56
out in 2008, by making a renewal conditional on increased exchange of infor-
m ation on tax matters, the US was able to increase pressure on Liechtenstein.
Pressure a lone, however, cannot explain why Liechtenstein and Switzerland re-
sponded so differently. Both countries were faci ng major economic and political
p roblem s in the second half of 2008: while Liechtenstein was hoping to renew the
QI agreement, from O ctober 2008, Switzerland was faced with the possibil i ty that
its biggest bank, UBS, might be criminally indicted by US authorities, which could
have led to the bank’s collapse ( Em menegger 2017 ). From a Swiss perspective,
UBS is clea rly “too big to fail” – the bank’s colla pse could have disastrous conse-
quences (Bundesgericht 2011). Both countries were equally under great pressure.
Rather than pressure overall, we argue following Katzenstein (1985 ) that the great-
est difference between the countries was the distributi o n of the pressure. In Lie ch-
tenste in, the legal disputes d ogging LGT and Liechtensteinische Landesbank
(LLB) were considered to be attacks on the e ntire financia l c entre. Moreover, the
industry as a whole was more dependent on offshore wealth management than its
Swiss counterpart. Thus, the banks were quick to find common ground.
In contrast, Switzerland’s more heterogeneous financial servi ces industr y was
deeply divided. Until at least late 2009, there was a widespread perception that
UBS’ legal troubles did not concer n the Swiss financial services industry as a
whole. As a result, the Swiss Ba nking Association, most banks and all but the left-
lea ning political parties failed to make more than the minimal conce ssions required
to stem international critic ism (Steinlin and Trampusch 2012). With little or no
representation outside Switzerland, traditional private banks specializing in off-
shore wealth management in particular showed little willingness to close ranks to
supp ort UBS. This uncompromising position was based largely on the erroneous
belief that Swiss banks without representation outside Swi tzerla nd were perfectly perfectly
