The End of Switzerland

By Macshane, Denis | Newsweek International, February 15, 2010 | Go to article overview
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The End of Switzerland

Macshane, Denis, Newsweek International

Byline: Denis Macshane

The economic crisis and rising xenophobia are breaking down the great Swiss myths and undoing this once unique model nation.

In the third man, Orson Welles famously mocks Switzerland by saying, "Five hundred years of democracy and peace, and what did that produce? The cuckoo clock." This was never quite true. While 20th-century Switzerland often displayed a clocklike efficiency, with a skilled workforce and an enviable road-rail network, it also represented something more profound. Its unique blend of nationalities, languages, and religions, of farmers, bankers, and engineers, showed how forces that tore other nations apart could be formed into a relatively harmonious whole. The World Economic Forum does not hold its big annual meeting (which convened late last month) in Davos by accident. For the evangelists of globalization, Switzerland has long been the model nation.

The country appeared to combine deregulated low-tax economics with robust rule-of-law democracy. It was the first refuge for those fleeing communism after 1917 or Nazism after 1933--just as it offered safe haven to Voltaire, James Joyce, and Lenin. Openness made Geneva a world capital, with the League of Nations, the International Red Cross, and then key U.N. agencies all settling there. The Alpine nation was an island of freedom during World War II. Churchill went to Zurich to appeal for European unity after 1945. Diplomats signed peace treaties in Switzerland in the 1950s and 1960s. The country sold itself as neutral, free of Cold War alignments and the snares of the European Union. Reagan and Gorbachev met there to begin ending the Cold War. Switzerland was where the world came to find solutions.

Today, however, Switzerland's cities are grubby, its trains run late, its highways are always under repair, and its politicians often seem provincial. This former haven has turned ugly, as xenophobic populists have campaigned to close doors to outsiders (except the super-rich). More and more, Switzerland seems like just another small, struggling European nation. As Europe ponders its role in the new geopolitical order, Switzerland is looking less and less important to world affairs. The Swiss like to define themselves as a Willensnation--literally, a nation formed by the people's will. But the will to reinvent Switzerland now seems lacking.

In the meantime, the Swiss people's self-satisfied myths are rapidly evaporating. Take banking secrecy. The tradition began in the 1930s, when the Swiss sheltered French capital fleeing left-wing governments and then Jewish money escaping the Nazis. The trick was to make it a crime to reveal any details of a Swiss bank's dealings--even to the Swiss tax man. The country quickly became famous for its no-questions-asked depositories.

These are now a thing of the past. A decade ago, the Swiss were forced to disgorge unclaimed Jewish money banked in the Nazi era by depositors who had subsequently perished. Then the United States, chasing tax evaders, threatened to cut off Swiss banks from the lucrative U.S. market if they didn't reveal details on hidden American money. Washington also forced the Swiss to pay mammoth fines for allegedly breaking U.S. sanctions on Iran. Switzerland has now agreed to tax the savings of EU citizens holding Swiss accounts, and disgruntled bank employees have sold details of offshore deposits to German tax au-thorities. Even Italy, hardly a model of fiscal probity, has managed to use a tax amnesty to persuade its rich scofflaws to bring billions of euros back home from Switzerland. Swiss banks may still attract plenty of money, but they can no longer guarantee secrecy.

Switzerland's exemplary integration and tolerance are also slipping. Today the Swiss French hardly bother learning German, and Swiss Germans have stopped learning French. The most common second language is now English, not one of the country's four official tongues.

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