Swiss confident of solution to EU talks impasse

Switzerland's strict bank customer privacy laws is a sore point in discussions between Bern and the EU Keystone Archive

A senior Swiss negotiator says he is hopeful the government can find a compromise to unblock key negotiations with the EU.

Jacques de Watteville, head of the Foreign Ministry’s Economic and Financial Affairs Division, said he was confident that the next round of bilateral negotiations with the European Union would not see an erosion of Switzerland’s much cherished banking secrecy laws, despite pressure from certain EU member states.

The official was speaking as the Swiss cabinet met for the first of two sessions at which it will devise a strategy to take into negotiations with the EU on four key financial issues. These topics – customs fraud, taxation of savings, liberalisation of services and the Schengen and Dublin accords – form part of a second raft of ten bilateral agreements.

The first batch of seven accords – approved by the Swiss people in a referendum and ratified by all 15 EU national parliaments – will come into force on April 1.

Parallel talks

The EU wants talks to advance rapidly on the matter of customs fraud – and especially cigarette smuggling – and taxation of savings. The Swiss want all ten dossiers to be treated in parallel.

“It’s inconceivable that we advance only on those issues where the EU has an interest,” de Watteville told swissinfo.

So far, of these four financial dossiers, talks have only begun on the question of customs fraud. These are stalled, after the EU demanded that Switzerland make further concessions to the proposals it has made. It is no secret that certain EU member states believe this is an ideal opportunity to push for an erosion of Swiss banking secrecy laws.

“In the European Union there are those who would like to have a solution that goes beyond the concrete problem and puts it at a dogmatic level,” de Watteville said.

“The issue of banking secrecy is not up for discussion,” he said, pointing out that banking secrecy exists in many other countries – including members of the EU.

Cabinet divisions

De Watteville said Switzerland had already taken important measures to combat customs fraud, and was prepared to “offer a solution for every problem” the EU had on the issue.

“What is at stake is not banking secrecy, but cooperation in the field of customs fraud. We must find an adequate solution that respects the Swiss legal order and at the same time prevents Switzerland being used for these kinds of criminal activities,” he added. This raises the question of how far the Swiss are prepared to go in combating fiscal crimes, and on this the cabinet is divided.

Economy Minister Pascal Couchepin and Foreign Minister Joseph Deiss are in favour of adopting a more flexible approach, while the finance minister and current president, Kaspar Villiger, is opposed to giving any ground.

“I don’t think that their positions are so different. Switzerland is saying: ‘show us the problems and we’ll find solutions’. The political will is there – from Mr Couchepin and Mr Deiss, but also Mr Villiger – to find those solutions, to cooperate, but within certain limits,” de Watteville explained.

Analysts are portraying the dilemma facing the government as a clear choice between maintaining banking secrecy and closer integration with Europe.

The government will publicly outline its strategy next week. Whichever strategy it adopts in the negotiations on customs fraud will have a huge bearing on the talks on other topics, most notably, how to combat tax evasion.

Bottom-up approach

He said there was a fundamental difference in approach between the Swiss and the EU. While the Swiss favoured a “bottom-up” approach, whereby solutions are found to specific problems, the EU wanted a “top-down” approach, where an overriding principle solves everything.

“We are pragmatic, and believe bottom-up approach is more appropriate to our situation. We are not opposed to other solutions, but they have to be realistic and politically acceptable to the Swiss parliament and the Swiss people,” he said.

Officials insist that banking secrecy has not prevented Switzerland from cracking down on money laundering and tax evasion. Recent studies showed that its legislation was among the most advanced in the world at combating money-laundering. Yet opposition from abroad persists.

“Switzerland is not very good at public relations. Certainly we should invest more in explaining what we are doing. There are still a lot of clichés in worldwide public opinion about what Switzerland is doing in that respect,” de Watteville says.

by Roy Probert