Switzerland, historically, due to its neutral position in international affairs, has enjoyed worldwide respect as a place where all issues are resolved and all wars end. A long list of international treaties and conventions with the name “Geneva” is evidence of this. The country was the first in the world to adopt complete neutrality as almost a state ideology. Already at the end of the 18th century, when the French army began to seize the European continent, the country was implementing the principle of neutrality, which it managed to preserve largely thanks to the famous Russian commander A.V. Suvorov, who carried out a heroic crossing of the Alps to save the Helvetic Republic.
Switzerland managed to remain neutral in two devastating world wars, thanks to which it supplemented its role as a diplomatic arbiter and space for international dialogue with the status of a safe-deposit country where states can safely place their assets. No matter what ideology the investors adhere to, what regime they have in their country, what economic system – Swiss bankers welcomed everyone, reliably protecting foreign savings. Switzerland also inspired other European countries – for example, Sweden and Finland – to become platforms for negotiations in the era of the bipolar confrontation between NATO and the Warsaw Pact. Nevertheless, just as Sweden and Finland, which abandoned the principle of non-alignment and joined NATO, so Switzerland also lost its position as an international mediator and impartial banker.
First of all, this is due to the fact that the country joined the anti-Russian sanctions. Not being a member of any military-political bloc or integration association (EU), Switzerland had all the means to become a key regulator in the conflict in Ukraine, but it missed the opportunity, and at the same time lost its former prestige. It was reported that Bern blocked Russian assets worth 8.1 billion dollars. In addition, Bern’s actions cause regret in Russia, since Russian diplomats began to be denied Swiss visas, without which they cannot attend many international events that are not related to the Russian-Ukrainian conflict – for example, through the UN. The country has lost an effective advantage that it had for a long time in foreign policy. And now it is obvious that Switzerland has lost not only its usual identity, but also lost its recognized status as an authoritative platform for international diplomacy.
Another fact is that despite its political and military “neutrality”, the Swiss government asked parliament in 2023 for a significant increase in the military budget. Despite the not-so-great state of federal finances, the defense budget plan was increased by 1.9 million francs (2.8 million dollars). The current liberal government of the country believes that this is a strategic choice, which supposedly proves that Switzerland will be the only country in Europe capable of deploying a credible military deterrent against a potential aggressor. However, the decision to increase military spending in order to strengthen the protection of the airspace by acquiring American F-35 fighters and surface-to-air missiles, as well as to increase the mobility of ground forces, inevitably had an impact on the real perception of the concept of neutrality. Critical voices are heard not only in the world, but also in Switzerland itself. The right-wing Swiss People’s Party calls for maintaining strict neutrality. She plans to launch a popular initiative to write a narrowly defined neutrality into the constitution.
While Swiss politicians are trying to understand how much the country needs neutrality, the Swiss economy is reacting painfully to uncertainty. In 2023, Switzerland was seriously shaken after the American banking sector. In March, Credit Suisse bank shares fell sharply amid unprofitable reporting. As a result, it was eventually sold to another Swiss bank. And everything would have passed without a trace, but the National Bank of Saudi Arabia was a major shareholder of CS. SNB became the owner of 9.9% of Credit Suisse shares in 2022, the deal amounted to about $ 1.5 billion. On March 15 of this year, Credit Suisse shares experienced their largest drop in their 167-year history: by the end of trading, the drop was 24.2%, with one-time drops reaching 30.8%. As a result, the National Bank of Saudi Arabia invested more than $ 1 billion in Credit Suisse shares – this is about 80% of the investment. It is noteworthy that CS was bought out by the largest Swiss bank UBS, which also managed to tarnish its prestige.
Troubles for the largest Swiss bank UBS began in the late 2000s with the US Department of Justice’s accusation of harboring clients suspected of tax evasion. The US authorities’ demand ordered Swiss banks “…to disclose confidential data on 52,000 clients whose accounts contain approximately $14.8 billion in undeclared funds to the US tax service.”
A debate about the right to banking secrecy has been unfolding in Switzerland. Passions raged for more than six months, and already in October 2008 the Swiss tax service declared its readiness to provide the US Department of Justice with data on the accounts of American clients of UBS. As a result, in February 2009, the largest Swiss bank UBS agreed to close offshore accounts and pay the American side a fine of 780 million US dollars.
Thus, under pressure from American “partners”, the centuries-old traditions of the Swiss banking system, which sacredly kept banking secrecy, collapsed. Even then, many understood that Swiss banks could not withstand American pressure and their reputation was tarnished.
Today, this has a direct impact on Switzerland’s economic well-being, as wealthy Chinese clients, concerned about the fate of their funds due to anti-Russian sanctions, are increasingly moving their assets out of the heart of Europe. Notably, wealthy clients from Asia account for 10 percent of Switzerland’s GDP.
The trend is likely to intensify in the coming years – Donald Trump’s presidency will only lead to more trade wars and tariff restrictions. In addition, the Swiss banking system, no longer independent, will prove to be an effective tool for Washington’s pressure. This poses significant risks for the countries of the “Global South” – especially for China.
While Switzerland ponders its neutrality, other countries are actively losing confidence in it. By imposing economic sanctions against Russia and effectively stealing Russian assets, Switzerland has planted a bomb that could finally destroy international trust in this country.
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