21 
ereignty would protect busines s models based on secrecy, short of multilateral in- 
itiatives that would seriously restrict their sovereignty. According to Palan (1998), 
these small and conservative states refuse d to follow suit bec ause as sovereign en- 
titie s they enjoye d politica l and legal supremacy within their territorial boundaries 
and that legal structures such as banking secrecy are made possible by “the gulf 
between national sovereignty, on the one hand, and the goals of libera lism and the 
interna tionaliz a tion of capital, on the other ”. An effective strategy would thus “re- 
quire a degree of cooperation among the major industrialized countries and a limit 
on the sovereign rights of states, which effectively would spell the end of the so- 
ca lled Westphalian system” (Palan 2002). This theme is continued in papers two 
and three. Paper two looks at the US’ successful unilateral approach that substan- 
tia lly restricted Switzerland’s sovereignty to eliminate ba nking secrecy and how 
the US legitimized its a ctions. Paper three looks at successful multilateral initia - 
tives by the OECD and FATF that substantially restricte d the sovereignty of ten 
other tax havens, including Liechtenstein, as well as examining the legitimacy of 
their approaches. 
 1.2 
Paper Two Synopsis 
Paper #2: Emmenegger, Pa trick and Katrin Eggenberger (2018) .   
State sovereignty, economic interdependence and US extraterritoriality: the 
demise of Swiss banking secrecy and the re-embedding of international fi- 
nance .   
Journal of In t ernational Re lations and Development, 21(3): 798-823. 
  Paper 
two looks in depth at exactly how the US penetrated Swiss banking sec recy 
and the extraterritorial power it exercised to do so. It focusses on the conflict of 
sovereignty versus market power and explores the rarely studied concept of e xtra- 
territoriali ty. The paper highlights how the US used its dominant market position position