Austria appears to be the last EU country resisting any attempt to disclose banking secrecy. The announcement made that even Luxembourg is to lift its bank secrecy by 2015 leaves Vienna as the only state standing against such a measure. On Friday 12 April, France, Germany, the UK, Italy and Spain announced in a joint press conference the intention of setting up a pilot, multilateral project to exchange banking information based on FACTA in force in the US.
“Austria is sticking to bank secrecy”, stated a fiercely an defiant Austrian Finance Minister, Maria Fekter, in response to criticism at the last Eurogroup meeting in Brussels. The Austrian Minister answered back to her British counterpart George Osborne that “the UK especially has a plethora of money-laundering paradises and tax havens in its immediate area of legal responsibility”. The accusation was promptly rejected by the British Minister who listed the country’s efforts to tackle tax evasion and the importance of setting up a European wide information exchange concerning bank account holders.
Meanwhile the EU estimates in that one trillion euros is lost through of tax evasion in Europe (every year??). The Commissioner responsible for taxation, Algirdas Semeta, underlined the importance of an agreement on the requirements foreseen by the Saving Directive, which implies also aims for a more transparent bank management. “This is a part of a wider agenda which also includes a tougher stance against tax havens and abusive tax planning”, he said after a meeting in Dublin.
It goes without saying that Austria cannot maintain this tough stance for a long. A recent investigation conducted by international journalists showed how much tax havens affect the European economy and its society. Bank secrecy is directly linked to these phenomenons, as the Cahuzac case in France clearly shows. The economic crisis and the austerity measures that have affected hit European citizens and enterprises require all European countries, and the EU itself, to prevent all the leaks and resolve once and for all the unbalances imbalances within its borders. Financial markets and banks proved to be one of these.
“Nobody can deny that bank secrecy is outdated, that we need an efficient system of to tackle evasion strategies”, stated French Minister Pierre Moscovici. Actually “outdated” is an euphemism. The recent bank crises in Greece, Cyprus and Spain highlights that banks need greater transparency and accountability in their activities. Cyprus is perhaps the clearest example of how an unregulated banking system can become a threat to an entire country. The Cypriot banking bubble had become grown to eight times the country’s GDP, a situation that soon proved to be unsustainable.
Today Austria, ranked as a AAA country by rating agencies, refuses to disclose its banking secrecy. In so doing Vienna is proving not only egoism but also political myopia. Even Luxembourg, a country with a banking industry roughly 22 times the size of its economy, and with deposits 10 times its GDP, surrendered to international pressure and announced the end to bank secrecy by 2015. “We cannot deny to the Europeans all that we will have to concede to the Americans in a bilateral treaty”, said Luxembourg Premier Minister Jean-Claude Juncker. Now it is the turn of Austria, to follow suit.
The only good results that the economic crisis could deliver is better regulation of financial markets and banks activities and a deeper European integration. So far people have paid all the bill. Lets’ take something positive out of all this mess.