In the dark heart of Europe lies a nation rotten to the core. Renowned as a secret banking haven where North Korean leader Kim Jong Il allegedly squirreled away billions of dollars, its economy is tied to the whims of capricious global money markets. The country's per capita external debt is 84 times that of the debt-ridden United States (some $3.76 million for each man, woman, and child). Democracy is a joke, undermined by a hereditary and unelected head of state who not only can dissolve parliament, but appoints some of its members in the first place. Beleaguered citizens worry about just how sustainable their ever-more-fragile country is, which is no surprise given that foreigners make up 44 percent of the population and the equivalent of another 25 percent invade the country daily just to do its work.
So where is this armpit of the European Union, this cancer of the continent? Greece? The Balkans? Not exactly. Behold the Grand Duchy of Luxembourg, population 503,000, a tiny freckle on the map between Belgium, France, and Germany.
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Sure, cyclists and hikers might see this bucolic country as a verdant paradise, with its rolling green hills and lush pastures. And bankers may marvel at its spectacular wealth: Luxembourg boasts the world's highest per capita GDP, $108,832 in 2010. But something must be wrong. The miserable Luxembourgers -- who rate lower than all but one other European country on the Happy Planet Index (they're tied with war-torn Sudan!) -- buy more cigarettes and alcohol and have a higher per capita carbon footprint than any other country. And yet their national motto is "We want to remain what we are."
I had to know: Could this hard-partying little duchy hold the secret to the dark forces now tearing apart Europe?
On the cloudless summer day when I arrived, the quiet, well-kept streets of Luxembourg's capital, creatively named Luxembourg City, seemed idyllic enough. The only time I sensed any sort of abyss was when I looked down from the elegant stone Pont Adolphe into the lush, precipitous gorge that cuts through town. An 18-piece military brass band was playing "Come Fly With Me" in the city center as well-dressed white people filtered in and out of luxury chain stores on the edge of the charming old town. In the distance, a row of investment banks glistened in the sun, identically armored with reflective, modern exteriors.
I wandered into a stylish bistro that leaked pulsing rhythms onto the Rue de la Boucherie, the trendiest street in the center of the old town -- the kind of place, the waiter told me, where bankers gather to knock back copious amounts of booze on weekends. A bottle of whiskey in Luxembourg, explained Panagiotis Meidanis, an 18-year-old server with a truncated pompadour, sells for half the price that it does in his native Greece, where people earn a fraction of the local income, especially now. "When we close on weekend nights, they always want more," said Meidanis of his customers. "But for some reason they never get into fights here."
But what did he know? I needed to find a real Luxembourger. Across from the 19th-century Gare de Luxembourg with its art nouveau flourishes, I met with Georges Hausemer, who has published one of the remarkably few novels in the native Lëtzebuergesch language. Hausemer's 1998 novel, Iwwer Waasser (Above Water), is a tale of a broken marriage set in the world of banking that the author describes as a "portrait in miniature" of Luxembourgian society.
But when I asked him whether his personal $3.76 million share of the external debt keeps him up at night, he said: "Is that true? No one is talking about this here." He sipped a Schweppes, sans alcohol, and then admitted soberly: "We are a bit lost." He spoke of the encroachments of "foreign" languages -- French is officially used, while German and English are more common in business circles -- and distant cultures. The end result, he says, is a country of commerce and banking that is "losing everything else." Even Hausemer, it turned out, is barely keeping the faith: He wrote his other novels in German.
To better understand modern Luxembourg's raison d'être, I tracked down Igor, a nattily attired 30-something banker who agreed to speak with me on the condition that I wouldn't mention his last name or the firm that employs him. He also insisted that we speak while he marched, in his designer shoes, from a business lunch to his car.
Igor told me of the sturm und drang that the 2008 financial crisis brought upon his poor country. "For clients, it was beyond stressful. They could lose their fortunes. They didn't know if the banks were going to go under. They were guaranteed €100,000 by the state, but above that, nothing."
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