Straighten up EU-Switzerland relations

“Switzerland does not need a framework agreement with the European Union”.

by Felix W. Zulauf*

The EU has slapped Switzerland in the face by recognising the rules and regulations of the Swiss stock exchange temporarily for only one year. Primarily this is the case due to the wrong behaviour of the Swiss authorities over the past 25 years.

“Switzerland does not want any partition, because it has one of the most open economies and depends on foreign trade. Many proponents of closer relations with the EU have drawn horror scenarios that market access would no longer be possible without a framework agreement.”

In spring 1992, shortly before the EEA vote, the Federal Council submitted Switzerland’s application for membership to the EU. It thereby gave the EU hope that Switzerland would join it in the medium term.
With the exception of the SVP, all parties in the Federal Council had Switzerland’s accession to the EU on their programme. Meanwhile, the FDP and CVP have removed it because the people do not want it, but there is still a large number of hidden supporters in these parties.
All Swiss foreign ministers since 1992 (Felber, Cotti, Deiss, Calmy-Rey, Burk-halter) wanted to join the EU and held a staff of senior administrative officials who also wanted to do so.
Accordingly, Switzerland has continuously stimulated the corresponding hopes of the EU, even when the majority of the people had long refused to do so. All bilateral agreements were concluded from this perspective.
The Swiss negotiators and responsible Federal Councillors constantly took steps that threw sand in the eyes of the Swiss people in order to prepare the way to joining the EU and to block the way back.

“Berne will never be able to negotiate good contracts with the EU if its own representatives prefer to sit on the other side of the table.”

Brussels increases pressure

With the introduction of the euro, the EU has abandoned its original development goals after the Second World War, namely cooperation between sovereign states.
The single currency for economies with very diverse structures causes growing economic imbalances; they must be balanced through redistribution, thereby promoting centralism. The EU elite and also those in various capitals have the goal of the United States of Europe in mind.
The EU is very protectionist towards the outside world. It is understandable that the little white spot in the middle of Europe is a thorn in its side. As the vast majority of the Swiss population is now opposed to accession, anger and disappointment are spreading in the EU. Therefore, the EU is increasing the pressure on Switzerland to adapt and integrate.
Switzerland buys more from the EU in trade than vice versa, however, the EU is by far Switzerland’s most important trading partner (which is not the case conversely), hence some local export companies are afraid of possible discrimination.

“Bonuses for me” instead of bonum commune

Large formerly swiss-held corporations are today mostly in foreign hands and usually managed by foreign board members and managers. These do not really treasure the values of the direct democratic political order, the values, the history and the culture of the country.
They simply want to make as much money as possible for their company within the holding period of top managers (four to seven years) in order to receive the highest possible bonuses. They do not care much about the rest. Today, these managers have a decisive influence on economiesuisse’s formation of opinion. On economic issues, economiesuisse is an important opinion maker for the centre parties.
Switzerland does not want any partition, because it has one of the most open economies and depends on foreign trade. Many proponents of closer relations with the EU have drawn horror scenarios that market access would no longer be possible without a framework agreement.
But neither Chinese nor US-Americans automatically adopt EU laws. They still are able to trade extensively with the EU, thanks to the World Trade Organisation (WTO), whose members include Switzerland as well.

“In Switzerland’s political order, the people are the supreme authority; Switzerland is the only country where the people can correct the government and its decisions. Politically, the member states of the EU and the EU itself are organised completely different.”

Direct democracy is incompatible with the EU

In Switzerland’s political order, the people are the supreme authority; Switzerland is the only country where the people can correct the government and its decisions. Politically, the member states of the EU and the EU itself are organised completely different.
The government is elected every few years. In the meantime, the citizen has nothing to say. These two systems are not compatible. Accession to the EU or just an agreement with automatic legislative adjustment to EU law would turn Switzerland’s political order upside down and dissolve direct democracy.
People in Switzerland are better off economically and in terms of freedom than those people in the EU states. Not because the Swiss are better people, but because of the better system that creates more prosperity and freedom for citizens.
Federalism and direct democracy have disadvantages, but all in all, the advantages of subsidiarity are far outweighing. So, whoever dismantles the Swiss system also dismantles the high level of prosperity.

Errors in reasoning of the political elites

In high politics in Switzerland another serious mistake is being made, because of the linear thinking. The EU will have to overcome many hurdles on its way to centralism and probably even will fail, because the opinions of the individual states widely differ in some cases on issues such as centralism/federalism, monetary policy, social, fiscal or banking union, refugees and even defence.
The resulting divides become larger and centrifugal forces increase. In addition, the gap between these centralists and their own peoples is widening.
The narrow-mindedness of the EU technocrats has already provoked Great Britain’s withdrawal because, dogmatically, they have not allowed the British to set certain limits on the free movement of persons.
Hence the EU lost the second largest contributor and an economic output that is at least the same as that of the 20 smallest member states figured up (out of a total of 27). Also, with the United Kingdom, the nation is leaving that emphasised market-based and liberal principles the most of all EU states. If the EU now wants to take on Serbia, Macedonia, Montenegro, Kosovo, Albania and Bosnia-Herzegovina, it will weaken further. First, these are all poor nations, which will be big net recipients of funds, and secondly, most of them belong to a different cultural area. Merely the discussion on their admission will lead to bigger internal conflicts within the EU.

As a sovereign country – often linked to its neighbors – Switzerland has managed to preserve her independence. (picture mt, Rhine Falls/SH)

Cassis must provide remedy

Federal Councillor Ignazio Cassis should first of all replace all administrative officials willing to join the EU in the Ministry of Foreign Affairs with employees who regard the preservation of Switzerland’s independence as their primary goal. Berne will never be able to negotiate good contracts with the EU if its own representatives prefer to sit on the other side of the table. There is the rub. Over the years the wrong behaviour of the political elite in Berne has provoked an unpleasant situation to the disadvantage of Switzerland, which must now be rectified by Foreign Minister Cassis. Therefore he must make it clear to Brussels that Switzerland does not want to join the EU, but wishes to have a good neighbourly relationship, with an access to the market without obstacles and as easy as possible for both sides. Switzerland does not need a framework agreement, but a number of topics of common interest could be regulated, namely without a guillotine clause. It is important that Switzerland does not automatically have to adopt EU laws and that it regains sovereignty in terms of immigration. If the new foreign minister will understand this and thus takes actions, then there will be less economic and legal uncertainty and more clarity for Switzerland in future.     •

* Felix W. Zulauf is the owner and president of Zulauf Asset Management AG (Switzerland-based hedge fund in Zug). Before he worked as a global finance strategist at UBS . Zulauf started his investment career as a trader for the Swiss Bank Corporation, then training in research and portfolio management in New York, Zurich and in Paris. He is a long-time member of the Barron’s Roundtable Club and writes for Finanz und Wirtschaft on a regular basis. felixzulaufblog.blogspot.ch

Source: Finanz und Wirtschaft from 29 March 2018

(Translation Current Concerns)