Thinking big: Liechtenstein's art deal with China

Liechtenstein, as everyone here is quick to tell you, is a very small country. It's the sixth smallest in the world (Vatican City is No1). The pair of statistics you hear quoted most are that it measures 160 square kilometres and has 35,000 inhabitants, but here's how truly small it is - it doesn't have a Starbucks. On a map you'll find it, after some searching, squeezed into the Alps between Switzerland and Austria, an unexpected knobble of nougat amid the chocolate slopes of a Toblerone bar. Not only does it lack a train station and an airport, it's doubly landlocked: its inhabitants have to cross two countries before they get to dip their toes in the sea.

His listeners are from the mainland Chinese media; they are visiting Europe in order to acquaint themselves with Liechtenstein's princely collections, which are held in two palaces (both in Vienna, Austria) and one castle (in Vaduz). Liechtenstein's ruling family has lent China 100 works by Rubens, van Dyck and other Flemish masters, for an exhibition: "Masterpieces from the Collections of the Prince of Liechtenstein" opens on Tuesday in Beijing's National Museum of China and will travel on to Shanghai's China Art Museum in March. A trade delegation accompanied by His Serene Highness Prince Alois, son of the current head of state, His Serene Highness Prince Hans-Adam II, will be present at the Beijing opening.

It doesn't take a massive intellect to conclude that this meeting of royal-sanctioned capitalism and state-run communism isn't simply about art. The exhibition is sponsored by LGT Group, an international private banking and asset-management com-pany owned by the Princely House of Liechtenstein, which is also its biggest client. (The family's investments with LGT are worth three billion Swiss francs, or about HK$26 billion.)

The government's official handout lists Liechtenstein's famed financial advantages as including "a traditionally protective attitude to private wealth and personal privacy". In recent years, however, less-polite observers in the European Union and the United States have taken to using the words "tax evasion", and the repercussions have been on the large-ish side - in July, for instance, the country's oldest bank, Liechtensteinische Landesbank, was obliged to pay US$23.8 million to avoid criminal prosecution in a US tax case.

"The Americans have shot themselves in the foot - finito!" His Serene Highness Prince Philipp, chairman of LGT Group and brother of Hans-Adam II, remarks over lunch in the Liechtenstein City Palace (which is, confusingly, in Vienna). "We never looked for Americans in private banking but now that's ended; it's too complicated, too much of a risk."

These days LGT, on behalf of its clients, is turning its investment gaze east. It doesn't, yet, have a private banking presence in China ("for regulatory reasons") but Philipp, 67, who says he's just been hunting elk somewhere "north of Moscow", is not a man to be intimidated by size. When asked about a distinctive tie he's wearing - dotted with what look like stags - he replies, with a laugh, "I like big animals - maybe because I'm from a small country."

You may be wondering why the Liechtenstein City Palace and the Liechtenstein Garden Palace are both to be found in Vienna, 525 kilometres from Vaduz. The royal family springs from a line of Habsburg court career diplomats in what is now Austria, and their 12th-century ancestral castle is about half an hour's drive from Vienna. Although it was extensively renovated in the 19th century and now has the air of an abandoned stage-set, its facade still bears the pale colour - " liechtenstein" means "bright stone" - from which the dynasty took its name.

Until the 20th century, the princes (there are no Liechtenstein kings) hardly visited the remote lands they had acquired in the early 18th century solely to obtain voting rights in the Habsburg Imperial Council of Princes. Liechtenstein was a poor place, populated by farmers and marmots, and the family preferred to spend its time amid the baroque delights of Vienna while building palaces across mittel-Europe and amassing an art collection.

All that changed in March 1938, when Hitler annexed Austria. At the time, the reigning prince was the childless, 84-year-old Franz I. His wife, Princess Elsa, was born Jewish and although she'd converted to Catholicism, it seemed prudent for the pair to leave Vienna immediately for one of their castles in what was then Czechoslovakia. Four months later, Franz I died and his grand-nephew, Franz Josef II, the new reigning prince, relocated to Vaduz (to a lowly farmhouse, the castle there being uninhabitable at the time), where the royal family has remained domiciled to this day.

The bulk of the art collection was left behind in Vienna until 1945, when, in the last months of the war, Franz Josef managed to transfer most of it to Vaduz. By the end of that summer, the family's holdings in Moravia and Bohemia had gone, Vienna was occupied by the Allied forces (and would remain so until 1955), and a question mark hung over the economic future of the house of Liechtenstein. Facing relatively straitened circumstances, it had to sell some of its treasures; at one point in the 1950s, the entire collection almost ended up in Ottawa, Canada, and although that catastrophe was averted, Leonardo da Vinci's Ginevra de' Benci was sold, in 1967, to Washington's National Art Gallery, for the then-record sum paid for a painting: US$5 million. (It is still the only da Vinci painting in a public place in America.)

