This is how Liechtenstein invented the corporate state out of nothing

In 2003 the tiny Principality nestled between Austria and Switzerland overturned the constitutional balance between sovereign and citizens and created a country “at the service” of those who live there

On March 17, 2003, the “Corriere della Sera” reported on the outcome of the referendum with which the citizens of Liechtenstein, the last “background noise” of the Holy Roman Empire, an ancient monarchy nestled between Switzerland and Austria, decided to increase the discretionary powers of the reigning prince, today as then Hans Adam II von und zu Liechtenstein, and proportionally reduce those of Parliament, a chamber of just twenty-five representatives.

The Council of Europe, the only international organization that brings together all the states of the Old Continent, sent a note of serious concern to the press agencies, expressing perplexity over a decision that could undermine the established foundations of democracy, even though it was the result of popular consultation.

Revised the old “charter” of 1921

The 16,932 voters of the tiny Alpine Principality (but just under 15,000 went to the polls) overwhelmingly approved the constitutional reform proposed by Hans Adam II, then 57 and on the throne since 1989. 64.3% of the voters said yes to a series of changes to the fundamental law of the State, which dates back to 1921, against 16% of the counter-proposal of the anti-monarchists and 20% of those in favor of maintaining the old Constitution.

“The Liechtenstein Head of State will have far broader prerogatives than those of a simple European constitutional sovereign. For example, he will be able to force the resignation of the government even if it enjoys a majority in Parliament. Or he will be able to make bills already passed by members of parliament lapse simply by not ratifying them within six months. The legislative body will not have any power of control over the acts of the prince, who will also be the only one to be able to change the rules governing the succession to the throne. If one adds to this the fact that the head of state already had the final say on the appointment of magistrates, it seems difficult to argue that the Liechtenstein constitution respects the fundamental principle of the division of powers. Legislative, executive and judicial powers now seem to be in two hands only: those of the prince“, wrote the famous paper from Via Solferino.

But what escaped the commentators of the newspaper directed by Ferruccio De Bortoli was that the constitutional order of the tiny State, known to most people at the time as a perfect example of tax and banking paradise and still a member of EFTA along with Switzerland, Norway and Iceland, contained the germs of a much wider ideological revolution, a twist that imagined for itself the first case of “State-company” or “State-business” of Europe and, perhaps, of the world.

The political scientist Luca Pirri wrote in 2012: “According to Hans Adam II, the State of the future must ‘become a utility company that faces peaceful competition and stop being a monopolistic enterprise, in a position to put its customers in front of the alternative between settling for bad services at the highest prices or emigrating’. The State is therefore considered in the same way as an enterprise operating in a competitive regime, no longer an immutable and superordinate entity with respect to individuals, but a simple organization of means and men, at the service of citizens, not vice versa. To this end, the necessary functions of the State are two: ‘the maintenance of the rule of law: this is, essentially, the state functions that relate to the maintenance of order, the production of legislation and the resolution of conflicts between citizens; foreign policy‘”.

A coexistence of tradition and modernity

The case of Liechtenstein, as well as a City of London anchored in corporate electoral rules dating back to the Middle Ages, demonstrates how tradition and modernity can represent virtuous short-circuits to the benefit of citizens. On January 23, 2019, the small mountain state also celebrated its 300th anniversary: many years had passed since Emperor Charles VI of Habsburg decreed the union between the County of Vaduz and the Lordship of Schellenberg, raising it to Fürstentum (“Principality”) under the name of the nobleman Antonio Floriano of Liechtenstein.

Article 1 of the reformed constitution reads as follows: “The Principality of Liechtenstein is to serve the people living within its borders so that they may lead a life together in peace and freedom”, which in itself is a constitutionalisation of those liberal principles which many schools of thought would like to be inspired by. In Vaduz there is the only case in the world of so called “dual” sovereignty, in the sense that it is perfectly shared between the prince and the people, placed on an equal basis, however the latter is entitled at any time to proceed to the abolition of the monarchy (article 113) or to present a reasoned no-confidence to the sovereign if at least 1,500 citizenship holders request it (article 13b).

But the real novelty, both from the point of view of comparative public law and for the already Lilliputian dimensions of the Liechtenstein State, is the affirmation of a positive right of secession, which has no precedent in the world (despite the fact that it was theoretically foreseen by the fundamental law of the USSR for the Republics which made up the federation). Article 4 states: 1) “The modification of the boundaries of the territory of the state can only take place by virtue of a law. Changes in the boundaries between municipalities, the creation of new municipalities and the merger of existing municipalities also require a decision by a majority of the citizens residing there with the right to vote. 2) Individual municipalities have the right to withdraw from the state union. A majority of the citizens entitled to vote in the municipality decides on the initiation of the withdrawal procedure. The regulation of withdrawal shall be effected by a law or, where appropriate, by an international treaty. In the case of regulation by international treaty, a second vote must be taken in the municipality after the conclusion of the treaty negotiations.

Eleven municipalities entitled to secession

The second point, as Luigi Pirri reminds us, is the most interesting of all: the communes of Liechtenstein (11 in number, according to Article 1 of the Constitution itself) “have the right to secede from the State Union“. This is another completely new element in modern constitutional history: the right of self-determination at municipal level, i.e. the possibility of seceding from the state to which one belongs by means of a municipal initiative and a subsequent local referendum. A second vote is foreseen if the modalities of withdrawal from the Union have been decided through an international treaty.

Using the words of Hans Adam II, born in Zurich on February 14, 1945 as the eldest son of Prince Franz Josef II and Princess Georgina of Wilczek, the following is foreshadowed: “A model of state that ensures peace, the rule of law, democracy and the welfare of the population, must remove the state’s monopoly on the territory. In order to take away the monopoly of the territory from the State, the latter must be divided into small units, so that the smallest possible population units have the possibility to ’emigrate‘”. But that’s not all: “This potential secession”, explains the scholar of political science, “reinforces the pressure on the State that works badly, pushing it to reform to avoid dissolving.

A “libertarian federalism” against centralism

For the legal experts of the website “Polyarchy – Polyarchie – Poliarchia – Poliarquia”, “we have, therefore, an idea of strong institutional and fiscal competition, a libertarian federalism which opposes the current supra-state unifying trend and which ‘forces’ public bodies to take into great consideration the demands of citizens, on pain of the very dissolution of the State (or, at any rate, its territorial reduction), valuing the contract-exchange relationship over political obligation. It is a question of multiplying governments in order to reduce (minimize) injustice, passing from a monopolized order to a pluralistic order, greatly lowering the costs of exit from one political system to another“.

“The attempt that, commendably, in the opinion of the writer, the political thought of Hans Adam II wants to achieve is the desacralization of the modern state through the overcoming of a static conception of order. The juridical-political science in the next years“, concludes Luigi Pirri mentioning the Gospel according to Mark (“The Sabbath was made for man, not man for the Sabbath”), “will have to take into great consideration the developments of the constitutional reform of the Principality. Moreover, the current fiscal and monetary crisis in Western states represents a unique opportunity for the promotion of forms of political community that do not authoritatively dispose of citizens, but are, finally and rightly, at their service.”

Sources:
“The State as an Enterprise: the Case of Liechtenstein” by Luigi Pirri for http://www.polyarchy.org/ (2012);
“Liechtenstein is the Prince’s” by Vittorio Malagutti for http://archiviostorico.corriere.it/ (2003).