Juncker’s Luxembourg Government to Resign as Coalition Fails

Luxembourg Prime Minister Jean-Claude Juncker, the European Union’s longest-serving head of government, said he’ll resign today after being implicated in a security service spying probe.

Juncker, 58, who led the group of euro-area finance ministers until early this year, said yesterday he’s stepping down after his socialist party coalition ally called for early elections. The move came after a July 5 report to Parliament that said Juncker is “politically responsible” for failing to inform lawmakers of “irregularities and supposed illegalities” by the State Intelligence Service.

“I could never have imagined that out of all people especially the socialist party would trip me up,” Juncker said in a speech to the chamber in Luxembourg yesterday. He said his government would meet at 10 a.m. local time today and that he would go to the palace “to propose new elections to the Grand Duke.” Elections must be held within three months.

Juncker, who has been Luxembourg’s premier since 1995, led the Eurogroup from 2005 until Jan. 21, when he stepped back from the front lines of the crisis. He’s been a driving force for the single currency. A signatory of the 1992 Maastricht Treaty that created the European Union and led to the creation of the euro, he served as an intermediary between Germany and France in hammering out the deficit-limiting stability pact in 1996 and in softening it in 2005.

‘Warring Tribes’

“Juncker kept the warring tribes together during the euro crisis,” Fredrik Erixon, the director of the European Centre for International Political Economy in Brussels, said in a phone interview. “He did this through personal charm and lots of hard work behind closed doors to keep Germany and France on the same page.”

Juncker prodded German Chancellor Angela Merkel to take on bigger financial risks and argued that Europe’s bailout fund should be allowed to buy government bonds and for joint European bond sales with shared liability. Merkel has repeatedly rejected the idea of euro bonds.

A chain smoker, who sometimes lights up cigarettes in conference rooms where smoking is banned, Juncker used his language skills to get the euro group’s messages across. At press conferences, he would shift from speaking French, to German, to English and his native Luxembourgish.

Secret Service

Juncker yesterday testified to Parliament and denied allegations that he had used the secret service to further his own aims and those of his Christian Social People’s Party.

“This is not the kind of person I am,” Juncker said. “If you think that I am, then vote.”

The secret service is accused of irregularities and possible illegal activities, especially during the period from 2004 to 2008, according to the report compiled by members of parliament. The inquiry was triggered by reports last year that the former head of the service had secretly recorded a conversation with Juncker.

According to the parliamentary commission created in December, the secret service engaged in the illegal interception of communications. It found that a private security agency was created by an active intelligence agent and raised questions about Juncker’s role in securing an agency job for his driver, a former policeman.

‘In Chaos’

“The prime minister didn’t inform the parliament enough and said nothing about the service being in chaos,” Xavier Bettel, president of the opposition Democratic Party, said in parliament on June 13. “You can’t say that it’s not your fault. You have a political responsibility. There’s no more trust to be had in the prime minister.”

Juncker initially challenged such assertions and refused to step down, arguing that the prime minister can’t be expected to resign over the alleged misconduct of a few intelligence agents.

“I’ve told you what my mistakes were,” Juncker said yesterday. “I showed you that when operations failed, I stopped them, and that if something went wrong, I did everything possible to prevent it happening again. For that reason I cannot accept personal responsibility.”

Juncker, who has been a Luxembourg government minister since 1984, spent his childhood in the south of the country, where his father worked at a steel plant. His political life began through his father’s union activities with the Luxembourg Confederation of Christian Trade Unions.

In 1979, Juncker earned a law degree from the University of Strasbourg. In 1982, a few days before his 28th birthday, he was made state secretary for labor and social security. Two years later he was elected to Luxembourg’s parliament.

To contact the reporter on this story: Stephanie Bodoni in Luxembourg at sbodoni@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net

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