What strategies to overcome the current impasse between Switzerland and the European Union?

On the same topic:

La Suisse, un modèle pour l’Union européenne? / Par Dusan Sidjanski

La Suisse anti-européenne? Certainement pas / Par François Longchamp

Quelle place pour la Suisse dans l’espace Schengen et le système de Dublin de l’Union européenne? / Par Hervé Bribosia

Photos: DeGust  / René Schwok

Relations between Switzerland and the European Union are currently stalled. Two main issues are at stake. The first is the “institutional dimension”. It means that the EU demands an adjustment of the mechanisms that govern the relationship with Switzerland. As long as Berne procrastinates, Brussels refuses to enter into negotiations on many issues (electricity, Reach etc.). The second question relates to immigration. It results from the referendum of February 2014 which set limits on the establishment of foreign citizens in Switzerland. Such a measure is in contradiction with the bilateral agreement on the free movement of persons with the EU. Legally, the Union is therefore entitled to terminate this agreement, as well other agreements with the Confederation. To understand the discussion and to consider scenarios to get out of the crisis, it is necessary to look back in depth on each of the two topics. But first, we must also keep in mind that Switzerland is the only country in the world where direct democracy plays such an important role in decision-making, particularly in the area of foreign policy (1). 

The main party in Switzerland (25% of the votes), the Swiss People’s Party (SVP), has won numerous referendums on issues related to Europe and on the relationship towards foreigners. This party is fundamentally hostile to any infringement of what he considers as a violation of national sovereignty. The Federal Council (Swiss government) is constantly caught into a two-level game. He is stuck between, on the one hand, the European Union, and on the other, the Swiss electorate who has the final word. The Council must therefore at the same time make concessions to Brussels and take into account the pressure coming from possible referendums. It is also necessary to remember that the Federal Council is a unique system of government. It consists of a broad coalition of political groups. There are five parties for seven ministers! There is no programme of government (Schwok, 2012: 74) (1). Thus, Federal Counsillor Uli Maurer, representing the sovereignist party SVP has consistently opposed its partners on the European issue. Finally it should be recalled that there is no head of government that can impose his will on the six other ministers.

The institutional dimension

In broad terms, the problem comes from the willingness of the EU to change its relations with Switzerland. It is not about policies, but on polity. There is indeed almost a decade that the European Commission considers that Switzerland – EU bilateral agreements are inadequate.

According to Brussels, these agreements give to Switzerland too many possibilities to distance itself from EU legislations and from the homogeneity of the internal market. Therefore, the Commission has been pressing the Confederation to be put in a position as close as possible to the European Economic Area (EEA). For the record, the EEA is the mechanism set up by the EU in order to enable Iceland, Liechtenstein and Norway to participate in the Internal Market, as well as in numerous EU policies, but without membership. In December 1992, the Swiss people refused to enter into such a system, against the view of the Swiss Federal Council and Parliament (Schwok, 2010: 18) (2). Since then, only bilateral and sectoral agreements govern the relationship between Bern and Brussels. These agreements are, however, extremely light and simple. Except for Schengen and air transportation, they do not commit the Confederation to take over automatically the development of the EU acquis relevant to the bilateral agreements. They also do not lay the possibility for a supranational body, comparable to the European Commission, to be able to check the implementation by Switzerland of European law in an appropriate manner. Finally there is no legal mechanism for the settlement of disputes; it is only politics, at senior officials of both sides. Therefore, the European Commission – now the European External Action Service (EEAS) – would like Switzerland to come as close as possible to the EEA, a kind of benchmark (EEAS, 2012; Barroso, 2012) (3). It does not, however, require that Switzerland enter the EFTA pillar of the EEA.

The Council of Ministers supports the efforts of the Commission and gave her a mandate to negotiate with Switzerland (Council of the European Union, 2014) (4). But it must be acknowledged that the impetus came mostly from the legal services of the Commission (European External Action Service, 2012) (5) and that the EU member states still have little interest for this issue. Of course, the Swiss reaction was mixed. The Federal Council would have preferred to maintain the existing mechanisms (Widmer Schlumpf, 2012). As any development towards a supranational solution which would grant more powers to the bodies of the European Union would create serious resistance within the country. Therefore, for years, the Swiss government has mainly practiced a policy of procrastination in order to try to gain maximum of time (Schwok, 2010: 66) (6). Finally, following intense pressure from the EU and also in the hope of solving some cases where Switzerland has its own interests (electricity), the Federal Council agreed to make a number of concessions.

