Speech before the Los Angeles World Affairs Council on March 14

Speech before the Los Angeles World Affairs Council on March 14, 2002:

Christian Blickenstorfer
Ambassador of Switzerland to the United States

Swiss-American Relations Against the Backdrop of the Terrorist Attacks of September 11th

Good evening. I would like to thank you very much for your kind invitation and for your kind and flattering introductory remarks, President Mack. It is, of course, a great honor for me to talk tonight before such a distinguished audience especially if you keep in mind, as President Mack has mentioned, that it is still only a bit more than six months since I have taken up my post as Swiss Ambassador to the United States.

I will first give you an update on the Swiss reaction to and its measures fighting terrorism. I would also like to describe the Swiss economic presence in this country and outline our bilateral trade relations, and then, finally, brief you on Switzerland’s approach towards Europe and its decision to join the United Nations.

I think there has, indeed, been a lot changed for Americans and for Swiss alike since Tuesday, September 11^th. The shocking terrorist attacks on the World Trade Center and the Pentagon made the world a different place. On the very day of the attacks, your ambassador to Switzerland presented his credentials to the Swiss President, and the Swiss Federal Council condemned immediately the terrorist strikes in the sharpest and strongest terms. Switzerland vowed to support, and still does as a close ally, the U.S.-led coalition against terrorism -- and I will come back to that in a moment. To better understand the Swiss reaction, you have to remember that … quite a few things have changed in Switzerland. The Swiss image used to be that of an extremely orderly country, some will say smooth as its tasty chocolate, whose trains run as precisely as our watches, where companies are profitable and even the President takes public transport to work.

All this has been battered over the weeks after September 11^th by a string of crises unlike any in recent Swiss history. You might recall that in late September the tranquility and security were shattered when a disgruntled gunman walked into the regional Parliament in Zurich and shot dead fourteen local politicians and members of the Cantonal government. Days later, we had the terrible tragic accident in the Gotthard Tunnel, causing about twelve victims, and a couple of days later we had the grounding of our national airlines, SwissAir. All that scarred Switzerland’s reputation for efficiency and reliability. At the same time, as was to be expected, banking secrecy came under increased scrutiny at this time as possible cover for terrorists. And all this coming in the wake of the September 11^th attacks on the United States, which by itself sent shudders around the globe. The cumulative effect of these disasters in Switzerland has been similar to an Alpine avalanche, and I think it is important to remind you of this to understand our reaction.

Over the years, and I’ve mentioned it already, a number of stereotypes, myths and prejudices have come up regarding the Swiss financial center, in general, and in particular about Swiss banking secrecy. The Swiss financial market has frequently been accused of attracting capital from criminal or dubious origin and of using banking secrecy to conceal it from international prosecution authorities. Late last year, in an article in the Washington Post, the author referred to Switzerland, and that was quite correct, as a country and I quote, "With a tradition of bank secrecy and the free flow of money." To continue then, and I quote again, "'don’t ask, don’t tell' is supposed to be the golden rule of business." Let me just state once more and at this podium that Swiss bank secrecy has never been absolute or intended to create a haven or shelter for criminal activity of whatever nature.

Switzerland sincerely shares the United States’ determination to combat terrorism. Cutting into the financial networks used by terrorists is of crucial importance, and to this effort Switzerland has not, and will not, tolerate any kind of use of its territory or its financial center by terrorists and other criminals. The following legislative tools provide Switzerland with an arsenal of measures that have been applied aggressively and uncompromisingly by the competent Swiss authorities. According to our Swiss penal code, membership as well as support for criminal organizations and money laundering are punishable offenses and will be prosecuted. Any funds used for such purposes will be blocked and confiscated under the Swiss Anti-Money Laundering Act. Financial intermediaries have to block funds and inform the competent authorities immediately if they suspect dubious activities. Moreover, under its law on international mutual assistance, Switzerland provides prompt legal cooperation to the United States and other countries and freezes corresponding funds. Switzerland also contributes fully to international cooperation in the fight against terrorism. It particularly welcomes UN Security Council Resolution 1373 on fighting terrorism and will implement it thoroughly. We are also actively participating in the negotiation of a comprehensive convention on international terrorism.

