| BERLIN, March 26
BERLIN, March 26 Luxembourg's foreign minister
accused Germany on Tuesday of "striving for hegemony" in the
euro zone by telling Cyprus what business model it should
Like Cyprus, Luxembourg has a large financial sector, whose
comparatively light-touch tax and regulatory regime has long
irked its much bigger neighbors Germany and France.
Germany, the European Union's biggest and most powerful
economy, had insisted that wealthy depositors in Cyprus' banks
contribute to the island's bailout and said the crisis has
killed a "business model" based on low taxes and attracting
large foreign deposits.
"Germany does not have the right to decide on the business
model for other countries in the EU," Foreign Minister Jean
Asselborn told Reuters. "It must not be the case that under the
cover of financially technical issues other countries are
"It cannot be that Germany, France and Britain say 'we need
financial centers in these three big countries and others must
That was against the internal market and European
solidarity, and "striving for hegemony, which is wrong and
un-European," he said.
Cyprus had faced bankruptcy and possible ejection from the
euro zone without a rescue deal with international lenders that
was finally sealed in the early hours of Monday and included a
clause penalizing large bank depositors.
Cypriot banks remained closed on Tuesday due to fears of a
run on deposits and were not expected to reopen until Thursday.
The Cyprus crisis has revived criticism of Germany in parts
of the euro zone, especially the austerity-battered south where
voters and commentators have long complained of what they see as
Berlin's domineering attitude and insensitivity to their pain.
But criticism from core northern states such as Luxembourg -
a founder member of the EU and euro zone - is less common.
Asselborn said it was crucial that smaller EU states in
particular were allowed to develop certain economic niches.
Germany should also keep in mind it was a prime beneficiary
of the euro zone crisis because its borrowing costs have plunged
as nervous investors seek safe havens, Asselborn added.
The tough stance on the banking and taxation policies of
countries such as Cyprus crosses Germany's political divide.
On Tuesday, Joachim Poss, deputy leader of the main
opposition Social Democrats in parliament, said the EU must
insist on reforms in other financial centers guilty of "tax
dumping" in the euro zone such as Luxembourg, Malta and Ireland.
Responding to Asselborn's comments, Poss said: "In the long
term no business model can be tolerated in a market economy that
circumvents fair competition. Of course Luxembourg belongs to
the group of problem countries."
German politicians have stepped up their attacks on tax
evasion ahead of federal elections in September.