http://www.bloomberg.com/apps/news?pid=20601100&sid=a7FvUTl_M12o&refer=germany

March 18 (Bloomberg) -- The German Finance Ministry is “surprised” at a Swiss politician comparing Finance Minister Peer Steinbrueck to Nazis after he criticized Switzerland’s banking secrecy laws, spokesman Torsten Albig said in Berlin.

Thomas Mueller, a Swiss lawmaker from the canton of St. Gallen, said today during a debate in the lower house of parliament in Bern that Steinbrueck’s criticism reminded him of the generation of Germans “who walked the streets in leather coats, boots and armbands 60 years ago” and that Switzerland was used as a “scapegoat” in the current tax dispute.

Steinbrueck has been among the most vocal of top officials in an international effort to crack down on tax havens, saying Switzerland needs to adhere to rules drawn up by the Paris-based Organization for Economic Cooperation and Development. The Swiss government earlier this month agreed to cooperate in cases of tax evasion as well as fraud to avoid being placed on the OECD’s black list.

“We’re very surprised that members of your national assembly uncover the evil German when all we do is discuss whether it’s wise to apply OECD rules or not,” Albig said at the government’s regular press conference in Berlin today in response to a Swiss reporter’s question.

The attacks by Steinbrueck threaten to strain diplomatic relations between the neighboring countries. Swiss Foreign Minister Micheline Calmy-Rey has twice summoned Germany’s ambassador in Bern regarding what she termed “insulting and aggressive” comments made by Steinbrueck.

Cavalry vs. Indians

The threat to put Switzerland on the OECD list of non- cooperative countries “is like having the Seventh Cavalry in Fort Yuma that can be ordered to ride out but doesn’t have to,” Steinbrueck told reporters after a meeting of finance ministers and central bank governors from the Group of 20 on March 14. “The important thing is that the Indians know it exists.” Switzerland is currently not on the OECD’s list, he said.

Albig said that Steinbrueck’s remarks hadn’t been offensive.

“With no syllable and no comparison, neither now nor earlier, has the minister been disrespectful toward Switzerland and its citizens,” Albig said. The picture of the cavalry defending against Indians is being used “frequently,” he said.

Steinbrueck said on March 14 that it’s “unacceptable” for Germany and infringes its sovereignty that some European governments are welcoming tax evaders, resulting in a contraction of the country’s tax base. He had earlier said it’s necessary to use not only the carrot but the stick to pressure Switzerland.

‘Economic War’

European pressure on Switzerland increased after UBS AG agreed on Feb. 18 to pay $780 million and disclose the names of about 300 account holders to avoid U.S. criminal prosecution on a charge that it helped Americans evade taxes. The U.S. government sued the bank the next day to force disclosure on as many as 52,000 Americans who allegedly hid money in Swiss accounts.

“We’re in the middle of an economic war,” said Hans Fehr, a Swiss People’s Party lawmaker during the debate. “It’s about a merciless competition to weaken financial marketplaces and Switzerland. If you let others blackmail you once, you will be blackmailed over and over again.”

Swiss banking secrecy laws were amended in 1998 to stop banks from shielding the identities of those suspected of money laundering or tax fraud. Swiss Finance Minister Hans-Rudolf Merz said today that Switzerland’s latest measures won’t affect the 75-year-old laws “in any way.”

“Tax authorities won’t be able to snoop around in our bank accounts in the future either,” Merz told lawmakers. “We’re all aware of the fact that the financial marketplace is of decisive important for the economy. It would be absolutely foolish to weaken the financial marketplace.”