Switzerland at a Crossroads on the Neutrality Issue

The “Neutrality Initiative”, launched by the “Pro Schweiz” group and the Swiss People’s Party (SPP), has filed a petition in favor of a national referendum to restore strict neutrality status for the country. The number of certified signatures (133,000 plus many more uncertified) gathered in a relatively short time period reflects the large support the initiative has found in the country. This is also confirmed by a poll conducted by Credit Suisse among Swiss managers, 75% of whom say that “it is in the interest of our firm for Switzerland to remain neutral”.

The issue became of pre-eminent concern after Switzerland, for the first time in centuries, broke its neutrality policy by endorsing the EU sanctions against Russia over the war in Ukraine. In the past, not only did Swiss companies enjoy the privileges of the neutrality status, which allowed them to do business in and with any country in the world, but the political authorities could also play a mediating role and offer a forum for negotiations in most conflicts. This has now been jeopardized by the decision to become a party in the Ukraine conflict, so much so that the attempt to organize a “peace conference” in Bürgenstock in June, will fail. Indeed, Russian Foreign Minister Sergei Lavrov, stated in an interview on April 19 that Switzerland had gone from a neutral nation to an “openly hostile country”, and was therefore not suitable for conducting peace negotiations on Ukraine.

Hopefully, Swiss politicians will understand the mistakes they made and abandon the pro-EU, pro-NATO stand without waiting for the Pro Schweiz referendum to be held which, under normal procedures, could take up to two years. But even if that initiative is successful, it will not suffice to protect Swiss interests like in the past. Whereas during the Cold War, Swiss companies could develop relations with nations in both camps under the protection of international law, that law has now been replaced by the so-called “rules-based order”, which respects no country’s neutrality.

In that respect, historian Pierre-Yves Donzé told the NZZ that during the Cold War, “the neutrality, the good offices and the humanitarian aid were also important for Swiss companies as Switzerland was a small country”. Today, however, neutrality will not help with respect to the growing conflict between the U.S. and China, or the U.S. and Russia.

During the 1950s, Donzé points out, Nestlé could not transfer its profits from Japan, because Tokyo kept capital controls. The Swiss government stepped in to help, with an agreement by which Nestlé transferred their gains in yen to the Swiss embassy in Tokyo, and received the equivalent sum in Swiss francs in Switzerland. “If Swiss companies did something similar with Russia today, there would be strong international protests… pressures can be more effective if they demand that a company choose one of two sides.”

That is why Switzerland has a fundamental interest in backing the Schiller Institute’s call for a new global security and economic architecture.