Swiss industry downplays Libyan boycott

The Swiss Oil Association says an oil embargo is a blunt weapon Reuters

In the latest twist to its long-running dispute with Switzerland, Libya has announced a “total trade boycott”.

Announcing the boycott on Wednesday, a Libyan government spokesman singled out medicines and industrial equipment as two imports from Switzerland for which alternatives would be sought.

The decision follows a call last week by Libyan leader Moammar Gaddafi for a “holy war” against Switzerland. On Thursday Libya’s ambassador to the United States, Ali Aujali, said this call actually referred to an “economic and commercial boycott”, not “an armed struggle”.

The balance of trade between the two countries is very much in Libya’s favour, so in fact Libya – whose main export is oil – stands to lose more from a boycott. Within Switzerland neither importers nor exporters are unduly worried about the latest Libyan threat to trade relations.

In any case, economic measures introduced against Switzerland by Libya in 2008 have already taken their toll. In 2009 Swiss exports to Libya were down by 44.7 per cent on the previous year, while its imports fell by 79.4 per cent, according to the statistics of the Swiss customs administration.

“Our businesses have accepted for some time the fact that economic relations with Libya have become tougher,” Ruedi Christen, head of communications of swissmem, the umbrella organisation of the Swiss engineering industry.

“They were better before 2008, but even then the figures were not huge.”

“A disaster for patients”

Roland Schlumpf, head of information at Interpharma, the umbrella organisation of the pharmaceutical industry, said exporting to Libya had become “more difficult” since July 2008 – the start of the Swiss-Libyan row – with the appearance of unpredictable administrative hurdles. He expects the boycott to make things even tougher.

“Things won’t go on as before, that is clear,” he told swissinfo.ch. However, Libya is not a major market for Interpharma’s members, so a boycott would not be an economic disaster for them. But it would be a disaster for the Libyan patients, he said.

“Our firms will do their best to continue to get life-saving medicines through to Libya. Whether they will manage, we don’t yet know.”

Taking a broader view, Jan Atteslander, head of international economic affairs at the Swiss Business Federation (economiesuisse), said a boycott would have no effect on the Swiss economy as a whole as Libya is 73rd on the list of export destinations.

A Libyan boycott of Switzerland would have no impact on oil imports either, Rolf Hartl, managing director of the Swiss Oil Association, believes.

“Before such an embargo really came into force we would have enough time to import oil from other states,” he explained.

In any case, in 2009 only 1.4 million tonnes were imported from Libya – “a relatively small amount”, said Hartl. Other producing countries – including Kazakhstan, Azerbaijan, Algeria and Nigeria – have made up for most of the shortfall since 2008.

Humanitarian concern

The economic boycott is of minor importance to the engineering industry when compared with the fate of Max Göldi, a Swiss currently serving a four-month jail sentence in Tripoli for violating visa regulations. He was in Libya as the representative of the engineering giant ABB.

“It is not economic questions that are at the foreground now, but humanitarian ones: getting Max Göldi released and bringing him home. Other issues are subordinate to this goal,” said Christen.

For Atteslander, “The show is not yet over.”

“We are still on the escalating side of this conflict. It’s extremely difficult for us to say what’s going to happen now, or tomorrow, or in six months. It’s definitely not what we would call an enabling business environment.”

Hartl is however optimistic that things will return sooner or later to “business as usual”. Libya owns one of Switzerland’s two oil refineries. “It’s an important economic asset for them. They won’t put it at risk over this matter,” he said.

Sabre-rattling

But in a globalised world, can boycotts have any impact at all?

“History has shown that economic boycotts are not suited to solving political problems,” said Atteslander. “Both sides suffer, in this case Libya even more than the Swiss side. It’s more a political signal than a helpful way to find a solution.”

Oil is certainly a difficult commodity to control, as Hartl pointed out, describing the Libyan action as political sabre-rattling.

“An oil embargo is a blunt weapon,” he said. “If Libya sells a shipment of oil on the spot market, the buyer is a trader or an oil company who sells it on, and Libya has no more control over where it goes.”

“The refineries take economic decisions. They buy the oil that meets their requirements for quality and price,” Hartl said.

The engineering industry also has ways of maintaining trade, as Christen explained.

“I don’t know what businesses will decide. For multinationals there is always the possibility of exporting, or producing, via a third country.”

Schlumpf agreed that although it is not necessarily simple, pharmaceuticals too can be produced in different places and transported via different routes.

“An embargo against a small country isn’t that easy to impose.”

Julia Slater, swissinfo.ch

Swiss-Libyan trade

In 2008 Switzerland exported goods worth SFr282.3 million ($262.9 million) to Libya, mainly machinery, according to the State Secretariat for Economic Affairs. This was 0.13% of total Swiss exports.

In 2009 exports were down to SFR156.2 million: 0.08% of the total.

Switzerland’s main import from Libya is oil. In 2008 imports were worth SFr3.3 billion. In 2009 they had fallen to SFr0.7 billion.

Trade between the two countries fell after Libya started introducing economic measures against Switzelrand in 2008, in the wake of the arrest of Hannibal Gaddafi in Geneva in July.

It reduced and eventually banned all Swiss flights to Libya. Libyan assets were removed from Swiss banks. Its deposits fell from SFr5.75 billion to SFr628 million.

But in January 2010 trade between the two sides started to rise.

Dispute timeline

July 2008: Hannibal Gaddafi and his wife are charged with abusing their staff. The staff are later compensated and charges dropped. Swiss nationals Max Göldi and Rachid Hamdani are arrested.

August 2009: The Swiss president apologises for Hannibal’s arrest.

October: A deadline for normalising Swiss-Libya relations passes.

November: Switzerland introduces visa restrictions for Libyans, affecting the entire Schengen area. Göldi and Hamdani are sentenced for visa violations.

January 2010: Hamdani’s term is overturned and Göldi’s is cut.

February: Libya stops issuing visas to citizens from the Schengen zone. European foreign ministers try to hammer out a solution. Göldi starts prison term. Hamdani is allowed to leave Libya.

February 25: Gaddafi calls for “holy war” against Switzerland.

March 1: Hannibal visits Göldi in jail.

March 3: Libyan Foreign Minister says dispute “close to solution”. A few hours later government announces “total economic boycott”.

March 4: Libya’s ambassador to the US says Gaddafi did not mean an armed struggle when he called for “jihad” against Switzerland, rather an economic boycott. US State Department urges Libya and Switzerland work out their differences in direct dialogue.