Banking secrecy is one of Switzerland’s most coveted products, along with wristwatches and Toblerone chocolate. Swiss banks manage $2.1 trillion in foreign money, and the financial sector generates about 10 percent of Swiss GDP, according to the Organization for Economic Cooperation and Development (OECD).

But a global crackdown on tax evasion, initiated by the OECD in 2009, has led to numerous information-exchange deals with tax havens like Luxembourg, Monaco, and the Cayman Islands. Ever since, Switzerland has tried to walk a fine line between concessions to the international desire for financial transparency and keeping the locational advantage of its banking secrecy.

“Swiss society is split over the banking secret,” says Ulrich Thielemann, who taught economic ethics at St. Gallen University in Switzerland before setting up a think tank in Berlin. “But even those who want to limit it do so out of economic consideration. There is no sense of guilt.”

Germany and Switzerland signed a treaty today on taxing Germans' secret accounts with Swiss banks. The German Finance ministry hopes the agreement will allow them to retrieve billions of euros in revenue that tax evaders have parked in Swiss offshore accounts. But the deal could still fail because German opposition parties – that consider it too lenient – might block it in parliament.

For years, Germany has pressed Switzerland to agree to a deal in which Swiss authorities would impose taxes on Germans’ accounts, charge fees on undeclared money, and pass the proceeds on to Germany. The Finance ministry in Berlin estimates that up to €150 million ($196 million) in German funds are stowed away in Swiss accounts. The US and Switzerland signed a similar treaty after massive pressure by US government agencies on Swiss banks.

But while the US got access to personal data of Americans with Swiss accounts, the deal with Germany does not go so far: the identities of German customers would still be withheld, making a prosecution by German agencies impossible. For the political opposition in Germany, this is equivalent to protecting criminals.

“This is a slap into the faces of honest German taxpayers," Sigmar Gabriel, leader of the Social Democrats, told journalists today. “The complicity of Swiss banks in crimes committed by German citizens needs to be tackled systematically.”

Mr. Gabriel said his party would block the ratification of the deal in parliament. The government needs the votes of the opposition on this issue.

The agreement has been overshadowed by a diplomatic row over arrest warrants issued by Swiss authorities against three German tax inspectors. On April 2, Swiss and German media reported that the Swiss federal prosecutor had issued arrest warrants for the three Germans, who in 2010 bought a CD from an informant containing personal data of Germans with accounts in Swiss banking giant Credit Suisse. The Swiss accusation of “industrial espionage” caused an outcry in Germany – “a scandal without comparison,” said Jürgen Trittin, chief whip of the Green party.

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Swiss politicians upped the ante. Toni Brunner, leader of the conservative Swiss People’s Party, called Germany’s defense of its tax inspectors “a declaration of war.”

While German Chancellor Angela Merkel asked for moderation in the debate, observers see the arrest warrants as bargaining chips in the tax deal. “The treaty grants freedom from prosecution for tax inspectors who may have broken Swiss law,” says Thomas Eigenthaler, head of the German Tax Union (DTSG), which represents civil servants working for the tax authorities. “It is no coincidence that the arrest warrants were issued at exactly this point in time. All this happens to keep the Swiss banking secret intact for a little longer.”