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A year in review: Political scandals, spy stories, and defence
2021 in review

A year in review: Political scandals, spy stories, and defence

by Yannick LAMBERT 13 min. 03.01.2022 From our online archive
Prime minister plagiarism allegations, Luxembourg's housing squeeze and spyware firm links made political headlines in 2021
Photo credit: AFP

Luxembourg links to a spyware firm, prime minister plagiarism allegations, and a US extradition request for one of the Grand Duchy’s former national intelligence agency directors all made the headlines in politics last year.

Here is a look at some of the biggest stories. 

Circle of Friends

While political life was to a large extent dominated by the pandemic, the largest opposition party, the Christian Democrats of the CSV, drew attention to themselves for denouncing their then-party president Frank Engel to the country's prosecution for a supposed fictional employment and issues around social security contributions. This led to police searches at the CSV headquarters. The investigators then widened the circle by including more party members, including some who are politically aligned with the party denouncing Engel, who resigned from his position. 

In a surprisingly fast moving court process, Engel and the other defendants were acquitted of - amongst other - fraud and forgery charges, and the prosecution decided not to appeal. However, damage has been done to the party, traditionally the most dominant force in national politics, which is now polling at historic lows.

NSO and Pegasus

Luxembourg has been at the centre of the developing story of the Israeli spyware firm NSO, which has been linked to surveillance abuses by authoritarian governments and democracies, because the Grand Duchy hosts several entities tied to NSO.

In a live interview with the Luxembourg Times, Prime Minister Xavier Bettel appeared to admit to using the software, although his ministry later said that he was speaking about spyware in general, and not about this particular software. Earlier in the year, Foreign Minister Asselborn said there were nine NSO-linked entities in the Grand Duchy, after initially saying he had only been aware of two. An earlier report by Amnesty International from June showed that the number of Luxembourg entities could be even higher.

Pressure is mounting on NSO as the US Department of Commerce has put the company on its dreaded 'entity list', and as more revelations are emerging on the software being used on Polish opposition politicians, and US State Department Officials. NSO is reportedly mulling a shutdown of its spyware. Apple is also taking the company to court over its zero-hacking technology deployed to enter Apple products.

Besides the spyware revelations, Luxembourg's prosecution also tried to retrieve information from the secure messaging app company Signal on users as part of a criminal investigation, which led to a sharp rebuttal from the company.

Spy extradition

Luxembourg's former director of operations of the national intelligence agency SREL, Frank Schneider, was arrested in France near the Luxembourg border in April 2020 and is currently facing extradition to the US over a multibillion crypto scam. Luxembourg is not interfering in the bilateral extradition between France and its ally across the Atlantic. The FBI even travelled to Nancy to congratulate French police on its successful arrest.

Schneider is cited as a co-conspirator in US court documents in the OneCoin scam, led by "cryptoqueen" Ignatova, who is on the run. She is alleged to have defrauded customers around the globe for more than $4 billion (€3.5 billion).

Schneider, who is also a defendant in a Luxembourg court case over how former Prime Minister Jean-Claude Juncker handled the intelligence service, is now facing yet another hearing in court in Nancy on 19 January after he had been released on electronic surveillance without bail, with an extradition decision expected then.

A Luxembourg Times investigation showed that Schneider had vetted clients for the Luxembourg-based European Investment Bank with his private company Sandstone. Email exchanges on Wikileaks also showed that Schneider had previously sought contact with an Italian spyware firm which Luxembourg later admitted to be a customer of, and which also made headlines for government abuse. 

Russia Today in German

Luxembourg received an application from the parent company of RT, formerly known as Russia Today, to broadcast its new German-language channel, circumventing German legislation on banned state-funded channels. Government officials met with German counterparts, including intelligence officers, to discuss the issue, and eventually Luxembourg said it would not grant the licence

Currently, RT in German operates with a Serbian licence to broadcast into Germanophone countries, but is already facing many technical and legal hurdles.

Bettel plagiarism

Prime Minister Xavier Bettel plagiarised a large chunk of his postgraduate research thesis, an investigation by said, and his former university is currently investigating the claims.

