Rare Earth: The Witchhunt that Founded Liechtenstein

We happened to be driving past Liechtenstein on our way to filming and came across this story. I couldn't find it online in English, so I decided to make the pit stop.

TLDR News: Have May's Red Lines Made Getting a Deal Impossible? - Brexit Explained

May has been talking about red lines for months, her hard limits when it comes to Brexit negotiations. However, there's a case to be made that these red lines are exactly what's sabotaged the Brexit process. We discuss why the red lines have limited the chances of getting a deal and how the EU sees the process.

Quartz: Europe’s richest country has no airport or trains and an official 90-minute lunch break

Now, Liechtenstein, which today (Jan. 23) celebrates the 300th anniversary of the principality’s creation, is thriving. The country is the world’s richest country per capita, driven by a 12.5% corporate tax rate—among the lowest in the continent—and freewheeling incorporation rules resulting in many holding companies establishing offices in the country’s capital, Vaduz. [...]

The country used its low taxes as a selling point. In 1955 Liechtenstein, described itself (paywall) as a country “where citizens dwell virtually tax-free, and where similar freedom awaits foreign corporations.” (The top tax rate at that time was 1.4%.) Foreign corporations with headquarters in Liechtenstein could enjoy “only minimal taxation”—as well as dreamy mountain views. Change did not come as swiftly as the country’s rulers might have liked: At an especially dire point in the 1960s, its ruling family was forced to sell off its Old Master paintings to the highest bidder—among them Leonardo da Vinci’s counterpart to the Mona Lisa (paywall) and four Breughels formerly displayed in prince Franz Josef II’s Austrian hunting lodge. [...]

Its politics remain stuck in the past too: until 1984, it denied women the vote. The country has two ruling princes—the head of state, Hans Adam II, and his son, Alois, who now performs day-to-day duties—who were previously a banker and an accountant before assuming their roles. Since 2003, they have had the right to veto parliamentary decisions, appoint judges, and sack the government. The country’s princes may be high up in their castle on the hill, but they are watching closely nonetheless.

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VisualPolitik: How does DIRECT DEMOCRACY work in LIECHTENSTEIN?

Despite being a constitutional monarchy, most of the political decisions in this Principality are done through referendums. This includes economic policy, social spending and even… Citizenship!

Even the right to self-determination can be guaranteed by referendum. This means that any of the 11 municipalities inside of Liechtenstein can hold a popular vote to decide whether they want to stay in the country or become an independent nation. Sounds pretty crazy, right?

How is all of this possible? How can you manage to guarantee such a stable political system when people can vote in any crazy law they want with a referendum? Well… This is what we were wondering here at VisualPolitik...

And we figured the best way to answer these questions is by going to the country and asking. So, we did just that!

statista: The worst countries to be gay in Europe

The latest edition of ILGA Europe's Rainbow List has found that Malta, Belgium and Norway are the most LGBTI-friendly countries in Europe. The annual review ranks 49 European countries on a scale from 0 percent to 100 percent. Those closer to 0 percent are considered worst for gross violations of human rights and discrimination while the other end of the scale respects human rights and full equality.

LGBTI people planning a trip are best advised to avoid Turkey, Armenia and Azerbeijan. The latter is rock-bottom of the ranking with 4.70 percent. Russia, host of the 2018 FIFA World Cup, also scores poorly on the list with 10.90 percent.

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The Atlantic: How Iran Can Evade Sanctions This Time

Iran is no stranger to intense economic pressure. It has weathered U.S. sanctions for nearly four decades, and survived the brutal UN sanctions imposed over its nuclear program from 2010 to 2015. It learned how to avoid sanctions to sell its oil and acquire the products and raw materials it needed to sustain its economy. But the United States has also gotten more adept at cracking down.“Fifteen years ago some guy would set up a company in Dubai’s Jebel Ali port and load stuff from wherever and ship it to Iran and no one would notice,” Farhad Alavi, a sanctions-compliance attorney at the Akrivis Law Group in Washington, told me. “Now the detection systems and knowledge are leaps and bounds ahead.” [...]

To circumvent the banking measures in the past, Iran has tried to conduct transactions in gold or in local currencies, allowing foreign companies to pay for oil and gas with their own money instead of dollars. China and India, for example, set up barter deals to do business with Iran using local currencies, while Turkey conducts some business with its neighbor in lira. The problem for Iran is that businesses abroad rarely want to be paid in Iranian rials, which are plummeting in value. In addition, the United States could demand that local currency or gold transactions also be limited, potentially foiling an ongoing attempt by Iran to build a trading network with Russia and Turkey. “Because Iran had problems with the U.S. central bank, Iran cut separate deals with Russia and Turkey,” Mehmet Koç, a scholar at the Center for Iranian Studies in Ankara, told me. “But the new condition Trump has put is that Iran can’t do business in either dollars or rials.” [...]

While a few countries like the UAE, which long opposed the nuclear deal, may agree to crack down on Iranian financial networks, others will require more costly sweeteners from the United States. China may demand an easing of trade rules, undermining Trump’s other policies. Russia may press for an easing of sanctions over its invasion of eastern Ukraine and meddling in U.S. affairs. Turkey may require a return of the self-exiled scholar Fethullah Gulen, the spiritual leader now living in Pennsylvania and accused of backing a 2016 coup attempt, as well as an end to U.S. backing for Syrian Kurdish militias deemed a threat by Ankara. Iran could also turn to Iraq, Lebanon, Afghanistan, or Syria, where it has local allies.  

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Politico: Vestager to investigate IKEA’s taxes

Margrethe Vestager, the EU’s competition boss, is poised to open a formal probe into the tax affairs of IKEA, the world’s largest furniture retailer, according to people familiar with the investigation. [...]

Commission investigators have been looking at royalties paid by a Dutch entity to a Luxembourg subsidiary holding intellectual property during the period between 2006 and 2010. They have also been examining the acquisition of that intellectual property by a Dutch IKEA entity, financed by an internal group loan from Lichtenstein, according to a person with knowledge of the inquiry.

In February 2016, Green MEPs published a report that found IKEA companies had avoided €1 billion in taxes across Europe over the prior six years. IKEA did so, the report claimed, through an aggressive franchising structure, the payment of business charges to Lichtenstein and a sweetheart tax ruling in the Netherlands. [...]

IKEA, which turned over some €35 billion in 2016, would be a prominent European scalp for Vestager, who has been dogged by accusations she is “disproportionately” targeting U.S. companies.

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