Like his tiny country, Xavier Bettel has learned to pick his shots

LUXEMBOURG CITY — When your country has fewer inhabitants than a medium-sized city, the global spotlight doesn’t shine your way very often — and when it does, you have to make it count.

That is exactly what Luxembourg’s Prime Minister Xavier Bettel did this week when he was left standing alone in front of a crowd of journalists, like a groom abandoned at the altar. His U.K. opposite number Boris Johnson had bailed out of a planned press conference because of a few dozen noisy protesters.

Bettel’s grandstanding performance gave voice to a catalogue of EU grievances that have festered behind the scenes for more than three years as diplomats have watched the Brexit mess in London go from bad to worse. In the process, his display of pent-up fury made him a pin-up for U.K. Remainers and Continent-wide Europhiles to boot.

But the 46-year-old Luxembourg leader’s opportunistic strike was entirely in keeping with his live-by-your-wits approach to running the EU’s second smallest nation. Landlocked, and without the territorial and geographical advantages of other EU members, Luxembourg has had to find niches at which to excel.

A descendant of Sergei Rachmaninoff, Bettel leads a country of about 600,000 people that sits at the heart of Europe.

As Europe’s richest state by GDP per capita, the Grand Duchy’s focus on financial services has paid off handsomely. But Bettel isn’t resting on his laurels. With new ventures such as an attempt to own the future market in legal services for ownership in space and setting up the world’s first data embassy, he is looking for new niches in which the country can succeed. And although he says he turned down an offer of one of the EU’s top jobs in the recent changing of the Brussels guard, many believe his own personal ambitions are not constrained by his country’s tiny size.

Brexit megaphone

In a wide-ranging interview with POLITICO, a few days before his remarkable Brexit diatribe, Bettel voiced nearly identical anger and frustration over Brexit. “I’ve never seen such a disunited Kingdom that we have at the moment, there’s no United Kingdom anymore,” he said, adding that Brexit is “a problem of the Tories, to keep internal peace.”

But it is not just on Brexit that Bettel has seized his chance to grab the limelight.

At the first EU-Arab League summit in Egypt earlier this year, he spoke out forcefully in support of gay rights and marriage equality. It was hardly a friendly audience but he later tweeted, “saying nothing was not an option for me.”

In a similar show of pride, and confidence, he took his partner, the Belgian architect Gauthier Destenay, to a meeting two years ago with Pope Francis at the Vatican.

Xavier Bettel took his partner, Gauthier Destenay, to a meeting with Pope Francis at the Vatican | Andreas Solaro/AFP via Getty Images

Despite the obvious differences with Johnson, some diplomats say Bettel has similarities with the U.K. leader — exceptional communication skills and a willingness to disregard convention. But while British critics have accused Bettel of boosting his image at Johnson’s expense, he seeks to play down any sense that his actions — or the mere fact that he is a gay head of government — are somehow groundbreaking.

“For me it was not history. For me it was fully normal,” he said of the Vatican meeting. “I have pictures with Angela [Merkel] and [her husband] Mr. Sauer and my husband in the Chapelle Sixtine, I love that.”

“I’m not the gay prime minister,” he added, mixing French and English, “but a prime minister who happens to be gay.”

A descendant of Sergei Rachmaninoff (his mother was the Russian composer’s grandniece), Bettel leads a country of about 600,000 people that sits at the heart of Europe between France and Germany. Its former leaders — probably also because of that accident of geography — have also found themselves at the heart of the EU, with three going on to be presidents of the European Commission (Gaston Thorn, Jacques Santer and the incumbent, Jean-Claude Juncker).

Bettel says he is not upset that no Luxemburger is in line for a top EU position this time around (it’s “a little break,” he joked). And he rejects suggestions that he has an eye on a future in Brussels: “I am elected here. I started a job, I wanted to modernize my country, and my job is not finished. ”

On Xavier Bettel’s office walls there is contemporary art from his own collection | Emmanuel Dunand/AFP via Getty Images

But the Luxembourg PM revealed that as leaders struggled to find the right top jobs mix he was asked if he would put his hat in the ring. “I was very pleased to be asked because it’s an honor to be asked.”

