Who will win the great showdown between Germany and Liechtenstein? Suspecting the tiny principality of being a giant tax dodge, German agents have paid for stolen records detailing who is banking there. Such espionage against a fellow European nation has left Crown Prince Alois fuming at the “criminal energy of the Germans”.

Sanctions are looming. Yet if Angela Merkel has studied the life of one of her predecessors, Otto von Bismarck, then she will not expect to see the white flag fluttering from the battlements of Vaduz Castle.

In June 1866, Bismarck proposed expelling Austria from the German Confederation as a precursor to creating a Prussian-led German Reich. Vienna countered by convening the Confederation's assembly, the Diet, in Frankfurt. There, it advocated a mobilisation for war against Prussia.

It was a tight vote. The large states had one vote each while the smaller ones, including Liechtenstein, were grouped in “curias”. After determining the majority verdict of its constituent entities, each curia delivered its vote. Eventually, the result was announced: it was war by 9 votes to 7. But confusion reigned when the Ambassador of Lippe claimed that the majority of states in the 16th curia had opposed war, only for bellicose Liechtenstein to miscount the tally. Thus, if the 16th curia's vote had been called correctly, there would have been an 8-8 tie and no mobilisation.

Although the allegation was false, Liechtenstein's vote had been what tipped the curia's casting vote for war. Playing up the absurdity of it, Bismarck was incandescent, accusing the tiny mountain state, with a population of 6,000, of starting the Austro-Prussian War, which resulted in more than 100,000 casualties.

For Austria the conflict proved calamitous. Liechtenstein, however, fared rather better. It posted its entire army out of the way on Tyrolean sentry duty. Eighty were dispatched; 81 returned.

Notwithstanding Bismarck's accusations against the country he held responsible for starting the war, nobody remembered to include Liechtenstein in the Treaty of Prague, which ended it. In 1938, Nazi activists pretended that the principality was therefore still at war with Germany and should be annexed. Perhaps taking a hint, the ailing Prince Franz I chose that moment to abdicate in favour of his cousin. The Nazis had started to take an interest in Franz's Jewish wife.

Thus Liechtenstein managed to sit out the Second World War, while giving refuge both to Jews escaping Hitler and, at the end of the conflict, to pro-German White Russian soldiers fleeing Stalin.

The German tax authorities may be a formidable force. But can Mrs Merkel really hope to outwit the country that successfully ignored the wrath of Bismarck, Hitler and Stalin?

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