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Luxembourg One Step Closer To Landing Google's $1 Billion European Data Center

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It's a deal in the works for many months, with intense negotiations behind the scenes that Luxembourg's government intensely hopes will end with Google locating its next European data center in the heart of the ever-more-digital nation, not far from the countryside castle of the Grand Duke and Duchess.

On Saturday, the country's exuberant prime minister, Xavier Bettel, was asked at a press conference about the Google center and stood by the government's efforts to convince the Internet titan to build in the Duchy, despite questions by some political opponents. "This implementation will create jobs and it is also important in terms of digitization," Bettel said.  "Luxembourg is attractive for international companies wishing to settle in Europe." 

The current government - a coalition of the prime minister's center-right Democratic Party, the Socialist and Green parties - faces an election next October that according to polls could well see it ceding control to the opposition Christian Socialist party, traditionally the country's main ruling party.

As a result, it's working hard to cement economic progress made since it unexpectedly won power in 2013.

Deputy Prime Minister Etienne Schneider, who leads the Socialists in government and is also the country's Economy Minister, has been courting Google since early this year. His primary challenge was to secure a large enough piece of property to house a center the size Google was looking for - no mean feat in a country where much of the non-urban land is tied up by agricultural interests.

Will Google's next European data center be built nearby? Photo: Wikipedia

Wikipedia

After considerable effort, officials located an 83-acre parcel in Bissen, a pastoral town of about 2,800 people 30-minutes north of the capital city. But they got stuck negotiating the sale of the land from the owners - three potato-farming brothers who had inherited the property from their parents.

It was a classic sibling conflict, according to Schneider: While two brothers agreed to sell, the third - who was estranged from the others - held out for months. "The problem was not the price for the potato farmer," Schneider told The Financial Times in September. "One didn't talk to the other two. The two wanted to sell it and the one didn't."

Schneider said that he'd decided on behalf of the government to buy the two-thirds, presumably with the idea of selling to Google, and that there were legal means to force the third brother to give in. In the end, that step was made unnecessary when the brother finally folded.

Google, meanwhile, was already on board for a purchase. "The price was discussed with them quite a long time in advance already because we're negotiating since the beginning of the year," he said.

Then, last week, Google announced it had placed an option to buy on the land "to expand its presence in data centres in Europe."

"We have secured 33.7 hectares of land in the Bissen Commune in the Grand Duchy of Luxembourg," a company spokesman in Belgium confirmed. "We want to ensure we have options to continue to expand our data-centre presence in Europe if our business demands it."

That said, though, the game is still on as the search giant insisted the Luxembourg site was "one of the options" pending a decision "in due time." Google has also bought land in Denmark and is considering sites elsewhere in Europe as well.

Rather than express frustration with Google's refusal publicly to commit, Bettel - for whom accelerating Luxembourg's economic diversification beyond the financial sector has been a priority - hailed the announcement. "This is a first step, but it is an important step," he said.

While the $1 billion center will create only some 300 jobs, and according to Schneider would represent "the biggest investment in the history of Luxembourg," - as well as its largest energy consumer - it's considered a showcase of Luxembourg's intentions to grow as a European pole of digital evolution.

The country has gotten itself on the global map for its focus on fintech, for example creating a House of Fintech to encourage startups to base in the Duchy and take advantage of the country's position as a global financial hub.

"This shows that Luxembourg is attractive and that it has taken the right steps to be competitive," said Schneider - who also has taken the lead in promoting Luxembourg as a legal and research center for the development of the space industry.

Tom Théobald, Luxembourg for Finance Photo: YouTube

YouTube

Importing Google to Luxemboug carries a message the government hopes will resonate globally, reinforcing its intense efforts to remake its image as a private banking tax haven and home for corporate tax evaders. "Over the course of the past five years, Luxembourg has clearly demonstrated that it is a reliable partner at the European and international level as a dynamic and open country," said Tom Théobald, Deputy CEO of Luxembourg for Finance, a public-private promotional agency. "All these efforts have contributed to shaping the image of Luxembourg abroad."

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