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Swiss referendum adds pressure to strained relationship with EU

Swiss voters go to the polls on Sunday for a referendum critical to the wealthy Alpine state’s future relationship with the EU.

Sponsored by the right-wing populist Swiss Peoples’ Party, the Begrenzungsinitiative – limitation initiative – if voted through, will revoke Switzerland’s existing freedom of movement agreements with Brussels. 

Should that happen, six other bilateral agreements with the EU would also automatically be voided, including deals struck on transportation of freight and goods through the Alpine country, research co-operation and the recognition of standards on high-tech goods and equipment. 

Switzerland, whose GDP is bigger than Poland’s despite a population of just 8.5 million, is the EU’s fourth-largest external trading partner after the US, China and the UK. 

There is no love lost between the Swiss people and Brussels, and immigration remains a hot topic within the country. Though its share of the vote has fallen in recent years, the Swiss Peoples’ Party is still the largest – with just over 25% of the vote last October – in the Swiss parliament.

In 2014, a referendum to end free movement across Swiss borders with neighbouring EU states was narrowly won with 50.3% of the vote. Although technically binding, Switzerland’s parliament managed, with deft legal footwork, to avoid fully implementing the vote – a sleight of hand that has rankled with the People’s Party and its supporters ever since. 

Polling suggests Sunday’s Begrenzungsinitiative will be comfortably defeated, however, indicating both a significant shift in the Swiss political scene in recent years, and a significant amount of wariness among many Swiss in the wake of Brexit. 

According to Lukas Golder of GfS Bern, Switzerland’s leading pollster, the initiative is unlikely to garner the support of more than 40% of the electorate. Current projections indicate a vote of around 35% in favour of the measure. 

Even so, thanks to the vagaries of Switzerland’s highly devolved political system, the exact level of support for the vote will also be critical to future EU relations, regardless of whether it results in a victory for the initiative or not. 

Opening salvo

In fact, the vote is in many ways only the opening salvo of an upcoming political tug of war in Switzerland over its future relationship with Brussels. Next year will see negotiations between Bern and the bloc over a so-called “framework agreement” come to a head. 

The agreement is intended to be the foundation for the renewal of more than 100 bilateral treaties between the EU and Switzerland. Securing it became acutely important for the EU in the wake of Brexit, because of fears in Brussels that Britain would latch on to the Swiss-EU relationship as an example of how to pick and choose components of a future-relationship while escaping the full weight of EU legal jurisdiction.

The slow progress on the framework agreement has been a source of continual frustration for the European Commission, which has cast around for levers to ramp up the pressure on Bern.

Jean-Claude Juncker, then commission president, even resorted last year to withdrawing key financial trading permissions from Switzerland. But the measure, which prompted Swiss retaliation, is widely seen to have backfired on European trading platforms.

So far, Bern has stalled the diplomatic process on the framework agreement: any deal will need to be put to a popular referendum in Switzerland. The outcome of Sunday’s vote will therefore have a decisive impact on Bern’s assessment of what it must ask of Brussels and what it feels the Swiss people will accept. 

Results of the referendum are expected by late afternoon on Sunday. 

Copyright The Financial Times Limited 2020

Sam Jones in Zurich