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Bern and Washington “close” to tax agreement

Manuel Sager, Swiss ambassador to the United States

After a year in the job, Swiss ambassador to the United States Manuel Sager talks to about issues ranging from Iran to post-UBS scandal tax negotiations.

Sager believes Switzerland and the administration of Barack Obama are “close” to an agreement on the tax front, but that unrelated political divisions between Democrats and Republicans in Congress are slowing down approval of a bilateral treaty. When your predecessor Urs Ziswiler arrived in 2006, he told that the fight against terrorism was the top priority in bilateral relations. What is the number one priority today?

Manuel Sager: Clearly, we have to get the issue of tax information behind us. Our main focus has been to avoid a clash of jurisdictions and we have made a lot of progress in the past ten months. We have agreed on a legal framework and a procedure to be followed for the exchange of information. The US side has accepted that Swiss law needs to be adhered to. Some issues remain open, but I’m confident we will find a resolution. Are you close to an agreement?

M.S.: We are reasonably close. It’s always difficult to predict while negotiations are ongoing, and nothing is agreed until everything is agreed. But I’m confident that a resolution will be reached within a reasonable time frame. After the Holocaust assets affair in the late-1990s, this tax issue related to Swiss banks is presumably the biggest problem between Switzerland and the US. It took years for people in the US to forget about the Holocaust affair. Do you think the bank issue will drag as long a shadow on Swiss-American relations?

M.S.: I’m not sure I agree with the assessment that the Holocaust asset affair had a huge or a long-term impact on Swiss-American relations.

In general, Americans know very well how to compartmentalise issues. While it was recognised in the 1990s that there was a problem with the restoration of assets to rightful owners of the Second World War period, the affair was really settled in the minds of people relatively soon after a settlement was reached with the two major Swiss banks. It’s true that the memory of it lingered, but I’m not sure I agree that it had a negative impact on overall bilateral relations.

As far as the tax issue is concerned, I think it’s more concentrated in the minds of the few people within the US administration who are directly involved in negotiations. It doesn’t have a broad impact on public opinion. In my contacts with members of Congress, I sense a certain awareness about these tax questions but no negative impact on discussions we have on other topics. Switzerland manages two mandates from the US. I suspect you are more busy with Iran than with Cuba…

M.S.: We were very happy that a resolution was found in September regarding the release of the two remaining American hikers, Josh Fattal and Shane Bauer, after Sarah Shourd was released last year. This embassy was very directly involved. It kept us busy, particularly in the months and weeks before the releases. We had frequent meetings at the State Department and with concerned members of Congress. Do the Obama Administration and Congress appreciate the Iranian mandate as managed by Switzerland?

M.S.: Yes, it’s very important to them. This is something that comes up every time I see any member of Congress or the administration. It’s always mentioned with appreciation for what we do in representing US interests. When I met President Obama to present my credentials, he thanked me for the great services that Switzerland provides to the United States in Iran. You presented your credentials to President Obama on December 7, 2010. What is your assessment of the political and economic situation in the US, as the country embarks on the presidential primary election process?

M.S.: The US is a very divided country right now. The political middle seems to be losing ground. That situation is exacerbated by the economic climate and the budget crisis. The rift between revenues and expenditures is unsustainable. That makes it very difficult to find common ground. The only way out is by increasing taxes, reducing spending or stimulating growth, or by doing all three.

There’s also a sense, real or not, that the middle class is losing or at least stagnating, due in great part to the real-estate crisis. This is a new experience in the US. By contrast, there’s also the feeling that banks have been bailed out by taxpayers while bonuses paid in the financial sector have not significantly diminished. This has led to resentment among the middle class which contributed to the Tea Party and now the Occupy Wall Street movement. Does this polarisation make your life more difficult?

M.S.: We are interested in the outcome of the legislative process on some issues debated in Congress. One of them is the double taxation treaty which will have to be one of the pillars of any agreement on the tax issue. There seem to be roadblocks that have as much to do with partisanship as with substance. What makes being an ambassador both exciting and frustrating?

M.S.: There is very little frustration attached to this job. I’m hard pressed to give you any examples, and I mean it. Of course, certain issues take a little longer to resolve but that’s part of the job. Patience is a virtue and one we all try to exercise.

Obviously, it’s more difficult to maintain relations with family and friends in Switzerland. But what I find particularly interesting is that a big part of my job here is networking, inviting people and holding events at the embassy and the residence, and in more than a year here, I’ve yet to experience a boring evening. It’s always very stimulating. Our guests are communicative, outgoing, willing to share their experience and information and that’s been a very rewarding part of my job.

Manuel Sager, Swiss ambassador to the United States, was born in Menziken, canton Aargau, in 1955.

He has a Doctorate in Law from Zurich University and a Masters from Duke University, a private institution in Durham, North Carolina.

He started his career as a private lawyer at a firm in Phoenix, Arizona. He began as a diplomat in 1988.

Washington was his first post as an ambassador representing Switzerland.

His wife of 28 years, Christine, is an American who has become a Swiss citizen.

Now the second-biggest Swiss embassy in the world, after Beijing (which has a larger visa section: 60 people employed in Washington, 75 in the Chinese capital).

The embassy organises at least 300 events a year in Washington alone; about 250 events are organised with the consulates throughout the United States.

The Soirée Suisse is the biggest event put together by the embassy – the 2011 event was the best attended so far, with some 1,200 guests.

The embassy welcomes about 10,000 visitors a year for events at the diplomatic compound itself and around the capital.

There are five consulates: Atlanta, New York, Chicago, Los Angeles and San Francisco, plus 23 honorary consulates, the UN mission in New York, the Business Hub in Chicago and the two Swissnex centres in Boston and San Francisco.

75,252 Swiss citizens are believed to live in the United States. Only 4,120 are registered with the embassy.

(Sources: Swiss Embassy and US Department of Commerce)

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