The business community response to the formation of the CSV-DP government in Luxembourg last Friday has been broadly positive. This includes the naming of Gilles Roth (photo) as finance minister to replace the outgoing Yuriko Backes, who’s taking up other government roles. It turns out that Mr Roth, a lawyer, has been waiting patiently to take up this position since his party was pushed out of office in 2013.
Roth, 56, is understood to have worked for Luc Frieden, the new prime minister and former finance minister from 2009 to 2013 in the then CSV/LSAP coalition, and to have worked extensively on finance topics from the opposition side.
Voters in the October Luxembourg national election were clear in their disappointment with the Greens and the direction the country had taken. It seems the CSV, once seen as the natural party of governance, is now considered to have done enough penance for its role in the blackening of Luxembourg’s name. This was in the wake of the country’s official 2009 grey-listing by the global anti-money laundering body the Financial Action Task Force, but prior to the LuxLeaks scandal.
Amcham likes what it sees
The view from the American Chamber of Commerce, which officially represents the interests of a wide range of American and other companies doing business in Luxembourg, is very positive on the new government.
“We are optimistic that the new government understands the need to enhance Luxembourg's attractiveness as a business location to retain the companies already domiciled here and to attract new companies to make Luxembourg their European operations hub,” said AmCham Chairman CEO Paul Schonenberg in a message responding to Investment Officer’s questions.
“The twelve thematic categories of initiatives placed under prioritized development by the new government, if properly developed and implemented, will positively benefit the financial services sector companies and their employees which represents the heart of the Luxembourg economy.”
Businesses seek reassurance
Schonenberg expressed his wish that initiatives stemming from the 12 themes “will come quickly, be well thought through and effectively achieve the desired outcomes.”
“Businesses both within the financial sector and outside want to feel safe, appreciated, fairly treated and have good opportunities to make and keep profits.”
When it comes to the man who as finance minister will take point in reassuring the financial sector, it seems these businesses can rest easy as a picture of Gilles Roth emerges.
No real surprise
The naming of Gilles Roth, the sitting mayor of Mamer, a wealthy inner suburb of the capital, was “not so much of a surprise”, said Benjamin Holcblat, a University of Luxembourg researcher focussing on data science, econometrics and asset pricing, who pointed out that Roth has functioned in a role analogous to that of a “shadow minister” under a British parliamentary system.
“He finally got the job he was supposed to get in 2013,” said Holcblat. “He's a lawyer by training, he has a reputation of being a serious guy.”
Roth has not had prior experience as a minister, Holcblat said. “He knows the financial sector.” However, he cautioned: “It’s a particular view, a lawyer’s view, where Luxembourg has been pretty good at regulation and playing with regulations.”
As to how well he’ll do in the finance minister role, Holcblat offered that “he knows the environment, it does not strike as a bad choice – most people say it’s a logical choice. For people in the financial sector, I expect that they will be quite happy with him.”
In contrast to Roth’s predecessor in the finance minister role, Yuriko Backes, Holcblat said, “Yuriko is more of an outsider in this. And I think she was probably less expert in this”.
According to fellow Luxembourg parliamentarian and Pirate Party leader Sven Clement, Roth is a former public servant in the tax administration. “He is at least professional qualified to understand our current tax system.”
Needs time to adapt
However, if there’s any shortcoming to Roth, it’s his lack of experience on the European stage, as a negotiator or as a diplomat. “He will need time to adapt,” said Clement.
“He is fiercely interested in competitiveness,” he added. “But I’m not 100% sure he really understands the underlying issues, so he might be too much focussed on the surface and not on the substance.”
Whether Roth understands the finance industry “should be left to be analysed after his first acts of government or after 100 days.” This is a thought that also occurred to Holcblat. The appointment, he said “was expected. And let's see what is going to happen.”
Former finance minister, the Democratic party politician Yuriko Backes is taking up a broad portfolio including the ministerships of defence, mobility and public works and equality and diversity.