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Liechtenstein Modern History

During the post-war period, Liechtenstein has developed from an agricultural nation to a prosperous industry and an important financial center. Politics has been completely dominated by two bourgeois parties that have generally formed coalition governments.

For more than four decades, the Progressive Citizens' Party (FBP) dominated Liechtenstein's parliament, but in the 1970 election, the Federal Union (VU) won the most seats. VU then led most governments until 2001. For almost 60 years, however, both parties always formed coalition governments.

  • ABBREVIATIONFINDER: List of most commonly used acronyms containing Liechtenstein. Also includes historical, economical and political aspects of the country.

Prince Franz Josef II, who has ruled since before the Second World War, handed over power to his son Hans-Adam in 1984. However, Franz Josef retained the title of head of state until his death in November 1989.

In January 1989, Hans-Adam disbanded the country since the FBP had boycotted Parliament's work because of an intricate political conflict surrounding an art gallery. Ahead of the elections that followed in March, the number of mandates in the country day was increased from 15 to 25.

VU and the PDB were the only parties in Parliament until the 1993 elections, when the new environmental party Free List won two seats. The free list has held at least one seat in Parliament ever since.

Contemporary History of LiechtensteinThe first government crisis

Liechtenstein experienced its first serious government crisis after the 1997 elections. The PDB decided to leave the coalition government, for the first time since 1938. The motivation was that it wanted to create a real opposition in parliament, but political analysts spoke of contradictions between the leaders of both parties. VU formed a government on its own.

The same year, Hans-Adam went into open conflict with the land day. From time to time, the great powers of the prince had caused a squeak. Now, in violation of Parliament's will, he refused to appoint a certain judge as head of the local administrative court. The same judge had previously questioned the monarch's strong influence over the country's legislation. The judge took the case to the European Court of Human Rights, which in 1999 sentenced Hans-Adam to pay damages for violating the judge's freedom of expression.

In the 2001 parliamentary elections, the FBP gained its own majority and now formed its own government, with Otmar Hasler as prime minister. VU lost voter support, partly because of opposition to Hans-Adam's demands for constitutional amendments that would further strengthen his power (see Political system).

To put an end to the disputes over the powers of power, Hans-Adam called for a referendum on the constitution. The opposition raged against the proposal, and the Council of Europe, after an investigation, declared that the amendments would constitute "a serious step back" that could lead to the country being isolated. Before the referendum in March 2003, the prince threatened to leave the principality and move to his residence in Austria if he did not get what he wanted, and nearly two-thirds of voters supported his proposal. The turnout was high, about 88 percent.

In August 2004, Hans-Adam II handed over the daily government responsibility to his son, Alois. Hans-Adam retained the title of head of state.

A coalition government is formed

The two major parties lost were their mandate for the Free List in the 2005 election. No one got their own majority, and the result was that after eight years, the country again got a coalition government between FBP and VU. Hasler remained as head of government.

In April 2005, a commission presented its conclusions after a multi-year investigation into Liechtenstein's actions during the Second World War. According to the Commission, the country had not traded stolen Jewish assets in connection with the war, and no forced labor had taken place. The investigation of independent historians had come after accusations from the Jewish World Congress, WJC.

Liechtenstein's position as a "tax haven" came from the early 2000s to cause more and more criticism abroad. After repeated insults, the Principality introduced laws to combat money laundering and terrorist financing and other economic crime. However, the "ordinary" tax escape remained protected. The EU pushed for information on EU citizens' interest income from savings accounts. But despite threats of sanctions from the OECD Economic Cooperation Organization, the Vaduz government has been stubbornly guarding the country's banking secrecy. Liechtenstein was found to be placed on the OECD's "black list" of tax havens.

Thus, the irritation was already great when prosecutors in Germany in 2008 revealed that hundreds of Germans were hiding billions in Liechtenstein. Spectacular tax raids were conducted in Germany. The German intelligence service had purchased the information on the tax accounts of a former employee of a bank in the Principality. Crown Prince Alois, who took over the government responsibility from his father, accused Germany of committing a criminal offense by purchasing the stolen documents, an act he called "an attack" against his country.

But the secret tax accounts became an increasingly troublesome issue for the Principality when several other OECD countries, including Sweden, gained access to the stolen information and launched their own investigations. The deal led to new pressure from both the OECD and the EU to persuade the Principality to reduce banking secrecy. The prince and Prime Minister Hasler rejected the charges, but at the same time the work on restricting banking secrecy continued. In 2009, the OECD Liechtenstein first withdrew from its "black list" and then also from the "gray list" of countries that do not cooperate fully.

In the 2009 parliamentary elections, VU got its own majority in the country day. However, in the election movement, the party had promised a continued coalition with the PDB, and that was the case. VU's Klaus Tschütscher became new prime minister.

Prior to a 2011 referendum on legalizing abortion, Alois threatened with veto whether the proposal was voted on. The proposal was rejected by a slight margin. The threat of the crown prince resulted in democracy activists launching a campaign to deprive the prince of his right of veto against legislative proposals approved in a referendum. A referendum on such a constitutional change was held in July 2012, and before the threatened Crown Prince Alois to leave office if the result went against him. Now, however, the proposal was rejected by 76 percent of voters.

 
 

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