Last, but not least, Switzerland has swiftly and fully implemented UN Security Council Resolutions that impose targeted financial sanctions against the Taliban, Osama bin Laden and the Al Qaeda organization and others. As a consequence, a number of bank accounts of Afghan banks have been blocked. Switzerland has taken additional forceful actions after the events of September 11^th. The Swiss federal prosecutor has opened his own criminal proceeding, a terrorism task force has been created by the federal office of police, and the Swiss supervising authorities have instructed all financial intermediaries to block accounts of persons and institutions linked to the terrorist attacks in the U.S., names that figure on the so-called “Bush list.” All these facts clearly display that the myth surrounding Swiss banking secrecy has nothing to do with reality. Today, the Swiss financial market possesses probably the world’s most modern and effective legal frameworks, which features extensive preventive as well as prosecution measures. So, to the journalist who wrote the article in the Washington Post, which I mentioned earlier, I would simply say, “Go back, check your story and try to do a better job.”

Especially gratifying for me is the fact that the U.S. government has repeatedly recognized Switzerland’s role and clear leadership in destroying the financial networks used by terrorists in the wake of the terrorist attacks of September 11^th. And if this is still not good enough, I’m pleased to tell you that President Bush, when I presented my credentials on the 10^th of October, asked me specifically to convey to the Swiss government his profound gratitude for the excellent cooperation the U.S. is getting in identifying terrorist money flows.

Let me come to an end of this chapter by stating that Switzerland will continue to be a close ally in the fight against terrorists. We have to place all the necessary legal and political instruments, and we shall continue to use them efficiently and powerfully, but let me also tell you on this occasion that this cooperation in fighting terrorism has to be a two-way street between our two countries. The very recent visit of the Swiss Minister of Justice provided both sides the welcomed occasion to take the necessary steps to further enhance this cooperation, be it through joint investigations on both sides of the Atlantic or be it through more frequent meetings on either side. In addition to that, I’m convinced that the bilateral cooperation in the field of fighting terrorism, but also in the larger field, can only gain if we have more exchange of high level visits in both directions. I’m glad that from the Swiss side we have had, since the beginning of January, five of our seven Cabinet members in the United States for bilateral discussions with their American counterparts. I must, on the other hand, of course, say it can’t go on like that because we wouldn’t be able to handle every two months visits from high-ranking officials but I think it was good that we had this start.

Now, let me come to the Swiss investments in the United States. The Swiss economy is very present in this country, which Switzerland still considers the land of opportunity. You, as important representatives of the business community here on the West Coast, certainly do agree with the assumption that capital when it flows freely flows to its best uses. Moreover, you will undoubtedly agree on the crucial importance of foreign direct investment, which is seen as the global market’s seal of approval on a country’s policies and prospects. Foreign direct investment is far more than mere capital. It is a uniquely potent bundle of capital, contacts and managerial and technological knowledge, the cutting edge of globalization. Despite the recent slow-down in the United States, foreign companies continue to put their faith and investment in the American economy. Figures released by the U.S. Department of Commerce last year show that foreign companies continued the rapid pace of U.S. direct investments in 2000, starting new companies and acquiring existing businesses and transactions that total a record high of 321 billion dollars.

