When in Europe part of my beat was the tiny Grand Duchy of Luxembourg, about which I have developed strong opinions. The mini-country looks very like Ithaca, New York, home of Cornell University, with deep gorges and dramatic scenery. And like Ithaca it has become highly dependent on outsiders, not students and faculty, but multinational corporations.

Like the townie mayor of Ithaca trying to keep the gownies happy, the government aims to make corporations, funds, and banks happy with low taxes. As one of the original 6 members of the Common Market with a Grand Duke to trot out for greeting big shots, Luxembourg seemed safe and chic and was not too near real capitalist centers.

The financiers came to what had been a steel-making center thanks to the Kennedy Administration decision to block access to US dollar bonds for the USSR by imposing a tax. A store-front in its capital, also called Luxembourg, was where the fledgeling market in eurodollars got its start. Luxembourg offered low taxes and multilingual services.

The country officially is run in French, the language of the Grand-Ducal mini-Court and the administration, based on Napoleonic rules. If you get a parking ticket it will be in French so you had better read the language to pay the fine. But the population speaks its own lingo, Letzerbuergisch, which sounds like nothing so much as Yiddish without the Slavic and Hebrew influences.

I write as a polyglot who speaks proper German rather than as a linguist. Officially they speak Platt- Deutsch. And they are over 95% Catholic. Luxembourg also welcomed Portuguese emigrants seeking to improve their lot but kept out Muslims who troubled its neighbors, Germany with Turks and Belgium with North Africans.

After steel declined some more the Luxembourg clones of the Ithaca Mayor opted to lure in more finance business, starting with investment funds buying eurodollar and other bonds. They then lured in more fund managers also offering equities, plus a little ipo market and a stock exchange. There would be no taxation at source and no reporting to the homeland (initially next-door Belgium) where the shareholders lived. But later Germans came too.

Then the Luxembourgeois innovated more, working out how to offer the borrowers on their markets ways to create finance subsidiaries. The subs of foreign companies could avoid taxes on capital they raised in eurodollar bonds. The way it worked is that the lawyers and advisors received from the PM of Ithaca a comfort letter stating that they would not be subject to taxes above a certain often derisory level. This was enough to get them to incorporate subs in the Grand-Duchy.

The government’s finance and prime ministers crafted deals to allow major European companies with assets greater than Luxembourg’s GNP to set up operations there. At least one of them was a fraud, the holdings of the Portuguese Espirito Santo family. And US firms also joined up.

The Mayor of Ithaca (Luxembourg’s Prime Minister and former Finance Minister) however decided aim for higher office. Jean-Claude Juncker, who had cobbled together many tax deals to lure financial subs of large mostly US firms to incorporate in his country, immodestly decided to run to become head of the European Commission. Despite opposition from David Cameron, the British PM, the Luxembourg PM got the job.

He has been as disastrous as the Ithacan would have been, messing up long-term negotiations over a Greek financial bailout and the EU response to the inflow of refugees from Syria and elsewhere. Juncker has no experience dealing with refugees as opposed to Portuguese seeking to better themselves, and none with Muslims. He also was very establishmentarian finance minister which did not help on Greece.

More an Antique Roman Than a Dane

Now the whole kaboodle is under attack from within the Commission, by competition commissioner Margrete Vestanger who is 1) a woman; 2) a Dane with Scandinavian belief in fair taxes; and 3) not even a member of the inner circle because Denmark has rejected using the single currency, the euro, and persists with its kroner. Ms. Vestanger has brought into play rules dating back to the original European Union where Luxembourg was a founding member, the Treaty of Rome, articles 85 and 86. They were written to prevent the 6 member countries from giving companies special government benefits not available to their private rivals.