Focus: Europe In Crisis: No shame for the local hero

The people of little Luxemburg felt enormous pride in Jacques Santer - and they still do

After church today the most humiliated man in Europe will probably do what he always does: drink coffee and cognac with his old friends in a suburban cafe. Jacques Santer, the only Luxemburger ever to become world famous, will find comfort among friends in his native city. To them he will not be the disgraced President of the European Commission.

"He is Uncle Jacques," says Simon Gray, an Englishman who has lived in Luxemburg for two decades. "Every Sunday after church he goes for a drink with his mates, the people he has known all his life. Luxemburg is only about three generations off the farm, and people don't forget that."

They are unlikely to turn their back on Mr Santer: Luxemburg felt enormous pride when he was appointed in 1994, and it seems willing to share his pain now. "It is a matter of national pride," says Mr Gray. "People feel wounded that their senior representative in the world has been humiliated in this way."

Most Luxemburgers believe Mr Santer's achievements have been ignored - and complain that the more powerful nations have used him as a scapegoat to hide the failings of their own representatives. They applauded his decision on Friday to stand as a representative for the European Parliament at the next elections - a move which astonished most people outside the Grand Duchy.

The tiny sovereign state the size of Oxfordshire, squeezed between France, Germany and Belgium, is a cosy place, and quiet this time of year. The bells toll for mass in the Cathedral Notre-Dame, but the streets of Luxemburg city are almost empty. A young soldier in white gloves and a beret shoulders arms outside the Palace of the Grand Duke, stamping his feet to beat off the chill of dusk, for want of anything more exciting to do. There is no security threat to the royal couple, who may move freely among their people.

The same is true of the Prime Minister, Jean-Claude Juncker, whose office is in an 18th century Prussian townhouse in one of the pretty cobbled courtyards behind the cathedral. Any citizen may knock on the door. "If a minister went into town with security guards around him people would laugh ," says Jean-Claude Conter, a civil servant who is used to bumping into the country's most powerful men and women as they shop for vegetables in the Place d'Armes on a Saturday morning.

The Luxembourgeois are naturally reserved people, and scrupulously polite: enter any of the bars in the city and these immaculately dressed strangers will chorus, "Bonjour Monsieur."

Only 75,000 people live in the capital, which still has a village mentality - but the nation itself also has an inferiority complex the size of a planet. It may be the richest country in the world, with a GDP of $39,833 per capita (around pounds 25,000), but Luxemburg has never quite got over being one of the great victims of European history.

The city was founded in 963 when Count Siegfried of Lorraine built a citadel on a cliff overlooking the gorges formed by the Alzette and Petrusse rivers. The Latin name Lucillinburhuc, or little fortress, first appeared on the charter that gave him the land, which was in a highly strategic position on the Roman crossroads linking Metz with Trier. As the gateway between France and Germany it became highly prized as the balance of power shifted in Europe - and at various times fell under the control of the House of Burgundy, Spain, the Austrian Netherlands and Napoleon. Each new owner fortified the city until it was impregnable. This protection meant that the houses built in the old city and the gorges under the Hapsburg empire were never torn down, and their presence gives the spectacular views around Luxemburg the look of a middle-European fairy tale.

The massive city walls were dismantled in the late 19th century when the seven major powers of Europe signed a treaty guaranteeing independence to Luxemburg. Unfortunately Germany paid no attention when it invaded in 1940, conscripted young Luxemburgers and sent them to fight on the Russian front. There was a strong resistance movement supported vocally from exile by the royal family, led by Grand Duchess Charlotte, whose bronze statue now stands near the palace.

"In those days the Luxemburgers did not decide on their own future," says Mr Conter. "Which is why we have the constant feeling we need to prove ourselves as a nation. Out of this time also grew the conviction that we could only survive in times of peace, and that we should therefore invest ourselves in building a peaceful Europe."

As a result, Luxemburg was a founder member of the United Nations, Nato and the European Coal and Steel Community, the forerunner of the European Union. The nation has no sporting heroes - it has only ever won one gold medal at the Olympics, in 1952 - and has never produced a decent actor or pop star. Its heroes are the royal family, or eurocrats. Pierre Werner, the prime minister from 1959, drew up a blueprint for monetary union; his eventual successor, Gaston Thorn, was also president of the European Commission, for four years from 1981.

"Many people would say the Grand Duchy's greatest influence on Europe has been as a model of openness in terms of economic freedom and as a relaxed melting pot of different cultures," says the Golden Book of Luxembourg, read by many of the 2.5 million tourists and businessmen who visit every year.

Luxemburg responded to the steel crisis of the 1970s by becoming a tax haven, which brought an astonishing rise in prosperity. The results can be seen in the immaculately preserved historic buildings, and the stunning, high-tech museums. The country has managed to integrate a large number of Portuguese immigrants, who now make up more than 30 per cent of the population. It has three official languages: French, German and Luxemburgish, which has become the favoured tongue among the young. Most people also speak English.

Like its neighbour Belgium, Luxemburg produces fine chocolate, beer and Moselle wines. But many who visit do so because it is home to major departments of the EU. The European Investment Bank and the Court of Justice are among several huge glass and steel constructions in a sprawling estate on the edge of the city. Compared to the humble and elegant government offices, these new developments seem arrogant - the very accusation levelled at Jacques Santer and his commissioners.

"Perhaps we should not be surprised," says Simon Gray, editor of the magazine Luxembourg Business. While Mr Santer has not been accused of personal wrongdoing, "the idea that the commissioners should be accountable for the money spent - or wasted, or stolen - under their supervision still seems unfathomable to him".

During his 11 years as prime minister of Luxemburg, he presided over splendid economic growth, though Mr Gray alleges he turned a blind eye to cronyism. "No one would say it was a corrupt country but he presided over the kind of morally dubious behaviour now condemned as unacceptable in Brussels."

Still, the mood in the bars on Friday night suggested that life would go on. The national motto is Mir Woelle Bleiwe Wat Mir Sin - we want to remain what we are. Most Luxemburgers will continue to support Santer whatever he does next, suggested one man in his thirties, for the same reason that the mayor of their city would probably see out her second decade in the job. "We do not like harsh change."

LEADING ARTICLE PLUS JULIAN CRITCHLEY, PAGE 28