Ultimately though, he stuck with his own choice for European Council president, his friend Charles Michel, the Belgian prime minister. “Friendship in politics, it’s just not very common,” he said.

(Fiscal) paradise lost

Marking a difference with his predecessor, Bettel has left Juncker’s small office in the prime minister’s building and relocated to nearby premises that, until recently, were occupied by the Ministry of Foreign Affairs. On the walls there is contemporary art from his own collection. 

The financial sector is the main engine of the country’s economy, accounting for 25 percent of GDP but Bettel said Luxembourg no longer encourages sharp practice. In a good mood, and sporting a beard, he was keen to stress that the country is no longer a tax haven. “Under my government my country disappeared from black and gray lists,” he said. “This was a good decision of my government.”

“[French President] Emmanuel Macron visited here and said that if someone is speaking about tax haven in Luxembourg [they don’t] know the country,” he boasted.

“We are one of the very few countries who did legislation to be able to extract the asteroids in space” — Xavier Bettel, Luxembourg’s prime minister

While the European Commission agrees that there has been progress, its latest report on the country did not give it a clean bill of health. The country’s “tax rules appear to be used by multinationals engaged in aggressive tax planning structures, but some steps are being taken to limit such practices,” the report read. 

More mundanely, the country’s main problems remain “heavy traffic congestion and insufficient housing supply [that] may also be negatively affecting the country’s attractiveness,” the report concluded. Bettel replied that this is an issue especially for the middle class, excluded from social housing and market prices, but he stressed that “we need to do affordable housing, and so that’s what we did,” explaining how he personally intervened to lower the costs of some projects.

Instead of undercutting its neighbours on tax, Bettel said he is trying to steer the country toward capitalizing on the green economy (by promoting green finance) and digitalization. Estonia, for example, has opened a “data embassy” on Luxembourg soil — essentially a bank of servers where Tallinn can store sensitive data outside of its borders, but with the same legal protections a traditional embassy would enjoy.

“We did legislation so that the data center is considered as an embassy, with all the privileges of an embassy,” said Bettel, adding that the Baltic state is “the first one, but now we have other countries, other institutions who have the data embassy here.”

Another exotic and forward-thinking punt that plays to the country’s strengths as a legal center is Luxembourg’s bold pitch to be the international legal broker for space ownership.

Xavier Bettel knows from previous U.N. gatherings that he can’t necessarily bank on the global attention he received this week | Angela Weiss/AFP via Getty Images

“We are one of the very few countries who did legislation to be able to extract the asteroids in space. And so we have a lot of startups and companies moving to Luxembourg also in that activity,” said Bettel, adding that he had also signed an agreement with the U.S. on the subject.

In short, Bettel’s plan is to turn his niche country into a country of niches: “I need to be able always to find new niches, where you are able to to develop niches.” As any smart investor knows, portfolio diversification is key: “If you think that one sector is enough, the day you have a crisis in that sector, your country is broken.”

Luxembourger in New York

In his spare time, Luxembourg’s leader says he likes to read crime novels (John Grisham is a favorite), or biographies. The last one was on French King Louis XIV. While at work he usually listens to classical music. Which composer? “I won’t say Rachmaninoff because this was too easy.”

In the next few days though, he will likely have little spare time as he prepares to travel to the annual U.N. General Assembly in New York.

“I didn’t prepare [my speech] yet but I think I will speak a lot about the environment because [it] is really a top priority for my country. And I think that this will be the very important topic for me.” Also on the list of subjects he wants to touch on is rule of law.

But Bettel knows from previous U.N. gatherings that he can’t necessarily bank on the global attention he received this week. “Everything is full,” he said, when the leaders of big countries like Brazil or the U.S. speak, but he noted wryly that he can’t offer the same pulling power.

“I remember the first time I had to speak. There was some stress … so many persons. And then I had to go up. And I saw that the Luxembourgish bench was the only one that was complete,” he laughed.

Don’t bank on Bettel not finding some way to grab the limelight though.

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