Swiss Referendum To Cause Turmoil

A note on the Swiss Referendum Result

1) Those who live by referendums die by them. The Swiss result is a major rupture in Switzerland’s post-1945 reputation as Europe’s most open market. It is a triumph for domestic populist politics over the rationality of managing Switzerland’s role as a small country punching well above its weight in global economic terms by promoting liberal open market economics and employment policies
2) Martin Schultz, the EU Parliament President, was right to call for a calm head and not to rush to judgement. The Swiss 7 strong Federal Cabinet should also pause, take breath, enjoy Swiss hopefuls in Sochi and wait for the next session of Switzerland’s part-time parliament to debate what happens next.
3) The Swiss voted for a return to the status quo ante. When I moved to Geneva to work there in 1979 there were very strict limits on foreign workers. Many were seasonal, only allowed in for nine months of the year before returning, much richer, to southern Italy, Yugoslavia, Portugal and Spain. Nevertheless, Switzerland had and has a much higher percentage of foreign born inhabitants or citizens – upto 15 per cent of the population – than other European countries.
4) The referendum vote has been depicted as just an anti-EU measure. In fact, it applies to all immigrants. Switzerland took in so many asylum seekers from Kosovo during the decade of Serb genocidal atrocities in the 1990s that Albanian is the country’s fourth language. The low pay work – cleaning, hotels, cafés, domestic servants, all-night service stations, sandwich making, construction – once done by southern Europeans is now undertaken by workers from strife torn Muslim nations, Africa, and ex-Soviet republics. They are more visible, notably in Geneva which is Europe’s most multicultural, multi-hued city. (Predictably the Yes vote was higher in cantons with fewer immigrants. Xenophobic fear whipped up by the SVP (Swiss People’s Party, the Blocher-led rightwingers) is similar to UKIP’s appeal in the UK, the FN’s appeal in France and the Wilders operation in the Netherlands. Mainstream parties have been helpless in finding answers to the mass people movement of neo-liberal globalization.)
5) A particular problem in Switzerland was the number of Germans moving into the liberal professions or studying in Swiss universities. Medical schools in particular have been swamped with German and Austrian students unable to find a place at home. The reintroduction of a numerus clausus politics should come as no surprise. It is what David Cameron is seeking to do when he says he wants to limit total immigration into the UK to 100,000. Britain’s Interior Minister, Teresa May, was on the BBC today (9 Feb) boasting she had closed 70 English language schools in order to discourage young foreigners from coming to the Britain.
6) The big difference is that the Swiss referendum impacts on EU citizens. They may get work permits but will not be allowed to bring their families – a measure almost certainly contrary to modern interpretation of the European Convention on Human Rights. This may lead to Switzerland having to quit the Council of Europe if it defies the European Court of Human Rights on the issue of families living together.
7) The referendum follows on the 2009 ban on minarets and the failed referendum seeking to create a limit on top salaries with a 12-1 ratio between top and bottom salaries. Unfortunately, the main campaign against Sunday’s referendum was spearheaded by big business and what Swiss MP and business executive, Alec Vongraffenried, calls Economiesuisse. The bankers and bosses are as popular in Switzerland as they are elsewhere. They have the money but have no voice nor political skills to tackle xenophobic and anti-Brussels populism.
8) What the referendum does is put into question the entire suite of 1999 bi-lateral agreements between Berne and Brussels. These were drafted in response to the Swiss referendum No in 1992 to joining the European Economic Area (where Norway is located). They include the gradually introduced free movement of EU citizens. In fact the agreements have benefitted the Swiss who could easily and legally move into neighbouring France, Germany and Italy and buy property and live there which was previously forbidden. After the Single European Act (1985) and Maastricht (1992) many Swiss suddenly found they had EU parents or grandparents to obtain EU passports as the red passport of Switzerland, once the most precious in the world, lost its value and the burgundy coloured EU one became more useful.
