SWITZERLAND: The Swiss view of EU is being changed by new realities
Thomas Cromwell

Switzerland has long enjoyed the image of a beautiful, mountainous island of peace and stability in the midst of a world of conflicts. During the last century, the Swiss maintained neutrality while two world wars swirled about them. And, increasingly after the Second World War, the Swiss leveraged their neutrality to act as peacemaker around the globe.

However, Europe itself has changed dramatically since the guns fell silent in 1945, and Switzerland’s maverick neutrality has taken on more of an economic identity as country after country has joined the European Union, leaving Switzerland and its tiny brother Liechtenstein, two lonely standouts on the continent.

“Imagine,” says Ambassador Christian Blickenstorfer, “that the state of Colorado was independent from the rest of the United States. That, approximately, is the status of Switzerland today, surrounded as it is by the 25 members of the European Union.”

The ambassador believes that this reality will eventually translate into a change of mind among the Swiss, and a decision to enter the EU. For one, as a non-member, Switzerland often is put in a position to have to negotiate bilateral agreements with the members. As the EU evolves, this is an increasingly difficult, cumbersome and costly process.

The ambassador notes that the Swiss would have to give up at least some of their system of direct democracy and trade their beloved Swiss Francs for Euros. But the upside, in terms of ease of political and commercial relations, as well as Switzerland gaining a stronger voice in pan-European affairs, would make this well worthwhile, he believes.

Ambassador Blickenstorfer recently met with DiplomaticTraffic.com and discussed this and other issues. His comments follow.

On the identity Switzerland wants in the world today
We want to be seen as a small European country, but very engaged internationally. Neutrality, which is a fact, is nowadays used almost as a springboard for doing things that other countries can’t do. Originally neutrality was rather passive: not taking part in wars, mostly between our neighbors in the past. Now it is universally recognized that Switzerland is a neutral country, so why should we fight that label? We are not fighting it. We are neutral. We use [our neutrality] for our active contribution in areas of peace-promotion, peace-seeking and also all the humanitarian aspects that go with it.

From neutrality to peace-keeping
On a very modest scale in Europe, we also participate in peace-support nowadays, but that had to be decided in a referendum by the Swiss people in 2001 because that was a clear change in the perception of the Swiss people (not necessarily the government).

We are contributing to peace-keeping in the Balkans, Bosnia and Kosovo (about 250 troops). We have also extended our network. We have soldiers and policemen in Afghanistan (about 40 or 50), as part of the Partnership for Peace effort with NATO. The Swiss population is generally supportive, but we are monitoring it carefully. Swiss participation in Iraq would not have been possible. What we need for the engagement of our soldiers is either a UN or OSCE mandate.

The spur to more action
We had a negative vote on joining the United Nations in 1986, which is understandable, since at that time the UN did not work at all. It was during the Cold War so it was mostly blocked. The government didn’t like that defeat (2/3 to 1/3), and not a single canton in favor, and we needed a double majority in favor, both of the population and the cantons. So the government said ‘we have to do something’. Namibia was then the first time that Swiss soldiers, as unarmed blue berets, not armed blue helmets, participated in peace-keeping. This was relatively clever of the government because there was a strong anti-apartheid movement in Switzerland, which was against South Africa. So that operation was successful, not only from the Swiss perspective, but on the whole. People got used to it. It lasted one year, and people had neighbors who had participated, so the overall experience was good. That was the first step, which started in 1989.  Unarmed Swiss troops were sent to Bosnia-Herzogovina in 1996,  and then the referendum to arm Swiss peace-support troops passed in 2001.

On what might change the public on EU membership
I think experience will change it. Membership in the EEA (European Economic Area) was rejected in 1992 (when Norway, Liechtenstein and Iceland formed the agreement, after their people rejected EU membership). Our government then had to find ways to organize our relationship with the EU, which had to be by bilateral treaties. We have had a series of a dozen bilateral treaties in two rounds of negations, the first of four in the late 90s, and the second round two years ago. In the meantime we have, more or less, organized our everyday life, which of course makes it less urgent (the feeling of the population that something should be done about membership in the EU).

But, in the long run, I am convinced that we should be a member of the European Union because it just doesn’t make sense for a multi-lingual country in the middle of multi-lingual Europe not to be part of that, Europe being our biggest trading partner and neighbor in everything. And of course you can’t separate out problems nowadays, so we have to do a lot of things in exactly the same way that the EU does.

There is one fundamental problem. Our direct democracy system is very different from other member countries. There needs to be some negative experiences of our not being a member to realize that the price is not too high to give up some of our direct democracy rights in order to be a member, participating in decisions, shaping and making policy, which through our bilateral treaties we cannot influence. Through these treaties we can deal with immediate issues, but Switzerland and the EU are moving on, and the agreements become outdated, because they don’t have evolutionary clauses.

The government will not seek a vote so long as they don’t have at least 50 percent of the population in favor of EU membership. That would be the worst (scenario): to have a rejection of the European Union membership.

But I think eventually it will happen. The outlook is not all that bleak. We have had two votes this year on European matters, one in June, where we accepted to become part of the Schengen system, so we will get rid of our border controls; at the same time we also became part of the Dublin Agreement, as far as migrants and refugees are concerned. And a week after the French rejection in September of a new European Constitution, we extended the free movement of people treaty with the 15 EU countries to the 10 new EU countries. That was a sign that the Swiss realized where there interests are. We wouldn’t accept that the European Union would give certain rights to only 15 of our cantons, and not to the others. It was surprising for France and others in Europe, that the Swiss, given their anti-EU sentiments, voted for this. It was fiercely fought because we have one political party that is opposed to increased immigration.

The last round of agreements with 15 EU countries, on taxation of interest on bank accounts, was quite difficult. With 25 countries to negotiate with, it will become nearly impossible to negotiate agreements. In my opinion, that was the last time we could negotiate an agreement with all EU members. To adjust minor points would be possible, but not to negotiate a major agreement with all members. Why should the Poles or Hungarians see any need to treat Switzerland specially? They will say, ‘just do like us and join.’

Once we realize agreements with all members will not be possible, there will probably be negative consequences in social and economic areas. Then the people will probably realize that the way out is to become a member of the EU. The longer you wait the more difficult it becomes. Joining now means you have to accept the Euro as your currency, and it is quite difficult for the Swiss to give up the franc, which is quite a solid currency.

Why economic growth has been sluggish recently
Switzerland has had minimal economic growth in recent years. Opinions are mixed as to the reasons. I think it is not so much a consequence of not being an EU member. If you look at Austria, which was always behindus, after they became a member they really went ahead. Our joining the EU would not have brought those advantages. Our problem is clearly that Germany for many years has not done well, and Germany is our largest trading partner. But then we are too regulated. This would have been favorable if we had joined the EU. We would have been pushed to reduce regulation. For Portugal, Ireland and Austria, becoming a member was a great boost.

We have a relatively costly social system. We are not as enterprising as we were 100 years ago. People have it quite good. We still have a very good educational system and science.

Economic drivers 
Innovation and services are the main drivers. Not production. We are too expensive for that. Whether you can make an economy work just with brains, is not proven yet. We are strong in banking and insurance. We are very strong in nanotechnology. But big enterprises, like Novartis, have no more space or manpower available in Switzerland. So they are investing abroad. For example, Novartis has invested in Boston. In Basle, there simply is no physical space.

Relations with the United States
Bilateral relations are good and are about to get even better!

The dormant banking accounts issue has been settled. The money has not been entirely distributed yet, but that is an American issue. We enjoy very good relations with America. Sad to say, 9/11 helped. The United States realized that in Switzerland it had a partner willing to help in fighting the financing of terrorism. We have very close cooperation between our investigative and police forces. And this spring the Swiss government, having organized the relations with the EU (which had dominated international affairs for some 15 years, because of the negative votes on the EU), is once more looking at the rest of the world. The government has identified some areas and countries around the world where there is a desire for stronger relations. The United States is the first among these.

