Switzerland and its banking secrecy laws have come into the line of fire of French presidential candidates looking to boost the public purse by taxing expatriates.
But with voters going to the polls in the first round on Sunday, will the presidential election lead to a change in relations between Paris and Bern?
Those on the left in Switzerland are hoping that if front-runner and Socialist candidate François Hollande moves into the Elysée Palace, there will be a repetition of the easing of tensions that followed François Mitterrand’s election in 1983, but remarks from the various candidates do not bode well.
Incumbent Nicolas Sarkozy has been a strident critic of Switzerland, last year slamming its “deficiencies” in cooperating on tax matters and comparing the country to the tax havens of central America.
In March, as the unpopular president launched his bid for re-election, he proposed taxing people who leave the country in order to avoid paying taxes – something which would necessitate a renegotiation of the double taxation agreement between France and Switzerland.
Hollande also wants to renegotiate the agreement which is deemed too flexible. He has also proposed applying France’s tax on large fortunes to expatriates.
Meanwhile, on the far left Jean-Luc Mélenchon has labelled Switzerland “the deposit box of the world’s thugs”, while Marine Le Pen for the far-right National Front wants to revoke double taxation agreements with “tax havens” without specifically naming Switzerland.
For the Greens, Eva Joly also entered the fray by proposing an “exit tax” while evoking those who live “on the edge of Lake Geneva solely to avoid paying taxes”.
So far there’s been silence from Bern. “We never comment on the remarks of political candidates,” said a finance ministry spokesperson. “It would be different if it was a precise programme being implemented by an elected government.”
Such vocal attacks are a major turnaround from 2007 when Sarkozy’s election team had no qualms about collecting money in Switzerland for his campaign.
One of his advisors, Manuel Aeschlimann, advertised his Bernese origins, while the Socialist candidate Ségolène Royal – Hollande’s former partner and the mother of his children – advocated “participatory democracy” and showed interest in the Swiss system of direct democracy.
But the 2008-09 financial crisis changed all that. Paris intensified its efforts to fight tax evasion and Switzerland, with its banking secrecy laws, was singled out. Relations became strained.
“Nicolas Sarkozy probably has a problem with us,” said a surprised Swiss President Micheline Calmy-Rey in November 2011 after Sarkozy declared Switzerland should be excluded from the international community at a G-20 summit.
Beyond the financial crisis, Sarkozy has largely ignored the bilateral relationship. During his mandate, traditional annual meetings between the heads of state have been held just twice.
“Sarkozy said some pretty strong things in relation to Switzerland, making a big show of it but not always following through,” said Didier Berberat, Social Democrat senator for Neuchâtel.
In this sense, “a Hollande presidency couldn’t be any worse. The Socialist candidate seems to me to be more level-headed than the unpredictable Sarkozy. Bern will have to quickly contact the Elysée and the new government to establish a stronger relationship,” Berberat said.
Berberat met Hollande last Sunday at a political rally in the Parisian suburb of Vincennes and says the pair agreed to strengthen ties between their two parties.
Should the candidates’ “threats” in relation to Switzerland be taken more seriously?
“These comments are directed more at an internal audience than externally,” Berberat reckoned.
Hollande has pledged to be a less hyperactive president than Sarkozy, and the makeup of his government, if he is elected, will have a certain influence on the bilateral relationship.
His team includes as many Swiss detractors – Vincent Peillon and Arnaud Montebourg – as it does “Swissophiles”, real or imagined – Manuel Valls, Swiss on his mother’s side, or the conciliatory Laurent Fabius.
Rubik tax accords
For Bern, it’s a question of waiting until the election is over.
The view in the Swiss capital is if Sarkozy wins, it’s not impossible that he’ll show interest in the Rubik accords.
Rubik is the name given to accords signed with the British and German governments which allow for applying a withholding tax to assets held in Swiss bank accounts by citizens of those countries while maintaining their anonymity.
In Bern, the thinking is that if other states also opt for Rubik, it’s not out of the question that Hollande, if he is elected, will also rally around it.
Relations between Switzerland and France have rarely been idyllic, according to historian Alain-Jacques Tornare.
“Don’t forget that French irritation regarding the flow of capital into Switzerland does not date from yesterday, nor from Mitterrand’s rise to power,” Tornare said.
“Already in the 1960s, the collapse of the new French franc provoked a financial exodus towards Switzerland which infuriated President Charles de Gaulle.”
In 1983, the exodus of capital didn’t stop Mitterrand becoming the first French president to visit Switzerland since 1910. The renewal of ties allowed for an easing of bilateral tensions and the organisation of semi-annual meetings at the highest level.
It is that spirit of friendly but demanding dialogue that those on the left in Switzerland hope to re-establish in the event that François Hollande becomes president.
French in Switzerland
In 2010, Switzerland was home to 95,600 French citizens. This had risen from 73,500 in 2006.
The French represented the fifth-largest group of foreigners living in Switzerland (after Italy, Germany, Portugal and Serbia), although the number would be higher taking into account those who have not registered at the consulate.
(Source: Federal Statistics Office)
In recent weeks, most polls have placed conservative candidate and incumbent president Nicolas Sarkozy neck-and-neck with Socialist challenger François Hollande in the first round with around 27% of the vote each. However, several polls on April 20 placed Hollande up to three points ahead of Sarkozy in the first round.
According to the most recent poll from TNS Sofres-Sopra, Marine Le Pen of the far-right National Front is expected to take third place on Sunday with 14-17% of votes, followed by Jean-Luc Mélenchon for the far left with 12-14.5%. Centrist candidate François Bayrou will pick up around 10%.
If the polls are right and Hollande and Sarkozy face off in the run-off vote on May 6, Hollande remains the favourite – as he has been since the start of the campaign. Latest polling suggests he will comfortably defeat Sarkozy with 54-57% of the vote.
(Adapted from French by Sophie Douez)