updated 8/17/2009 11:04:49 AM ET 2009-08-17T15:04:49

Liechtenstein's reigning prince has angered German Jews by invoking the Holocaust to defend his country's banking secrecy laws, drawing sharp reactions Monday.

The latest flare-up of fractious relations between the tiny Alpine principality and its much larger neighbor to the north stemmed from comments in a weekend interview Prince Hans-Adam II gave for Liechtenstein's national holiday.

The prince took aim particularly at Germany, which has been pressuring Liechtenstein to clamp down on confidential banking practices that it claims allow wealthy Germans to evade taxes.

"We and Switzerland saved many people, especially Jews, with banking secrecy," Hans-Adam II told the Liechtensteiner Volksblatt. "Germany should clean up its own act, and think about its past."

The prince noted how some Jews were able to buy their safety during the Holocaust by using money they had safely deposited in Switzerland or Liechtenstein. Secrecy rules also helped people persecuted by communist governments and "continues to save life ... in Third-World countries run by bloodthirsty dictators," he said.

"Beyond that, Germany and many other countries have an unbelievable mess with their state finances," Hans-Adam II said, referring to a traditional argument here that poor governance and high taxes lead to tax evasion, not banking secrecy. "These must first be put in order. They have been unsuccessful until now in doing this. The financial crash basically goes back to this alarming disability."

Harsh criticism
The comments were met with harsh criticism from Germany's Jewish community, which also slammed Hans-Adam II last year for describing modern-day Germany as a "fourth" Reich.

"The comments are a mockery of the Holocaust and its survivors," Stephan Kramer, general secretary of the German Central Council of Jews, told Bild newspaper. "It is historically incorrect for him to portray Liechtenstein as a merciful helper of the Jews. His highness would be better off retiring."

The Central Council did not answer a request for comment, while the Liechtenstein royal family's press office declined to respond to the criticism.

Legal battles
The prince, 64, has waged numerous legal battles in Germany to recover artwork he claims was looted from his family by the Nazis during the Second World War. More recently, Liechtenstein has been embroiled in a spat with Berlin over rich German citizens that have evaded taxes through the principality's banks.

Last year, German authorities paid a former employee of Liechtenstein's LGT bank to obtain the names of about 1,400 alleged tax cheats. The seizure provoked an angry response from the bank, which is wholly owned by the prince and his family, but also pushed the country toward reforming its financial sector.

Hans-Adam rejected the idea that his country was prospering because of tax evasion.

"What is demanded is high quality performance, and now we are offering that," he said in the interview. "There are clients who deposit money here completely legally, because they value our good service."

Still, he warned that Liechtenstein faced contraction over the next two or three years as "the market crash is hitting far more negatively than the whole tax debate."

More on: Liechtenstein | Germany

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Discuss:

Discussion comments

,

Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments