Switzerland

Posted by Mad Mitch on  UTC 2019-04-01 10:04 Updated on UTC 2019-07-28

For a young British man in the 1970s, Switzerland was a very strange place. It was extremely tidy and extremely orderly. It was extremely expensive, particularly in Zurich. Only breathing seemed to be free: several times a day money had to be pushed into machines for something or other. And what money it was! Beautiful, heavy, silvery coins, almost always perfectly clean. If you received a coin with a speck or two on it, you cleaned it – it seemed to be the right thing to do with this stuff, unlike the tawdry, dirty copper in other countries, that made your hands and pockets smell. The banknotes were a triumph of the graphic designer's art.

The coinage is still with us, at least until the cashless society arrives, but that is one of the few things still here to remind us what Switzerland once was. Today's Swiss banknotes are gruesome and could be those of almost any other country in the world, indicative of how much national identity and self-confidence has been lost in the last forty years. Those years have been years of political and social decline. At each stage of that decline the signs were there for all to see, but remained unseen and uncountered. The crunch is coming.

The military heart

In those far off days of the 70s, strangers visiting Switzerland came face to face with the concept of 'armed neutrality'. Outside Switzerland, 'neutral' meant 'non-aggressive', which in turn meant 'weak' or even 'pacifist'. Once inside the country, how wrong that stereotype was!

In this nation famous for peace and compromise, train and bus stations frequently heaved with uniformed soldiers carrying kit-bags and the Swiss man's greatest friend, his rifle. There were bunkers of all kinds under or near to nearly every building, tank traps in the fields, or others with bases located under harmless looking manhole covers, ready to be erected within hours. Roads and bridges had mine emplacements at strategic points. Some even had explosive charges in position – in the middle of the Gotthard road tunnel, for example.

The extreme danger of the Second World War had given way to thirty years of the Cold War in Europe. Switzerland was ready to do whatever it took to preserve its political independence and neutrality. In secret offices around the country there were maps and plans, mobilisation timetables, charts of artillery ranges and coverage.

The country had even hamstered enough plutonium to build its own atomic bomb. When I arrived, the cavalry units had just been abandoned, but their companion, infantry battalions on bikes, would last some decades longer. The bikes were quite remarkable, heavyweight monsters: the rider might be blown to smithereens or shot to pieces but the bike would survive it all.

Nearly every adult male was required to do army service: around seventeen weeks of basic training – a rite of passage for young men – then every year some weeks of active service. This service changed character as the soldier aged. For the normal soldier military service lasted about thirty years and full release came at fifty years old. After that you could spend a decade or two more doing your bit in the civil defence system learning how to build emergency beds and man sirens. Oh, and several times a year there was obligatory shooting practice – every community has its firing range. The higher you rose through the ranks, the more time you spent on military service. The system applied not just to men: there were plenty of women who volunteered for adapted forms of military service.

One cannot overestimate the effect this militia system had on every aspect of life in Swiss society. Men from all walks of life, rich and poor, humble and mighty, had a shared experience of military service that lasted a good part of their lives. Even as late as the 1970s there was still a rough correlation between military rank and management positions in Swiss companies. Employers were required to do without their employees for sometimes long periods and tolerate some military work being done on the firm's time, but the solidarity of universal military service meant that this was never really an issue: bosses and workers were all in the same boat.

Men were exposed to the military way of doing things: understanding and following regulations, documenting what they did, following detailed office practices, being able to formulate tasks and instruct others clearly in how to carry them out, being orderly, neat and tidy, cleaning up after themselves and getting on with each other.

For many this wasn't arduous. Many regarded their annual military service as a kind of working holiday. Officers were not despots or slave drivers – no one wanted discontented troops. Soldiers served in many parts of Switzerland, meaning that military service was a geographical education of the most practical kind. If soldiers chose their speciality wisely they were able to spend those weeks in some of the most beautiful places in the country. But above all, the experience of military life was shared with everyone else.

I found myself in numerous meetings in those early days in which the male Swiss participants, strangers to each other, were almost always able to find some common bonds in the military service they had done, shared commanding officers and shared experiences. That said, discretion was built into the system and the outsider would understand little of these conversations.

In a sense, the Swiss army is a democratised and broad-based version of what the British call the 'Establishment', the group of well-connected people with similar biographies, but instead of applying to a clique or elite it applied to nearly every Swiss male. Having seen the positive effects of Switzerland's militia system at close hand I could happily argue that it would be worth having even if an army were not needed.

At its height in the mid-seventies there were nearly 900,000 men under arms, nowadays there are around 100,000. The modern theory is that, in essence, the best defence is to get on with other countries so that they don't feel the need to invade you. Well, it's a theory. But the special problem of reducing the Swiss army is that, because the militia system is so tightly integrated into the larger Swiss society, that society itself is disembowelled in the process. In the forty years since your author had his first contact with those strange Swiss people, Swiss society has been militarily hollowed out.