In recent years, many Swiss companies have found that by building plants in the U.S., opening resort facilities here and selling to American consumers, they glean especially high returns on their capital. Swiss direct investments in the United States are still very attractive due to the fairness of U.S. laws, the friendly business environment and the other accommodating and courteous handling by the U.S. authorities. In the year 2000, Swiss capital flows to the United States for direct investment grew an estimated 26 billion dollars, or almost 50 percent. The Swiss direct investment position in the United States is ranked sixth or seventh, totaling 82 billion dollars. It’s impressive that statistics show the continued confidence Swiss companies have in the United States. Given the fact that the year 2000 investment figures in the U.S. marked the dramatic fall in the rate of new investments, these figures are even more impressive. On the other hand, Switzerland is also a great business location for U.S. companies. The United States is the largest investor in Switzerland. Currently, over 650 American firms make Switzerland their home, employing over 70,000 people. Concentrated in the Geneva-Zurich and Lucerne-Zug areas, many of these companies use Switzerland as their base for overseas operations. A number of factors have led U.S. companies to relocate to or expand in Switzerland. Particularly attractive to U.S. companies planning to invest there is Switzerland’s political stability, the flexible labor system, and so on. There are no great economic strings, no problems with labor strikes, an incredible sophisticated infrastructure, and a very reliable place to do business.

Switzerland will continue to rank as an attractive place to do business through 2005, according to a five-year forecast by the Economist Intelligence Unit. In the global listing, the country is in the top three in Europe. With 31 companies in the Euro 500, Switzerland ranks fourth after the United Kingdom, France and Germany. And the Heritage Foundation of the Wall Street Journal 1999 Index of Economic Freedom ranks the United States the most economically free country in North America and Switzerland the most economically free country in Europe.

The latest international trade figures between the United States and Switzerland are a bit less encouraging than the before-mentioned foreign direct investment figures because, during the year 2001, bilateral free trade relations between Switzerland and the United States were cooling off following the weakening in the domestic demand in both countries. The value of Swiss imports of United States merchandise decreased last year by 18.5 percent reaching a total of 8.3 billion Swiss francs – that’s a bit more than 5 billion dollars. Swiss exports to the United States diminished by some 10 percent for a total value of 15.6 billion Swiss francs, or roughly 10 billion dollars.

Now, I will not bother you with any more trade figures and statistics, but the numbers put into perspective what an important trading partner Switzerland is for the United States. Moreover, I believe that these statistics reflect something much deeper and enduring about our bilateral relationship. Over the years we have built close business ties on a foundation of mutual trust. We simply feel comfortable dealing with one another because we have so much in common. As citizens of long-established sister republics we appreciate the similarities between our domestic institutions, our respect for the rule of law, and our mutual determination to create an even better world for the generations to come.

Now, I will have come back very briefly to SwissAir. As I said in the beginning, there’s no one event that has shaken Switzerland’s self-confidence over the past year more than the plight of SwissAir, the country’s national airline. Also known as Switzerland’s Ambassador to the World, SwissAir has been much more than a national enterprise. SwissAir was probably the national symbol, apart from the national flag, in which Swiss shared most common pride. Then, the news in early October that the entire SwissAir fleet was on the brink of bankruptcy. An over-ambitious international expansion plan, and the entire fleet was grounded for two days, has led to much soul searching in Switzerland. Now, you are aware, or you should be aware, that Switzerland has decided to keep its airline flying. The government was willing to write off 600 million dollars to keep the carrier flying until a solution was found to give a new national airline a chance to take off. The good news is twofold. The old SwissAir didn’t need the promised money and the new airline Swiss, and the airline is only very small, will be ready as of April 1^st. The operation is costly. It will require nearly 1.8 billion dollars to weather the transformation and the problems the new company is going to face are still substantial. But, after an indepth discussion I had the chance to have with the CEO of Swiss I’m personally reasonably optimistic about the positive outcome. And that means for me, a bit selfishly, direct flights from Washington to Zurich -- but also, I can tell you, from Los Angeles to Switzerland.

If we take a step back in thinking about SwissAir’s crisis with a little distance, it is apparent that SwissAir symbolizes in an extreme way, I will admit, many of Switzerland’s own challenges in dealing with the process of globalization. One of Europe’s poorest countries 150 years ago and today arguably one of its richest, Switzerland has changed from a rural mountain economy into a thriving nation, driven by precision industry and financial expertise. The picturesque image of watches, music boxes, chocolates, cheese, snowy mountains – not necessarily this winter – skiing and the particular sound of Alp horns has been overtaken by industries that excel in pharmaceuticals, ultramodern precision manufacturing, and by a banking and financial services sector which ranks among the best in the world.