9) At the UK Foreign Office I helped change UK airport entry laws to allow Swiss citizens to enter with EEA and EU nationals as previously they had to queue up with Nigerians, Venezuelans, Bangladeshis and American citizens. Europe bent over backwards to be helpful to Switzerland. The pressure on banking secrecy came more from Washington than Brussels. With Luxembourg as Europe’s private on-shore banking secrecy centre as well as the City’s role in shielding oligarch’s money it was hard for Brussels to take action on banking secrecy though pressure was exerted.
10) Far more important were rules on Swiss banks and traders to comply with EU dictated regulations. Last year (February 2013) the Swiss government produced a major report on commodity trading which now generates upto 10 per cent of Swiss GDP with giant trading centres based in Zug and on the Lake Geneva shoreline. The report highlighted that Singapore, Dubai and other centres were making a major pitch to get commodity traders to operate away from Europe. Switzerland would have to make special efforts to attract and keep the best in the business. Many of these are foreign specialist employees may now fall foul of the referendum result.
11) Switzerland has also made huge efforts to promote itself as the ideal location for foreign companies to set up business. Easyjet’s European network, to take one example, is based at its Contrin hub in Geneva. If these firms cannot hire non-Swiss executives and specialists or can only do so on the basis they cannot live with their families, Switzerland’s attractiveness to foreign firms and investors will plummet. This is a golden opportunity for other EU capitals – London, Frankfurt, Amsterdam – promote themselves as foreign friendly and open for business. Paris should consider recasting its populist high-tax measures on big earners if it wants to win any foreign firms looking elsewhere to locate in Europe as Switzerland rejects non-Swiss employees.
12) But that will require a politics of standing up to populism. Already England’s most popular politician, UKIPs’ Nigel Farage as well as the Dutch Geert Wilders have hailed the Swiss result and urged similar plebiscites to ban European citizens from entry except on a restricted basis. In Britain there is discussion amongst some political writers about whether we are entering a ‘post-liberal’ era. Even the UK opposition Labour Party now wrings its hands and apologises for allowing Polish citizens to work in Britain. The pandering to the anti-EU and anti-foreigner prejudices goes well beyond the parties of the populist right.
13) According to the terms of the Swiss referendum, Berne has three years to negotiate a new agreement with Brussels. There are no specific figures set out. Does each EU member state get a quota? Or will Switzerland apply its new laws mainly to extra-EU citizens?
14) The Swiss have free access to the EU single market but as part of a package that includes free movement of people. We will have to wait for the arrival of a new Brussels team – a new Commission, a new Commission and Council President and a new Foreign Affairs chief as well as a newly elected European Parliament. This new EU leadership will not be in place until the autumn at the earliest so there is a pause for Berne and for national capitals as well as Brussels to reflect on exactly how to interpret and implement the referendum result.
15) There are already calls in France, for example, to bring in visa requirements for Swiss citizens. Populism can work in both directions. It is hard to envisage the EU denying free movement for its citizens while maintaining free movement for Swiss exports, especially of services, or pro rata allowing only so many Swiss citizens to live and work in EU member states.
16) Current tricky negotiations on banking rules (e.g. derivative trading, or capital requirements, or tax reporting) will get much harder with no incentive for Brussels to be helpful given the direct insult, if not assault on European citizens agreed on Sunday.
17) The Swiss referendum is part of the wider crisis of Europe and reflects the lack of leadership and drive and vision in the present EU leadership, both Commission and Parliament, as well as the pettiness of national leaders so visible on EU matters in recent years.
18) The Swiss have always been independent and refused to bow before orders coming from outside their borders. In the 1936 Winter Olympics in Bavaria, the British athletes all threw up their hand in the Heil Hitler salute as they marched past the Fuerhrer in the opening ceremony. The Swiss kept their eyes to the front and their hands to their side refusing to kow-tow to Hitler. The referendum result is now Switzerland seeking to dictate to the rest of democratic Europe. It is hard to see an easy solution just as it is hard to see how Europe finds solutions and leadership to the wider crisis of confidence and identity it is faced with.

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