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Switzerland (03/02)


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For the most current version of this Note, see Background Notes A-Z.

PROFILE

OFFICIAL NAME:
Swiss Confederation

Geography
Area: 41,285 sq. km. (15,941 sq. mi.); about the size of Vermont and New Hampshire combined.
Cities: Capital--Bern (population about 122,000). Other cities--Zurich (338,000), Geneva (175,000), Basel (166,000), Lausanne (115,000).
Terrain: 60% mountains, the remainder hills and plateau. Switzerland straddles the central ranges of the Alps.
Climate: Temperate, varying with altitude and season.

People
Nationality: Noun and adjective (singular and plural)--Swiss. Population (2000): 7.2 million.
Annual growth rate: 0.7%.
Ethnic groups: Mixed European.
Religions: Roman Catholic 44%, Protestant 37%, Muslim 4%, others 3%, no religion 12%.
Languages: German 63.9%, French 19.5%, Italian 6.6%, Romansch 0.5%, other 9.5%.
Education: Years compulsory--9. Attendance--100%. Literacy--100%.
Health: Infant mortality rate--4.8/1,000. Life expectancy--men 76.5 yrs., women 82.5 yrs.
Work force (3.87 million): Agriculture and forestry--4.8%; industry and business--25.9%; services and government--69.3%.

Government
Type: Federal state. Independence: The first Swiss confederation was founded in August 1291 as a defensive alliance among three cantons.
Constitution: 1848; extensively amended in 1874; fully revised in 1999 Branches: Executive--Federal Council, collegium of seven members, headed by a rotating one-year presidency. Legislative--Federal Assembly (bicameral: Council of States, 46 members; National Council, 200 members). Judicial--Federal Tribunal.
Administrative subdivisions: 26 cantons (states) with considerable autonomy (20 are full and 6 "half" cantons for purposes of representation in the national legislature).
Political parties: Swiss People's Party (SVP), Social Democratic Party (SP), Free Democratic Party (FDP), Christian Democratic Party (CVP), and several smaller parties representing localities or views from extreme left to extreme right.
Suffrage: In federal matters, universal over 18.

Flag: flag of switzerland

Economy
GDP (2000): $239.5 billion (404 billion Swiss francs).
Annual growth rate (2000): 3.0% in real terms.
Per capita income (2000 est.): $33,260.
Avg. inflation rate (2001): 1.0%.
Natural resources: Waterpower, timber, salt.
Agriculture (2.26% of GDP in 1999): Products--dairy, livestock, grains, fruit and vegetables, potatoes, wine.
Arable land (1999): 26%.
Industry (29.9% of GDP in 1999): Types--machinery, chemicals, pharmaceuticals, time pieces, precision instruments, textiles and clothing, pigment, transportation equipment. Services (67.8% of GDP in 1999).
Trade: Exports--Sfr. 131 billion: machinery and electronics; chemicals and pharmaceuticals; instruments and timepieces. Major markets--Germany, United States, France, Italy, U.K. Imports--Sfr. 130 billion: machinery and electronics; chemicals; vehicles. Major suppliers--Germany, France, Italy, United States, the Netherlands, U.K., Japan, Austria, and Belgium/Luxembourg.

PEOPLE
Switzerland sits at the crossroads of several major European cultures, which have heavily influenced the country's languages and cultural practices. Switzerland has four official languages--German, French, Italian, and Romansch (based on Latin and spoken by a small minority in the Canton Graubuenden). The German spoken here is predominantly a Swiss dialect, but newspapers and some broadcasts use High German. Many Swiss speak more than one language. English is widely known, especially among professionals.

More than 75% of the population lives in the central plain, which stretches between the Alps and the Jura Mountains and from Geneva in the southwest to the Rhine River and Lake Constance in the northeast. Resident foreigners and temporary foreign workers make up about 20% of the population.

Almost all Swiss are literate. Switzerland's 12 institutes of higher learning enrolled 95,700 students in the academic year of 1999-2000. The constitution guarantees freedom of worship. Switzerland consistently ranks high on quality of life indices, including highest per capita income, one of the highest concentration of computer and Internet usage per capita, highest insurance coverage per individual, high literacy and health care rates. For these and many other reasons, it serves as an excellent test market for businesses hoping to introduce new products into Europe.

HISTORY
Originally inhabited by the Helvetians, or Helvetic Celts, the territory comprising modern Switzerland was conquered by Julius Caesar during the Gallic wars and made part of the Roman Empire. It remained a Roman province until the 4th century AD. Under Roman influence, the population reached a high level of civilization and enjoyed a flourishing commerce. Important cities, such as Geneva, Basel, and Zurich, were linked by military roads that also served as trade arteries between Rome and the northern tribes.

After the decline of the Roman Empire, Switzerland was invaded by Germanic tribes from the north and west. Some tribes, such as the Alemanni in central and northeastern Switzerland, and the Burgundians, who ruled western Switzerland, settled there. In 800, the country became part of Charlemagne's empire. It later passed under the dominion of the German emperors in the form of small ecclesiastic and temporal holdings subject to imperial sovereignty.

In 1291, representatives of the three forest cantons of Uri, Schwyz, and Unterwalden signed the Eternal Alliance. This united them in the struggle against "foreign" rule by the Hapsburgs, who then held the German imperial throne. At the battle of Morgarten in 1315, the Swiss defeated the Hapsburg army and secured quasi-independence within the German Empire as the Swiss Confederation.

Under the Treaty of Westphalia in 1648, European countries recognized Switzerland's independence from the Holy Roman Empire and its neutrality. In 1798, armies of the French Revolution conquered Switzerland. The Treaty of Vienna and the Second Peace of Paris in 1815 re-established Swiss independence, and the powers participating in the Congress of Vienna agreed to recognize Swiss permanent neutrality.

Switzerland adopted a federal constitution in 1848, modeled in part on the U.S. Constitution. The Swiss amended their Constitution extensively in 1874, establishing federal responsibility for defense, trade, and legal matters. Since then, continued political, economic, and social improvement has characterized Swiss history. The Swiss did not participate in either world war.

GOVERNMENT
Switzerland is a federal state composed of 26 cantons (20 are "full" cantons and six "half" cantons for purposes of representation in the federal legislature) that retain attributes of sovereignty, such as fiscal autonomy and the right to manage internal cantonal affairs. Under the 1999 Constitution, cantons hold all powers not specifically delegated to the federation. Switzerland's federal institutions are:

  • A bicameral legislature--the Federal Assembly;
  • A collegial executive of seven members--the Federal Council; and
  • A judiciary consisting of a single, regular court, the Federal Tribunal, in Lausanne and special military and administrative courts. The Federal Insurance Tribunal is an independent division for social security questions (the seat of the latter is in Lucerne, but it is part of the Federal Tribunal).

The constitution provides for separation of the three branches of government. The Federal Assembly is the primary seat of power, although in practice the executive branch has been increasing its power at the expense of the legislative branch. The Assembly has two houses--the Council of States and the National Council. These two houses have equal powers in all respects, including the right to introduce legislation. Legislation cannot be vetoed by the executive nor reviewed for constitutionality by the judiciary, but all laws (except the budget) can be reviewed by popular referendum before taking effect.

The 46 members of the Council of States (two from each canton and one from each half canton) are directly elected in each canton. The 200 members of the National Council are elected directly under a system of proportional representation. Members of both houses serve for 4 years. The Assembly meets quarterly in 3-week sessions and can be legally dissolved only after a popular vote calling for a complete constitutional revision.

All citizens 18 or older have the right to vote and run for office in national, cantonal, and communal elections unless individually disqualified by the relevant legislature. A strong emphasis on the initiative and the referendum arises out of the traditional Swiss belief that the will of the people is the final national authority. Every constitutional amendment adopted by parliament has to be brought to the ballot and 100,000 voters may themselves seek a popular vote on a proposed change to the Constitution by means of an initiative. A total of 50,000 signatures is required to petition a popular vote on new federal legislation, the so-called referendum. The Assembly can declare an act to be too urgent to allow time for popular consideration, but this is rare. At any rate, an act passed urgently must have a time limit and is later subject to the same constitutional provisions on popular review as other legislation.

The top executive body is the Federal Council. Although the Constitution provides that the Assembly chooses and supervises the Council, the latter has gradually assumed a preeminent role in directing the legislative process as well as executing federal laws.

The Council has seven Councilors elected for 4-year terms by the Assembly. Each year, the Assembly elects from among the seven a president and vice president, following the principle of seniority. The member who is vice president one year traditionally is elected president the next. Under an arrangement called the "magic formula", two Councilors are elected each from the Christian Democrats, the Social Democrats, and the Free Democrats and one from the Swiss People's Party. Councilors constitutionally act collectively in all matters, not as individual ministers or as representatives of the parties to which they belong.

Each Councilor heads one of seven federal departments and is responsible for preparing legislation pertaining to matters under its jurisdiction. The president, who remains responsible for the department he heads, has limited prerogatives and is first among equals.

The administration of justice is primarily a cantonal function. The only regular federal court, the Federal Tribunal, is limited in its jurisdiction. Its principal function is to hear appeals of civil and criminal cases. It has authority to review cantonal court decisions involving federal law and certain administrative rulings of federal departments, but it has no power to review legislation for constitutionality. The Tribunal's 30 full-time and 30 part-time judges are elected by the Assembly for 6-year terms.

The cantons regulate local government. The basic unit of local government, which administers a village, town, or city, is the commune or municipality. Citizenship is derived from membership in a commune and can be conferred on non-Swiss by a commune. Cantons are subordinate to federal authority but keep autonomy in implementing federal law.

POLITICAL CONDITIONS
Although it has a diverse society, Switzerland has a stable government. Most voters support the government in the armed neutrality underlying its foreign and defense policies. Domestic policy poses no major problems, but the changing international environment has generated a significant re-examination of Swiss policy in key areas such as defense, neutrality, and immigration. Quadrennial national elections typically produce only marginal changes in party representation.

In recent years, Switzerland has seen a gradual shift in the party landscape. The rightist Swiss People's Party (SVP), traditionally the junior partner in the four-party coalition government, more than doubled its voting share from 11.0% in 1987 to 22.5% in 1999, thus overtaking its three coalition partners. This shift in voting shares has put a strain on the "magic formula," the power-broking agreement of the four coalition parties (since 1959 the seven-seat cabinet comprises two Free Democrats, two Christian Democrats, two Social Democrats, and one SVP). Most observers believe that if the SVP sustains its voting share in the 2003 federal elections, the magic formula will have to yield to accord the SVP a second seat on the cabinet.

The constitution limits federal influence in the formulation of domestic policy and emphasizes the roles of private enterprise and cantonal government. However, the Confederation has been compelled to enlarge its policymaking powers in recent years to cope with national problems such as education, agriculture, energy, environment, organized crime, and narcotics.

Principal Government Officials
Federal Council 2002
Finance--Kaspar Villiger (President for 2002)
Economic Affairs--Pascal Couchepin (Vice President for 2002)
Defense--Samuel Schmid
Foreign Affairs--Joseph Deiss
Interior--Ruth Dreifuss (President for 2000)
Environment, Transport, Energy and Communications--
Moritz Leuenberger (President for 2001)
Justice and Police--Ruth Metzler-Arnold
Federal Chancellor--Annemarie Huber-Hotz
Ambassador to the United States--
Christian Blickenstorfer (since 2001)

Switzerland maintains an embassy in the United States at 2900 Cathedral Avenue NW, Washington, DC, 20008. Consulates General are in Atlanta, Chicago, Houston, Los Angeles, New York, and San Francisco. Swiss national tourist offices are in Chicago, New York, and San Francisco.

ECONOMY
Despite a dearth of natural resources, the Swiss economy is among the world's most advanced and prosperous. Per capita income is virtually the highest in the world, as are wages. During most of the 1990s, the Swiss economy was western Europe's weakest, with annual GDP growth averaging 0% between 1991 and 1997. The economic recovery, however, which began during the second half of 1997, has steadily gained momentum. The year 2000 registered the strongest GDP growth in a decade at 3.0% in real terms. Being so closely linked to the economies of western Europe and the United States, Switzerland has not been able to escape the slowdown being experienced in these countries. In 2001 the rate of growth has fallen from the highs experienced the previous year, and the economy was expected to grow by about 1.6%. Economic growth is expected to be around 2.0% for 2002--the rate most economists see as the economy's average long-term growth potential.

