Luxembourg's Prime Minister Resigns - NYTimes.com BRUSSELS - The longest-serving government leader in the European Union, Jean-Claude Juncker of Luxembourg, resigned as prime minister on Thursday amid a ballooning intelligence service scandal that began with revelations that the duchy's former spy chief taped official meetings with a recorder disguised as a wristwatch. His governing coalition shattered by outrage over Luxembourg's wayward spy agency, Mr. Juncker, 58, offered his resignation to Luxembourg's head of state, Grand Duke Henri, who has the power to dissolve Parliament to prepare for new elections. The grand duke was quoted by local media as saying that he would "pause to reflect" and then begin a "series of consultations" on the political situation. The antics of Luxembourg's State Intelligence Service, detailed in a report commissioned by Parliament and released on July 5, have sent shock waves through the political establishment of a nation best known for its stolid calm, secretive banks and one of the world's highest per capita incomes. Allegations include the misuse of funds to buy luxury cars and more sinister actions, like the keeping of extensive archives on individual citizens. The grand duke has himself been caught up in a frenzy of allegations following claims that he worked closely with British intelligence. The grand duke's office has denied this. Mr. Juncker, who became prime minister in 1995, has not been accused of any criminal wrongdoing, but during a hearing Wednesday in Parliament on the report on the intelligence service, he came under attack, including from his own supposed allies, for not keeping the security service in check. His position became untenable after a junior partner in his coalition government, the Socialist Workers Party, joined a chorus of condemnation and demanded that he step down and open the way for new elections. Although from a country with only 539,000 people, Mr. Juncker is one of Europe's most high-profile political figures because of his eight-year stint as president of the so-called Eurogroup of finance ministers as they struggled to contain a rolling debt crisis and hold the euro together. The release of the parliamentary report into the intelligence service coincided with the trial in Luxembourg of two former police officers accused of links to a series of unexplained bombings in the 1980s that were blamed at the time on leftist militants. Together, the trial and Parliament's findings set off a wave of outrage over the spy agency's actions and feverish speculation over the existence of rogue operatives linked to a cold war NATO program known as Stay Behind. The purpose of that program was to build up underground networks that, in the event of Europe being overrun by the Soviet Union, would stay behind and organize resistance. The trial and the parliamentary inquiry "have been feeding each other and became a perfect storm," said Egide Thein, the former director of the Luxembourg Economic Development Bureau. The resulting collapse of Mr. Juncker's government, he added, is a climax to a drama "that is one of the most important political events in Luxembourg since the Second World War." Mr. Juncker, whose Christian Social Party has governed Luxembourg almost continuously since 1945, initially resisted pressure to step down, telling Parliament on Wednesday that he would not take responsibility for the misdeeds of intelligence operatives "because if that were to happen, each minister would be responsible for the smallest error committed by a civil servant." But the defection of his coalition partner, he declared later, left him with no choice but to resign. Elections that were originally scheduled to be held early next summer are now expected in October. The unusual turbulence in Luxembourg began in November last year, when local media reported that a 2007 meeting with Mr. Juncker and an earlier one with Grand Duke Henri had been secretly recorded by Marco Mille, then the head of the State Intelligence Service. Mr. Mille, according to a transcript of his conversation with Mr. Juncker printed in a Luxembourg newspaper, alleged that the grand duke had had regular contacts with British intelligence. The media reports led Parliament to set up a commission of inquiry to investigate the intelligence service. The commission's final report, released earlier this month, detailed a host of abuse accusations, including that the service retained large archives of "political espionage" information collected during the cold war on individual citizens and that a stash of money and gold established as part of the Stay Behind program had not been properly accounted for. Alex Bodry, leader of the Socialists, told Parliament during marathon hearings on Wednesday, "The prime minister must take responsibility, not because he is dishonest or incompetent but because he made the wrong choices." Citing "serious malfunctions" in the intelligence service, he demanded new elections. Mr. Juncker, who has spent much of his time in recent years struggling with the crisis in the euro zone, acknowledged that the intelligence service "was not my top priority." He added, "I hope Luxembourg will never have a prime minister" who sees the intelligence service as his or her priority.