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Return to center-right tradition likely as Luxembourg votes

LUXEMBOURG (Reuters) - Luxembourg may revert to political tradition on Sunday if an election confirms opinion polls showing a resurgence for its long-dominant center-right party at the expense of the liberal-led coalition.

Surveys indicate the Christian Social People’s Party (CSV), led for decades by EU chief executive Jean-Claude Juncker and by far the biggest single group, will end Xavier Bettel’s five-year term as only the second non-CSV leader since World War Two.

The conservatives, however, may lack an outright majority in the 60-seat chamber after a campaign focused on local issues, notably housing. If so, leader Claude Wiseler could try to renew Juncker’s pre-2013 coalition with Etienne Schneider’s Socialist Workers’ Party (LSAP), Bettel’s Democratic Party or with Greens.

These three parties seized on a surprise setback for Juncker when he called a snap election after a wiretapping scandal to form a three-way coalition in the Grand Duchy under Bettel that froze the CSV out of power for the first time since the war.

That ended Juncker’s 20 years as prime minister and saw him move to Brussels the following year as president of the European Commission, the European Union’s executive arm.

However, external policy for the EU’s second-smallest state is unlikely to change much. Successive governments have defended a 40-year-old economic model based on financial services and low corporate taxation.

To avoid isolation in the EU, Luxembourg has been adapting its long-term economic plan under pressure from bigger neighbors who have branded it a tax haven and a money-laundering hub.

Also the wealthiest country in the bloc, Luxembourg has seen little of the controversies over immigration that have boosted far-right parties’ popularity ahead of May’s elections to the European Parliament, although in 2015 Luxembourg’s 250,000 electors decisively rejected giving the vote to the 48 percent of the population who are foreign, mostly from other EU states.

Editing by Louise Ireland and Alastair Macdonald