ZURICH (Reuters) - Barack Obama’s election as U.S. President opens up a new front in the pressure mounting against Swiss banking secrecy, already under fire from Germany which wants the country put on a tax haven blacklist, officials said.
Obama has singled out Switzerland’s UBS as one of the banks who helped “tax cheats” and he also helped introduce a Senate bill last year to crack down on offshore tax havens.
“The pressure on Switzerland will definitely increase now,” Martin Naville, head of the Swiss American chamber of commerce, told the Tagesanzeiger daily, advising the government to approach the new U.S. administration to improve the country’s image.
“Anybody who wants to get Switzerland out of the firing line cannot go with empty hands,” he said, adding that the U.S. authorities did not understand the Swiss distinction between tax fraud and tax evasion, only helping in probes into the former.
Finance Minister Hans-Rudolf said earlier this week he did not think tackling Switzerland would be Obama’s first priority, but Foreign Minister Micheline Calmy-Rey said pressure was mounting in an interview with the daily Tribune de Geneve.
Asked how Switzerland would respond after Obama’s election, she said: “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.”
UBS, already reeling as Europe’s worst hit bank in the credit crisis, is under investigation by U.S. authorities into charges it helped wealthy Americans dodge taxes by hiding their cash in Switzerland.
A Swiss newspaper reported last month that 250 U.S. customers of UBS had been given 30 days to appeal against Switzerland handing over their details to the U.S. authorities.
Meanwhile, Germany called last month for Switzerland to be put on a list of uncooperative tax havens which currently includes Monaco, Andorra and Liechtenstein. French President Nicolas Sarkozy has also called for tax havens to be banned.
Switzerland reacted angrily to the call by German Finance Minister Peer Steinbrueck to “use the whip” against the country, noting it had already made concessions to the European Union in recent years, introducing a withholding tax on interest from savings of non-residents.
The Swiss tradition of strict client confidentiality goes back centuries, but was codified in the early 1930s as pressure mounted on the country to exchange client details, partly from Nazi Germany, which was pursuing assets of fleeing Jews.
But it subsequently became closely associated with tax evasion, which is not a crime in Switzerland, as the rich of the world started pouring money into the Alpine nation.
Switzerland is the world’s biggest offshore center with about $2 trillion or about 27 percent of estimated global offshore assets, according to the Boston Consulting Group.
“The economic pressure on Switzerland will be enormous if the EU and the United States pursue it together,” Matthias Graf von Krockow, of private bank Sal. Oppenheim, said in an interview with the Bilanz business weekly published on Friday.
“You can’t build a business model just on banking secrecy,” he said, predicting that Switzerland would ultimately have to agree to share more information with EU states.
Additional reporting by Stephanie Nebehay in Geneva and Lisa Jucca in Zurich; Editing by Jon Loades-Carter