Liechtenstein - Foreign policy

For most of the twentieth century and into the early twenty-first century, the emphasis of Liechtenstein's foreign policy was on neutrality. The country's last foreign involvement was in 1866, when Liechtenstein sent 80 men to patrol the Austrian border with Italy under its obligation to the German Confederation. The army was disbanded in 1868, shortly after the confederation broke up. Although neutral in both world wars, Liechtenstein's economic links with Austria made it a target of Allied embargoes each time.

With the reign of Hans Adam, however, in the second half of the twentieth century, Liechtenstein's foreign policy has gained noticeably in importance. Highlights among the numerous activities are without doubt admission to the United Nations (UN) in 1990, membership in the European Free Trade Association (1991), participation in the European Economic Area (EEA) in 1995, and admission to the World Trade Organization (WTO) in 1995.

Liechtenstein's closest international association is with Switzerland, a relationship that dates to the Customs Union Agreement signed in 1923. Liechtenstein is represented abroad by Switzerland, but diplomatic decisions affecting Liechtenstein cannot be made legally without its consent. The agreement also allows Liechtenstein and Switzerland to be represented as one mutual economic area. Therefore, the borders between those states are open. The border between Liechtenstein and Austria is secured by Swiss customs officers. However, Liechtenstein has also been a member of the EEA since 1995—largely through the initiative of Hans Adam; this affiliation allows the country to participate in the European Union (EU) internal market.

Liechtenstein came under the international microscope in 2000 when the Organization for Economic Cooperation and Development (OECD) listed the nation as one of 15 "noncooperative" countries in its eleventh annual report from the Financial Action Task Force (FATF) on money laundering. Liechtenstein was also cited as having "potentially harmful" or unfair tax practices. The objective of the FATF in these reports is to locate areas within the global financial infrastructure that may potentially be used by those seeking to finance or benefit from drug traffickers, arms smugglers, and terrorists. Though the Liechtenstein government defended its tax system, immediate measures were taken, in cooperation with the OECD, and the country was removed from the list the following year.

As a recognized sovereign state, Liechtenstein belongs to the Council of Europe, International Telecommunications Satellite Organization (INTELSAT), and the Organization for Security and Cooperation in Europe (OSCE).

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