Plugging the gap in the Union map

Date: 04/07/1996

THE hole in the map of the EU is not about to be filled in by Switzerland but, for the first time in years, the Union and Berne are beginning to see something more than red lights ahead.

Two years of negotiations aimed at opening Switzerland's borders to EU goods and workers finally seem to be making headway, with both sides offering compromises after months of tortuous talks.

“The breakthrough came in April,” said a Commission spokeswoman. “We finally knew they had decided to play ball.”

But even if the pro-Union government in Berne desires closer integration with its neighbours, both it and the EU are hostages to Swiss democracy. Both know that any move too far in their negotiations may be overthrown by Swiss voters in one of their famous, or infamous, referenda.

The Union knows what that feels like. Swiss voters rejected membership of the European Economic Area (EEA) in a 1992 referendum, and a vote against an EU-Berne agreement would set back proponents of Union membership by years.

The effects of that No vote four years ago are still being felt. It has forced the EU to negotiate with a shell-shocked and intimidated Berne, and has prolonged the existence of the dinosaur known as the European Free Trade Association (EFTA).

Unlike its 1992 legislative programme, which focused on opening Switzerland to the rest of Europe, the Federal Council's 1995-99 programme contains no plans for closer ties with Europe.

The only club it mentions even possibly joining is the Partnership for Peace (PFP) programme created by NATO to bring it closer to ex-Warsaw Pact nations.

This dearth of new initiatives to build new bridges between Switzerland and its EU neighbours is not for lack of desire on Berne's part.

“The government wants Switzerland to join Europe,” explains Christian Meuwly, spokesman for the Swiss mission to the Union in Brussels. “But it must do that in a realistic way. Attempting to enter (the Union) straight away would be hopeless with the current state of public opinion.”

While recent polls show a slim majority in favour of joining the European Economic Area for the first time since 1992, they also show that the Swiss do not yet want to join the EU.

During legislative elections last October, campaign posters depicted the Union as a giant which would flood the tiny paradise with foreigners, siphon off its wealth and end the Swiss tradition of direct democracy by referendum.

Mass demonstrations - atypical for Switzerland - illustrated the depth of feeling on this issue. On one particular day, 10,000 anti-integrationists marched through Zurich swinging cowbells, playing alphorns and throwing sunflowers. On the other side of town, 12,000 pro-Union campaigners - mostly younger people - called for openness and warned against excessive nationalism. Their spokesman, former Finance Minister Otto Stich, said to applause: “It is not right to present as good Swiss only those Swiss who wave flags, yodel and oppose EU membership.”

The election resulted in 13 new parliamentary seats for the pro-European Social Democratic Party and four new seats for the anti-EU Swiss People's Party.

Crédit Suisse economist Martin Neff was quoted at the time as saying: “Europe is the burning issue for Switzerland over the next four years.”

Last summer, Swiss voters rejected a draft law that would have allowed foreigners - even long-time residents in Switzerland - to buy houses or land in their country. That cannot be a good sign for those who aspire to EU membership.

Such sentiments are preventing Berne from making too many concessions during its talks with the Union in seven areas: free movement of people, heavy vehicle transport on Swiss roads, air transport, agricultural and industrial trade, public procurement and scientific research.

But both sides are coming closer to the centre and, although hopes of finishing the talks by August will not be realised, they have not given up on finalising a deal in 1996.

Ironically, the 'mad cow' crisis which has wrought havoc in the Union could be seized on by those who argue in favour of eventual EU membership for Switzerland. While the Union will pay hundreds of millions of ecu in compensation to beef farmers hit by the crisis this year, Swiss taxpayers will have to foot the 700-million-ecu bill resulting from its own cases of BSE alone. And when Germany and Austria unilaterally banned imports of Swiss beef, Berne could not go crying to Brussels. (Although the EU veterinary committee recently ordered Bonn and Vienna to lift their bans because Swiss efforts to limit the BSE disease had been faultless.)

There are other arguments for joining. Stich cites growing unemployment (the Swiss jobless rate is now an uncharacteristically high 4&percent;) as a key reason for banding together. “As long as European jobs are lost to Asia, unemployment is a ghost hanging over all of Europe,” he warns.

Another Swiss concern, the environment, provokes both pro- and anti-EU sentiment. One camp fights to keep European lorries out, while the other argues that pollution does not stop at national borders and is best tackled through joint action.

The health of the legendary Swiss franc also depends, to some extent, on Union moves. The franc has weakened against the deutschemark this year, but bankers believe the franc will grow stronger as plans for a single currency gather pace. If the Euro is weaker than the deutschemark, investors will be attracted to the franc - and a strong franc could hit Swiss exports. Set against the low growth the country is already experiencing, that it is not a happy prospect.

Another sacred cow, Swiss neutrality, could also be affected by closer alignment with the EU.

In 1992, a Berne government report declared that the Union's Common Foreign and Security Policy (CFSP), as it then stood, was compatible with Swiss neutrality. As the Union tries to beef up its notion of a common defence, that may change.

“The IGC results will be of high interest,” says Meuwly, explaining that the Swiss are watching the Intergovernmental Conference to see “the new face of security policy”.

Meuwly says it is too early to assess whether Switzerland (which has Europe's second largest army after France) could stomach an EU policy allowing members not to participate in - but unable to block - joint defence initiatives.

But he insists the tradition of neutrality does not mean Switzerland has to stay out of the Union forever. “Swiss neutrality is not a principle established forever. It is an instrument of foreign policy and depicted as such in the constitution. One could imagine the day when neutrality could be given up for higher benefits,” he says.

However, Meuwly suggests it is too soon to even speak of such things. NATO has invited Switzerland to join PFP, but Berne has not responded. The defence and foreign ministries have concluded that PFP membership would not endanger Swiss neutrality, but Meuwly says “there is reluctance to raise more opposition on foreign policy topics”.

Whatever happens in the next few years to that hole in the map, he maintains that “the declared aim of the Swiss government is full membership of the European Union”.

And although that is out of the question for now, Berne still wants some form of integration. “The first step must be the group of bilateral agreements. The next step is not yet defined,” says Meuwly.