ROBERT SIEGEL, HOST:
And I'm Robert Siegel in London for this week's big referendum. On Thursday, the Brits vote on whether to remain in the European Union or to leave it, to exit. Hence the name of the vote, Brexit. Ever since the U.K. joined what used to be called the Common Market back in 1973, it has been a rocky relationship.
So before coming here, I went to a country where the relationship with the EU was anything but rocky to see how the European Union works at its best and whether it might ever work that well for the United Kingdom. I went to the country with the highest per capita income of all 28 European Union member states - Luxembourg.
MARK DOLAN: Thank You. Hello, Luxembourg.
SIEGEL: The comedian Mark Dolan is a Brit, but the comedy club in a bar room cellar packed with 65 patrons is in Luxembourg city, home to several EU institutions as well as a big international financial sector.
DOLAN: So first of all, who here is actually from Luxembourg? Make some noise if you're a local.
DOLAN: That's three people, OK. The population is just over 570,000 people. Almost everybody from Luxembourg is in this room.
SIEGEL: Luxembourg is about the size of Rhode Island. In the EU, only Malta is smaller in population and area. Most residents of Luxembourg city and almost half the residents of the whole country are non-Luxembourgers. They're mostly from other EU countries. Luxembourg borders Belgium and, more critical to its history, it is sandwiched between Germany and France. Jean-Louis Wolzfeld is Luxembourg's ambassador to the United States.
JEAN-LOUIS WOLZFELD: Our history is what determines how we see Europe. We have spent the last centuries between two big land neighbors who were never friends.
SIEGEL: And that is an understatement. During World War II, Germany occupied Luxembourg for the second time in the 20th century.
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UNIDENTIFIED MAN: (Foreign language spoken).
SIEGEL: After the war, in the early 1950s, Luxembourg was a leader in creating new institutions designed to make yet another continental war impossible.
WOLZFELD: The European project has given to us for the first time, I think, in Europe's history 70 years of peace.
SIEGEL: Which is why hardly anyone today thinks of Europe as one of the world's war-torn regions, which it was for centuries. And for centuries, Luxembourg was a pawn in the war plans of larger powers. I looked at the site of one of the biggest battles in the second World War with Carlo Hein, who makes apple cider on land overlooking the Sure River.
CARLO HEIN: When you see the sight - valley going here up to the left, that was the south front of the Battle of the Bulge.
SIEGEL: It's a densely forested landscape. We stood on a hillside road, and he showed me where the Nazi lines had been just across the river in Germany.
HEIN: The Germans were over there. Down here in the valley, that was no man's land. Everybody had to go away.
SIEGEL: After the war, a Luxembourg-born French statesman, Robert Schuman, proposed a coal and steel community, supranational control of two commodities countries used to build the weapons of war.
HEIN: And out of that came the European Union. And in this context, it was always about peace, about working together.
SIEGEL: Working together has proved to be good for business, too. The EU is a customs union. Carlo Hein's apple cider from Luxembourg can be sold in other EU countries with no tariffs, just like cider from New York State that's sold in New Jersey or Texas. So Luxembourg, a country of just half a million people, has easy access to a continental market of half a billion.
The principles of the European unit are the free movement of goods and services, and capital and people. In fact, many of the lawyers and bankers who work in Luxembourg's financial district are from Britain. Father Ed Hone, an English Catholic priest who lives and works in Luxembourg, says that his little adoptive country epitomizes what today's Europe is all about.
ED HONE: It's almost emblematic of a Europe without borders because it's so small that you take two steps this way, you're in Belgium. Two steps that way, you're in France. And two steps the other way, you're in Germany.
SIEGEL: In the scenic riverside village of Schengen, Luxembourg, Germany and France are just a couple of hundred yards across the water.
MARTINA KNEIP: This is part of Sierck-les-Bains, which is a village in France. And, well, if you look in this direction, you look into Perl, which is a village in Germany.
SIEGEL: I'm here on the banks of the Moselle River in Luxembourg, and with me Martina Kneip.
SIEGEL: You're with the European center here.
SIEGEL: And we are here in Schengen...
KNEIP: Schengen, yes.
SIEGEL: ...A town in Luxembourg because we're at a point where these three countries converge. Now, do people from this part of Germany - would they commute from here to Luxembourg City?
KNEIP: Every day.
SIEGEL: In fact, 180,000 commuters come to Luxembourg from neighboring countries to work in its prosperous polyglot economy. They do so thanks to an agreement hammered out by European ministers over 30 years ago in a boat that was moored in Schengen. The agreement is named for its birthplace.
KNEIP: Today, we speak about the Schengen Area, which means those countries being part of the Schengen Area have no internal borders anymore.
SIEGEL: So I can fly into Frankfurt in Germany...
KNEIP: You're right, yes.
SIEGEL: ...And drive straight into France and straight into Luxembourg...
SIEGEL: ...And Belgium. No border control.
KNEIP: No border controls.
SIEGEL: Martina Kneip has dual citizenship. She was born in Germany and lives in Luxembourg. Like most educated Luxembourgers, she speaks French. And she's learned Luxembourgish, which is like German.
KNEIP: To be integrated, I think the language is the most important thing. And if you live in Luxembourg, I think it's important to talk the language.
SIEGEL: What do you think about the idea that if European integration deepens and continues more and more, that the very idea of having an identity like being Luxembourgish...
KNEIP: Yes, yes.
SIEGEL: ...Will become less important? You'll be a European who happens to live in a place called Luxembourg.
KNEIP: Yeah, of course. Very often people ask me, do you feel European or Luxembourgish or German or whatever? I think this does not really make a difference. It's either I decide being European or being German or, I don't know, Czech or whatever.
KNEIP: Why not?
SIEGEL: In several key respects, Britain's relationship to the EU is very different from Luxembourg's. The U.K. never joined in the Schengen Area. It never adopted the common currency, the euro. Far from being a landlocked mini-state, it is a former imperial power with a big economy and global ties to its former colonies.
As for memories of war, it has the English Channel to protect against occupying invaders. The last ones came ashore in 1066. Many Britons chafe at the loss of sovereignty to EU headquarters in Brussels. But Luxembourg's prime minister, Xavier Bettel, says what comes out of Brussels reflects the input of EU member nations.
XAVIER BETTEL: Brussels is also Luxembourg. Brussels is also the other 27 countries sticking together. We should stop to say that everything which is perfect is my responsibility. And I'm the good guy so - while it's positive, and all the bad things are coming from Brussels.
SIEGEL: Like other strong EU advocates, Prime Minister Bettel is concerned that if the European Union makes too many concessions to Britain to induce the U.K. to stay in, the project of European integration will be weakened.
BETTEL: I think it's not menu a la carte where you choose what you want to stay in the European Union.
SIEGEL: And the Luxembourgish prime minister is unequivocal about what he hopes British voters will choose.
BETTEL: Every British citizen has to watch himself in the mirror and should realize that he's in a win-win situation. It's good for Europe to have a U.K. partner, and it's good for the U.K. to be a European partner.
SIEGEL: On one level, the United Kingdom and the Grand Duchy of Luxembourg do have a common stake in European Union. Both export heavily to other EU members. The customs union helps them both. We'll see whether those economic benefits of membership prevail when British voters settle the matter in the Brexit referendum this Thursday.
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