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Switzerland Forges Ahead on All Fronts
Switzerland’s admission to the United Nations and ongoing negotiations with the European Union have opened up a brand-new chapter in the nation’s history. H.E. François Nordmann, the Ambassador of Switzerland to France, describes the principal challenges the Helvetic Confederation must overcome as it steps into the international arena and strives to meet its new multilateral commitments.
The Diplomatic Letter: Mr. Ambassador, Switzerland adopted a new federal constitution on 18 April 1999. Could you outline the goals of this deep-reaching reform for our readers, and tell them whether it has altered the rules of direct democracy, a founding principle of the Swiss political system? As the federal elections scheduled for 19 October 2003 draw nearer, could you summarize the key issues spurring the national debate in your country?
H.E. François Nordmann: The new federal constitution of 18 April 1999 is the result of a good deal of hard work to tidy up our constitutional pact. With the successive ballot measures tied to the Swiss system of semi-direct democracy, the 1874 constitution had already undergone repeated modifications that eventually undermined its systematics and clarity. What’s more, it did not address an entire catalogue of fundamental rights that were spread throughout a variety of texts and judicial precedents. A full revision, mainly of a formal nature, was approved and undertaken by the Swiss people and the Swiss cantons to rectify these shortcomings.
With regard to next October’s federal elections, it is very difficult to make any predictions at this time. The campaign will no doubt center around concerns over economic growth, unemployment, and the future of the social security system. Opening up the country to Europe will be another key stake in the elections.
T.D.L.: The Swiss economy appears to be going through a slump. What are Swiss authorities doing to jump start the economy, most notably in terms of increasing production capacity? Does the government have specific ideas on how to open up the domestic market to competition? Does the National Bank have enough room to maneuver to limit the impact of the rise of the Swiss franc?
H.E.F.N.: Promoting greater competition on the domestic market is absolutely essential in order to spur growth and increase production capacity. To that end, our existing legal framework has been reinforced by a new law that specifically targets vertical arrangements between companies. This legislative measure should make basic services more affordable for businesses that export. It should also make prices more competitive for consumers, and increase their purchasing power in kind. This “extra” available income could in turn stimulate consumption, one of the driving forces behind growth.
As for the Swiss National Bank’s maneuvering room to limit the impact of the rising Swiss franc, we should point out that when interest rates are as low as they are right now, directly intervening in foreign exchange markets is still the best answer. The SNB has this tool at its disposal, and wields it with total autonomy.
With regard to opening up the Swiss economy to the rest of the world, in recent years this has led to the signing and implementation of seven sectorial agreements reached with the European Union. These agreements, which mainly govern the economic arena, are gradually making their impact felt. The free circulation of people, in particular, has led to greater freedom in the provision of services. These agreements should facilitate exchanges and improve our access to the common market, spurring even more dynamic growth.
T.D.L.: While Switzerland’s “social calm” ensures it a certain amount of stability, your country is still facing an array of problems tied to the current economic situation as well as structural weaknesses. In that light, what is the government doing to reign in the rising unemployment rate? With the Swiss population growing steadily older, what is Swiss government doing to ensure the pension scheme remains on an even keel in the future?
H.E.F.N.: Switzerland has a flexible labor market that is relatively resistant to structural distortions. While the current unemployment rate is relatively high for Switzerland, hovering around 4%, the experts agree that most of this is cyclical unemployment. According to the OECD, only 1.75% of Switzerland’s unemployment rate is structural in nature. We are countering the present circumstances by bolstering the labor market with reforms enacted with the aim of creating greater flexibility.
With regard to the challenge the aging population raises for our pension scheme, Switzerland will no doubt be forced to launch the same kind of reforms shaping up elsewhere across Europe. The problem is currently under study, but the process hasn’t moved forward as far as it has here in France. Demographic realities will eventually impose solutions similar to those other countries have had to adopt, but only once the Swiss people are convinced of the need to enact reforms and only after a consultation process and referendum.
T.D.L.: Swiss voters recently rejected a more restrictive asylum system. How can Switzerland uphold its humanitarian traditions and still revamp its immigration policy, which continues to attract a growing number of refugees to your country?
