July 10, 2005

Luxembourg backs EU constitution, saves PM

By Carsten Lietz

LUXEMBOURG (Reuters) - Luxembourg approved the European
Union's troubled constitution by a solid majority in a
referendum on Sunday, averting the threat of Prime Minister
Jean-Claude Juncker's resignation.

Voters in the duchy of 465,000 people that houses several
key EU institutions backed the charter by 56.52 percent to
43.48 percent, with all votes counted.

The result is unlikely to revive the charter, designed to
make EU decision-making more efficient after the bloc's
expansion last year, after it was rejected in French and Dutch

But it will allow veteran EU leader Juncker to keep his
jobs of prime minister, finance minister and chairman of euro
group of 12 nations sharing the euro currency, while
strengthening his already considerable clout in the 25-nation

Juncker, 50, had decided to go on with the referendum and
kept his promise to quit if the constitution was rejected,
although the June EU summit agreed on a long period of
reflection on the constitution after the two failed

The summit's decision has prompted the majority of EU
members yet to ratify the treaty to postpone or suspend the
process. The charter has now been ratified by 13 countries.

Juncker said last week that Luxembourg's "Yes" would offer
a glimmer of hope for the constitution despite its rejection in
France and the Netherlands, but most politicians and analysts
believe the charter is dead.

"You cannot have the constitution without France," said
Daniel Gros, director of the Center for European Policy
Studies, a Brussels-based think tank.

The charter cannot go ahead unless it is ratified by all 25
member states, either in a referendum or parliamentary vote.


Juncker, who has served 11 years as prime minister, bet his
career on the referendum, saying a closer EU integration is
needed to prevent the bloc from sliding into national rivalries
that once resulted in World War II.

An architect of the euro currency evoked, during the
campaign, the wounds his father suffered during the war when he
was forcibly recruited into the German army.

Similar arguments fell on deaf ears in France and the
Netherlands, where voters appeared to be more preoccupied with
stagnant economies, threats of globalization and fears of EU
further expansion into countries such as Turkey and Ukraine.

The Grand Duchy, sandwiched by Germany, France and Belgium,
and a founder member of the EU, has benefited politically and
economically from the post-war drive for unity in Europe.

It is Europe's richest country in terms of gross domestic
product per head - 52,600 euros ($62,640) a year, twice that of
Germany and France - thanks to its flourishing banking sector.

A deeply Catholic country, the prospect of Muslim Turkey
joining the EU has been used by the "No" campaigners as it was
in the French and Dutch votes by the right.

Juncker's success at the referendum is certain to be
greeted with relief by many European leaders who admire the
wily negotiator for his wry sense of humour. (Additional
reporting by Michele Sinner and Huw Jones)

($1=.8397 Euro)