The Juncker–Polfer Government was the government of Luxembourg between 7 August 1999 and 31 July 2004. It was led by, and named after, Prime Minister Jean-Claude Juncker and Deputy Prime Minister Lydie Polfer.

The Juncker-Polfer government represented a coalition between Juncker's Christian Social People's Party (CSV) and Polfer's Democratic Party, which had been elected the largest and second-largest parties respectively in the general election of 1999.

Until 1999, the CSV had been in coalition with the Luxembourg Socialist Workers' Party (LSAP). The Juncker-Polfer government came to an end with the general election of 2004, after which the LSAP once again joined the CSV in coalition and the Democratic Party returned to opposition.

Ministers

Name Portrait Party Office Jean-Claude Juncker CSV Prime Minister Minister for Finances Lydie Polfer DP Deputy Prime Minister Minister for Foreign Affairs and Foreign Trade of Luxembourg Minister for the Civil Service and Administrative Reform Fernand Boden CSV Minister for Agriculture, Viticulture, and Rural Development Minister for the Middle Class, Tourism, and Housing Marie-Josée Jacobs CSV Minister for the Family, Social Solidarity, and Youth Minister for Women's Rights Erna Hennicot-Schoepges CSV Minister for Culture, Higher Education, and Research Minister for Public Works Michel Wolter CSV Minister for the Interior Luc Frieden CSV Minister for Justice Minister for the Treasury and the Budget Anne Brasseur DP Minister for National Education, Vocational Training, and Sport Henri Grethen DP Minister for the Economy Minister for Transport Charles Goerens DP Minister for Cooperation and Humanitarian Affairs Minister for Defence Minister for the Environment Carlo Wagner DP Minister for Health Minister for Social Security François Biltgen CSV Minister for Work and Employment Minister for Relations with Parliament Minister for Religion Minister-Delegate for Communications Joseph Schaack DP Secretary of State for the Civil Service and Administrative Reform Eugène Berger DP Secretary of State for the Environment

Formation At the election of 13 June 1999, the two parties which had governed the country since 1984 suffered significant losses.Thewes (2011), p. 232 The CSV now had 19 seats in the Chamber, down from 21 in 1994, while the LSAP received 13 seats, down from 17. The Democratic Party managed to increase its number of Deputies to 15, up from 12 in 1994.

The elections confirmed the growth of small parties at the expense of the three largest parties (CSV, DP and LSAP. The Aktiounskomitee fir Demokratie a Rentegerechtegkeet received 7 seats, the Greens (Déi Gréng) received 5, and The Left (Déi Lénk) received one.

The Grand Duke charged the Prime Minister, Jean-Claude Juncker, with forming a new government. Coalition negotiations were started between the CSV and the DP. On 7 August 1999 the new CSV-DP government was sworn in.

Foreign policy

European Union

Enlargement and reform European questions continued to dominate Luxembourg's foreign policy.Thewes (2011), p. 234 The period from 1999 to 2004 was devoted to enlargement of the European Union and institutional reforms that went with it. On 16 April 2003 in Athens, 10 new member states (Estonia, Hungary, Lithuania, Latvia, Poland, Slovakia, Slovenia, the Czech Republic, Cyprus and Malta) signed the treaty of accession. Their admission came into force on 1 May 2004. The European Union now counted 455 million residents. This evolution confirmed the government's conviction that despite its small size, Luxembourg had to make all the more efforts to impose its presence on the international scene as the European Union grew.

Luxembourgish diplomacy intensified its work not only in the old member states, but also in the new member states. Luxembourg supported an EU policy aimed at reinforcing the European institutions and their decision-making capacities. Luxembourgish representatives participated in the Convention on the future of the European Union which resulted in the proposed Constitution for Europe. From 27 June 2003, the government took the decision to proceed with the ratification of the future European Constitution – once signed by the 25 heads of state or government – by a national referendum. But at the same time, Luxembourg did not intend to surrender important rights such as the right to a Commissioner, the right to the presidency of the Council of Ministers and an adequate representation in the European Parliament. While it did not deny the necessity for a weighting by population size, it defended the principle of equality between member states. At the Council of Nice, in December 2000, the Union came to an agreement which was also satisfactory for Luxembourg. The Treaty of Nice, signed on 26 February 2001, maintained one Commissioner per member state. Following the new distribution of votes, Luxembourg now had four votes in the Council of Ministers and continued to send six members to the European Parliament.