H.E.F.N.: When speaking of migratory flows, it is important to make a clear distinction between immigration policy and asylum policy. As concerns our asylum policy, illustrated by the ballot measure to which you are referring, Switzerland intends to remain true to its humanitarian tradition, granting asylum and protection to people fleeing persecution in accordance with the Geneva Convention. Having said that, closer cooperation with the European Union on this delicate issue is becoming all the more indispensable. This is why my country would like to be part of the system set up within the European Union, so that we can work together to overcome a problem that affects all our societies.
As far as immigration is concerned, Parliament is currently considering a new federal bill pertaining to foreigners. An agreement between Switzerland and the E.U. on the free circulation of people recently came into force, which means that this new law will theoretically apply solely to non-European nationals. The objective is to limit the growth of our foreign population (currently over 20% of the country’s population), while making it easier for newcomers to integrate Swiss society. The Swiss people will no doubt be asked to voice their opinion on this project sometime in the not too distant future.
T.D.L.: The debate over the role of the Swiss Army has been rekindled in recent years. Given Switzerland’s strong attachment to the principle of neutrality, how is your country going to adapt its diplomatic principles and priorities to the world’s new geostrategic climate? Could you summarize the motivations and goals of the “Army XXI” reform program? Will Switzerland gradually take on a new role in the European security and defense system, and possibly even join NATO one day?
H.E.F.N.: The new geostrategic climate is dominated by transnational risks and threats that are both complex and unpredictable. The line between interior and exterior security – like the line between nonmilitary violence and war – is gradually fading.
The Federal Council took the new geopolitical order into account when it adopted a security policy (codified in its Report to the Federal Chambers on security policy of 7 June 1999) focused around the main idea that the security of the country and of its citizens is guaranteed primarily by cooperation. Not only cooperation on the domestic front between the various actors and instruments that generate security (army, police, firefighters, health services, etc.), but also closer cooperation at the international level to overcome risks (terrorism, organized crime, proliferation of weapons of mass destruction) a single state (especially a small state) can no longer surmount on its own.
The deep-reaching reform of the army approved by the Swiss people on 18 May 2003, under the name Army XXI, is a logical extension of this. The Army XXI reform respects the principle of neutrality, while taking account of the restraints imposed by the current state of federal finances as well as the drop in births (which has diminished the demographic resources available to the army). The goal is to make our military instrument more flexible and more reactive, enabling it to work hand-in-hand with our other national instruments of security and, when necessary, with foreign partners.
The army thus becomes the major tool at the disposal of the government and the Swiss people to meet the new security challenges Switzerland could find itself confronting. This new concept does not mean we are abandoning our neutrality, or gearing up to join NATO. Army XXI allows us to scale up our cooperation ability at the international level, giving the Federal Council freer reign as it determines its policy. It will enable the government to better defend our interests by allowing it to chose between several options if a crisis does arise, or in times of war. The options range from neutrality and a completely autonomous defense system, to membership in an existing or temporary alliance. We should note that Switzerland is actively involved in the Partnership for Peace as well as the Euro-Atlantic Council, and that it is also helping out in Bosnia.
T.D.L.: Switzerland has long been a defender of causes championed by the U.N., which keeps several key agencies headquartered in Geneva. The Helvetic Confederation joined the United Nations on 10 September 2002. What does this historic milestone represent for your country? What would Switzerland like to accomplish through U.N. membership? How has the Iraq crisis affected the organization's functioning? What is your take on the controversy over the election of Libya to chair the Human Rights Commission? Switzerland has been elected to serve on the U.N. Narcotics Commission starting in 2004. What type of policy does it plan to champion there?
H.E.F.N.: Switzerland joined the U.N. after a hard-fought battle that included a double vote by Swiss voters and the Swiss cantons on 3 March 2002, which laid the democratic foundations of the policy the Federal Council has undertaken to champion within the organization.
