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Switzerland

The Swiss say no
Mar 8th 2001 The Economist

SWITZERLAND is a paradox. Here is a small country surrounded by members of the European Union. Its citizens speak three main languages, none of them (at least as written) specifically Swiss.

Of its 7m people, one-fifth come from outside. It lives off cross-border commerce, selling chemicals, machinery and precision instruments to the world, welcoming tourists and bank depositors from it. Swiss companies include such giant multinationals as Nestlé, Ciba-Geigy and ABB, itself born of a big cross-border merger. That may change after a referendum in 2002. But as for the far more restrictive bonds of the EU, no way: on Sunday, in a referendum calling for an immediate start to negotiations on EU membership, almost 77% of those who voted said no.

The call for a vote at all came only from dedicated Swiss Europhiles. The government and most politicians were against it, and so even were businessmen, essentially because they did not want a referendum which they knew would be lost.

The government has been planning to start talks on membership at some (steadily receding) date from 2004, and wanted time to prepare Swiss institutions and practices— and, above all, public opinion. A premature vote could only hurt its plans, and has. Even the Europhiles did not really expect to win. But they did want to keep the issue on the front-burner. In the event, they were not just beaten but smashed, and the issue is off the stove itself.

Why? Why defy what look like solid economic arguments for getting inside the EU? After all, Switzerland already enjoys trade with the EU that is more or less free. The Swiss voted only last year in favour of a package of deals with the EU on various quite weighty matters. Over 70% of their trade is with EU countries, nearly all of them ones that will soon be using its new currency, the euro. Would it not be better to be on the inside of such a grouping, able to influence its decisions, rather than haggle with it, a small economic power with a huge one, from outside? And, equally, inside the euro-zone, and the European Central Bank? One could well think so.

One could, but the Swiss did not. There were short-term, immediate reasons, but the basic one is centuries old: the Swiss have forged and fought for their identity and independence since 1291, and they do not want to give it up. Not for nothing is their national myth-figure William Tell, a man who preferred to risk his son’s life rather than accept foreign rule.

In any event, today’s Swiss reckon that the economic case is less than compelling. They need free trade, but they can get it without being members of the EU, as the past 45 prosperous years have shown.

They have no voice in Brussels, but they reckon they have not suffered unduly by bargaining from the outside.

As for the euro, of course it is convenient to share a currency with your customers, but the Swiss have traded in umpteen foreign currencies since the gold standard. They can survive next-door to but outside the euro-zone, with no voice in its central bank, just as they have next-door to Germany’s D-mark and with no voice in its Bundesbank: under pressure from a mighty currency, but still with some freedom to manage their own.

In sum, they have most of the economic benefits of EU membership already, but none of the formal political constraints.

The economic gains of joining would, at best, be modest; the psychological loss could be great.

The story does not stop at Switzerland. Canada has lived for 160 years next to a far larger economy, with a different currency. Possibly Canadians would be richer if they were all Americans. Certainly they would carry more weight in Washington: think, for comparison, of California.

RE: se also Canada's Chilling Lesson for EMU,
by Bernard Conolly and John Crow, Wall Street Journal 97-07-14

Yet they prefer to be what they are, just as Irish republicans chose to cut loose from Britain in the 1920s, or as Norwegians voted against EU membership in 1994. And as most Britons, for similar reasons, would vote against euro membership today.

The risks for Britain may be greater: it depends more than Switzerland does on foreign investors, and they might prefer to set up inside the euro-zone. But it is no good denouncing national feelings as mere tribalism.

Such feelings may seem old-fashioned to some. But if people or nations feel that way, so be it.

There is little evidence that most of them suffer thereby.

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