Bolstering the Swiss Image

In terms of foreign relations, Switzerland already depends heavily on the outside world to support its prosperous economy. Swiss membership in such supra national economic alliances as the Organisation for Economic Co-operation and Development, the World Bank, the International Monetary Fund, and the World Trade Organization belies the country’s image of isolationism. Even if Switzerland seeks to remain apart from foreign political influences, its economy nonetheless welcomes the wealth that foreign citizens bring to the country.

As one of the world’s wealthiest countries—its standard of living is second only to that of Luxembourg—Switzerland is estimated to hold approximately US$1 trillion in offshore wealth, accounting for at least one-third of the world’s total. Despite the country’s longstanding reputation as a banking giant, many Swiss bankers nevertheless worried that a sustained policy of isolationism could hurt investment. In recent years, Swiss banking practices have come under heavy fire from international organizations and Western nations; the United States and the members of the European Union have attempted to crack down on tax evaders who stash their money in notoriously private Swiss institutions. Politician Jean Ziegler described Switzerland’s economic role as “the fence to the world,” acting to facilitate nefarious activities by laundering money—notably gains from drug sales—and bolstering profits through intervention in weak governments.

International pressure against banking secrecy, weak financial regulation, and low-tax financial centers has increased since the late 1990s. Though Switzerland has not admitted any wrongdoing, state regulators have been significantly more diligent in their exposure of shortcomings and have in a number of instances reprimanded and fined banks. In spite of Swiss efforts to keep pace with the demands of the modern world, the cachet of the Swiss bank account may not be enough to sustain the levels of prosperity that the country has experienced. Bankers, among other Swiss business leaders, encouraged the Swiss move to join the United Nations in the hopes of thawing the Swiss image and promoting investment. Prominent struggles over World War II-era assets have only heightened fears that Swiss banking secrecy is not sustainable. By joining the United Nations, Switzerland hopes to dispel the image of its financial institutions as shadowy money-laundering facilitators by demonstrating to the world that it values integration and conformity above separation and isolation. While isolationism advocate Blocher spread fears that UN membership would hurt the national economy “because foreign confidence in Switzerland will fall because one of the main Swiss pillars—its independence—is at least marred,” the consensus among analysts remains that an increase in perceived Swiss economic integrity can only help the country.

The European Union and NATO

The majority of Swiss citizens, however, are more concerned about what UN membership means for Switzerland; specifically, speculation centers around whether joining the United Nations will lead Switzerland to join the European Union. In past referenda, the voting public has soundly turned down proposals to join a European free trade agreement, the European Union, and NATO. However, with the circulation of the euro starting in 2002 and the expansion of both the European Union and NATO to nations in Eastern Europe, Switzerland finds itself the lone holdout against increasingly comprehensive institutions. Switzerland already complies with most EU regulations to facilitate trade across Swiss borders, limiting the differences with its unified neighbors. Nonetheless, Swiss resistance to joining the European Union is estimated to be considerably stronger than was the movement against approving UN membership, in large part because the controls that the European Union demands are much more rigorous and limiting than the criteria for UN membership. While the Swiss government lists EU membership as a long-term goal of the administration, officials still hedge against a direct correlation between joining the United Nations and joining the European Union. Although Swiss President Kaspar Villiger is in favor of eventual EU accession for Switzerland, he dismissed discussion of a possible link between the two events as “like saying that Madagascar joining the United Nations would see the country preparing for joining the European Union. The United Nations has nothing to do with the European Union.” Joining the European Union would hinder current Swiss banking practices that keep the country solvent with high levels of wealth. Perhaps in the long run Switzerland could prove more amenable to suggestions of EU accession. In the short term, however, it is likely that Switzerland will retain its current stance toward the European Union.

Switzerland also seems fixed in its current position on NATO. Following the end of the Cold War and the demise of the Soviet Union, Switzerland joined NATO in a partnership agreement that persists today. Within the past decade, however, the Swiss government has shown no desire to become a member of military alliances such as NATO. This is not because Switzerland’s policy is inherently pacifist; to the contrary, it boasts the largest standing army in the world relative to its size, supports universal military service, and earmarks almost one-third of its national budget for military spending. Rather, considerations of autonomy have bolstered the Swiss decision; the country considers itself adequately protected as it is. Given the small margin by which UN membership was approved, more contentious moves such as joining regional security alliances or continental organizations are likely to fail for at least the time being.

Swiss Hit or Miss

Through the centuries, Switzerland has carefully guarded its neutrality and its autonomy from other nations and organizations. With an international shift toward globalization and increasing openness in many arenas, Switzerland has finally shaken off its reservations and sought membership in the United Nations. This move is seen largely as a psychological step, with little immediate bearing on Swiss policy or on the country’s place in the world. However, the decision reflects a general trend in Switzerland toward greater openness. With Switzerland’s formal submission of its application for membership to the UN General Assembly in September 2002, it will cross the threshold to a more global outlook. UN Secretary-General Kofi Annan called Switzerland “a vivid example of what the United Nations stands for—a tolerant, peaceful and multicultural society” as he welcomed it into the fold. Swiss Foreign Minister Joseph Deiss commented that “if there is a winner in this election, then it is our country.” With prominent politicians on both sides acclaiming this milestone in Swiss foreign policy, UN membership, even if it does not cause sweeping changes in Switzerland, may vastly alter global perceptions of this European country.