In the meantime, even Heidi has come to Hollywood. It is a small country of 7.2 million people, covering an area of 1/10^th of California and a bit less than one-third of this state’s population, with no natural resources, save hydroelectric power. The country has, through hard work and brain power, built itself into one of the most competitive economies in the world. Switzerland leads the pack as the best place to develop the high technology knowledge-based industries of the 21^st century. According to a just-released table of countries compiled by the Financial Times, Switzerland is best positioned to acquire the newest skills and technology necessary for the leading edge industries of the future. Switzerland already generates 40 percent of its gross domestic product from international trade and, in order to continue to prosper, its corporate sector must seek its growth in the international market place. It is a dilemma facing many of Switzerland’s most successful multinationals. How do they exploit the opportunities of globalization without losing touch with their Swiss roots?

One of the secrets behind the tremendous achievement lies in the fact that Swiss companies, through highly paid international managers, are running some of the most successful companies. Half of the chief executives of Switzerland’s top companies are foreigners. Two-thirds of them do not speak German or French, Switzerland’s two main languages. English is rapidly taking over as the country’s main business language. In the past, the German-speaking Swiss learned French as their second language, while the French-speaking minority learned German. Today, English is the more common way that Switzerland’s two biggest linguistic communities communicate with each other. This creates problems for the country, but it is in a way a natural development and we have to try to live with it. That was the idea of my remarks of affects of globalization, starting with the SwissAir and the problems that SwissAir faces, which is a clear example.

Now, let me come to Switzerland’s relations with the European Union. As you know, Switzerland is not a member of the European Union. In the past fifteen years the European Union has changed from a customs union into the world’s large single market. The importance of Switzerland’s relationship with it cannot be overstated if you think only of the geographical situation. In the last ten years, the Swiss government and the EU’s principal goal was to minimize the negative affects resulting from Switzerland’s absence from the common market. It took four years of intense negotiations to conclude a package of seven bilateral agreements. They will extend to Switzerland some of the achievements of the European Union, in particular in the fields of free movement of persons, free access to road transportation, railroads and aviation companies, public procurement, participation in research programs, trade and agriculture and mutual recognition in the area of industrial trade. With an unexpected delay due to complicated ratification procedures in some of the fifteen member states, this agreement will now enter into force only this summer.

Of course, the debate over the future course of Switzerland’s future policy toward Europe will continue. Some flirt with the idea of Switzerland remaining an independent platform in the heart of Europe. Others are convinced, and I am one of those, that it is only through full integration into the European Union that the national interests can best be safeguarded. However, the supporters of full year membership face a rather stiff challenge. A year ago, a referendum calling for the start of immediate negotiations for entry to the European Union was overwhelmingly rejected. Those of you familiar with Switzerland probably know that things tend to take longer to happen in Switzerland. Some fundamental characteristics of the Swiss people are reserve, reliability and tolerance, characteristics that do not necessarily imply rapidity of action.

Things move steadily in Switzerland, not rapidly. Whenever there is an important change it is usually accompanied by a lengthy discussion as to the right moment, a trait which has prompted an old joke that if God had been Swiss he would still be waiting for the right moment to create the world. Now I wouldn’t -- as I said, I’m in favor of Switzerland joining the European Union -- I wouldn’t use these harsh words to blame those who are a bit reluctant. We have to clearly see that more than for any other European country joining the European Union, the change for Switzerland would be more than for other countries because of our direct democratic system. We will not be able to have votes on something that will have been decided by twenty or twenty-three countries in a referendum held in Switzerland within the block of the execution of such a decision. That is for a population that has lived for 150 years with a system quite satisfactory, where they decided every major step is quite a big change. The government and those in favor will have to do an excellent job to show to the people that in the long run giving up some of the things that are dear to us is better than trying to keep the things we have and be isolated and stay continuously outside. You can make as many bilateral agreements regulating things, they will stay punctual and just for the moment. The evolution that is taking place inside the European Union is always leaving the country only associated with it, it is leaving it behind. So, in the long run I am personally convinced that we have to join, but I agree and accept that it is a major step for Switzerland.

