| VIENNA, April 12
VIENNA, April 12 Call it the battle for
That is how politicians here are framing a debate over
whether Austria should roll back banking secrecy and share
information on depositors with European partners and the United
States. Luxembourg's decision this week to open its books has
fixed attention on Austria, the last EU holdout.
The discussion has touched a nerve in a country where the
confidentiality banks offer is so cherished that banking secrecy
is anchored in the constitution. Why Austrians are so wedded to
such secrecy is answered in part by a distrust of authority. The
country's Catholic identity and a nod-and-wink approach to
off-the-books work in the shadow economy may play a role too.
"I and certainly many other customers require two things
above all from banks: reliability and discretion," reader
Florian Stadler wrote to Krone, Austria's most-read tabloid. "It
is no one else's business how much money I save or spend or with
whom I do business."
Officials insist they will defend Austrian citizens' privacy
from the taxman and discuss revealing details only of foreigners
with accounts in Austria.
Unlike in Luxembourg and Cyprus, brought to the brink of
bankruptcy by its overblown banking sector, foreign deposits
play a relatively modest role in Austria.
Central bank data show other EU citizens have around 35
billion euros ($45.9 billion) in banks here, a tenth of overall
deposits. In all foreigners have 53 billion in local banks.
Finance authorities can already get access to accounts if
they have well-founded suspicions of wrongdoing.
Politicians like to say that Austrian bank secrecy is
centuries old. Vienna finance professor Werner Doralt said the
real roots of modern bank secrecy stem from the post-war era of
contraband trading in a makeshift economy flattened by World War
UNDER THE MATTRESS
"There was a lot of dirty money that people did not want to
put in the bank because they were afraid. Then we said in
Austria it is better to have dirty money in the bank than under
mattresses at home, then at least it is in circulation and can
be lent on," he said.
"To give people a feeling of security, the anonymous bank
account was made possible. That is the real history. Our banking
secrecy was stronger than that in Switzerland."
Anonymous accounts - accessed with a passbook and secret
code - ended only under international pressure a decade ago.
There was a popular uproar but scant outflow of funds.
Confidentiality was diluted again when Austria determined
that authorities could get access to bank records when checking
specific allegations of tax evasion, not only when a formal
investigation had been opened, Doralt said.
But secrecy remains strongly embedded in popular culture.
"We are a 'do you need a receipt?' society. That is why it
is so sensitive," political analyst Peter Filzmaier said, adding
people fear more transparency would mean the taxman or social
services could suddenly see the few hundred euros people may
make on the side by helping out on a construction project.
With elections due by late September, "no one wants to be
the pioneer who cries out this is no longer acceptable. You know
that lots of Austrians - and thus voters - do this," he said.
Erich Kirchler, a business psychology professor at Vienna
University, said many countries cling to traditions. "But in
this case it concerns banking secrecy, which is something very
special in Austria. It doesn't exist in Germany, for instance."
FEAR AND ENVY
Much like Austria's political neutrality, however, bank
secrecy has been surrounded by myths, particularly that it is
needed to keep snooping eyes away from people's wealth, Kirchler
"The fear of envy, the fear of checks by the authorities may
be especially relevant here from a psychological perspective.
There is fear that giving up banking secrecy could make people
transparent, helplessly exposed to the state or other powerful
figures. This fear is certainly there, whether justified or
not," he said.
When people feel their freedom is under attack, they quickly
go on the defensive, even if they would be hard pressed to
explain exactly why they feel that way about bank secrecy.
Austria's traditional Catholic roots also come into play.
"For Catholics money and wealth is not necessarily a sign of
God's favour. On the contrary, the poor will pass through the
eye of the needle into heaven," Kirchler said, citing the Bible.
"In Protestant or Calvinist culture, wealth is seen as the
result of the positive virtues of hard work and thrift. There
are certainly things here that you can explain with the
country's religious background and ideology."
Austrian banks at times use banking secrecy as a marketing
tool, noting that only a constitutional amendment could end the
Austria does not share personal data on EU citizens' wealth,
but imposes a 35 percent withholding tax on their interest
income and returns most of those funds anonymously to home
Peter Pilz, a member of parliament from the opposition
Greens party, said the Italian mafia, especially the
Calabria-based 'Ndrangheta, had years ago used Austria as a
money-laundering centre, cleansing around 2 billion euros.
"Now it is mainly a matter of Russian money. A lot of banks
must be afraid that the Russians will take their millions and
flee to Asia," he said.