Diplomacy driven by economic interests

The Iraq crisis has seen the Swiss walking a diplomatic tightrope Keystone

The Swiss business community is bracing itself for a rough ride in the event of war in Iraq, with Switzerland's main trading partners likely to be hit hard.

But analysts say Bern’s cautious diplomatic manoeuvres during the crisis will help it weather the economic storm – regardless of the outcome of the stand-off.

Around half of Switzerland’s trade is carried out with member states of the European Union, with the United States its second-largest trading partner.

Rudolf Ramsauer, the head of the Swiss Business Federation – economiesuisse – says this poses a political conflict of interests for Bern.

Business leaders are hoping consensus can be reached within the United Nations Security Council.

Ramsauer says politicians on all sides must heal the divisions within the UN and salvage the organisation’s credibility – and the global economy.

“The weakening of international organisations such as the UN and the World Trade Organisation is not in our interests,” says Ramsauer. “They provide us with a stable economic framework.”

Political ideals

But Victor-Yves Gebali, a professor at Geneva’s Institute for International Studies, says too much energy is being devoted to safeguarding these global institutions, and not enough to political ideals.

“This crisis is about two opposing world views,” says Gebali. “On the one hand, we have France and Germany defending the tenets of international law; on the other, we have a superpower looking to impose its will on the international community.”

Gebali says Switzerland has so far sided with the French camp, arguing that its diplomats – including the Swiss ambassador to the UN, Jenö Staehelin – have repeatedly reiterated their commitment to a negotiated solution within the UN.

But Gebali adds that it remains to be seen whether this is the right stance for Switzerland in financial terms, as Bern could easily see its economic interests suffer if the US goes it alone.

“In this crisis, you have to make a choice between your economic interests and your [political beliefs].”

Economic imperatives

But Hans-Ulrich Jost, a Swiss historian, argues that historical precedents show that Switzerland has always weathered diplomatic storms without too much damage to its economy – and the scenario is likely to be the same in the current crisis.

“Whatever happens, the Swiss government will be able to handle its partners – and Washington in particular.”

Jost says it is no coincidence that the Swiss president, Pascal Couchepin, was quick to request a meeting with President Bush during this summer’s forthcoming G8 summit in Evian.

In an interview with the German-language “SonntagsZeitung”, Couchepin stressed the importance of Swiss ties with the US.

“Many jobs in Switzerland depend on the good relationship with the USA,” he said.

Even though Couchepin no longer heads up the economics ministry, Jost says it is clear the Swiss president will be defending the country’s financial interests.

“Modern-day Switzerland has always presented itself as a tiny country without resources,” he says. “But in the past century, it’s consistently ranked among the world’s top 15 economic powers.”

“Bern’s given up on having a foreign policy in favour of economic opportunism,” adds Jost. “But at the same time, it’s always been careful to keep [its political allies] happy.”

swissinfo, Frédéric Burnand (translation: Vanessa Mock)

In brief

Switzerland’s main trading partners are likely to be hit hard in the event of a war in Iraq, which could mean trouble for Swiss businesses.

But analysts say Bern’s cautious diplomatic moves during the crisis will help the business community.

Swiss business leaders hope that a consensus can be reached within the United Nations Security Council.

Around half of Switzerland’s trade is carried out with member states of the European Union, with the United States its second-largest trading partner.