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Swiss Government Fears Obama's Stance On Banking Secrecy

by Ulrika Lomas,, Brussels

12 November 2008

The anti-offshore stance of US President-elect, Barack Obama, coupled with the US need to increase revenue in order to finance the banking bailouts, and slow the current economic slide are likely to increase pressure from the United States on Swiss banking secrecy, it has been suggested this week.

Various representatives of the Swiss government and banking sector have warned that although the issue is unlikely to be Obama's first priority when he takes office in January, his administration is likely to step up the anti-offshore campaign sparked earlier this year by the news that Swiss bank, UBS, had helped wealthy US citizens duck their tax liabilities. UBS subsequently announced that it would no longer be offering private banking services to US residents.

Speaking to the Swiss media, Foreign Minister Micheline Calmy-Rey observed that an increase in pressure on the Swiss authorities with regard to the issue of banking secrecy was very much expected by the Swiss authorities, and was quoted by Reuters as observing that:

"It is clear that fiscal questions will come to the forefront and we have to face them, as much from the European Union and as from the United States. That is the logical consequence of the financial crisis."

The AFP news agency, meanwhile, quoted Martin Navillle, head of the Swiss-US Chamber of Commerce, as warning that:

"American legislation can move very quickly and laws can get passed speedily."

Obama lent his support last year to Senate legislation dealing with 'Tax Haven Abuse'.

Switzerland is also under fire closer to home. Last month, the German government suggested that it should be included on any new 'blacklist' of uncooperative offshore jurisdictions in an attempt to reduce cross-border tax evasion by wealthy German citizens and raise the level of transparency in the global financial system.

A strident Peer Steinbrueck, Germany's Finance Minister, made his remarks following a conference of OECD leaders in Paris, where the main topic of discussion was the role of offshore financial centres in the international banking crisis.

According to Steinbrueck, Switzerland offers conditions that invite Germans to evade domestic taxes and is unwilling to cooperate with the German authorities when these cases are being followed up. "Therefore, in my view Switzerland belongs on such a list," he argued.

Switzerland was unable to respond directly to Steinbrueck's remarks because, like Austria, Luxembourg and the United States, it did not attend the meeting.

However, the Swiss Finance Ministry responded by stating that it complies with all rules laid down by the OECD regarding exchange of banking information, and that it has information exchange agreements regarding tax with several countries, including Germany.

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