Breaking the Banks: Switzerland Ponders a Future of Clean Money

By Mathieu von Rohr

The end of Switzerland's famous banking secrecy seems inevitable as US and German authorities crack down on tax evaders. Many Swiss are asking themselves whether their prosperity will survive if the country abandons its status as a tax haven. But some academics argue that the importance of the banking sector has been wildly exaggerated.

Photo Gallery: Fear and Loathing in Switzerland Photos
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Jean Ziegler steps onto the veranda behind his house. It's a warm day in late summer. He points to the hilly landscape on the other side of the Rhône River, to France, where Mont Blanc is visible in the distance. "That's where Switzerland finally comes to an end," says Ziegler. It's the kind of joke you would expect of Ziegler, a man notorious for never sparing his own country.

No one else is as well known for his moral criticism of Switzerland. Ziegler is 78, and until a few years ago he traveled the world as a United Nations special rapporteur. The fight against hunger and against Swiss banks has shaped his life. Has nothing changed in the last 20 years? "No, the banditry of the banks is in full swing!" he says energetically. His wife is about to serve a meal of Wiener schnitzel accompanied by white wine.

A search for answers about Switzerland begins in Ziegler's garden in Russin, a wine-growing municipality near Geneva. Where does the country's wealth come from? How much of it is due to Switzerland's tradition of banking secrecy, and for how much longer will it exist? And what happens to Switzerland when that secrecy is gone?

This Wednesday, the finance committee of the German parliament, the Bundestag, will continue a public hearing on Berlin's tax treaty with Switzerland. Under the agreement, the money held by German citizens in Swiss banks would be taxed retroactively, while allowing the account holders to remain anonymous. German Finance Minister Wolfgang Schäuble estimates that the change will bring in about €10 billion ($12.9 billion) in tax revenues.

Full of Clichés

But the Bundestag hasn't voted on the measure yet. The opposition center-left Social Democratic Party (SPD) wants to block the treaty in the Bundesrat, the body that represents the German states at the federal level, arguing that it would be too advantageous for Switzerland and the tax evaders, because they could simply withdraw their previously untaxed funds in advance while remaining anonymous. The debate has brought the subject of Switzerland into the center of German domestic politics.

Many German politicians don't know very much about Switzerland. Clichés shape German views of the country, namely that it's a beautiful and clean place populated by mountain dwellers who speak German with a funny-sounding accent. It's commonly regarded as a vacation playground for the rich. Another, less flattering cliché of Switzerland is more of a malicious caricature: a safe haven for ill-gotten wealth, a country that is happy to protect tax evaders.

This tradition is reflected in statements made by former Finance Minister Peer Steinbrück, who likened the Swiss to Indians who could be dealt with by dispatching the cavalry, or in a claim by the Süddeutsche Zeitung, a respected German daily newspaper, that the profit from tax evasion was the country's "reason of state."

What's the reality in Switzerland? It is a country that lives in excess and is plagued by uncertainty, one in which the notion of being a special case in Europe is reaffirmed every day by its economic success -- and an unemployment rate of only 2.8 percent. Switzerland is a paradise that seems constantly threatened.

Drawn by High Salaries

Switzerland was a poor country until World War II, but after that it became one of the wealthiest countries in the world, and it was barely affected by the crisis of recent years. As a result, Switzerland has seen more and more immigration, with the population currently growing at an annual rate of 1 percent, to about 8 million, a number that has many people in the country alarmed and has triggered a major public debate. Foreigners make up 23 percent of Swiss residents. Many of them are Germans, drawn to the country by higher salaries than they would earn at home.

Why is Switzerland so rich? Politicians, business leaders, academics and intellectuals offer a wide range of answers to this question.

"It's because of the highly competent and totally cynical fencing activities of our banks," says Ziegler. "Because the financial sector is subsidizing the economy with low interest rates," says Oswald Grübel, the former head of two major Swiss banks, Credit Suisse and UBS. "Because Switzerland, thanks to federalism, pursues better policies, which lead to less debt and low taxes," says Reiner Eichenberger, a liberal economist from the town of Fribourg in western Switzerland. "Not because of the banks, but because of the industrial corporations and the highly specialized small and mid-sized export companies," says Bern banking expert Rudolf Strahm.

Next to the malevolently smiling bankers in James Bond films, no one has shaped the image of Switzerland as a hotbed of immorality as much as Ziegler, and hardly anyone is as polarizing a figure in his own country. Ziegler is the source of the most drastic accusations against the financial industry -- and his outspokenness has ruined him. The house where his wife is now bringing a meal out on to the terrace belongs to a bank.

'Blood Is Dripping from the Facade'

Ziegler is in debt to the tune of more than 6 million Swiss francs ($6.4 million, or €4.95 million), the result of claims for damages, legal fees and court fees relating to his book "Swiss Whitewash." Published in 1990, it describes Switzerland as a "financial hub of international crime" and dictators. Its publication triggered an avalanche of lawsuits.

"You know," says Ziegler, addressing the SPIEGEL reporter with the familiar "du" form that he uses with everyone, "my book showed the world that blood is dripping from the façade." The book, says Ziegler, explained why Switzerland is so rich. "It's because of hot money from the Third World, tax evasion from industrialized countries and Mafia money."

His latest book, "Mass Destruction -- the Geopolitics of Hunger," is an indictment of hunger, the second enemy in his life, and international commodities speculators, many of whom are headquartered in Switzerland. "Those who make astronomic profits with food speculation are killing people," he says.

Ziegler comes from a middle-class family in Thun near Bern. He was born Hans Ziegler, but after fleeing to Paris in the 1950s and connecting with the French philosopher Jean-Paul Sartre, Simone de Beauvoir changed his name to Jean. In 1976, he launched his first attack against banking secrecy, titled "Switzerland Exposed."

'Den of Thieves'

"The fat cats from Zürich and their lackeys vilified me for decades, calling me crazy and pathological, and characterizing my ideas as extreme left-wing delusions," says Ziegler. Today the term "Swiss bank account" has become a loaded expression -- so much so that US presidential candidate Mitt Romney has had to justify having one, even if he declared it in his tax returns.

"Switzerland is a wonderful country," says Ziegler, "but it's been colonized by the oligarchy of banks. We have to liberate it. After all, we don't want to be a den of thieves."

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1. Endlosung
jiz 09/25/2012
----- Original Message ----- About the "Endlosung der Schweizerische Fragenstuk" exists , as expected, large differences between the Germans and the rest of Europe (see that Abkommen with Austria and GB). It seems that the reason for this are mainly historical. All have a good reminder that thanks to the Swiss legal system in the thirties and forties tens of thousands of people and properties from the hands of the Germans escaped.For the most Europeans is the reason for a cautious approach of the whole problem (The repetition of history can not excluded.). For many German politicians,knowing well the mood of the audience,and especially for many German legal and police circles an opportunity to revenge. How else can the brutality of many German politicians explain. In which country one can hear from a minister his wish to send the cavalry to a neighboring country (and he probably meant the Panzerdivision). That judges a purchase of stolen goods as a whole as something self-evident, because there is a lot of money in the play.
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