Status review at midyear 2017

Sluggish negotiations Switzerland/EU and resistance of the cantons against a clearance sale of the public service

by Dr iur Marianne Wüthrich

News on the subject of “negotiations between Switzerland and  the EU”: Obviously they are currently stuck. The reason for this is the tiresome “institutional framework agreement”, which as widely agreed, wouldn’t come through a referendum. Federal Councillor Didier Burkhalter, head of the Federal Department of Foreign Affairs FDFA, is apparently tired of the stony path towards Brussels and will resign at the end of October. The Parliament is now challenged to elect a personality as member of the Federal Council, which does not rigidly focus on Brussels, but first of all advocates Swiss interests. – The Federal Council has not yet betrayed the Swiss voters of another tough nut to crack beyond the Framework Agreement forcing EU law and EU judges on Switzerland. But the cantonal governments are bringing the fact to light that Brussels is showing interest in our high-level public service, which, thanks to direct democracy, is still to some extent in the hands of the cantons and municipalities, i.e. the people.
New facts and critical reflections concerning Swiss foreign Policy:

Framework agreement: Federal Council conceals a hefty chunk

After the Federal Council’s meeting of 28 June 2017, the Federal Council once again stated that the further development of the bilateral approach was only possible “through a clarification of the institutional rules of the functioning of the EU market”, in plain language: By a framework agreement which brings Switzerland under EU legislation and jurisdiction. Once again the Federal Council postponed the “overall assessment of all dossiers” – and without clearly naming the concerned ones – to the beginning of autumn. The usual mysterious insinuations with respect to open questions “concerning the process of resolving disputes and its range of application, as well as to government subsidies [emphasis by the author] and certain aspects of the free movement of people.”1
The facts concerning government subsidies have been brought to the public by the KdK (Conference of Cantonal Governments) only a few days ago. Although this is a crucial question in the Swiss conception of statehood, the Federal Council has not yet found it necessary to inform the public about it. (see below in the article: EU Commission intends to eliminate the  Swiss public service).

Approval upon the framework agreement crumbles and the Head of the EDA chief is stepping down

In order to render the framework treaty possible, the Social Democratic Party (SP), which still aims for an EU membership in its programme, is using a rather harmless name: “Partnership-based relation with the EU Member States”2 – successfully coining a phrase in Orwellian manner! In spite of all the spasmodic efforts, however, support for the framework agreement by the civil parties is dwindling.
Besides the SVP, which has always been opposed, also the FDP (Liberal Democratic Party) shows little enthusiasm: “It’s a question how urgent this agreement really is”, says the president of the FDP Petra Gössi. There is currently no concrete agreement on the table. “Everyone tells something different concerning its content.” and CVP (Christian Democratic Peoples Party) President Gerhard Pfister is not willing to accept that the European Court of Justice (ECJ) is foreseen in the jurisdiction clause to judge in bilateral treaty disputes.”3
Obviously, more and more politicians are taking note of the fact that EU leaders represent their interests rigorously and only for their own benefit, and they would not dream of coming to any accommodation with Switzerland – still the Federal Council can talk as much again. (see box “Whenever Switzerland wants something from the EU, the condition made is submission under EU law”)
No wonder that federal Councillor Didier Burkhalter all of a sudden has the urgent desire to “do something different”, and announces quite in a rush his resignation for the end of October. Burkhalter, who was also a member of the nebs (New European Movement Switzerland) in his time as parliamentarian, which aims for a Swiss membership in the EU, has been really stubborn in advertising the framework agreement, since he took over the EDA in 2012. Albeit he didn’t succeed because the agreement is contrary to the political climate in Switzerland.
Federal President Doris Leuthard is at the ready to push this critical dossier. For the time being she leaves it open, whether she wants to take over the Department of Foreign Affairs from her colleague Burkhalter from 1 November onwards, but indicates that she wants to take the decisive step in her presidential year (i.e. until the end of 2017) to realise the framework agreement with the EU. To this end, Leuthard unashamedly intervenes in Parliament’s rightful powers: “If the parliamentary commission interferes all the time, it weakens our position.” The fact that one cannot so easily get peoples agreement on the European Court of Justice leads Leuthard to the ominous allusion: “There are also clearly better solutions here.”3 In case the Swiss President refers to the so-called EFTA Court, the “little brother” of the ECJ, this latter one is not a bit better.4

Another cohesion billion “of mutual interest”?