Two texts summarize the Swiss position on the institutional dimension. The first is the official mandate for negotiations on the institutional component (Federal Council, 2014) (7). As it is always the case at the beginning of a process of bargaining, the stance is quite uncompromising. The second paper is entitled “Rossier O’Sullivan non-paper” (Rossier O’Sullivan, 2003) (8). The latter is interesting and rather unusual because it is a compromise which has already been negotiated between Yves Rossier, the Swiss State Secretary for Foreign Affairs and David O’Sullivan, the Administrative Director of the European External Action Service of the EU. This is an informal text, a non-paper, which is not binding to the parties, but that is pretty much where could lie in fine a compromise between Switzerland and the EU. It offers three options, but only one of them was accepted by both parties. This one has already been approved by most constituted Swiss bodies, following a consultation organized by the Federal Council (parliament, cantonal governments, interest groups).  

The approach of the “Rossier O’Sullivan non-paper” is rather unusual because Switzerland and the EU give the impression of having already reached the conclusions of their negotiations before they even started the whole process. This document is obviously a compromise and one feels it when reading it. So it does not provide for automatic take over of the evolution of the EU acquis as the EU wanted (Council of the European Union, 2014), but it also rejects current statism. The text uses the term “dynamic”. It is therefore neither automatic nor static… To verify the correct implementation of EU law by Switzerland, the text mentions the possibility for the Commission to have opportunities for investigation, without specifying under what conditions and to what extent. The option for the Swiss courts of last instance to seize the EU Court of Justice (EUCJ) for a preliminary ruling is also mentioned. Finally, in case of dispute in the interpretation of law, the non-paper states that both countries will turn to a joint political committee. But if this one can not find an agreement, he will have to request the EU Court of Justice to give an opinion.

The “Rossier O’Sullivan non-paper” clearly states that this opinion will be binding. At the same time, and paradoxically, this same text envisages Switzerland may not adopt it. It even foresees the sanctions that the EU may adopt in the event of Switzerland’s unwillingness to comply. This text, though relatively short, is very complex and full of ambiguities. The devil lies in the details. In any case, the SVP and Swiss sovereignists do not care of the subtleties. They just observe that “foreign judges”, those of the EUCJ, would give opinions that are binding. And they highlight the power, considered exorbitant, which will be allotted to the European Commission, a body they love to bash. These far right forces have already promised they would launch a referendum if a compromise incorporating the main elements of this “Rossier O’Sullivan non-paper” was adopted.

The Swiss citizens are obviously completely overwhelmed by a too technical and ambiguous issue. But many people are highly permeable to slogans about “foreign judges” as this goes to the root of Swiss independence (William Tell). In this context, the game is far from being won for the partisans of the bilateral agreements as they will have tremendous difficulties to win a referendum. Perhaps it will be compulsory if it contains elements of supranationaly, under Article 140.1.b of the Constitution. According to this hypothesis, it is necessary to get a so-called double majority: that of the population at the national level and that of the population, but this time in a majority of cantons. This second majority is significantly more difficult to achieve because there are many Swiss German cantons which are not very populated, not urban and poorer. They are known to be traditionally reluctant to European integration. Under these conditions, it is preferable that this institutional dimension is discussed again in a few years when the immigration issue has been resolved in Switzerland. Meanwhile, Switzerland should unilaterally implement most of the elements of the “Rossier O’Sullivan non-paper”. It should thus take over more dynamically the evolution of the relevant Community acquis and not hesitate to refer more clearly to the jurisprudence of the European Union Court of Justice.

Switzerland should also avoid giving any pretext for the EU to reproach her for a possible misapplication of EU law. Links with the European Commission and the EFTA/EEASurveillance Authority should be strengthened. It is therefore essential that Brussels and the member states are convinced that the market between the EU and Switzerland in the areas covered by the Treaties remain homogeneous.

The issue of immigration

Relations between Switzerland and the European Union have become even more of a headache after the popular vote of February 9, 2014 anchoring in the Federal Constitution (art. 121a) a limitation of immigration. The “yes” was certainly very low, 50.3%, but it is neither disputed nor relativized. This new constitutional article stipulates that the number of permits issued for the residence of foreigners in Switzerland may be limited by ceilings and quotas. These should be set according to the overall economic interests of Switzerland and in accordance with the principle of national preference; they should also include the cross-border workers. Such constitutional provisions contravene to the bilateral agreement between Switzerland and the EU on the free movement of persons.  

