The United States has offered $5,000 (SFr6,405) to the family of an Iraqi-Swiss citizen who was allegedly killed by American soldiers in Baghdad in June.
The family of Salah Jmor called the American compensation offer "an insult", while the Swiss government is seeking a full inquiry into the killing.
Jmor, who held dual Swiss and Iraqi nationality, was killed on June 28 this year as he drove along a Baghdad highway. His family claim that he was killed by an American soldier.
The US has yet to provide the Swiss foreign ministry with a complete account of events. In particular, Switzerland has not received the US army's full report into the incident.
A Swiss foreign ministry spokesman said that if an inquiry revealed that US forces were responsible for Jmor's death, the question of compensation should then be handled through normal legal channels.
The Swiss representative in Baghdad received the compensation offer by email from the US embassy in the city, the lawyer for the deceased's wife confirmed.
But the principle of "condolence payments" does not mean that the US acknowledges legal responsibility for causing the death.
Following the US offer, the Swiss foreign ministry sent a letter to the Jmor family's lawyer, indicating that the proposed compensation was clearly insufficient.
Jmor had lived in Switzerland for 25 years and was a graduate of the Graduate Institute for International Studies.
He had been a member of the Social Democratic Party in Geneva for the past five years. Jmor supported the rights of Kurds, publishing a book on the issue.
He was opposed to the US intervention in Iraq and had reportedly been approached about becoming a member of the Kurdish regional government in Iraq.
swissinfo with agencies
Salah Jmor, who held dual Swiss and Iraqi nationality, was killed on June 28 this year as he drove past a US patrol on a Baghdad highway.
A week later, the US ambassador to Switzerland expressed regret to Swiss Foreign Minister Micheline Calmy-Rey over the killing and called for rapid clarification.
In September, the US has confirmed the first details of the circumstances surrounding the fatal shooting.
However, Swiss authorities are still waiting for a full inquiry into the killing.