The Swiss Experiment
Pfäffikon SZ, Switzerland – Pfäffikon SZ, Switzerland – Last week, Switzerland confirmed what we already knew was coming – the restriction of immigration. I have mentioned this before, but now it’s a fact. Slowly, we are going back in time. We may see a return to old-fashioned border controls in Basel. I see it as a first warning signal for the EU. It is music to the ears for supporters of Le Pen and Wilders.
Brussels Is Not Amused
It will take a while before the immigration borders begin to take shape. The Swiss Federal Council must now discuss the process of introducing the new laws. The draft legislation must be ready before the end of this year. The whole process will probably take about three years. This does not alter the fact that the Swiss experiment could have far-reaching consequences. Brussels is not amused and has immediately placed a thick line through various Swiss agenda items, such as negotiating a new framework agreement. In turn, Switzerland is sending an envoy directly to Brussels to smooth the waters.
Falling House Prices
Another side effect may be a decrease in the steep Swiss house prices. For the Swiss themselves, buying a house would have become inaccessible. I have believed, for a while now, that house prices have gone too far. It seems to me that a correction is appropriate. Several major Swiss banks have been preparing for a possible decrease of the Swiss house market for some time. Swiss regulators are also pointing out the possible consequences and are urging for measures to be taken.
Personally, I do not find the Swiss to be suspicious of foreigners, least of all the Dutch. Maybe my situation is different because I am independent entrepreneur. I am not worried about the restriction of immigration. The Swiss immigration service has already made it clear that, in principle, existing immigrants will not be affected. A few years ago I consciously rushed to enter Switzerland and this has not been in vain.
Switzerland never in the EU
Switzerland will never join the EU as a result of adopting the immigration proposal. I think this is good news because I believe the EU is unstable in too many areas. If it succeeds at all, it will take decades before Europe is a strong entity. I have my doubts and I act accordingly. When countries such as France and the Netherlands adopt the Swiss experiment, the future of the EU monetary union will be at stake.
Childish
The recent statements by the President of the European Commission, José Manuel Barroso, are childish. Empty threats. Instead, the EU should ask why so many of its nationals would want to live and work in Switzerland. The answer to this question is simple: the EU has ruined the purchasing power, pensions and house values of its citizens through irresponsible actions. Note: in my view, the U.S deliberately put this process in motion. The EU has subsequently been slow and poor to respond, something the U.S. anticipated superbly. Switzerland is by far the most successful country in Europe. It is therefore hardly surprising that the Swiss will not, under any circumstances, allow an arrogant Brussels to destroy this. How all this ends is relatively simple according to yours truly: Switzerland and the EU will have to sit back down at the table. New agreements will follow, but this will take some time.
Fly in the Ointment
Finally, I want to highlight a small European fly in the ointment that barely made headlines. Last Friday, the German Constitutional Court ruled on the limits of the power of the European Central Bank (ECB). The Outright Monetary Transactions (OMT), which the ECB has taken in recent years, are inconsistent with the German Constitution. Furthermore, the European treaties do not cover OMT either. And so we get to the heart of monetary union. The Euro is a currency of treaties between a collection of countries without a solid core. Actually, if I am to believe the German courts , the Euro is nothing. The Swiss have no problems with this because the Swiss Franc is very solid in value and one of the most respected currencies in the world. It is high time Brussels looked in the mirror and stopped neglecting its citizens.
It remains for me to wish you a good weekend.
Jan Dwarshuis is a senior asset manager at Thirteen Asset Management AG, where he is responsible for the Thirteen Diversified Fund. Dwarshuis writes his columns in a personal capacity and is not paid for them. Nor is he paying for his columns to be placed. Professionally, he holds positions in major European, American and Russian stock funds. The information in his columns is not intended as professional investment advice or a recommendation to make certain investments. At the time of writing, he has no position in the above shares and has no intention of doing so in the next 72 hours.
