History of Liechtenstein

Prince Johann Adam of Liechtenstein bought the domain of Schellenberg in 1699 and the county of Vaduz in 1712. By acquiring these two counties he was striving for a seat in the Holy Roman government. On January 23, 1719, emperor Karl VI decreed that the counties of Vaduz and Schellenberg be promoted to a principality with the name Liechtenstein for his servant Anton Florian of Liechtenstein. Liechtenstein became a sovereign state in 1806.

The French under Napoleon occupied the country for a few years, but Liechtenstein regained its independence in 1815 within the new German Confederation. In 1868, after the Confederation dissolved, Liechtenstein disbanded its army of 80 men and declared its permanent neutrality, which was respected during both World Wars.

Until the end of World War I, it was closely tied to Austria, but the economic devastation caused by that conflict forced the country to conclude a customs and monetary union with Switzerland. In 1919 Liechtenstein entrusted its external relations to neutral Switzerland.

Since World War II (in which Liechtenstein remained neutral) the country's low taxes have spurred outstanding economic growth. Liechtenstein became increasingly important as a financial center. In 1989, Prince Hans-Adam II succeeded his father to the throne, and in 1996, Russia returned the Liechtenstein family's archives, ending a long-running dispute between the two countries. In 1978, Liechtenstein became member of the Council of Europe, and then joined the United Nations in 1990, the European Free Trade Association (EFTA) in 1991, and both the European Economic Area (EEA) and World Trade Organization in 1995.

In a referendum on March 16, 2003, Prince Hans-Adam, who had threatened to leave the country if he lost, won a large majority (64.3%) in favour of overhauling the constitution to effectively give him more powers than any other European monarch. The new constitution gave the prince the right to dismiss governments and approve judicial nominees and allowed him to veto laws simply by refusing to sign them within a six-month period.

On August 15, 2003, Hans-Adam announced he would step down in one year and hand over the reins to his son Alois.