Gramm says Europe and US need each other

Phil Gramm says fewer nations have closer economic ties than the US and Switzerland Keystone Archive

Former United States senator Phil Gramm has said that transatlantic tensions over the war in Iraq will not result in major economic repercussions.

Gramm, who is vice-chairman of UBS Investment Bank, added that few nations were more closely bound economically than Switzerland and the US.

“Do people buy products and invest based on hurt feelings and political differences? I think happily the answer is no,” he told the annual meeting in Zurich of the Swiss-American Chamber of Commerce.

“In the end, people will want to buy the best product at the lowest possible price and will invest based on expected return and risk. The reality is that Europe and America need each other,” he commented.

“As my grandmother used to say, ‘blood is thicker than water, but money is thicker than blood’,” he added.

Substantial strains

In Monday’s keynote address, Gramm admitted that the build-up to the war in Iraq had placed “substantial strains” on the relationship between Europe and the US.

But he said that, in retrospect, it was clear that the two sides had been drifting apart for some 20 years. One example was Nato.

“Nato is the most successful alliance in history and yet it is difficult to define what Nato is supposed to do given the demise of the Soviet Union,” he said.

Gramm also commented on the differing perceptions of the role of the United Nations on either side of the Atlantic.

“Many Europeans view the UN as an end in itself – an arbitrator of legitimacy as something of a world government,” he said.

“Americans have never viewed the UN as an end in and of itself. Americans have seen the UN as a vehicle for achieving national objectives.”

September 11

He said that before the terrorist attacks of September 11, some degree of international unity probably would have been required for military action against Iraq.

“However, after September 11, America was clearly determined to act alone if need be to meet what it perceived to be a threat to its people,” he added.

Commenting on the current downturn in the global economy, Gramm said it was the result of a speculative bubble that broke in the equity market.

“The reality is that our current recession was triggered almost totally by a dramatic decline in investment. The recovery will have to come from an increase in investment,” he said.

Future growth

But he was optimistic that delays to investment projects worldwide because of uncertainties over the war in Iraq would now soon be over, stimulating growth in the United States and having positive effects for the economy of Switzerland and the rest of Europe.

Gramm stressed the bond formed by the close economic ties between Switzerland and the US.

“In direct investment alone, Switzerland has invested the amazing amount of $8,013 (SFr10,650) per man, woman and child.”

“If that’s not a bond, I don’t know what is. Where your money is, so is your heart,” he added.

swissinfo, Robert Brookes in Zurich

Key facts

Switzerland is the sixth-largest foreign investor in the United States, while it is the fifth-largest destination for US direct investments abroad.
Total Swiss investment in the US last year was $274 billion, while total US investment in Switzerland was $268 billion.
Swiss exports to the US in 2002 were more than SFr14 billion, up three per cent over the previous year.
Imports of US goods to Switzerland stood at SFr6.5 billion.
69,500 Swiss live and work in the US, while 13,400 Americans live and work in Switzerland.