Swiss minister at centre of Libya spat resigns

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Swiss finance minister Hans-Rudolf Merz announced his resignation on Friday, a year after his highly criticised handling of a diplomatic row with Libya and international pressure on banking secrecy.

"I have handed in my resignation this morning" 67 year-old Merz, a member of the centre right Radical Party, said at a news conference. He added that he would step down in October after nearly seven years in office.

Pressure for Merz's departure had grown in recent weeks after Transport and Energy minister Moritz Leuenberger, a Socialist, announced last month that he would step down at the end of the year after 15 years in office.

Both ministers in the five-party cabinet, the Federal Council, have to be replaced in elections by Switzerland's parliament, setting the stage for a political battle for the two vacant posts.

Merz also held the Swiss presidency in 2009 and triggered a rare Swiss political storm with his attempts to resolve a dispute with Libya over two businessman who were prevented from leaving the North African country.

The tensions with Tripoli escalated shortly after Merz delivered an unexpected and controversial apology to Libya's government in August 2009 for the brief arrest of one of Libyan leader Muammar Kadhafi's sons in Geneva in 2008.

The Swiss businessmen were eventually allowed out earlier this year, but only after one of them served a jail sentence in Libya for alleged visa offences.

Merz, who weathered a heart attack during his tenure, was also at the centre of the official Swiss reaction to US and European led clampdowns on tax evasion and banking secrecy, which led to a softening of Swiss bank secrecy rules.

A rigorous and successful advocate of budgetary discipline, he was also instrumental a multi-billion dollar state rescue package for the country's biggest bank, UBS, in 2008 after it was hit by the financial crisis.

Each of the seven ministers has equal ranking in the prime minister-less Federal Council and power is traditionally shared by the biggest parties from across the political spectrum.

The largely ceremonial post of Swiss president is rotated among ministers every year.

© 2010 AFP

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