There is now just one single superpower on the international stage, which has seen the emergence of new non-State players. The U.N. is still the only place where all the international actors can exchange views and voice their myriad concerns, working together to lay out policies that benefit everyone. Switzerland’s key objectives include working actively to promote peace and to enhance the stability of the international system. This will entail, among other things, taking preventative measures and helping to achieve lasting reconciliation in strife-ridden societies once the conflicts have ended. Switzerland lays great importance on promoting human rights and ensuring the safety of human beings. It wants to see greater coherence in the area of international cooperation, in order to spur lasting development. It also plans to pursue an active environmental protection policy. As you will note, Switzerland is already a member of the U.N.’s specialized agencies. Working within the U.N., it wants to help in the fight against AIDS and against its consequences in the social and economic arenas. In order to ensure that the international system functions more effectively, Switzerland believes it is essential to continue and to expand U.N. reforms. We must also extend international law and ensure its effective implementation, with special emphasis on the successful operation of the International Criminal Court. From this perspective, the Iraq affair has shown that states guided by democratic values, with respect for the law, will not be able to forever circumvent the laws enacted to limit the use of force in international relations. The United Nations is still the only vehicle with true international legitimacy.
The Human Rights Commission helps ensure the U.N. maintains this legitimacy. No state that does not meet its international commitments in an exemplary manner, and is not working to enforce and expand international law, should sit on the commission. Switzerland has voiced its desire to be admitted to the commission in 2007. As a member of the U.N. Commission on Narcotic Drugs (CND), Switzerland will work to show that its policy – which combines prevention, therapy, reduced risks, and less repression – meets the demands of international cooperation. Switzerland’s experience with this policy has put it in a position to play a notable and innovative role in helping the international community come up with a well-balanced and multidisciplinary approach to this problem.
T.D.L.: As a key backer of developing countries and one of the world’s leading financial markets, Switzerland has certainly earned a say in the debate over global governance. How do you explain your country’s absence from the G-20, created at the 1999 Cologne Summit to widen the dialogue on economic and financial policy? Will the creation of a strict mechanism to reign in debt weaken Switzerland’s commitment to helping countries in the South?
H.E.F.N.: Switzerland has long been a supporter of strengthening international law, including in the economic and financial arenas. The G-20, along with the G-8 and the G-10 (of which Switzerland is a member), are forums that afford interesting opportunities for exchanging ideas and discussing problems. That said, Switzerland has always preferred to keep these meetings informal, with the fundamental work being carried out in specialized institutions, most notably in the IMF and the World Bank. Moreover, Switzerland is not absent from the G-20 by its own choosing.
Our framework budget for development cooperation must be passed by Parliament. As in many industrialized countries, it is defined as a percentage of GDP. Parliament is in charge of all arbitration on the policy to reign in debt. It is thus wrong to presume that a budget crisis will necessarily hit development aid any harder than other sectors.
T.D.L.: Bank secrecy plays an important role in Switzerland’s financial prosperity. As the fight against international terrorism is stepped up, how can your country cooperate more effectively at the judicial level to combat the networks that finance terrorism and transnational crime? Is the government making Swiss financial institutions more mindful of the need to fight money laundering?
H.E.F.N.: Switzerland does not abide terrorists using its financial system to commit criminal acts. As required by current legislation on judicial cooperation, as well as the international treaties to which is is party, Switzerland cooperates fully with all international legal proceedings. To put it plainly: Swiss banking secrecy does not protect terrorists or people who bankroll criminal organizations, or, for that matter, any other type of criminal activity.
Swiss banks opened the way, back in 1977, when they put forward the “Agreement on Due Diligence" in order to fight money laundering. This system has been repeatedly reinforced over the years, most notably with the 1998 law which requires all financial intermediaries, and not only the banking sector, to report all suspicious transactions. This ambitious law was put into force only after coming up against a number of initial difficulties, which have since been largely overcome. The Federal Ministry is now in charge of prosecuting these crimes.
T.D.L.: Switzerland has adopted an agreement on the taxation of savings income, as part of the drive to comply with its sectorial agreements with the European Union. Has this brought Switzerland even closer to the Union? Your country has all the necessary assets to successfully integrate the European Economic Area. Could you describe the obstacles still preventing it from becoming a full-fledged member of the Union? The Swiss people have steadfastly opposed E.U. membership in the past. Is this still the case today?