Although the Federal Council, at its meeting on 28 June, discussed “the deblocking of all pending dossiers between Switzerland and the EU, which are of mutual interest”, it has specifically commented only on a new contribution to the cohesion fund (1.3 billion Swiss francs, which Switzerland has already spent, and Brussels speaks about another billion!), which is certainly not “of mutual interest”, but the Federal Council apparently wants to put it in the balance during the negotiations.5
But, ladies and gentlemen sitting in the federal council: It is to be paid only on delivery by the EU! How about the renegotiation of the agreement on the Free Movement of Persons, for example? This idea is brought up by CVP president Gerhard Pfister: the cohesion contribution almost offered a chance to get concessions on migration from those EU Member States who would like to benefit from Switzerland’s financial support.6

The European Commission intends to eliminate the Swiss public service: with this the framework agreement is off the table

We almost missed a tiny phrase in the Federal Council’s media release of 28.6.17, namely the open question in the negotiations with the EU “on government subsidies”. Fortunately, the cantonal governments are notifying this and bringing the matter to the point: they want to clarify “the consequences of the European Union’s demands for more monitoring of government subsidies.”7
The point is this: as a condition for concluding an institutional framework agreement, the EU Commission calls on Switzerland to ensure that “the state does not distort competition when it wants to participate in the European internal market. That is why they should prohibit government subsidies, or apply it based on EU law.”8

The corresponding EU law: Treaty on European Union (Official Journal of the European Union 2008/C 115/01)

Section 2 State aid
Article 107
(1) Save as otherwise provided in the Treaties, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the internal market. […]
Article 108
(1) The Commission shall, in cooperation with Member States, keep under constant review all systems of aid existing in those States. It shall propose to the latter any appropriate measures required by the progressive development or by the functioning of the internal market.
(2) If, after giving notice to the parties concerned to submit their comments, the Commission finds that aid granted by a State or through State resources is not compatible with the internal market having regard to Article 107, or that such aid is being misused, it shall decide that the State concerned shall abolish or alter such aid within a period of time to be determined by the Commission.
If the State concerned does not comply with this decision within the prescribed time, the Commission or any other interested State may, in derogation from the provisions of Articles 258 and 259, refer the matter to the Court of Justice of the European Union direct. […]

In the daily Press9, the consequences of these provisions for the Swiss public service are explained, if we citizens would agree to a framework agreement (We are not so stupid and would cut our well entrenched roots!).
The EU Commission could, among other things, prohibit:
–    State guarantees for the cantonal banks (almost all cantonal banks are still owned by the cantons; it protects the savers in the event of the bank’s insolvency)
–    Shares in public utilities supplying power (see box “public service must remain in the hands of the citizen. Example power supply”)
–    Subsidies in agriculture and power production (carefully prepared by the Parliament and confirmed by the sovereign)
–    Contributions of a municipality, for example, to a football stadium (decided by the municipal assembly or in large municipalities at the urn – in plain language: abolition of municipal autonomy)
And what will happen to state-owned companies like SBB (Swiss railway)? With the public schools? With the cantonal hospitals?

Surveillance authority…

The surveillance authority is the EU Commission itself or a so-called “national authority” (controlled by the Commission and therefore hardly acceptable); based on Article 108 (2), each EU member State could call the ECJ against Switzerland.

… and their methods

The EU Commission, for example, has required some Member States that their federal states/municipalities have to break contractual commitments afterwards. No comment!
In the EU, state aid is “only allowed in exceptional cases […], for example for the bank bailout.” (With something like this, things are getting clearer ...)

We can live as well without further bilateral treaties

The public service has been weakened and restricted for years by privatisation or by the drive to effectively economize. If we think about the hefty chunk of monitoring of public service from the EU-side and, as a final consequence, its abolition, the serious question arises whether we would live well without further bilateral agreements with the EU. Switzerland has already completed more than 100 of these, some of which have not successfully passed an endurance test (e.g. Schengen/Dublin). Their predicted negative impact on Switzerland has been surpassed many times over (land transport and Free Movement of Persons agreements). Or to organise them autonomously is clearly less expensive for Switzerland (Erasmus+). Abandoning new contracts coming with many other unknowns, we would get rid of this sword of Damocles of an institutional framework agreement. It does not fit to the federalist and direct democratic State of Switzerland, still having a good public service.
Each individual member of the federal and cantonal authorities is obliged, on the basis of his official oath, to actively protect the freedom and independence of Switzerland and its people. This includes the fact that Switzerland cannot conclude contracts with other States or groups of States that contradict the basic principles of the Swiss Government. It is therefore to be welcomed that the cantons oppose the planned deprivation of public service out of their hands. •