At the European Council of 17 to 18 June 2004, the 25 EU member states managed to find agreement on the Treaty establishing a Constitution for the European Union. This agreement made Europe more efficient and transparent, reducing the number of decision-making instruments in European institutions, and more democratic through an increase in the powers of the European Parliament. At the same time, the new text respected the equality between member states, while consecrating the principle of demographic difference. Finally, the constitutional treaty allowed Luxembourg to retain its six European Parliament members.

Banking and taxation The question of tax harmonisation touched on a vital interest of the Grand Duchy.Thewes (2011), p. 235 Wealth management remained the principal activity of the financial centre, even though other sectors such as management of investment funds were developing. However, considerations of confidentiality constituted the life of private banking. In negotiations on the European level, the Luxembourgish government demanded the maintenance of banking secrecy as long as its principal financial-service competitors maintained it as well. But this confidentiality should not be used for criminal activities. This was why the previous government had put through anti-money laundering legislation. The Juncker-Polfer government extended these measures to improve the effectiveness of the fight against fraud and economic and financial crime. In terms of tax harmonisation, the European summit of Feira in June 2000 was a way towards a compromise. An action plan with a deadline of 2010 was agreed. In January 2003 in Brussels. in an "Economic and Financial affairs" council meeting, the European Ministers for Finances and the Economy finally reached an agreement on the taxation of revenue from savings. The agreement stipulated that EU member states could choose between two models: information exchanges between tax administrations, or the introduction of a withholding tax with a progressive increase in the rate of revenue which, after a transition period, would reach 35% from 1 January 2011. The move to the generalised automatic exchange of information was coupled to a similar action by third-party countries, including Switzerland.

Development aid The government had given itself the objective of guaranteeing "the future of a small country in a growing Europe, in an increasingly complicated world".Thewes (2011), p. 236 But it was in the framework of development aid that Luxembourg was probably best able to affirm its role on the international scene. Overseas aid, which in previous governments had been under a secretary of state, was now under a fully-fledged minister. Public development aid, which had increased constantly, reached 0,8% of gross national income in 2003. With this number, Luxembourg was in 4th place globally. The Luxembourgish effort was now concentrated geographically on a certain number of target countries, and content-wise, on eradicating poverty, social structures, education, health, and equality of opportunities between men and women.

Asylum-seekers As in the past, the vagaries of the international situation translated themselves into migration movements, which also affected Luxembourg. Especially from 2002, there was increased number of asylum-seekers, which led the government to adapt legislation. The objective was to speed up the procedure, while respecting human rights as well as related international agreements and treaties. In the course of the period 1999-2004, the government several times undertook a forced return of rejected asylum-seekers.

Domestic policy

Economy While the Luxembourgish economy showed very high growth rates in 1999 and 2000, only outperformed by Ireland, the economic situation changed sharply in 2001.Thewes (2011), p. 237 GDP growth fell by 5 percentage points to less than 2,5%. At the same time, the unemployment rate, which had been under 3%, grew to 4,3% by 2003. The economic slow-down brought a decrease of tax receipts, which the government could however compensate by using budget reserves. The fiscal reforms of 2001 and 2002 concerning individuals and businesses turned out to be useful, as they contributed to maintaining domestic demand at a relatively stable level, despite economic disturbances.

Public investments Despite the difficult economic context, the government maintained significant public investments. The European enlargement led the Luxembourgish state to invest heavily in the improvement and extension of the EU's infrastructure and services, based in Luxembourg. The government was also concerned with consolidating the country as a European seat. In June 2001 building work commenced on the Place de l’Europe in Luxembourg-Kirchberg. The project included two office towers, an extension of the conference centre as well as a concert hall. The conversion of industrial wastelands of ARBED in Belval constituted the second large construction project started under this government. This development project which aimed to improve the Southern region, manifested the government's decentralisation policy. In February 2001, the company Agora, including representatives of the State, ARBED, and the communes of Esch-sur-Alzette and Sanem, was created to develop the wastelands. The Fonds Belval, a state-owned company, was charged with realising the government's plans on the Belval-Ouest site and to showcase the blast furnaces. The industrial wastelands would host the "Centre de musiques amplifiées" (Rockhal) and a "Cité des sciences, de la recherche et de l’innovation". In healthcare, the government would concentrate its efforts to stem the explosion of costs. A hospital plan provided for the reorganisation of healthcare, by putting more emphasis on outpatient treatment, and rationalising and modernising existing infrastructures.

Sustainable development