A solution must be found before February 2017, otherwise there is a risk that this agreement will be terminated by the 28 Members States, as well as other agreements with the Confederation. The dilemma seems insurmountable. Suggestions to come out of this aporia abound and we can already count nearly fifty proposals. Political parties, the business community and intellectuals compete with ingenious ideas, although sometimes unrealistic and inconsistent. Without being able to analyze them in detail here, most of these changes share a common flaw: they involve a modification of the federal constitution. And this requires a double majority of the people and the cantons. As we have already mentioned, this makes them very difficult to be accepted. The Federal Council, for its part, pledges to scrupulously respect the vote of the majority of citizens, while pursuing in catamini a dual strategy vis-à-vis the Swiss people and the EU. On the one hand, Berne encourages the parliament, which is predominantly anti-SVP to develop a flexible legislation application of the new constitutional article in order to avoid having to limit to strictly the establishment of EU nationals and to impose them discriminatory measures. On the other hand, the government tries to gain acceptance by the EU that the current number of Europeans settling in Switzerland will remain broadly stable and that they will not experience unfavorable treatment. Initial reactions services by the European External Action Service were negative. But in order to coax Brussels, the Federal Council relies on an ambiguous sentence of the EEAS letter of reply regarding a willingness to discuss technical issues. 

Berne will try to “sell” a solution that was mentioned in a very dense official report (Federal Department of Justice, 2014: 27) (9). The idea is to reintroduce so called “L” permits of 364 days which would be automatically granted to nationals from EU countries and with no ceilings. Of course, as it is the case now, these EU nationals need to have first a work contract in Switzerland. But there will be no limits on the number of those permits. They will also be renewed automatically as long as the European citizen keeps his employment’s contract. These “L” permits would be in such a large number that Switzerland would continue to admit tens of thousands of European workers per year. For cons, the long-term residence permits (over one year), will be drastically limited. This would be the biggest change to the current situation and the most difficult to be accepted by the EU.

This compromise is ambiguous. This would involve “trompe-l’oeil” quotas. On the one hand, they should be large enough for the EU in order to declare that freedom of movement is de facto preserved. And, on the other hand, they should allow the Federal Council to claim that the federal constitution is respected since quotas were introduced. Let us add that the Federal Council proposes not to monitor compliance with national preference in each case. This criterion would be taken into account only in general, in order to set limits by using indicators such as the number of vacancies, job seekers, etc.

The implementing legislation of the new constitutional article 121a, and a possible new agreement with Brussels will be subject to the approval by both chambers of the federal parliament. 50,000 people driven by the SPP will most likely call a referendum. The advantage of this approach is that it is an optional referendum. It therefore does not require the majority of the cantons. This type of consultation is easier to win for EU integration supporters.

The catchall’s temptation 

In the Federal Council, a large number of ministers would like to conclude a comprehensive agreement with the EU that bring together the institutional dimension based on the “Rossier O’Sullivan non-paper”, as well as a compromise on immigration under the proposals outlined above. This agreement would also include the resolution of issues that remained pending on electricity, access to the European market for financial services, scientific cooperation, etc. It would be a wide melting pot that would cover all cases. This approach bets that the EU would prove more open to Swiss constraints on immigration if the Confederation demonstrated flexibility elsewhere (issue linkage). For instance, Switzerland might commit itself to less procrastinate on the institutional dimension, to delete the dumping tax on foreign companies as well as to increase its funding of Central and Eastern European countries. On the one hand, it is undeniable that this large approach has its advantages. First, it provides the EU with a material incentive to be more flexible on the issue of free movement of persons. Moreover, it the Swiss people will face a comprehensive solution that will allow him to vote in a referendum with full knowledge. On the other hand, this approach generates a high probability of being rejected by the electorate. This is due to three reasons. 

First, it could unite all parochial and sectoral oppositions. The SPP will obviously will consider this path as contrary to its initiative on immigration. And this party will communicate on the danger of “foreign judges”. SPP could be supported by the nostalgics of banking secrecy, by those who do not want to spend more for the Central and Eastern European countries, as well by some sectors of extreme left. Second, those Bilateral Agreements III could be subject to a mandatory referendum under Article 140.1.b of the Constitution. This implies a double majority of the people and of the cantons which is more difficult to obtain than a simple majority. Many sparsely populated German-speaking cantons remain suspicious about immigration and European integration. If we mechanically apply the result of the February 9, 2014, it would need to obtain the consent from 53 to 56% of the entire population in order to reach a majority of the cantons. Third, we can add the observation that in the face of complex issues and an impression of “catch-all-“ solutions, citizens often show distrust and end up choosing the option of refusal. Thus, this catchall policy worries us because it looks like a very risky double and quits.

The European Union would have nothing to gain by showing a lack of understanding vis-à-vis Switzerland

One can legitimately ask what the EU would benefit for being soft vis-à-vis Switzerland. Why should Brussels postpone the resolution of the institutional aspect and be flexible on the issue of free movement of persons? What could be the issue-linkage in favor of the EU? It is certainly low. First, because Switzerland has already given up on the issues of taxation of business taxation and on banking secrecy. Berne could certainly make some additional concessions on the issue of electricity and be more generous solidarity funds vis-à-vis Central and Eastern Europe. But it is true that it represents nothing very substantial. Despite this, the EU would have nothing to gain by expressing a lack of understanding to the problems posed by Switzerland.