1    Relations between Switzerland and the EU: The Federal Council sets its priorities and agenda. Press release of the Federal Council from 28.6.17
2    SP statement from 15.6.17
3    “Framework agreement with the EU: Doris Leuthard wants to go forward.” Schweiz am Wochenende from11.6.2017; similar to “Didier Burkhalter out on a limb”, “Basler Zeitung” from 15.6.2017
4    cf. “EFTA Court has nothing to do with EFTA.” Current Concerns No 29 from 19.11.2015
5    Relations between Switzerland and the EU: The Federal Council sets its priorities and agenda. Press release of the Federal Council from 28.6.17
6    “CVP on the cohesion-issue.” Ostschweiz am Sonntag from 2.7.2017
7    “Cantons are preparing for EU demands.” Ostschweiz am Sonntag from 2.7.2017
8    “Cantons are preparing for EU demands.” Ostschweiz am Sonntag from 2.7.2017
9    “Cantons are preparing for EU demands.” Ostschweiz am Sonntag from 2.7.2017

“Whenever Switzerland wants something from the EU, the condition made is submission under EU law” (former member of the Council of States Carlo Schmid-Sutter)

“The EU strategy is clear and logical: Whenever Switzerland wants something from the EU, the condition made is submission under EU law. […] The approval to the Day-Ahead and to the Intraday market coupling [participation at the EU electricity market exchange, author’s note] is conditional to concluding an electricity agreement, but this is subject to, as we all know, concluding an institutional agreement on the automatic adoption of the acquis futur and the review of the Swiss compliance by EU bodies. […] But if the EU wants something from Switzerland, conversely, however, it does not hesitate, even without underlying institutional agreement, to urge subordinate instances to do so, to push us into the transposition of EU legislation.”

Federal Electricity Commission ElCom. Current problems from the point of view of the regulatory authority. Presentation by Carlo Schmid-Sutter in the Swiss Congress on Electricity, 13 Jan 2017, p. 6/7.

***
mw. This story tells someone who needs to know: Carlo Schmid-Sutter (CVP), veteran of Swiss policy, member of the Council of States and Mayor in the Canton of Appenzell Innerrhoden for decades; today, he is president of the Federal Electricity Commission.

Public service must remain in the hands of the citizen

Example energy supply

mw. The electricity agreement with the EU is what the Swiss energy industry wishes in the first place. So Alpiq Management Member Markus Brokhof told the CVP parliamentarians who visited the energy group at their parliamentary group excursion: “I as responsible for trading need the bilateral energy agreement with the EU.”9 If the Swiss people need this agreement is at least controversial. Why does Alpiq necessarily want an electricity agreement with the EU? Alpiq Holding AG emerged from the Swiss electricity companies Atel Holding AG (Aare-Tessin AG for electricity) and EOS S.A. (Energy Ouest Suisse), and their shares are still to almost three-quarters in the hands of a number of cantons and communes. But the energy group no longer delivers its power at fixed prices to Swiss households, but specializes in the wholesale and participation in energy companies in Switzerland and in many European countries. Therefore, Alpiq is already represented on all major electricity exchanges and trading platforms. The crux for such a corporation is that the Swiss electricity industry is not fully liberalised. With the electricity agreement Switzerland/EU, this could be redirected in the way.
The example Alpiq shows how far the public service has already slipped out of the Swiss population’s hands. A secure energy supply is part of the public interest and must therefore remain in the hands of the State, the citizen. The strongest pillar of the Swiss electricity market is the hydro-power, of which we must take great care. Because some of our energy companies make business in the EU electricity market exchanges and look first to their return and only later care for the Swiss basic supply, the Swiss electricity market is in difficulties already today.
The electricity agreement shows what applies also to other planned bilateral agreements with the EU: To do without is certainly most reasonable in today’s situation and is in best accordance with the direct democratic participation of the Swiss population.

“It is a strange time when looking at these ‘kiss and hug’ diplomacy of high level EU-Representatives and seeing how progress is claimed to be reached in the mutual relations of this country. At our level there is nothing felt like thaw, on the contrary, it is an ice age.” (Carlo Schmid-Sutter)

(Translation Current Concerns)