GERMAN-SWISS RELATIONS:SWISS FOREIGN minister Micheline Calmy-Rey has called for an end to tax havens by forcing financial centres to follow Switzerland's lead in adopting international financial and banking standards.
Ms Calmy-Rey spoke at a chilly press conference in the Berlin foreign ministry yesterday with her German counterpart Frank-Walter Steinmeier.
For years, disagreements over tax matters have overshadowed Berlin-Berne ties. But relations are now severely strained after German finance minister Peer Steinbrück said that recent Swiss concessions on banking secrecy reminded him of American Indians scared of the US cavalry.
The remark caused uproar in the Alpine republic, months after he suggested that someone needed to “take the whip” to the Swiss to bring their banking rules into line with guidelines of the Organisation for Economic Co-operation and Development (OECD).
Bern has finally agreed to make changes and adopt OECD standards after threats from Germany and others to put it on a “tax haven” blacklist being prepared for today’s G20 meeting in London.
“Switzerland has decided to accept OECD regulations and, for us, it is important that other financial centres in the world will apply the same standards,” said Ms Calmy-Rey.
Mr Steinmeier joked with journalists after yesterday’s talks that, “against all expectations, we are both completely uninjured”.
A grim-faced Ms Calmy-Rey folded her arms defensively at the joke and avoided eye contact.
Asked about the remarks of the German finance minister, she said: “We are nice neighbours and you don’t treat nice, friendly neighbours in this way.”
Mr Steinmeier welcomed the Swiss move but, following the lead of Dr Merkel, he did not apologise for or distance himself from Mr Steinbrück’s remarks. “It is the finance minister’s job to look at financial matters and ensure a level playing field exists,” he said.
German tax officials estimate that Swiss banks hold over a third of the estimated €485 billion in assets hidden by German taxpayers worldwide. Locating that hidden money and applying Germany’s 4 per cent withholding tax would raise an extra €5 billion for the budget, a welcome sum in the current climate.
Today’s G20 meeting was the deadline for Switzerland to act after European nations, in a draft communique, threatened to blacklist countries that did not meet OECD standards.
The demand hit the Swiss banking sector at a weak moment. In February banking giant UBS agreed a tax evasion settlement with US authorities, paying a record $780 million fine and naming 255 of its US customers.
The bank soon learned that the settlement was the thin end of a very expensive wedge when, hours later, US authorities filed a second, civil suit, demanding the names of a further 52,000 US citizens suspected of using UBS to evade tax on assets worth $14.8 billion.
Swiss banks are calling on European neighbours for a partial tax amnesty for customers who come clean about their tax affairs. They are also insisting that others follow their lead.
