Liechtenstein (lĭkh'tənshtīn') , officially Principality of Liechtenstein, principality (2005 est. pop. 33,700), 61 sq mi (157 sq km), W central Europe. It is situated in the Alps between Austria and Switzerland and is bounded in the west by the Rhine River. Vaduz is the capital.

Land, People, Economy, and Government

The country is mainly mountainous, with the Rhine valley in its western third. The population is largely Roman Catholic, with a Protestant minority. German is the national language; a High German dialect is also spoken. There is a large component of foreign workers.
Traditionally agricultural, Liechtenstein has been increasingly industrialized, with industry now employing over half of the workforce. Most of the rest of the labor force works in the service sector. Only a small fraction of the population still engages in agriculture (dairying and the raising of livestock and cereals). The leading manufactured products are machinery and other metal goods, pharmaceuticals, optical lenses, electronic equipment, textiles, ceramics, and consumer goods. A large part of the production is exported. Tourism is an increasingly important industry. Much revenue is derived from the minimal taxes imposed on international corporations, which, because of the low taxes, are headquartered there. The stable political environment and the secrecy of its financial institutions contribute to its reputation as a banking center and tax haven. Liechtenstein is a member of the European Free Trade Association (EFTA).
The ruling prince is Hans-Adam II. A constitution has been in effect since 1921. Members of the 25-seat unicameral parliament (Landtag) are elected by popular vote for four-year terms. Liechtenstein uses Swiss currency and is represented abroad through Switzerland. The country has no army and only a small police force. Liechtenstein is divided into 11 communes.

History

The Liechtenstein ruling house is an old Austrian family. The principality was created in 1719 by uniting the county of Vaduz with the barony of Schellenburg. The princes, vassals of the Holy Roman emperors, also owned huge estates (many times larger than their principality) in Austria and adjacent territories; they rarely visited their country but were active in the service of the Hapsburg monarchy. Liechtenstein became independent in 1866, after having been a member of the German Confederation from 1815 to 1866.
The principality escaped the major upheavals of the 19th and 20th cent. Prince Hans Adam II succeeded to the throne in 1989 after the death of his father, Francis Joseph II, and has had a number of conflicts with the parliament due to his attempts to have a significant role in running the government, particularly its economic policy. In 2003 voters approved a number of constitutional amendments that the prince had demanded, including giving him the right to dismiss the government and approve judicial nominees.