Liechtenstein, if you’re not five minutes early, you’re late. I’m not sure if they were being sarcastic about that.
Fritsche: That is not sarcasm, that’s the way we operate. We are extremely punctual. I think it is our Alemannic background. We stay on our toes all the time. It’s in our genes.
TWD: Aside from the punctuality, I noticed that bus drivers in Liechtenstein uniformly spoke English and they often exchanged greetings with everyone. They also seemed to know their passengers by name in many cases.
Fritsche: This is due to the small size of the country. If you don’t know the person, you probably know their brother or cousin or friend. It is a small place. Everyone is familiar with each other’s life circumstances. With regard to knowledge of English, English and French are taught early in our schools, and Liechtenstein is a very international place so we are used to encountering non-German speakers. English is very widely spoken.
TWD: Does your country have more of a cultural kinship with Switzerland or Austria?
Fritsche: We have longstanding, historic ties with Austria and we have strong economic ties to Switzerland. There is no border; we have a customs union, meaning there are open borders. And since the 1920s, Liechtenstein’s economy is very closely linked to Switzerland. There are intensive, neighborly ties with both countries for different reasons.
TWD: The army was abolished in 1868, so does Switzerland protect your country’s borders?
Fritsche: No. That is a widely held perception but we have no treaty with Switzerland to defend our borders. And the same goes for Austria. In case of a catastrophic situation, all eligible male citizens would be called on to defend our borders. I guess we would also rely on our 150 or so policeman.
TWD: So if someone was to be deported from your country, who removes them? The Swiss police?
Fritsche: It depends where the person came from. Any refugee or asylum seeker would have already crossed at least one other country (Switzerland or Austria). If there is a deportation, it would be carried out by our police, in cooperation with the police in either Switzerland or Austria, depending on where they are returned to.
TWD: Let’s talk about something more fun: food. The national dish of Liechtenstein is Käsknöpfle, which is kind of like a type of pasta with melted cheese. What else do Liechtensteiners eat?
Fritsche: Käsknöpfle dates back to earlier times when people could not afford to eat meat, fish or poultry every day. It’s still popular today. The dish contains a very strong smelling cheese, so it’s not to everyone’s taste. It is made on the basis of eggs, flour and water and then you need a special grater whereby you can push the dough into the boiling water. In terms of other dishes, we are very influenced by our region, so you’ll find fondues, Austrian specialties and, of course, international cuisine. In the fall we like to eat a great variety of venison dishes.
TWD: So if someone wanted to visit your country, what’s the best way to experience the culture?
Fritsche: What you did, visiting during the National Day (Aug. 15), is really a good idea because you get to see a lot of our traditions. But if you can’t come then, I would suggest late spring or early fall. Definitely plan a hike in the mountains; they come very easy or challenging. Visit a museum or two — we have a choice of six museums on 600 meters. Taste our food and excellent wines. Venture outside the capital and visit some of the surrounding villages — don’t just stay in Vaduz.
About the Author
Dave Seminara (@DaveSem) is a contributing writer for The Washington Diplomat.