Switzerland Gives EU $1.3 Billion Amid Treaty Negotiations

Swiss President and Federal Councillor of Economic Affairs Doris Leuthard speaks at the World Economic Forum’s annual meeting in 2010. (Wikimedia Commons)

Switzerland announced on November 13 a 1.3 billion SFr. ($1.3 billion) contribution to the European Union for the purpose of lowering economic inequalities and migration control, with a focus on EU members in Eastern Europe, as well as Greece and Italy, who have faced large volumes of incoming migrants. The Swiss Federal Council plans to distribute the funds for training and education in eastern European countries over a decade, largely for the purpose of decreasing migrant flow into Switzerland by lowering unemployment and improving migration management in EU nations of first entry.

According to the Swiss government, the funds are “intended to reduce economic and social disparities in Europe, which it described as in Switzerland’s “economic and political interest.”

The Swiss will earmark 200 million SFr. ($200 million) specifically for migration control, and additional funds for professional training, economic growth, and unemployment reduction. Parliament must still approve the proposed funds, although Switzerland has made similar contributions to the EU in the past.

The development aid comes as Switzerland aims to stabilize relations with the European Union and to establish a new treaty governing this relationship. The Swiss government made the announcement during a meeting between EU Commission President Jean-Claude Juncker and Swiss President Doris Leuthard.

Switzerland is not an EU member, but the European Union is Switzerland’s main trading partner, and a complex web of bilateral deals on trade, labour, migration, and other critical issues closely connects the two. Both sides wish to establish a framework in the treaty to replace the more than 100 bilateral accords, ensure Switzerland adopts EU laws, and grant Switzerland access to the EU single market.

The treaty would also allow greater Swiss access to the EU power markets, lowering costs and increasing supplies during emergencies, and the EU financial services market, which would greatly boost Swiss-based banks and insurers. None of these deals can be achieved without a treaty, which EU officials believe make it more appealing to Swiss voters who will likely have to approve it via referendum.

Both Swiss and EU officials intended to finalize the treaty by the end of the year, but concerns over the jurisdiction of EU courts in dispute resolution have delayed the conclusion of the agreement, which will not occur this year.

Relations between Switzerland and the EU have been rocky since 2014 when Swiss voters accepted a proposal to re-introduce immigration quotas, limiting the free flow of citizens required for access to the EU single market and nullifying various bilateral agreements with the EU. Nonetheless, after three years of maneuvering, Parliament approved a highly modified plan that pacified the EU by not re-instituting quotas and Swiss citizens by instead granting citizens registered as unemployed priority in job applications.

Brussels and Bern have since established agreements on industrial standards and carbon trading systems. The EU is also soon expected to formally establish Swiss financial rules as meeting EU standards.

“Switzerland has shown that it is a reliable partner,” Juncker told reporters in a sign of warming relations. “Things are going in the right direction,” he said after meetings in Bern.

However, both the treaty and the 1.3 billion SFr. ($1.3 billion) contribution faced mixed reactions in Switzerland. Some politicians view the contributions and the treaty positively, as in the case of Socialist MP Roger Nordmann of Vaud, who said the move is “in the interest of Switzerland” and “completely normal.”

Others, primarily of the right-wing Swiss People’s Party (SVP), currently the largest in parliament, condemned the contribution and the treaty, accusing the government of freely surrendering money to the EU without receiving anything in return.

Conservative politicians worry that the treaty, if it gives EU judges power in settling Swiss disputes, will aid the SVP politically before the 2019 elections.

A survey earlier this month by gfs.bern for Credit Suisse showed that 60 percent of citizens back current bilateral relations with the EU, down from 81 percent in 2016. Twenty-eight percent support ending the negotiations and the accords, up nine percent from 2016.

The SVP has already started a campaign to sink the treaty and fundamentally alter the nation’s immigration policy.