The economic stagnation experienced from 1991 to 1997 had a major impact on the labor market. Over this period, 255,000 jobs (aggregated as full-time job equivalents) were lost. To the surprise of most forecasters, however, the unemployment situation improved dramatically from a rate of 5.7% in February 1997 (the highest in decades) to 1.6% in June 2001. Since then unemployment has slightly increased to 2.6% in January 2002.

Trade has been the key to prosperity in Switzerland. The country is dependent upon export markets to generate income while dependent upon imports for raw materials and to expand the range of goods and services available in the country. Switzerland has liberal trade and investment policies and a conservative fiscal policy. The Swiss legal system is highly developed, commercial law is well-defined, and solid laws and policies protect investments. The Swiss franc is one of the world's soundest currencies, and the country is known for its high standard of banking and financial services.

A highly skilled, motivated work force, laws promoting labor flexibility, and collective bargaining agreements between trade unions and employers' associations have meant very little labor unrest. The machinery, metals, electronics, and chemicals sectors are world-renowned for precision and quality. Together they account for well over half of Swiss export revenues. In agriculture, Switzerland is about 60% self-sufficient and imports about $5 billion of agricultural products annually. Swiss farmers are one of the most highly protected and subsidized producer group in the world. The U.S. share of the Swiss agricultural import market is currently quite small, but the steady application of World Trade Organizations rules should gradually improve the situation.

Tourism, banking, engineering, and insurance are significant sectors of the economy and heavily influence the country's economic policies. Swiss trading companies have unique marketing expertise in many parts of the world, including eastern Europe, the Far East, Africa, and the Middle East. Not only does Switzerland have a highly developed tourism infrastructure (making it a good market for tourism-related equipment and services), the Swiss also are intrepid travelers themselves. On a per capita basis, more tourists visit the United States from Switzerland than from any other country. Tourism is the most important U.S. export to Switzerland (earnings almost $2 billion). In 2000, more than 400,000 Swiss went to the United States--and for the majority it was not their first visit.

According to the Swiss National Bank (SNB), Switzerland's current account surplus increased by $4.4 billion to $31.2 billion in 2000 (7.4 billion to 52.4 billion Swiss francs), equivalent to 12.9% of GDP--the highest such percentage among OECD countries. This represents a 16.5% increase over 1999's figure of $26.8 billion (45.0 billion Swiss francs), or 11.6% of GDP. In value terms, exports of goods rose by 10.6% and imports by 13.4%. The balance of trade showed a modest deficit of $1.25 billion (2.1 billion Swiss francs). The surplus from services increased by $1.7 billion to $13.5 billion (2.8 billion to 22.6 billion Swiss francs). Investment earnings from abroad rose by $5.2 billion to $28.0 billion (8.8 billion to 47.1 billion Swiss francs), due to improved net earnings on both portfolio and foreign direct investments.

The European Union (EU) is Switzerland's largest trading partner, and economic and trade barriers between them are minimal. In the wake of the Swiss voters' rejection of the European Economic Area Agreement in 1992, the Swiss Government set its sights on negotiating bilateral sectoral agreements with the EU. After more than 4 years of negotiations, an agreement covering seven sectors (research, public procurement, technical barriers to trade, agriculture, civil aviation, land transport, and the free movement of persons) was achieved at the end of 1998. Parliament officially endorsed the so-called "Bilaterals" in 1999, and the Swiss people approved them in a referendum in May 2000. The agreements, which had to be ratified by the European Parliament as well as legislatures in all 15 EU member states, are expected to come into force in the first half of 2002.

Switzerland has so far attempted to mitigate possible adverse effects of non-membership by conforming many of its regulations, standards, and practices to EU directives and norms. The Swiss Government has embarked on a second round of bilateral negotiations with the EU (known as Bilaterals II). Talks on the four dossiers of customs fraud, environment, statistics, and trade in processed agricultural products started in July 2001. Negotiations on the liberalization of services, pensions, student and youth exchange programs, media, the taxation of savings as well as police and judicial cooperation (under the Schengen and Dublin accords) are yet to begin. While most issues are not really contentious, talks on customs fraud are moving slowly. Police and judicial cooperation and the taxation of savings are controversial, mostly because of possible adverse effects on Swiss bank secrecy. Switzerland refuses to open negotiations on a tax on savings as long as the EU has not yet framed its mandate for negotiations for all 10 dossiers.