H.E.F.N.: In 1992, Swiss voters and the Swiss cantons refused to join the European Economic Area, created by the European Union and the members of the European Free Trade Association, of which Switzerland is a member. Switzerland subsequently signed, in 1998, seven bilateral sectorial agreements with the EU, which came into force on 1 June 2002. They were designed to resolve problems such as access to the common market and the transport of goods across the Alps, to the benefit of both parties, and to find ways of ensuring the free circulation of people.
A second round of talks is currently underway, following the same model. They focus primarily on the taxation of savings income, fraud, participation in the EU’s “Media” program, processed agricultural products, and the enforcement of asylum and immigration policies (Schengen/Dublin). Switzerland has put forward very generous offers in these areas, which take full account of the Union’s interests while safeguarding the unique character of the Swiss financial market. My country, for its part, would like to participate fully in European cooperation efforts on police, judicial and asylum matters. The Swiss government deems it important to find a well-balanced solution for all of the ongoing negotiations, aiming of course to guarantee the best interests of both parties.
Only after all these agreements have come into effect, and once the impact of European Union enlargement and of the resulting constitutional changes has been taken into account, will Switzerland be ready to consider the possibility of joining the EU. The Federal Council would like to open up this debate during the next legislative session, starting in 2004-2005. Switzerland shares the values of the European Union, and will one day join ranks with its partners in the Union.
T.D.L.: This year France and Switzerland commemorated the bicentennial of the Mediation Act, underscoring once again their excellent and long-standing relations. In what areas have French-Swiss ties traditionally been the strongest, and in what areas could they be bolstered? Does decentralized cooperation play an important role in bilateral exchanges?
H.E.F.N.: The commemoration of the bicentennial of the Mediation Act was a highly symbolic moment in relations between our two countries. At the invitation of the President of the French Senate, the President of the Confederation honored the event with his presence. The ceremony underscored not only the long-standing ties that unite us, but also their great diversity. The close cooperation between our countries was witnessed once again at the recent G-8 Summit in Evian. It is important for our countries to keep moving forward in this same direction, to ensure that this exemplary partnership endures on every front, be it political, economic or cultural.
Our geographic proximity, along with Switzerland’s federal structure, have led to vigorous decentralized cooperation between our countries. Regions like the lemanic Arc and "Regio basilensis" have forged extremely strong and dynamic ties that we can only applaud.
T.D.L.: As a key member of the French-speaking community, what is Switzerland doing to help bolster cultural exchanges and human rights within the Francophonie? Did the May 13th visit to Bern by the Secretary General of the International Organization of the Francophonie, H.E. Abdou Diouf, make an impact on your country?
H.E.F.N.: Like the other states and governments that belong to the International Organization of the Francophonie (IOF), Switzerland is working very hard right now to defend cultural diversity. The goal is to promote the creation of a normative instrument to ensure cultural diversity, so that cultural goods and services are not considered mere commercial goods subject to the law of the market, with no consideration for their unique character. Switzerland supports France’s efforts in this area at UNESCO, which will debate the issue this fall.
With regard to human rights, Switzerland applauds the commitments made by the IOF, and hopes to see the Bamako Declaration implemented in short order. It is particularly concerned about the exercise of democratic practices, rights, and freedoms, and the creation of operational instruments enabling the Secretary General to carry through his political and diplomatic agendas. Thanks to the development and reinforcement of its networks, the political Francophonie possesses unique means for helping member countries ensure that their political mechanisms continue to function properly. Switzerland is striving to determine how these actions should be carried out, along with the other member countries.
During the May 13th visit to Switzerland by the Secretary General of the Francophonie, Mr. Abdou Diouf, we reconfirmed that the key aspects of Swiss foreign policy are in perfect harmony with IOF objectives. Both share a strong desire to promote democracy and human rights, most notably in Africa, and to safeguard our cultural and linguistic identity. We also agree on the great importance of the World Summit on the Information Society, which will be held in Geneva in December 2003.
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