Luxembourg Crisis. Mr. Juncker’s Fantasia - Genesis of a Downfall

My Orchids, Phalaneopsis. Three scandals cannot be whitewashed. Photo ET

Luxembourg Crisis. Mr. Juncker’s Fantasia - Genesis of a Downfall

I would characterize Mr. Juncker’s career, that when he graduated from College where he had majored as Prime Minister, he became Prime Minister. Of course it is a little cartoonish, but it helps to understand the story. Being the Prime Minister at a very young age carries some problems. Such as, what is your career perspective, except to slide from boring reelection to boring reelection in a boring small country? The therapy is a European ambition, in that vast field of unelected European positions.

His dream was to become the first European President. Mr. Sarkozy killed that. Maybe become President of the European Commission? Not good enough. The second Prize was acceptable though: President of the Euro Group, or “Mr. Euro”. He would cumulate this job with his duties as Prime Minister of Luxembourg. Any military commander knows that you can’t command the whole and also a part of the whole. Something had to give, and that was to care about his Luxembourg duties. He governed superficially as an absentee Prime Minister, something the Luxembourg voter tolerated. Of course, if you don’t pay attention, you pay a price. In his case he pays for a succession of scandals during his tenure.

The first scandal was a real estate project combined with a "National Stadium" in a wetland zone. Developers, politicians and environmentalists got into a brawl that killed the project. An effort to investigate related threats and wrongdoings was voted down in Parliament. Public opinion sizzled.

The second scandal was the sale by Luc Frieden, Minister of Finance, of 35% of Cargolux, the national all cargo airline to Qatar Airways for $117.5 million. Qatar also bought two banks, KBL and BIL, and other arrangements were made for a rapprochement of Al Jazeera with SES, the Luxembourg satellite company. Pricing and those strange alliances brought up suspicions, but an effort to investigate wrongdoings was voted down again in Parliament. Public opinion sizzled more.

Then emerged a third scandal. Actually it started with a benign revelation by Mr. Juncker himself. He revealed that about four years ago, the chief of SREL, the Luxembourg spying agency, had secretly recorded a conversation both had. With the help of a gadget disguised as a wrist watch. Mr. Juncker, the political boss of the agency learned about it through a mole he had placed into the agency, but did not take legal action. To me the story was broken by Mr. Juncker to distract from scandal one and two, according to the wag the dog strategy, where you put your kitchen on fire to distract from the fire in the garage. Parliament got involved and lo and behold, didn’t dare to vote a third time against an official inquiry. A Parliamentary investigation was set up. What was considered as a low risk inquiry was however revealing very soon that the spying agency, under benign neglect, had taken a life of its own. Feeding into that inquiry were court proceedings in a 25 year old series of terrorist attacks on Luxembourg infrastructure, still unresolved but with suspicions that actually it was a plot by security forces, including episodes of the spying agency’s involvement.

The cumulative effect of those scandals have created an atmosphere of distrust in the government. The Parliamentary inquiry about the spying agency’s wrongdoing is so damaging for Mr. Juncker, its formal political chief, that the emerging consensus is that Mr. Juncker has to go and that the present Christian Social / Socialist coalition government will not survive.

The final outcome might be known as of today. Though an outdated and murky Constitution makes it very hard to predict which one of the many options it leaves open, will be adopted. A free interpretation could be that Parliament be dissolved and new elections held by October.