The journalistic investigation, published at the end of October, examined Bettel’s thesis in detail, having spoken to several independent researchers. Only two pages - the introduction and conclusion sections - out of 56 did not contain any plagiarised passages and 20 pages of the thesis were taken directly from the website of the European Parliament, the article concluded.

"That piece of work was not great at the time.... I did not cheat, I did not try to swindle the professor who supervised the work", Bettel said during a press conference after the exposé.

His popularity sagged after the news broke.

Earlier this year, Bettel's former party colleague at the Democratic Party, Monica Semedo, was also in the news after she was sanctioned by the European Parliament over allegations of "psychological harassment" by her assistants. She left the party but stayed on as European Parliament member.

Luxembourg ramps up defence efforts

Luxembourg attempts to be a better NATO partner as the country's defence spending is among the very lowest in the military alliance. Luxembourg is set to form an army battalion with Belgium which will see the two countries field ground troops in a joint unit, as part of the Grand Duchy's plans to boost its defence spending for the NATO military alliance, the government announced in June 2021.

Luxembourg has recently increased its military spending efforts on satellite communicationsspace, and cybersecurity and has also invested in NATO's push for mid-air refuelling capacity in Europe.

In February, the parliament voted in favour of laws to increase the country's military expenditure and recruitment in a bid to meet spending targets set by NATO and to be seen as a "reliable partner" within the alliance.

Luxembourg is also set to pay €7 million into a NATO programme to protect satellites against harmful debris and spot hostile activity in space, an area where countries are deploying more military assets all the time.

Space fair in Dubai

Luxembourg showcased its space credentials at the largest space fair in the world, the International Astronautical Congress in Dubai in October 2021.

Many of Luxembourg's space companies took part in the fair, which this reporter covered on the ground, and they struck cooperation deals with  large space companies and space-faring countries. There was also an announcement on positioning Luxembourg as a venture capital investor into space tech around the globe, and the country re-asserted itself as a player in the global race for space resources. A lot of the technology showed by manifold countries and companies could be deployed for both civilian and military uses.

Vaccine roll-out

The country's vaccine roll-out was off to a slow start on 28 December 2020, much like that of most of its EU peers, with the country only being able to vaccinate a handful of adults. Luxembourg briefly considered going beyond the EU's joint procurement to secure more vaccines but then dropped the idea quickly. 

The roll-out picked up pace in spring and summer, but Luxembourg often kept lagging behind comparably wealthy EU states in per capita vaccines. Now, as winter just has started, supply is not an issue anymore and the country ramps up its administration of booster doses, with new restrictions increasingly targeting the unvaccinated or those who have not received a booster shot.

There is no doubt that the situation hugely improved last year, as restaurants, bars, cinemas and other venues stayed open, and with no curfew confining people to their homes. 

The government is now considering introducing a general vaccine mandate, which is already in place for the country's army.

Ongoing housing issues

A political and economic issue that just won't go away is Luxembourg's exacerbating housing crisis.

A staggering 82% of voters said they were "greatly worried" about access to affordable housing at the end of the year, in line with the 81% that said so in the previous survey in June, as the country faces one of the worst housing squeezes in Europe, according to the survey carried out by TNS Ilres polling firm for Luxembuger Wort and RTL.

Prime Minister Bettel pledged to act against the housing prices in his annual address to the nation, saying he would set up a register to tax empty dwellings to counter speculation. 

House prices rose by more than 17% at the end of 2020 compared with the same period the previous year and empty flats and plots have contributed materially to the country's ballooning property prices. Thousands of citizens have opted for cheaper housing in neighbouring Germany, France or Belgium.

The value of land designated to be built on rose by a cumulative 83.3% between 2010 and 2019, while house prices rose by 65.3% for existing units and by 61.8% for homes under construction over the same period.

According to multiple studies by research institutes in Luxembourg, the market structure in Luxembourg is oligopolistic, with only a handful of owners and developers dominating and taking advantage of the situation.

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