The government will have to draft new proposals on internal security following parliament's rejection of a series of amendments.
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The House of Representatives on Tuesday followed the Senate in refusing to extend phone tapping and the surveillance of mail and telecommunications to combat terrorism, intelligence operations and the illegal arms trade.
Parliamentarians called on the government to re-examine legislation to ensure the private sphere of citizens as well as freedom of information.
Defence Minister Ueli Maurer acknowledged that improvements were necessary to balance the interests of terrorism prevention and the right to privacy.
He also said the new draft would aim to put Swiss security forces on par with those in other European countries.
The domestic intelligence service was recently transferred to the defence ministry which is also in charge of foreign intelligence gathering.
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The Federal Police said on Friday that the threat was real even though it had no evidence of any attacks being planned in recent years. The director of the Federal Police office, Jean-Luc Vez, said in the introduction to the internal security report for 2007 that “western Europe is a hotbed of jihadism and Switzerland…
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If you want to start a conversation about a topic raised in this article or want to report factual errors, email us at english@swissinfo.ch.