Swiss pay price for crossing Libya

Switzerland faces foreign challenges to its banking secrecy laws, diplomatic spats with Libya, and internal debates over its political system.
Swiss pay price for crossing Libya
The current economic crisis has pushed unemployment in Switzerland to 4.2 percent, the highest in more than five years.
By Matthias Wabl and Klaus Wille
Sun 10 Jan 2010 04:00 AM

Switzerland faced a tough 2009 with foreign challenges to its banking secrecy laws, diplomatic spats with Libya, and internal debates over its political system.

It hasn't been a good year for the traditional Swiss way of doing things.

The country faced foreign challenges to its banking secrecy laws, spats with France and Poland over the arrest of film director Roman Polanski, and an ongoing diplomatic row with Libya over the arrest of leader Muammar Qaddafi's son.

Then came the November 29 referendum that approved a ban on the building of minarets, which has triggered a debate about the nation's 700-year-old history of direct voting on single issues.

"Switzerland got slapped in the face many times this year," said Michael Hermann, a political scientist at the University of Zurich. "Once the country thought there is some time to breathe, the next problem popped up, calling the Swiss way of doing business and politics into question."

The minaret referendum came after the anti-immigrant Swiss People's Party, or SVP, collected enough signatures to put the question to the people.

The government had opposed the ban, while the SVP said Muslim immigration to Switzerland could eventually lead to the introduction of Sharia law, the Islamic religious code derived from the Koran.

Switzerland currently has a total of four minarets - towers from which Muslims are traditionally called to prayer - and about five percent of its population adheres to Islam.

The vote had 58 percent backing, and the result automatically changes the constitution to include the minaret ban.

The SVP, which controls the defence ministry, won 29 percent of the vote in 2007 elections, the most of any party.

The outcome reflects a failure by the country's politicians to address "a whole set of issues that we have in Switzerland," including immigration and the Libya dispute, said Hans-Ulrich Meister, the head of Zurich-based Credit Suisse Group AG's domestic business.

"There is anxiety, and it hasn't been properly addressed by politicians," Meister said. "Now the people have reacted to that anxiety."

Switzerland's brand of direct democracy traces its start to 1291 when the three cantons of Uri, Schwyz and Unterwalden agreed to form a defence community.Its neutrality goes back to the aftermath of the Thirty Years War, which ended in 1648, though the country has agreements with the European Union covering migration, labour, trade and financial services.

 "We should consider a fine-tuning of our system, meaning a thorough legal examination to make sure that every initiative is in line with fundamental norms of international law before it is put to a vote," said Thomas Bernauer, a professor of international relations at the Swiss Federal Institute of Technology in Zurich.

The dispute with Libya began with the arrest of Hannibal Qaddafi and his wife Aline in Geneva in July 2008. They were released on bail after spending two days in custody following a complaint by employees of the couple for mistreatment during a stay in a Geneva hotel. The complaint was eventually dropped after the two servants received compensation from an undisclosed source.

Libya later that month apprehended two Swiss nationals in the country, accusing them of violating visa and business regulations. Their trial was postponed for the second time, earlier this month. The pair is now staying at the Swiss Embassy in Tripoli, the Libyan capital, pending the second trial.

Swiss president Hans-Rudolf Merz flew to Tripoli in August and said the government was ready to apologise for what he called the "unnecessary arrest" of the Libyan couple.

Merz failed to win the freedom of the Swiss nationals, and his trip sparked controversy at home over whether Qaddafi's son would be above Swiss law because of commercial interests with Libya, once its biggest supplier of oil.

Oil imports from Libya dropped almost 90 percent during the first half of 2009, after the country threatened to cut ties in the wake of the arrest, according to government statistics. Before then, Libya provided almost half of Switzerland's oil.

It isn't clear how, or if, the Libya row may have influenced the minaret vote. Researchers are now polling voters to examine the issue, with the results to be published in January, according to Lukas Golder at the GFS Bern Institute.

"The Swiss vote on minarets may have been an emotional response to many perceived threats such as immigration and the Libya affair in somewhat uncertain economic times," said Jan Techau, a foreign policy analyst at the German Council of Foreign Relations in Berlin.

Those times have pushed unemployment to 4.2 percent, the highest in more than five years, cementing support for the SVP even as the Swiss economy and franc have weathered the financial crisis better than neighbors.

The Swiss franc rose last week to its highest value against the euro since March. The Swiss National Bank expects the economy to contract by 1.5 percent this year, compared with about a four percent average for the euro area.

Swiss politicians and academics, including lawmaker Christa Markwalder Baer, head of the country's foreign relations committee, have been arguing that Switzerland needs to think about EU membership now or face "marginalisation."

Switzerland agreed in August to hand over as many as 4,450 UBS AG account details to US authorities and in March agreed to relax its banking secrecy rules. The country is still embroiled in tax disputes with France, Italy and the EU.

"The country is waking up to the world and is wondering how to interact in the future," said political scientist Hermann. "Switzerland has been shattered and its reputation took a blow. Now there is a discussion going on whether we have to change our political system, get closer to the European Union or pursue an isolationist path."

This article is courtesy of Bloomberg.

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