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Liechtenstein: So far but no further

Liechtenstein's ruler, Prince Hans-Adam, was so sure of the benefits of closer economic ties with the rest of western Europe that he threatened to abdicate if his subjects rejected EEA membership. The principality's bankers and lawyers are more sceptical. Their concern is that limited changes to secrecy laws may deter the high-net-world

After decades of luxuriating in low-profile affluence, Liechtenstein's banking industry faces a shake-up that raises doubts about its future as a haven for the wealthy. The tiny Alpine principality sent out the first signals that it was on the verge of a new era after a referendum in December 1992. Its 30,000 inhabitants confounded pollsters by voting to join Iceland, Norway and the EU as a member of the the European Economic Area (EEA), thus ending a cherished tradition of independence from foreign regulators.

The result of the referendum raised eyebrows in Europe's financial community, since it came only two weeks after Switzerland, with which Liechtenstein maintains customs and currency treaties, had voted to remain outside the EEA. Because of Liechtenstein's formal ties with Switzerland, the referendum raised legal complications that required months of debate and compromise to resolve before Liechtenstein could go it alone. It also meant that Liechtensteiners would once more have to ratify their decision under the new arrangements by going to the polls. This they did in March last year, once again stubbornly voting yes to EEA membership.

The driving force behind Liechtenstein's move toward greater integration with the rest of Europe is the principality's ruler, His Serene Highness Prince Hans-Adam II von und zu Liechtenstein.

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