The founders of the Swiss militia system never foresaw that a time would come when a substantial proportion of the male population would be foreigners who had, of course, no obligation to serve in the military. Today it is not unusual to find in particular businesses and particular places Swiss men, who are obliged to perform military service under threat of severe sanctions if they refuse, in a minority working alongside foreigners who must sacrifice nothing for the country that is paying them.

We have mentioned the positive aspects of the integration of military service in the general populace. There were negative aspects, too. The money thrown at the military creates irresistible opportunities for corruption, particularly when combined with the political mismanagement which is characteristic of such projects around the world, not just in Switzerland.

Furthermore, the handy presence of the military, its soldiers, bases, barracks, depots and airfields, provided a pleasant financial cushion in the remote places of Switzerland. Happy to suckle on the military teat, these places largely did nothing to help themselves. Now the army has shrunk and retreated from these useless bases, there much wailing and gnashing of teeth in these deprived areas.

In the early nineties the Cold War collapsed. Without Russian tanks to worry about, what was the Swiss army there for? The bunkers were abandoned, some turned into restaurants and museums; the mined roads and tunnels cleared and returned to their normal state – even without the end of the Cold War all these defensive structures had become military anachronisms. Even that previously unthinkable thing happened: the Swiss became ever more active half-members of the United Nations. Small portions of the Swiss army started to be sent around the world to 'help out'.

The Swiss government is still trying to replace the air force's outdated under-performing planes with something second-hand from somewhere that might be slightly less outdated and under-performing. What these relics are supposed to do against modern weapons is still to be defined. All the strategic and tactical plans that were so clear and detailed in the 1970s have turned into ineffectual political arm-waving.

Local matters

It takes the foreigner some time to appreciate the Swiss culture of local independence, particularly if the foreigner is British and accustomed to a purely nation-state view of things. By the 1970s in Britain the only thing that really mattered was central government. Two great wars and a dose of socialist organization thereafter had forced centralisation and micromanagement on nearly all aspects of British life. All the other administrative levels – counties, towns and parishes – now danced to Whitehall's tune. In the end, the Man from the Ministry had the last word.

In contrast, Switzerland turned that upside-down – although the Swiss might reasonably call it the right way round. Switzerland was in many pieces before it became a whole in 1848, meaning that traditionally a Swiss citizen is firstly a citizen of a village or a town, then a citizen of one of the 26 cantons, then – a very distant third – a citizen of the Swiss Confederation. Each of these levels has its own income stream from taxation, a divine entity that the Swiss call 'the holy trinity': town, canton and federation. The federal government was once considered to be the third rank; in consequence, the world outside was a distant prospect indeed and Swiss politics could follow its own, unique path.

No way to run a railway

An early rumble of the difficulty of maintaining Swiss exceptionalism and independence in an increasingly integrated world came in 1980 – although your simple-minded author didn't interpret it so profoundly at the time. In 1977 the Swiss government decided to introduce summer time, mainly in response to the oil crisis of the mid-70s. The government had followed the completely bogus advice of experts – nothing has changed in that respect – who told them having summer time would save fuel. The neighbouring states fell for this fairy story, too, and starting preparing the introduction of their own summer time.

Such an act of administrative arrogance would have been easy to implement in Britain or most of the other European states. In Switzerland it met with vigorous opposition from the people and particularly from farmers, but, unlike the serfs in other European countries, the Swiss have direct democracy: a referendum was called in 1978 and the project soundly rejected.

As though that weren't bad enough for the ruling elite in Switzerland, the European neighbours introduced their summer time earlier than expected in 1980 – Swiss politics runs on a much slower metronome and is generally high-handedly ignored by every other country – but in the end, in the summer of 1980, Swiss clocks stayed unchanged in accordance with the people's wishes.

Your author experienced in that year some bizarre moments on Swiss trains that criss-crossed the German border on their route. The hands on station clocks on successive stations a few journey minutes apart jumped back and forwards by an hour. In that year, public transport timetables were chaotic and companies on both sides of the border that relied on foreign workers had to introduce special shift arrangements. It was a substantial mess – which is what happens when you let the people choose what they want to do.

In the end the Swiss government decided to do whatever the Germans, French and Italians did and took the political risk of reintroducing summer time from 1981 onwards on a 'provisional basis' – they were going against a referendum decision, after all. But after this taste of the perils of going it alone the Swiss public thought better of another referendum to reverse this decision – Swiss farmers would just have to suck it up.

The principle was now established: if Switzerland's neighbours are doing it, then Switzerland has to do it, too. That put quite a dent in the armour of Swiss independence. A corollary principle was established at the same time: the results of referenda, even large majorities, were not sacrosanct; in other words direct democracy is fine, as long as it's the right decision. Oh, and one further principle: whatever plucky little Switzerland wanted counted for nothing in the counsels of the great.