The Swiss federal government has declared EU membership as its long-term goal, but in a March 2001 referendum over 70% of voters rejected rapid steps toward EU membership. The issue of EU-membership is therefore likely to be shelved for several years. The government also formally declared that it wants Switzerland to join the United Nations. A popular initiative on UN membership, which the government endorses, will be voted on March 3, 2002.

In 2000 U.S. bilateral trade with Switzerland increased again (up 10% over 1999), surpassing $20 billion for the first time. The resurgent Swiss economy combined with the excellent reputation U.S. products and services enjoy in Switzerland suggests that 2001 will be a period of exceptional opportunities for American companies in this market.

The United States is the second-largest importer of Swiss goods after Germany. America, on the other hand, exports more to Switzerland each year than to all the countries of the former Soviet Union and eastern Europe combined. In addition, the United States is the largest foreign investor in Switzerland, and conversely, the primary destination of Swiss foreign investment. Some 200,000 American jobs, it is estimated, depend on Swiss foreign investments.

Switzerland is a member of a number of international economic organizations, including the WTO, the IMF, the World Bank, and the OECD.

DEFENSE
Switzerland has a 524,000-member militia army, but current proposals call for a significant reduction in this number to 220,000. All physically fit male Swiss citizens, aged 20 to 42, must serve. After this period, most personnel are assigned to civil defense duties until the age of 52. Members of the field forces are mobilized for training every other year for at least 3 weeks (longer for officers and specialists) and from 300 days for privates to 900 days for captains. A new category of soldier called a "single-term conscript" will be allowed to fulfill his total service time in one term of about 300 active-duty days. The armed forces have a small nucleus of about 3,600 professional soldiers, half of whom are either instructors or staff officers. The majority of other professionals are guards for fortifications. The army has almost no full-time active combat units but is capable of full mobilization within 72 hours. Women may volunteer to serve in the armed forces and presently total about 2,000; however, they are not assigned to functions involving the use of weapons for purposes other than self defense. The armed forces are organized into four army corps and an air force and are equipped with modern, sophisticated, and well-maintained equipment. In 1993, the Swiss Government ordered 34 FA-18s from the United States.

FOREIGN RELATIONS
Though not a UN member, Switzerland is party to the Statute of the International Court of Justice, a member of most UN specialized agencies and the International Atomic Energy Agency, and participates in many UN activities, including the Economic Commission for Europe, UN Environment Program, the UN High Commissioner for Refugees, UN Educational, Scientific and Cultural Organization, UN Conference for Trade and Development, UN Industrial Development Organization, and the Universal Postal Union (UPU). Switzerland maintains a permanent observer mission at UN Headquarters. Switzerland also is a member of the following organizations: World Trade Organization, Organization for Economic Cooperation and Development, European Free Trade Association, Bank for International Settlements, Council of Europe, Organization for Security and Cooperation in Europe, and INTELSAT. In 1992 Swiss voters approved membership in the Bretton Woods organizations but later that year rejected the European Economic Area agreement, which the government viewed as a first step toward EU membership. Among the declared fundamental principles of Swiss foreign policy are neutrality; universality; solidarity; international participation; and promotion of human rights, democracy, security, and peace.

Traditionally, Switzerland has avoided alliances that might entail military, political, or direct economic action, but in recent years the Swiss have broadened the scope of activities in which they feel able to participate without compromising their neutrality. Swiss voters rejected UN membership by a 3-to-1 margin in 1986 but will vote on it again in March 2002. The electorate also rejected a government proposition to deploy Swiss troops as UN peacekeepers (Blue Helmets) in 1994 but Switzerland joined NATO's Partnership for Peace and the Euro-Atlantic Partnership Council in 1996 and 1997, respectively, and deployed Yellow Berets to support the OSCE in Bosnia. On June 10, 2001, Swiss voters approved by a margin of 51% to 49% new legislation providing for the deployment of armed Swiss troops for international peacekeeping missions under UN or OSCE auspices. A second referendum on legislation to facilitate international cooperation in military training also passed by the same margin.