This, emphatically, is an arena in which Liechtenstein punches well above its size. The first prince in the family to buy a Rubens ( The Assumption of the Virgin Mary circa 1637) was Karl Eusebius I, who, in the 17th century, believed that what mattered in life - and even beyond - was art and architecture. Four centuries later, there will be 28 Rubens pieces - including graphic works and tapestries, as well as the lovely, fresh-faced Clara - in the China exhibition; and Johann Kraftner, who made the selection, is director of what has become the biggest private art collection in the world.

"I do not mention the collection of the Queen [of England] because it is in the hands of the state," he says, strolling through the glittering rooms of the City and Garden Palaces. "This collection is private. The prince can say, 'I will sell this' at any moment and he can do it."

Kraftner sighs at the memory of Prince Johann II, who did exactly that with two magnificent Rubens paintings. In 1880, the sensitive, reigning prince sold Samson and Delilah because he couldn't stand its figures' flaunted nakedness, and, in 1921, he sold The Massacre of the Innocents because he couldn't stand its violence.

" The Massacre of the Innocents was auctioned 10 years ago and fetched over £40 million [£49 million - or HK$614 million - to be exact]," says Kraftner, with a wince. Still, you lose some, you win some: in 2004, Kraftner was able to buy the exquisitely inlaid, ebony Badminton Cabinet, the most expensive piece of furniture in the world, for £19 million. It is now - along with The Assumption of the Virgin Mary - one of the highlights in the Liechtenstein Garden Palace.

After such a giddy whirl, you feel that an exhibition of just 100 carefully chosen, themed paintings is probably about right; and Kraftner has been exemplary in his selection. These are world-class artworks. No patronising third-class daubs complete with critters creeping from neglected frames (Kraftner has witnessed such wildlife at other exhibitions) will be appearing in China.

"Look at the dimensions," he remarks of Rubens' The Discovery of the Infant Erichthonius, which is 217.8cm by 317.3cm, and of a Rubens tapestry, The Death of Decius Mus, which measures 289cm by 518cm. "Not everyone would send such monumental works but we have enormous spaces in Beijing so I decided to send big-format paintings." And that, unfortunately, is why the exhibition isn't coming to Hong Kong: Kraftner couldn't find a suitable space. "When the new museum [in West Kowloon Cultural District] is open …" he murmurs.

A strange fact about the Liechtenstein treasures is that although you can - if you organise a guided tour - view them in Vienna, there is no public access to the collection in Vaduz. The castle, being the royal residence, is private, and its remarkable collections of antique guns, porcelain and paintings are seen by very few. Those Chinese tourists the country is keen to attract will have to occupy themselves in other ways.

There is the stamp museum, however; Liechtenstein Marketing was heartened, if surprised, to discover a couple of years ago that Beijing has a stamp collectors' club numbering one million, a vast platoon of potential enthusiasts for Liechtenstein philately. There is the city train, which runs on wheels - not an actual track - and takes 35 minutes to do a leisurely circuit round Vaduz, taking in the Princely vineyard and the local football stadium en route. (Liechtenstein's national anthem is identical to God Save the Queen, so on the rare occasions that the country plays England, the same tune is played twice.)

And visitors can buy watches, at about half the price they would pay in Beijing, at a shop staffed by Chinese saleswomen for that express purpose.

"Being a very small country," says Prince Alois, in a family sitting room hung with hunting scenes, "the exhibition is obviously a good promotional tool."

The prince, who spent three months in Hong Kong when he was in the Coldstream Guards regiment of the British Army in the 1980s, sees Liechtenstein as uniquely placed to offer China direct access both to the European Union (via Austria) and Switzerland. Like the golden stagecoach at the entrance to the Liechtenstein Garden Palace, which bore Isabella of Parma to her arranged nuptials in Vienna, the exhibition is symbolic of hopes for a happy, and fruitful, commercial union.

It also contains what might be seen as a little, Liechtenstein-sized joke. One of the paintings that will be on show, an early 16th-century oil by Quentin Massys, is of two unpleasantly leering men counting coins and entering an amount in a ledger. Kraftner purchased it in London five years ago for £5 million. "The faces aren't nice and the prince didn't want to buy it," he says. "But we had another Massys in the castle and so I could convince him." Its title? The Tax Collectors.