We already have very good relations, but we are exploring a bilateral free trade agreement. The original idea came from Bob Zoellick, the former US trade representative. He approached the EFTA countries, but Norway was not in a position to respond, because of some of its industries, so we proposed a bilateral pact. Both sides set the end of this year as the deadline to decide whether to pursue it, because we can’t have long negotiations, because the TPA (Trade Promotion Authority of the U.S. President) expires in June 2007, and there would need to be time for negotiations and a vote in the U.S. Congress before that.

The United States is the second largest market for Switzerland, after Germany. And Switzerland is one of the largest investors in the US, with about the same investment as Canada. There are about half a million Americans working for Swiss companies in the US. The US is the biggest investor in Switzerland.

A study by the International Institute for Economics indicates that the bilateral merchandise trade flow between the U.S. and Switzerland could increase 20-100 percent if an FTA was concluded. (Trade in services would increase by about 12 percent).  In addition, foreign direct investment in Switzerland would increase by around 40 percent.  Currently, Switzerland and the U.S. have a $36 billion trade relationship and $224 billion investment relationship.  And annual GDP gains to both Switzerland and the United States could be as high as $1.1 billion, or a permanent gain of about 0.5 percent for the Swiss GDP. 

We are also looking for more coordination in the political field, in bilateral areas and international cooperation, especially in UN reform. It would be better if our cooperation was more structured. We are not a member of NATO so we do not have a mechanism for regular consultations with the US, so we are looking into having regular bi-yearly meetings between foreign ministers with a flexible agenda. We have successfully worked together in Sudan, where one of our diplomats (former ambassador in Kenya) has worked for a solution for 12 years. Switzerland has represented the US in Cuba since 1960 and Tehran since 1980.

The key to Swiss success
The Swiss realized that they would have to do something or go under, meaning that a country without any raw materials would have to find ways and means to make the maximum out of the things that they purchased. That meant good education and very skillful labor, and clever people in selling what they produced. And that basically was the Swiss state, from a very closed environment they realized that they had to go out, that they had to learn languages, because nobody was waiting for others to learn our Swiss German. And people traveled. My grandmother visited the United States before she was 20, and that was at the beginning of the 20th Century. Her parents sent her to the US as a kind of education. They came from a small, rural area. The enterprising spirit still is there, but some of it has been lost. We were of course fortunate in the 20th Century to be spared two major wars.

We are building a new embassy residence (for about $10m) which will last for some time (showing our commitment to lasting relations with the US). It was a ‘blind’ competition, but the jury selected the only US-Swiss joint proposal. The design is by Steven Holl of New York and his Swiss partner, Justin Ruessli.

Secrecy laws
Swiss are absolutely at the forefront of working to prevent money-laundering, being very active on the Financial Action Taskforce Against Money Laundering (FATF). Banking ‘know your customer rules’ are now very important. When you hear of searches for stolen funds, we always quickly respond. For example, we recently returned $600m taken by Sani Abacha, former President of Nigeria. We don’t give the money back to the government if it could be misused again, but work with the World Bank. I think we have quite a good record.

Biography of Ambassador Christian Blickenstorfer
Ambassador Christian Blickenstorfer was appointed Ambassador of Switzerland to the United States in 2001. Prior to his transfer to the United States, he served as Head of the Political Directorate of the Federal Department of Foreign Affairs in Bern.

From 1997 to 2000, he was Head of the Political Division II, responsible for relations with Asia, Africa, Oceania and Latin America. From 1993 to 1997, he was Ambassador of Switzerland to the Kingdom of Saudi Arabia, the United Arab Emirates, the Sultanate of Oman and the Republic of Yemen.

From 1989 to 1993, he served as Deputy Chief of Mission and Head of the Political Section at the Embassy of Switzerland in Washington, D.C. From 1983 to 1985, he was Deputy Chief of Mission at the Embassy of Switzerland to the Islamic Republic of Iran in Teheran. He also served in that capacity at the Embassy of Switzerland to the Kingdom of Thailand in Bangkok from 1980 to 1983.

Ambassador Blickenstorfer entered public service in 1974, when he joined the Swiss Foreign Service. His first assignment was in Cairo, Egypt from 1975 to 1976.

Ambassador Blickenstorfer earned his Ph.D. in modern history and international law at the University of Zurich in 1972.

He is married to Mrs. Susanne Blickenstorfer and they have two children.