Fairy Tale Come True: Liechtenstein and its Princely Family

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The Princely Family of Liechtenstein are like no other royals. Acclaimed by referendum, independent of the taxpayers and respectful of their people, their unusual style may be the key to Liechtenstein’s success. 

Photo: Liechtensteiners gathering near Vaduz Castle to celebrate their National Day.


Once a year, a very select group of people – the citizens of Liechtenstein – receive an invitation from a prince to a castle. This is no fairy tale, but rather a very real invitation from a prince known and loved by his people – His Serene Highness Prince Hans-Adam II von und zu Liechtenstein. At his side, a real life princess – Her Serene Highness Princess Marie von und zu Liechtenstein.

The occasion marks the national day of Liechtenstein celebrated on August 15th, the Principality’s National Day. In the capital city of Vaduz, the people are greeted by H.S.H. Hereditary Prince Alois von und zu Liechtenstein and the President of the Parliament, Mr Albert Frick, on the lawn next to the Vaduz Castle. The entire population enjoys a gracious reception courtesy of H.S.H. Prince Hans-Adam II von und zu Liechtenstein and H.S.H. Princess Marie von und zu Liechtenstein in the garden of the castle. The celebrations continue at a fair in the centre of Vaduz and into the evening with spectacular fireworks.

Governmental synergies

One may expect that a fairy-tale principality, one of only two countries that are double landlocked (the countries that surround it are also landlocked), may be an insular place, but nothing could be farther from the truth. Modern Liechtenstein is vibrant and  internationally engaged. It is also prosperous, the world’s second richest country in terms of GDP per capita.

S.D. Alois von und zu Liechtenstein

H.S.H. Hereditary Prince Alois von und zu Liechtenstein.

The open political and economic institutions of the Principality are the main drivers behind its rapid growth. 20th century statesmen masterminded the transformation of Liechtenstein from a poor agrarian economy to a world leading financial and high tech manufacturing centre. Its model of governance works well today. The Prime Minister is appointed from the majority party upon approval of the legislature, called the Diet (Landtag). Four Ministers are elected by the 25 member Diet itself. The Diet members work under the principle of collegiality, finding consensus on who will hold various posts. Dr Aurelia Frick, Minister for Foreign Affairs, Education and Culture of the Government of the Principality of Liechtenstein, explains to HT how the Liechtenstein Cabinet is chosen.

“​The portfolio is negotiated among the members of the Government. I am particularly happy with my current portfolio, the Foreign Ministry, the Ministry of Education, and the Ministry of Culture. They overlap in many aspects and have various synergies,” explains the minister.

Enduring

The ruling Prince of Liechtenstein is the natural head of state. The dynasty of the Princely Family of Liechtenstein can be traced back to the Middle Ages. The country is named after the family, the House of Liechtenstein. H.S.H. Prince Hans-Adam II von und zu Liechtenstein is the current head of the Principality while H.S.H. Hereditary Prince Alois von und zu Liechtenstein, his eldest son, is the regent and handles day-to-day governance. In a striking contrast to other royal counterparts, this family pays its own way.

Independent

“All my family’s businesses, like LGT, are private businesses built and run completely separate from the state. It was actually thanks to the large family properties outside Liechtenstein that one of my ancestors could buy the territory that is now Liechtenstein. My family also never lived on tax income from Liechtenstein, but rather made large donations to support and build up Liechtenstein in past centuries. Also today my family does not receive any income from the state, but pays for the costs of the monarchy out of the income from the private family businesses,” explains H.S.H. Hereditary Prince Alois von und zu Liechtenstein.

LGT is lead by H.S.H. Prince Philipp von und zu Liechtenstein and H.S.H. Prince Max von und zu Liechtenstein, Chairman and CEO, respectively. The bank is known for its long-term and pragmatic approach to wealth generation and works to sustain and further the family’s legacy.

“As the family businesses are not state businesses like the Crown estate in the UK or the sovereign wealth funds of several other countries, there is also no special state philosophy behind running them. However, the family expects that the family businesses are run in a way that secures the income of the monarch and with it also their political independence in the long term.”

Cultural heritage

The Prince of Liechtenstein Foundation is a portfolio that consists of the family’s assets. Alongside properties held in the form of companies, palaces and residences, the family owns thousands of precious artworks known as the Princely Collections, matched only by the Royal Collections of the British monarch.

“My family does not collect art like a gallery to have a self-sustaining business. Initially, the family collected art mainly to furbish its palaces and for representational purposes. Today we enjoy sharing the collection with the broader public and we regularly organize exhibitions in many parts of the world. We have appreciated the value creation of the collection and hence we have also started to manage it with a certain investment perspective,” says H.S.H. Hereditary Prince Alois.

Royal popularity

The bulk of the art collection is kept outside of Liechtenstein, like another major family asset, Liechtenstein Castle, located near Vienna. While the Princely Family did not start living in Liechtenstein until about 200 years after the land was granted by the then Holy Roman Emperor, the Princely Family is hugely popular with citizens. When the Princely Family settled in its promised (and purchased) land, the Liechtensteiners insisted that the Prince should live in a castle. The National Day of Liechtenstein is closely connected to the birthday of H.S.H. Prince Franz Josef II von und zu Liechtenstein, not the first ruling prince, but the first ruling prince to have spent his lifetime living in the Principality.

“In Liechtenstein the monarchy still has an active political role, both according to its constitution and in practice. However, the monarchy in Liechtenstein is bound by a special form of democratic legitimization. Only 1500 citizens are needed to launch a popular vote of non-confidence against the Reigning Prince or a popular vote on the abolishment of the monarchy. Therefore, the Reigning Prince must act in the interest of the people; otherwise he risks his position or the monarchy,” says H.S.H. Hereditary Prince Alois.

Political rights still possessed by the ruling Prince include the veto powers and the power to dismiss the cabinet or any of its members. In 2012, a referendum to abolish the prince’s rights to veto was held – and rejected by 76% of voters. The Princely veto remains the will of the people.

A political culture that stresses consensus, tradition and consent from the public enables the Liechtenstein Government to endure over time. The Princely Family, in turn, brings continuity to its private and global businesses, furthering its legacy while creating and promoting the legacies of others. The Principality continues to benefit from a heritage of sage leadership and diligent public and royal political participation.