LIECHTENSTEIN ELECTIONS: CONSERVATIVES WIN

UNCLAS BERN 000062

SENSITIVE
SIPDIS

DEPT FOR EUR/CE (Y.SAINT-ANDRE)

E.O. 12958: N/A
TAGS: PGOV PREL EFIN LS
SUBJECT: LIECHTENSTEIN ELECTIONS: CONSERVATIVES WIN
MAJORITY, BUT OFFER TO FORM GRAND COALITION WITH
PROGRESSIVE PARTY

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VICTORY FOR CONSERVATIVE PARTY
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1. (U) In an outcome that surprised Liechtenstein's political
class, the conservative Fatherland Union (VU) party won an
absolute majority of parliamentary (Landtag) seats in the
February 8 elections. With 47,6 percent of the votes, the VU
surged back from the historic low of 38,2 percent reached in
the 2005 elections, and picked up three additional mandates
for a total of 13 seats in the 25-seat Landtag. The
Progressive Citizens' Party (FBP) lost 5.2 percent compared
to 2005, landing at 43,5 percent and slipping from 12 to 11
seats in the Landtag. The green-alternative Free List (FL)
party slipped from 13,0 percent of four years ago to 8,9
percent, retaining one Landtag seat and barely maintaining
the required 8% of the vote required for a party to have
parliamentary representation in Liechtenstein.

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GRAND COALITION LIKELY OUTCOME
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2. (U) Prime Minister Otmar Hasler (55),who led the FBP
ticket, announced his intention to retire from politics on
February 8, in light of the election outcome. While
acknowledging that the FBP's defeat was for him a "personally
difficult hour," Hasler said that the elections -- in which
84,6 percent of eligible voters cast ballots -- had
demonstrated that Liechtenstein's democracy remains vibrant.
VU headliner Klaus Tschuetscher (41),who served as Deputy
Prime Minister for the past four years in Liechtenstein's
grand coalition FBP-VU government, is expected to be the new
Prime Minister. Notwithstanding the VU's surprise
achievement of an absolute majority, Tschuetscher has
announced that he will stand by his campaign commitment to
seek to form a grand coalition with the FBP. Depending on
how the coalition negotiations progress, the Landtag will
meet sometime between the end of March and mid-April to
confirm the new government. Until that time, the
Liechtenstein government continues in its pre-election
configuration.

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COMMENT
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3. (SBU) While the VU's strong showing surprised
Liechtenstein pundits and politicians, few thus far have been
able to articulate compelling reasons for this turnabout.
Hasler served as Prime Minister for eight years, and was
credited with navigating Liechtenstein successfully through a
crisis in 2001 when the country was accused of being a major
center for money laundering. He had established a reputation
for balancing incremental reforms with defending
Liechtenstein's interests in the face of more recent
criticism of its banking secrecy practices. Tschuetscher's
success has been attributed to his support for a political
culture that eschews partisanship and emphasizes common
cause. Given Liechtenstein's tradition of democratic
consensus, political partisanship is, in any case, more
nuanced in the country than most other places. Thus, it
seems equally plausible that Tschuetscher's message tapped
into a more general desire for change, however incremental,
particularly with the younger members of the Liechtenstein
electorate. While leadership of what is likely to be a grand
coalition government will now shift to the conservative
party, post does not expect any major changes in
Liechtenstein policies that will substantially affect USG
interests.

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BIOGRAPHICAL INFORMATION: KLAUS TSCHUETSCHER
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4. (U) Dr. Klaus Tschuetscher became Deputy Prime Minister in
April 2005, and has headed the Departments for Economic
Affairs, Justice, and Sports. Born July 8, 1967, he studied
law at the University of St. Gallen where he completed a
doctorate in 1996. Tschuetscher also attended post-graduate
studies in international business law at the University of
Zurich. He has been Director of Legal Services at the
Liechtenstein Tax Authority since 1995, and Deputy Director
of the Liechtenstein Tax Authority since 1996. In addition,
since 1999, Tschuetscher has been a member of Liechtenstein's
EU delegation focusing on tax-related issues. In 2001 he was
a member of the Liechtenstein delegation for negotiations
with the USG on mutual legal assistance. Since 2003
Tschuetscher has coordinated issues related to


Liechtenstein's role as a financial center. He is married to
Jeanett Tschuetscher (nee Eggenberger),and has two children.
CARTER