|General background: The Principality of Liechtenstein
was established within the Holy Roman Empire in 1719;
it became a sovereign state in 1806. Until the end of
World War I, it was closely tied to Austria, but the
economic devastation caused by that conflict forced
Liechtenstein to conclude a customs and monetary union
with Switzerland. Since World War II (in which Liechtenstein
remained neutral) the country's low taxes have spurred
outstanding economic growth. However, shortcomings in
banking regulatory oversight have resulted in concerns
about the use of the financial institutions for money
Area comparative: About
0.9 times the size of Washington, DC
Continental; cold, cloudy winters with frequent
snow or rain; cool to moderately warm, cloudy, humid
Terrain: Mostly mountainous
(Alps) with Rhine Valley in western third.
Population: 32,842 (July 2002 est.)
Ethnic groups: Alemannic 87.5%, Italian, Turkish,
and other 12.5%
Religions: Roman Catholic 80%, Protestant
7.4%, unknown 7.7%, other 4.9% (1996)
Language: German (official), Alemannic dialect
Government type: Hereditary constitutional
Legal system: Local civil and penal codes;
accepts compulsory ICJ jurisdiction, with reservations.
Economic overview: 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 neighbours. Low business taxes
- the maximum tax rate is 18% - and easy incorporation
rules have induced 73,700 holding or so-called "letter
box" companies to establish nominal offices in
Liechtenstein, providing 30% of state revenues. The
country participates in a customs union with Switzerland
and uses the Swiss franc as its national currency.
It 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
European Free Trade Association (EFTA) and EU) since
May 1995. The government is working to harmonize its
economic policies with those of an integrated Europe.
Communication/Telephone system: Automatic telephone
Places of interest: The Alps - skiing, fine
wines and clean mountain air.