Now, it seems to be also a major step to get into the United Nations, as President Mack mentioned. At present, today, we are still, besides the Vatican, the only state not being able to speak and to vote in the 189-member U.N. General Assembly. That will not be for long, because with this crucial vote on the 3^rd of March the government is now empowered to ask to join the United Nations. It will take a little more time because every referendum, and we have about eight every year, has to be validated by the national parliament and that takes about two months. The next step then will be that the Foreign Minister … [writes to] the Secretary General of the United Nations asking to start procedures inside the organization to make Switzerland a full member of the United Nations. That will then go to the Security Council, and there the Security Council has to vote. There shouldn’t be any negative veto from one of the five major powers, and then there is a recommendation from the Security Council to the General Assembly, which should then make Switzerland the 191^st member. In the meantime, there is one state that will be independent in May, and this state will join immediately as is customary for newly-independent states to become U.N. members, so we will be the 191^st member, leaving the Vatican, which is a special case, outside the U.N.

As President Mack has mentioned, Switzerland belongs already in the past to all main specialized agencies and contributes more than 280 million dollars a year to U.N. activities, making it one of the biggest funders of the U.N. What is more important is that all our foreign policy priorities coincide almost exactly with the U.N.’s objectives on goals, peace, economic developments, human rights, protection of the environment and so on. So, the March 3^rd vote is very logical and, for many people, more than half in Switzerland, welcomed a step to finalize an operation that began in the early ’80s which was defeated once and which has now turned successful.

I’m coming to the end of my remarks and I would like to stress once again that U.S.-Swiss relations are strong and mutually beneficial. Switzerland and the United States share a long tradition of very similar economic policies and business climates. In both countries, economic policies are oriented toward open markets and competition. Both countries share high-quality protection of intellectual property rights, high production standards and service quality. As Ambassador of Switzerland I will do everything in my power to keep Switzerland as a reliable and promising partner to the United States. After the events of September 11^th, Switzerland is more committed than ever to fostering our trans-Atlantic relations. Of course, our relationship is not just about economic contacts and bilateral trade.

As two countries with common values we naturally join hands to pursue the strengthening of human rights, democracy and the fight against global terrorism.

As you know, we try to render our services to your country in specific areas, like representing you diplomatically in Havana, but also and probably more important nowadays in Iran, with the Iranian Islamic Republic. Those are mandates that are sometimes difficult to fulfill, but where we try to do our best because we are convinced that in the long run you will be able to return to normal relations also with these countries. We have had very good and fruitful cooperation in trying to get a handle on the civil war in the Sudan where in February a meeting, as a result of former Senator Danforth’s mission to Sudan, a meeting was organized under the chairmanship of the Swiss diplomat who has worked on improving relations, on stopping the civil war in Sudan, for the last eight years, with the successful outcome that a cease fire has been negotiated and is now being put in place with supervision monitoring on the ground. There are other examples where a big country like the United States and a small one like Switzerland can work closely on specific themes and subjects and produce positive results.

I, of course, am extremely honored to be here serving as my country’s representative, doing my part to increase the dialogue to strengthen the partnership and to enforce the foundation of trust which has existed between our two countries for the past 225 years. To do this I am fortunate to get excellent support from our Consul General and his colleagues here in Los Angeles and from five more Consulates General throughout the country. I also have three new instruments at my disposal. A quite well-endowed country program of Presence Switzerland. Presence Switzerland is a new entity within the foreign ministry in Bern coordinating all Swiss activities abroad, be they cultural, science and education-related or political or whatever. The Swiss House for advanced research and education in Boston is a platform facilitating all kinds of contacts between scientists of our two countries. Finally, a newly-created business hub in Chicago which was inaugurated last November and whose mission is to help small and medium-size companies to do business in the United States.

With that, I thank you very much for your attention and I’m willing to answer some of your questions.