Switzerland’s neutrality

057 – Over the years, Switzerland has been seen as a “utopia” due to its society, internal policies and good management of resources; and one of its external policies is that the country must remain neutral in the face of international war conflicts or establish alliances that could alter this status of neutrality.

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Since 1815, Switzerland has complied with its status as a neutral country and has been recognized by various international bodies, many of which have their headquarters in Switzerland for this reason. This foreign policy has kept the country out of membership in international associations such as the European Union or NATO; but it is an active member of other associations such as the UN, the Organization for Economic Cooperation and Development (OECD) and the World Health Organization (WHO).

Although Switzerland has no active participation in NATO and the European Union, it has agreements with both organizations in order to promote the development of international trade, but without affecting its neutrality.

Switzerland Agreements

Among Switzerland’s main active agreements is the Free Trade Agreement, which was signed with the European Union in 1972. This agreement allows both parties free trade in goods and processed agricultural products and free movement of people.

With this, Switzerland guarantees that the costs of its exported products are lower and thus has a competitive market, not only nationally but also internationally; it also allows it to innovate the technologies that are implemented in order to be increasingly competitive thanks to the elimination of restrictions such as the payment of customs duties or equivalents.

Secondly, the Switzerland-NATO Partnership Agreement signed in 1996, which is aimed at working together with NATO, if the situation warrants it, for cooperation in territorial defense and the fight against terrorism and weapons of mass destruction.

It is important to note that this agreement is only oriented in the event that Switzerland is affected and must end its state of neutrality, unlike NATO’s Article 5, in which “an attack on one member represents an attack on all NATO nations”.

Many critics consider that Switzerland has an indirect participation, since it enjoys some benefits as do the members, but it should not bear the burden or consequences of being a member country. It can be affirmed that Switzerland has benefited from the various agreements it has reached with different entities and nations, since its development has been peaceful and without any type of controversy or alteration of its democracy.

Economic impact of not being a member country

Switzerland, not being a member of the European Union, has the advantage of having independence in terms of monetary policy, that is to say, the country has its own autonomy in terms of decision making; while in the member countries of the European Union that have the euro as their common currency, it depends on the perspectives and decisions taken by the European Central Bank, since any decision taken by any country affects the rest.

If the main macroeconomic indicators are taken into consideration, it can be noted that the percentage growth of Switzerland’s GDP compared to that of the European Union has been higher by up to 14 times from 2000 to 2021. In addition, it is evident that, in times of recession, the Swiss economy shows a smaller decrease compared to that of the European Union.

It should be noted that the European Union has “problems” in the implementation of its internal policies, since as several members are using a common currency such as the euro, the economic results of each of the economies will affect the whole. That is why there is always an economic rescue or boost so that the European Union is not so affected; that is why there are cases such as the PIGS, which are a group of countries that have high levels of debt, but whose economies are not so affected due to the support of the other member countries.

On the other hand, according to the International Institute for Management Development (IMD) Switzerland since 2018 has been occupying the TOP-5 of the most competitive countries worldwide, and in its most recent edition held in 2022 ranked 2nd place. While member countries such as Denmark ranked 1st, Germany ranked 15th, UK ranked 23rd and France ranked 28th. This shows that Switzerland has remained a highly competitive country with an upward trend.

Undoubtedly, Switzerland’s economy has been extremely stable in recent years and has been an example for the rest of the world, not only because of the stability of its currency compared to the euro, which, although it has been devalued in recent years, practically has a parity with the euro, which shows that the Swiss Franc is a stable and strong currency at international level. In addition, it has one of the largest banking systems in the world, but its policies are framed with the purpose of ensuring that growth is sustainable over time.

For these reasons, it is very unlikely that Switzerland will join the European Union, since the instability of this union and the fact that all countries are walking together could affect Switzerland’s internal policies. In addition, recent precedents such as the cases of Greece or Spain show that there are still important details that must be perfected to avoid that all countries are harmed by the mistakes of just one.