Juncker Hands Fate to Luxembourg Ruler as Coalition Fails

Luxembourg Prime Minister Jean-Claude Juncker, the European Union’s longest-serving head of government, placed his political fate in the hands of the country’s grand duke after his ruling coalition collapsed.

Juncker, 58, who has been Luxembourg’s premier since 1995, may face an early election in October after his coalition partner, the Luxembourg Socialist Workers’ Party, defected during a marathon parliamentary hearing yesterday and called for the snap vote. The schism came after Juncker was implicated in a security service spying probe.

“I don’t consider the events that happened yesterday to be dramatic,” Finance Minister Luc Frieden said in an interview today. “Elections were foreseen for May anyway. Now they’ll probably take place in October. In difficult economic times, this will allow us to work on the basis of a strong coalition program for the coming five years.”

Juncker, a driving force behind the euro, stepped back from the front lines of Europe’s debt crisis in January, when he ceded the presidency of the Eurogroup, a post he’d held since 2005, to Dutch Finance Minister Jeroen Dijsselbloem.

A signatory of the 1992 Maastricht Treaty that created the European Union and led to the introduction of the single currency, 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.

‘Series of Consultations’

The challenge to Juncker came after a July 5 report to parliament that said he was “politically responsible” for failing to inform lawmakers of “irregularities and supposed illegalities” by the State Intelligence Service.

Grand Duke Henri, Luxembourg’s head of state, met with Juncker today and said afterwards that he would “pause to reflect” before undertaking a “series of consultations” on the political situation.

Under Luxembourg’s constitution, the grand duke has the power to dissolve parliament. In that case, an election must be held within three months.

Frieden said an early election would be “positive” for economic policy. The compressed campaign will allow the government quickly to resume “the work necessary to have growth in Luxembourg, to create jobs and to continue to develop the financial services sector,” he said.

Juncker said he’s keen to contest an early election, “but it’s up to my party to decide” on a candidate. His Christian Social People’s Party will hold a congress in Hesperange later today.

Secret Service

During yesterday’s hearing in parliament, Juncker denied allegations of using the secret service to further his own aims and those of his party. “I don’t have much choice,” Juncker said at the close of yesterday’s debate, indicating that he’d propose new elections to the head of state.

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.

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

He said Luxembourg needs “a fully functional government,” and dismissed reports that his Cabinet would resign. “Reports that today was the last meeting of the government are totally unfounded,” Juncker said. “We can’t be without a government until November.”

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