Ever Feel Like a Red Herring?

The latest flare-up of fractious relations between the tiny Alpine principality and its much larger neighbor to the north follows outspoken comments this weekend from Prince Hans-Adam II on Liechtenstein’s national holiday.

The prince took aim at Germany, which has been pressuring Liechtenstein to clamp down on confidential banking practices that allow German depositors to evade taxes.

“We and Switzerland saved many people, especially Jews, with banking secrecy,” Hans-Adam told the Liechtensteiner Volksblatt. “Germany should clean up its own act, and think about its past.”

Germany’s Jewish community, which last year condemned Hans-Adam II’s description of modern Germany as a “Fourth Reich,” slammed his latest comments Monday as another insensitive twisting of history.

“He is portraying a picture of the banks which is absolutely not true,” said Stephan Kramer, general secretary of the German Central Council of Jews.

Kramer told The Associated Press in a telephone interview that the prince was falsely describing the role of Swiss and Liechtensteinian banks as pursuing “a rescue mission” of Jews in World War II.

He said the prince should not cite the struggle of Jews to escape the Holocaust as “a defense shield against people targeting the banks and their practices today, hiding not only clean money but dirty money.”

But Hans-Adam noted how some Jews were able to buy their safety during the Holocaust by using money they had deposited in Switzerland or Liechtenstein.

The prince said banking secrecy also had helped people persecuted by communist governments. He said it could be a lifesaver today for people who must shelter their savings from “Third World countries run by bloodthirsty dictators.”

Hans-Adam said other nations’ high tax rates – not Liechtenstein’s money havens – were responsible for tax evasion.

“Germany and many other countries have an unbelievable mess with their state finances. These must first be put in order,” he said.

Kramer said Hans-Adam’s views were outrageous and insulting to Holocaust victims.

“This was not some search-and-rescue mission by the Liechtenstein banks or the Liechtenstein state or the Swiss state to help those poor Jews being persecuted,” he said. “This was their money in their bank accounts that they then took out to get rescued from the Nazis.”

The Liechtenstein royal family’s press office declined Monday to respond to the criticism.

The 64-year-old prince has waged many legal battles in Germany to recover artwork he says was stolen from his family by the Nazis during World War II. More recently, Liechtenstein has feuded with Berlin over German citizens’ use of Liechtensteinian banks to evade taxes.

Last year, German authorities paid a former employee of Liechtenstein’s LGT bank for the names of about 1,400 alleged tax cheats on its customer rolls. The bank, which is wholly owned by the prince and his family, responded with fury, but the operation did push Liechtenstein toward reforming its banking rules.

Hans-Adam rejected the idea that his country prospers from tax evasion. He said the principality’s banks offer “high-quality performance.”

“There are clients who deposit money here completely legally, because they value our good service,” he said.

Still, Hans-Adam warned that Liechtenstein’s banks could suffer over the next two or three years as “the market crash is hitting far more negatively than the whole tax debate.”