Claim: Luxembourg is an indirect democracy with a parliamentary monarchy.

Luxembourg -LSB- ˈlətsəbuərx -RSB- Luxemburg -RRB- , officially the Grand Duchy of Luxembourg , is a landlocked country in western Europe . It is bordered by Belgium to the west and north , Germany to the east , and France to the south . Its capital , Luxembourg City , is , together with Brussels and Strasbourg , one of the three official capitals of the European Union and the seat of the European Court of Justice , the highest juridical authority in the EU . Its culture , people and languages are highly intertwined with its neighbours , making it essentially a mixture of French and Germanic cultures . This is emphasised by the three official languages , Luxembourgish , French , and German . The repeated invasions by its neighbor countries , especially in World War II , resulted in the country 's strong will for mediation between France and Germany and , among other things , led to the foundation of the European Union .   With an area of 2,586 km2 , it is one of the smallest sovereign states in Europe , about the same size as the US state of Rhode Island or the English county of Northamptonshire . In 2016 , Luxembourg had a population of 576 249 , which makes it one of the least-populous countries in Europe , but by far the one with the highest population growth rate . As a representative democracy with a constitutional monarch , it is headed by a Grand Duke , Henri , Grand Duke of Luxembourg , and is the world 's only remaining grand duchy . Luxembourg is a developed country , with an advanced economy and the world 's highest GDP -LRB- PPP -RRB- per capita , according to the United Nations in 2014 . The City of Luxembourg with its old quarters and fortifications was declared a UNESCO World Heritage Site in 1994 due to the exceptional preservation of the vast fortifications and the old city .   The history of Luxembourg is considered to begin in 963 , when count Siegfried I acquired a rocky promontory and its Roman-era fortifications known as Lucilinburhuc , ′ little castle ′ , and the surrounding area from the Imperial Abbey of St. Maximin in nearby Trier .  Siegfried 's descendants increased their territory through marriage , war and vassal relations . At the end of the 13th century , the Counts of Luxembourg reigned over a considerable territory .   In 1308 , Henry VII , Count of Luxembourg became King of the Germans and Holy Roman Emperor . The House of Luxembourg produced four Holy Roman Emperors at the high time of the Middle Ages . In 1354 , Charles IV elevated the County to the Duchy of Luxembourg . Since Sigismund had no male heir , the Duchy became part of the Burgundian Circle and then one of the Seventeen Provinces of the Habsburg Netherlands .  Over the centuries , the City and Fortress of Luxembourg , of great strategic importance situated between the Kingdom of France and the Habsburg territories , was gradually built up to be one of the most reputed fortifications in Europe . After belonging to both the France of Louis XIV and the Austria of Maria Theresia , Luxembourg became part of the First French Republic and Empire under Napoleon .   The present-day state of Luxembourg first emerged at the Congress of Vienna in 1815 . The Grand-Duchy , with its powerful fortress , became an independent state under the personal possession of William I of the Netherlands with a Prussian garrison to guard the city against another invasion from France .   In 1839 , following the turmoil of the Belgian Revolution , the purely French-speaking part of Luxembourg was ceded to Belgium and the Luxembourgish-speaking part became what is the present state of Luxembourg .   The steel industry exploiting the Red Lands ' rich iron-ore grounds in the beginning of the 20th century drove the country 's industrialisation . ArcelorMittal , the world 's largest steel producer with headquarters in Luxembourg City , is still a reminder of these times . After the decline of the steel industry in the 1970s , the country focused on establishing itself as a global financial centre and developed into the banking hub it is reputed for . Since the beginning of the 21st century , its governments have focused on developing the country into a knowledge economy , with the founding of the University of Luxembourg and a national space programme , projecting the first involvement in a non-manned lunar expedition by 2020 .   Luxembourg is a founding member of the European Union , OECD , United Nations , NATO , and Benelux , reflecting its political consensus in favour of economic , political , and military integration . The city of Luxembourg , which is the country 's capital and largest city , is the seat of several institutions and agencies of the EU . Luxembourg served on the United Nations Security Council for the years 2013 and 2014 , which was a first in the country 's history . In 2016 Luxembourgish citizens had visa-free or visa-on-arrival access to 172 countries and territories , ranking the Luxembourgian passport 6th in the world , tied with countries such as Canada and Switzerland .