Today, Prince Alfred Michael Benedict whose cousin Prince Hans Adam II rules this nation of 35,000 speaks of transparency and accountability in global financial systems to ensure there is no repeat of the global financial meltdown.
Acknowledging that he too has had uphill baffles with his government in tightening financial regulations, Alfred said one must learn from hard lessons.
“But sometimes to learn a lesson, laws must be in place,” he said, adding that there must be some form of compulsion for people to want to change the systems that have contributed to present situation.
The prince was speaking in a specially-arranged interview by Wisma Putra. He was in town for Bridges-Dialogues Towards Culture of Peace featuring Rev Jesse Jackson —an initiative of International Peace Foundation, of which he is advisory board chairman.
Outside Liechtenstein, the pony-tailed prince is perhaps even more recognizable than cousin as the former heads several think-tanks and traverses the globe preaching humanitarianism and peace; idealism seems to be in contradiction with some of capitalists who govern his country but has earned him the Albert Schweitzer Humanitarian Award.
Liechtenstein is in the midst a balancing act — drafting regulations to adhere to international standards and the same time continue to maintain the attractiveness of its financial services sector which contributes half of its GDP.
Alfred said EU, Switzerland Liechtenstein are in talks where the OECD (Organisation Economic Cooperation and Development) and EU want a system in which the opening of bank account by an EU citizen outside its home state automatically obliges the bank to make report and full data transfer to tax authorities of the home
“Switzerland or Liechtenstein not want to be part of such automatic reporting system (but) the compromise is that Liechtenstein has agreed to foreign authorities to cooperate with them and respond to specific individual requests in cases where these authorities suspect a criminal behavior of one of their citizens,” he said.
However, he said while this is Liechtenstein’s contribution to walk the talk and make international financial system more transparent, one does not desire for smaller nations to be bullied into disclosure under political or economic pretexts, which results in a global surveillance-state.
“Since Sept 11, 2001, this trend has been extremely accelerated worldwide where a politics of fear and corresponding propaganda made many citizens around the world even agree to voluntarily accept and even ask for a system in which they are intensively monitored and controlled.
“War on Terror, Clash of Civilizations, security and transparency are main slogans in this respect
“This would lead us into slavery ... what we need is more accountability, as well as checks and balances to improve our democracies and for the international banking and financial system to lead it back to a function in which it is serving all people-especially the poor and underprivileged — and not only the rich,” he said.
To this effect, the prince suggested Islamic banking as an alternative. “It may be a new concept to many, but Islamic banking imbues principles of honesty and transparency which are sorely lacking in modern financial and banking systems.”
Alfred said the cause of the financial collapse, the worst in modern history is due to greed and thus it was time for political will to address these wrongs.
“We must say enough is enough, or else we will continue having these crises,” he said, alluding to the Asian financial crisis of 1997 and the global economic crisis a decade earlier.
Apart from changing cultural attitudes, Alfred agreed that political compulsion must be in a key factor in ensuring such mistakes are not repeated.
“In a society based on greed, eventually people will find it hard to make ends meet. When this happens, you will have political instability as society looks upon its leaders and blame them for riot shielding it from the effects of the meltdown.”
He opined that a financial crisis is the second phase in the end of a government. “The third phase is a political crisis when there is mass unemployment and many people end up on the streets.
“Politicians themselves will panic as they themselves do not know what to do,” said Alfred, whose country is famous for Hilti power tools and produces close to half of the world’s dentures.
On the slew of rescues of troubled institutions by their respective governments, the prince said he is not a fan of financial stimulus packages as they do not solve the problem in the long run.
“It is like a cancer and the bailouts are chemotherapy. It does not completely kill the cancer but arrests it for awhile until a new tumor grows.
“We are infusing toxic liquid into the financial system instead of establishing a new system of real economy. Present financial systems are so disconnected from real economy as the needs of the people are secondary.
“Instead of all these bailouts, we should take the money and create a fresh banking and financial system to save the common good,” he said, explaining that there should be more emphasis on developing human capital.
Comparing the economic collapse to the sinking of the Titanic, the prince, an economist by learning, said when the ship starts sinking; it is those in the lower decks who drown first.
“In the up-most deck, where the rich, the hedge fund speculators reside, the party is still going on ... but the water is rising and before long they too will drown.”