First, and apart from Norway and Iceland, all the neighboring states of the European Union – which are no EU candidates – are far more problematic than Switzerland. Many suffer from deficits in terms of democracy, good governance, respect for minorities andhuman rights. In addition, these states generally face severe economic circumstances, favoring, in some cases, social injustice and corruption. In addition, many of them haverecently experienced years of conflicts: Egypt, Georgia, Israel, Libya, Palestine, Russia, Syria, Tunisia, Ukraine. And others, still keep in a kind of perennial memory the stigma of the wars of previous decadesAlgeria, Armenia, Azerbaijan, Bosnia, Kosovo, Lebanon,Macedonia, Moldova, Morocco, Serbia. It is therefore not in the interest of Brussels to add an additional difficulty with Switzerland.

In addition, the current bilateral agreements work generally well and the EU has almost nothing to complain about Switzerland. There were no real contentious issues and the few difficult cases have been solved relatively easily by the Joint Committees. However, to reassure Brussels, Switzerland should already unilaterally implement the main elements of the “Rosssier O’Sullivan non-paper”, as we have said.

On the issue of immigration, the EU has an interest to show flexibility because it would also be a loser if Brussels lets the situation to deteriorate. Its citizens could no longer work in such large numbers in Switzerland (1.300’000). Unemployment would increase even more in France, Germany, Portugal, Spain and Italy. In addition, regions bordering Switzerland, with their hundreds of thousands of cross-border workers, would be the first to suffer. Therefore, the EU should refrain from adopting an uncompromising position. Nothing prevents to review treaties between Switzerland and the EU, or to interpret them in a flexible manner. Representatives of the EU should also stop repeating the slogan that free movement of persons is a fundamental and inviolable principle of the EU. First, because such a free movement of persons is not absolute within the EU. There are resctrictions and conditions, which could soon increase under the pressure, among others, of the British government of David Cameron who wish to renegotiate aspects of the free movement of persons. Second, because Switzerland is a third country and wishes to remain so. The Confederation does not intend to join the EU and therefore one cannot impose on this State to take over the EU acquis in a way as strict as it is the case for candidate countries. Finally, because the EU is not consistent. On the one hand, it refuses the free movement of people in some Deep and Comprehensive Free Trade Agreements (with Georgia, Moldova, Ukraine) and, on the on the other hand, it demands it in other agreements (with Switzerland). Now the approach of the EU vis-à-vis Switzerland should be more political and be delegated to the principal leaders of the European Union and of its Member States. Only these leaders can develop a sufficient high perspective in order to let both parties to get out of the current deadlock. For its part, the Federal Council should give up the vagueness of its diplomatic strategy which creates huge misunderstanding within the Swiss people. After all, they are the ones who will have last word.

(1) René SCHWOK, Politique extérieure de la Suisse après la Guerre froide, Lausanne, Presses polytechniques et universitaires romandes, 2012. (p.74)

(2) René SCHWOK, Suisse-Union européenne. L’adhésion impossible ?, Lausanne, Presses polytechniques et universitaires romandes, 2010. (p.18)

(3) José Manuel BARROSO, Lettre du Président de la Commission européenne à la Présidente de la Confédération, Eveline Widmer-Schlumpf, 21 décembre 2012.

(4) COUNCIL OF THE EUROPEAN UNION, Decision authorising the opening of negotiations on an agreement between the European Union and the Swiss Confederation on an institutional framework governing bilateral relations, Brussels, May 2014. (Non publié).

(5) EUROPEAN EXTERNAL ACTION SERVICE (EEAS), Note for the Attention of the Members of GRI, 11 septembre 2012. (Non publié).

(6) Eveline WIDMER-SCHLUMPF, Lettre de la Conseillère fédérale au Président de la Commission européenne José Manuel Barroso, 15 juin 2012.

(7) CONSEIL FEDERAL, Mandat de négociation avec l’UE, Berne, septembre 2014. (Non publié).

(8) Yves ROSSIER, David O’Sullivan, Eléments de discussion sur les questions institutionnelles entre l’Union européenne et la Confédération helvétique, Non-paper, 29 janvier 2013. (Non publié).

(9) DÉPARTEMENT FÉDÉRAL DE JUSTICE ET POLICE, Art. 121a Cst. (Gestion de l’immigration), Plan de mise en œuvre, 20 juin 2014. 

About the author: Prof. René Schwok, Director, Master in European Studies, Global Studies Institute, University of Geneva, Holder, Jean Monnet in political science

© EuTalk / www.eutalk.eu – ISSN 2116-1917 / Les propos exprimés par l'intervenant sont l'expression d'une réflexion personnelle. Ils n’engagent que leur auteur, et en aucun cas l’institution à laquelle il appartient ou qui l'accueille.