Pfäffikon SZ, Switzerland – Over twenty years ago Switzerland voted on joining the European Union. It will not come as a surprise that the vote came out as: “nein”. However, it was close. 49.7 percent voted in favor of joining the union versus 50.3 percent voting against. It came as a huge disappointment to many who thought it would lead to Switzerland becoming completely isolated and descending into a deep recession.
Last week I got into a discussion with a amicable Swiss europhile. This ex-politician argues that Switzerland missed a great opportunity. The country would have been able to promote a fiscally conservative policy within the EU. Moreover, claiming a leading role on finances would have been one of the many possibilities. The head office of the ECB would then perhaps have been located in Zurich rather than Frankfurt. Additionally, Switzerland would have been able to play an important role in curtailing – through legal frameworks – sovereign debt.
Hitting the Breaks
Things did not quite unfold that way. It’s worth noting that none of the doom scenarios has materialized. The Swiss economy continues to operate more than decently and the country has its finances in order; something very few member states can attest to. Moreover, unemployment can be characterized as being low and talk of being isolated is not applicable. Since 1992 Switzerland has signed more than one hundred treaties with the EU, but this fact consistently goes underreported. A known thorny issue is the free movement of persons. Here the EU forgets that Switzerland has created more jobs for workers from the EU than any EU country has done vice versa. It is for this reason that I am not surprised that the Swiss – to some extent – want to hit the breaks.
The key question, of course, is if Switzerland would have been better off if it had joined the union. I have my doubts. For many Europeans Switzerland serves as a magnet. The Swiss understand very well that they need the EU. But so does the EU. I hold, and will continue to hold, that Switzerland is a great example of how a country can operate autonomously. Even though the country has problems of its own, the canton system continues to serve them well. It took the Swiss 700 years to get to this point. Perhaps a similar structure could serve the EU in the future. Getting there would, however, be a lengthy process. As far as I’m concerned, Switzerland should keep things the way they are and never join the EU.
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.