This Europe: Democracy falls victim to Prince's plans for Liechtenstein

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The Independent Online

Men in bulletproof vests cradling automatic weapons patrolled the main street of Liechtenstein's capital yesterday, in advance of today's European Cup qualifier against England, but fans and locals were relaxed about the fixture.

Men in bulletproof vests cradling automatic weapons patrolled the main street of Liechtenstein's capital yesterday, in advance of today's European Cup qualifier against England, but fans and locals were relaxed about the fixture.

The townspeople were friendly and helpful to the knots of English fans. Pretty, prosperous, boring as hell – Vaduz, the capital with a population of 5,000, is putting on its familiar face. There was little sign this weekend of the vicious political campaign earlier this month that saw the principality of 32,000 bitterly divided, and the autocratic Prince Hans-Adam II threaten to quit his realm.

Two weeks ago, a referendum called by the Prince gave him a thumping victory – 62 per cent acceding to his demand for powers to dissolve governments, sack judges and ignore court rulings. The campaign had been bitter: the Prince likened his opponents to Second World War traitors and dead animals were dumped on their doorsteps. Today, in one of the last patriarchies of the Western world, it is not hard to find people who are grateful to their benign ruler. "We live in hectic times," said Edy Gabor, a taxi driver. "When you have a peaceful system that goes slowly, that's the best ... The Prince has brought this land up very much in the past 30 or 40 years. In Britain you pay your Prince taxes, here the Prince takes nothing...."

Ah yes, taxes. Prince Hans-Adam has transformed Liechtenstein into one of the most secretive banking and tax havens in the world. He has turned his state into the Switzerland of Switzerland – with no taxes for residents (Swiss by contrast pay VAT at 20 per cent).

He has also led his country into the United Nations, the World Trade Organisation, and other organisations. But at the same time Liechten- stein's reputation has been growing increasingly sinister. The banking system, critics say, is "notoriously opaque" – leading to accusations the country has become a haven for money laundering. The Organisation for Economic Co-operation and Development has described the country as "non-cooperative" for its secrecy laws, and classified it as a "harmful" tax haven. The US claims that funds linked to al-Qa'ida have been secreted here, funds it has sought to freeze.

Liechtenstein is becoming the closest thing in Europe to an absolute monarchy. "We are about to abolish democracy in the centre of Europe," lamented an opposition politician.

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