As Anna-Lena Högenauer, Associate Professor of EU politics at the University of Luxembourg, observes, Luxembourg’s expanding diplomatic network reflects a strategic push to bolster economic outreach and resilience amid shifting global power centres.
So far, Luxembourg had 36 embassies, 13 permanent representations and six general consulates abroad. It is now conducting feasibility studies for three new embassies and four new general consulates. In addition, experts from the Finance Ministry will reinforce several of these teams.
While these plans were announced just days after the abduction of the Venezuelan President by the United States, they are not directly linked to the growing geopolitical instabilities but represent a continuation of the changes of the last couple of years, when several new embassies were open in Canada, South Korea, Benin, Rwanda and Costa Rica.
One of the goals is for embassies to be distributed in such a way that they can serve as regional hubs that will also cover neighbouring states, so as to obtain good geographic coverage.
A second goal is to improve the marketing of Luxembourg’s economy and strong financial sector abroad: Luxembourg already has a network of ten Trade and Investment Offices abroad that facilitate economic contacts between Luxembourg’s economy and potential foreign investors. However, the competition does not sleep: Ireland, Hongkong, Jersey and the City of London have all posted financial experts to strategic locations.
The decision to add experts from the Ministry of Finance to some of the embassies and consulates will thus allow Luxembourg to advertise its financial sector and attract new investors. The locations of the planned new embassies and representations also reflect the changing geo-economic realities: New embassies in Singapore, Kenya and South Africa will improve Luxembourg’s representation in financial centres that are on the rise, and the new general consulates in Austin (Texas, USA), Sao Paulo, Hongkong and Mumbai also target economic hubs. Taken together, the recent and planned expansions of the diplomatic network target cities that are important for new technologies, finance, defence and space industries – sectors that Luxembourg has identified as priority areas.
The plans of the Foreign Ministry avoid the elephant in the Western diplomatic room – the increasingly unpredictable US foreign and trade policy and correspondingly unpredictable relations with the US. As things stand, the plan is to reinforce Luxembourg’s representation in the US due to its importance for the financial sector (and one could add new technologies and the space sector).
However, while it is true that the US has great economic importance for Luxembourg, last year’s erratic trade policy and this year’s military threats against a NATO partner might lead to lasting disruptions. In this context, the recent and planned diversification of representations abroad especially in important financial and economic hubs is all the more important. If Luxembourg’s, and Europe’s, economy do need to reorient themselves, having good diplomatic connections to other centres in Canada, South America, Asia and Africa will facilitate the process.
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