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Liechtenstein country profile

Map of Liechtenstein

The Principality of Liechtenstein is a tiny, landlocked country tucked away between Switzerland and Austria and with mountain slopes rising above the Rhine valley.

It owes much of its wealth to its traditional status as a low tax haven, though the country has in recent years taken steps to shake off its image as a tax haven and to reposition itself as a legitimate financial centre.

Overview

This status came under the spotlight in 2000 when two international reports criticised Liechtenstein for lax financial controls. The reports said that the Liechtenstein banking system enabled gangs from Russia, Italy and Colombia to launder money from their criminal activities.

Liechtenstein mountains
Alpine slopes cover two-thirds of the territory

The Organisation for Economic Co-operation and Development (OECD) began to take a close interest in Liechtenstein's financial regulations - a process that received a further impetus when the international recession took hold in 2008.

Governments affected by plummeting tax incomes became determined to flush out assets hidden in tax havens, and Liechtenstein came under considerable pressure to apply greater banking transparency.

Stung by the criticism, Liechtenstein gradually reformed some of its laws. It reached tax agreements with several countries - including Germany, the UK and the US - aimed at encouraging citizens of those countries to come clean about any assets they might have in Liechtenstein's banks.

Liechtenstein remained neutral in World War II. A report commissioned by the government in 2001 after allegations that the country's banks had had dealings with the Nazis found that the banks' actions had been above board. It also found that slave labour from Nazi concentration camps had been used on Crown estates in Austria, but described the principality as a bystander rather than a perpetrator.

The country has come through a lengthy political wrangle over the role and power of the hereditary monarchy.

After a campaign which was at times bitterly divisive the people voted in March 2003 in a constitutional referendum to give Prince Hans-Adam sweeping new political powers. The outcome was decisive with just over 64% in favour of the changes.

In effect, the referendum made Liechtenstein Europe's only absolute monarchy. It gave Prince Hans-Adam the power to hire and fire the government, despite publicly-expressed fears that the development could usher in dictatorship.

The Roman Catholic church has traditionally had a strong role in Liechtenstein. Women faced a year in jail for having abortions until new legislation legalised it in late 2005. A bid by pro-life activists to stop the legislation from being passed failed when voters strongly rejected their proposals in a referendum.

Facts

  • Full name: Principality of Liechtenstein
  • Population: 35,000 (UN, 2009)
  • Capital: Vaduz
  • Area: 160 sq km (61.8 sq miles)
  • Major language: German
  • Major religion: Christianity
  • Life expectancy: 75 years (men), 82 years (women)
  • Monetary unit: 1 Swiss franc = 100 centimes
  • Main exports: Machinery, dental products, foodstuffs, stamps
  • GNI per capita: $137,070 (World Bank, 2009)
  • Internet domain: .li
  • International dialling code: +423

Leaders

Head of state: Prince Hans-Adam II

Prince Hans-Adam, a successful banker, became head of state following the death of his father, Prince Franz Josef, in 1989. In August 2004 he handed over the day-to-day running of the principality to his son, Crown Prince Alois, while remaining titular head of state.

Prince Hans-Adam II
Prince Hans-Adam II: Royals can veto laws, dismiss governments

In 2003 the royals won sweeping new powers in a constitutional referendum which gave them the power to veto parliamentary decisions and to sack the government.

The family also won powers over the appointment of judges, powers which Prince Hans-Adam said were essential to ensure that the judiciary was independent enough to tackle tasks such as chasing illegal assets effectively.

Prince Hans-Adam pointed out that the changes to the constitution took away his right to rule by emergency decree for an unlimited period and to nominate government officials.

Prince Hans-Adam, 58 at the time of the referendum, had threatened to leave Liechtenstein for Austria if he lost.

In 2009, the royal family won respect in international financial circles for backing moves to improve the transparency of the banking system.

Prince Alois, who was 36 when he took over the running of his country, trained at Britain's Sandhurst military academy. He is the eldest of Prince Hans-Adam's four children.

Prime minister: Klaus Tschuetscher

Klaus Tschuetscher took over as prime minister in March 2009 after his conservative Patriotic Union (PU) won an absolute majority in parliament, allowing the party to form a government on this own.

The previous government, led by Otmar Hasler of the Progressive Citizens Party (PCP), was a coalition of the PCP and PU.

Mr Tschuetscher vowed to rid the principality of its image as an "uncooperative tax haven", promising to work with the Organisation for Economic Co-operation and Development (OECD) in combating tax fraud.

Media

Liechtenstein has a very sparse media scene, with the circulation figures of its newspapers at around 10,000 or less.

Its citizens rely on foreign and satellite broadcasters for most TV and radio services.

The press

Radio



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Compiled by BBC Monitoring

SEE ALSO
Tax dodgers told 'the game is up'
21 Sep 09 |  Business
The taxman cometh to Liechtenstein
11 Aug 09 |  Business
Liechtenstein national anthem
08 Aug 09 |  Country profiles
Liechtenstein signals tax reform
15 Aug 08 |  Business
Hunt for Liechtenstein tax mole
12 Mar 08 |  Business
Happy to be outside the EU club
20 Mar 07 |  Europe

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