Switzerland maintains diplomatic relations with almost all countries and historically has served as a neutral intermediary and host to major international treaty conferences. The country has no major dispute in its bilateral relations. Since 1980, Switzerland has represented U.S. interests in Iran. Switzerland played a key role in brokering a truce agreement between the Sudanese Government and Sudan's Peoples Liberation Army (SPLA) for the Nuba Mountain region, signed after a week's negotiations taking place near Lucerne in January 2002.

The principle of solidarity is described as Switzerland's moral obligation to undertake social, economic, and humanitarian activities that contribute to world peace and prosperity. This is manifested by Swiss bilateral and multilateral diplomatic activity, assistance to developing countries, and support for the extension of international law, particularly humanitarian law. Switzerland (mainly Geneva) is home to many international governmental and non-governmental organizations, including the International Committee of the Red Cross (whose flag is essentially the Swiss flag with colors reversed, the Red Cross historically being a Swiss organization). One of the first international organizations, the Universal Postal Union, is located in Bern. Participation--or engagement--has been expressed by an active Swiss role in various international organizations, programs and conferences, within and outside the UN system, and Swiss availability to facilitate the resolution of international conflicts.

The Swiss imposed economic sanctions against Iraq after the 1990 invasion of Kuwait. Switzerland also has joined UN economic sanctions imposed on Libya, Sierra Leone, UNITA (Angola), Liberia, and on Serbia/Montenegro. Switzerland has furnished military observers and medical teams to several UN operations. Switzerland is an active participant in the OSCE, its foreign minister serving as Chairman-in-Office for 1996. Switzerland also is an active participant in the major nonproliferation and export control regimes.

Switzerland implemented October 2, 2000, an ordinance to enforce UN sanctions against the Taliban (UNSCR 1267), which it amended April 12, 2001 in accord with tighter UN regulations (UNSCR 1333). Measures include an arms embargo, a ban on Afghan air traffic, a prohibition of technical assistance and the sale of acetic acid (used in drug production), as well as diplomatic and financial sanctions. The Swiss Government issued an ordinance November 7, 2001, declaring illegal the terrorist organization Al Qaida as well as possible successor or supporting organizations. More than 200 individuals or companies linked to international terrorism have been blacklisted to have their assets frozen. Thus far, Swiss authorities have blocked about 30 accounts totaling U.S.$20 million.

Under a series of treaties concluded after World War I, Switzerland assumed responsibility for the diplomatic and consular representation of Liechtenstein, the protection of its borders, and the regulation of its customs.

U.S.-SWISS RELATIONS
Switzerland is a democratic country subscribing to most of the ideals with which the United States is identified. The country is politically stable with a fundamentally strong economy. It occupies an important strategic position within Europe and possesses a strong military capability. It has played an increasingly important role in supporting the spread of democratic institutions and values worldwide, as well as providing humanitarian relief and economic development assistance. U.S. policy toward Switzerland takes these factors into account and endeavors to cooperate with Switzerland to the extent consistent with Swiss neutrality.

The first 2 years of cooperation under the U.S.-Swiss Joint Economic Commission (2000-02) invigorated bilateral ties by recording achievements in a number of areas, including consultations on anti-money laundering efforts, bioterrorism, and pharmaceutical regulatory cooperation; an e-government conference; and the re-establishment of the Fulbright student/cultural exchange program.

The first official U.S.-Swiss consular relations were established in the late 1820s. Diplomatic relations were established in 1853. The U.S. ambassador to Switzerland also is accredited to the Principality of Liechtenstein.

Principal U.S. Officials
Ambassador--Mercer Reynolds 
Deputy Chief of Mission--Jack Zetkulic

The U.S. Embassy in Switzerland is at Jubilaeumsstrasse 93, 3005 Bern, telephone: (41) (31) 357-7011. The U.S. Mission to the European Office of the United Nations and other International Organizations is in Geneva at Route de Pregny 11, 1292 Chambesy, telephone: (41) (22) 749-4111. The U.S. Mission to the World Trade Organization (WTO) is in Geneva at Avenue de la Paix 1-3, 1202 Geneva, telephone (41) (22) 749-4111. The U.S. Delegation to the Conference on Disarmament (CD) is in Geneva at Route de Pregny 11, 1292 Chambesy, telephone: (41) (22) 749-4407. America Centers and Consular Agencies also are maintained in Zurich and Geneva.



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