Synchronising with the world outside

Worse was to come as the brave new world of digital technology swept over the world, intolerant of all borders. We early adopters of technology had some bizarre experiences in Switzerland. For a short time in the early nineties my German mobile phone had to be physically locked against use by a lead seal – the sort British people used to find on their gas and electricity meters – attached by the Swiss customs authorities whenever I crossed the Swiss border, in order to prevent me making or receiving calls on the Swiss telephone system. The seal would be taken off by the customs post at which I left the country again.

Banking – the great collapse

Apart from Switzerland's hedgehog-like armed neutrality and the primacy of the local over the national, another thing that struck the foreigner in the 1970s was its banking system. The anonymity of the mythical Swiss 'numbered account' was famous throughout the rest of the world, but discretion went much deeper than this. That discretion was anchored in law and violating it in certain ways was a criminal offence.

After my first few years in Switzerland I moved to Germany for a few years. I had left about ten francs in my account in the bank then known as the Schweizerisches Kreditanstalt, the SKA, – the bank founded by Alfred Escher, the father of the Gotthard railway, as the lubrication system to oil the wheels of the developing Switzerland in the 19th century.

Every quarter, a plain white envelope, addressed in neat, female-apprentice handwriting in blue pen arrived at my German address. The envelope was not franked but bore a normal stamp. It contained a single sheet of paper with a very neutralised bank statement on it: ten francs! The amount trickled downwards over time as bank charges were successively applied, but I was able to use the account without problem some years later when I returned to Switzerland.

Which brings us nicely to the moment when this landlocked paradise in the middle of Europe began to fall apart in earnest. The phrase that directed the gaze of the world onto plucky little Switzerland was 'Nazi Gold'. It was to be the beginning of the end for old-style Swiss banking.

The issue is illustrated by that tale of my anonymous penfriend in the SKA who sent me my account statements so discretely. In the turmoils of the first half of the 20th century throughout Europe, whoever had any assets that wouldn't fit under a loose brick in the pantry tried to bring them into safety, and that meant Switzerland.

This process started during the crazed inflation of the interwar years in Germany, but accelerated after the Nazi takeover of Germany in 1933. Jews in Germany were subjected to progressively harsher confiscation rules; as the territory of the Third Reich expanded, more and more people were affected. Switzerland was the obvious place to stash it – banknotes, jewels, precious metals, stock certificates. They were very glad of Swiss banking discretion.

The National Socialist government of Germany was essentially a deeply corrupt, crypto-communist structure of backhanders and fraud, in which the favoured ones found themselves in a self-service store of pelf – that good old word that deserves to be brought back into common use for all its many modern manifestations. In those days in Switzerland the bank accounts of the persecuted and their persecutors lay side by side and no one even thought to ask: banks asking their customers impertinent questions about the origin of their assets is a recent phenomenon.

In the 1970s I met a precious metals trader in Zürich who claimed that he saved on the expense of hotels by taking the overnight sleeper to Chiasso and back several nights a week. My innocence at the time was such that I took the cheerful tale at face value, until several years afterwards, when my friend Emiliano, a financial expert from the Tessin, pointed out to his simple British friend that Chiasso, slap on the Italian border, was one of the great transit points for Italian money into Switzerland. Three times a week seemed about par on that stretch.

After the war ended, how many of these stashers were still alive, how many addresses still valid? In the nature of stashing, even the next of kin had often no idea of the existence of the stash. Silence fell over so many accounts, which in time became nachrichtenloses Vermögen, 'unidentified assets'. After a time the assets became the property of the bank.

Discretion is a one-way street. A discrete bank has no method of finding out where its account holders now live, whether they were still alive and who should inherit these assets. They were legally forbidden from informing anyone except the bag of bones who perished in Auschwitz in person or the officer fallen on the Eastern Front in person. Most of these assets were just the opposite of 'Nazi Gold', but mislabelling has become one of the curses of our age.

Whatever the rights and wrongs of the case, when the situation was discovered a tsunami of disapproval smashed over the Swiss banks and, by association, the Swiss people. Their much prized banking discretion, anchored in Swiss law, left them unable to defend themselves. It took quite some time for them to admit what they did in the cause of protecting their customers' assets from the Nazis. When little bits of the curtain of discretion were lifted, it also came to light that Adolf Hitler had a Swiss bank account, an account which enjoyed the same discretion as the people he was persecuting. It contained somewhat more than my ten Francs.

By the time the Swiss banks and the Swiss government got their act together they had been overwhelmed by propaganda and, ultimately, counter-measures: Swiss banks were threatened with exclusion from the lucrative state bond markets in the USA and many other financial trades. Even though the banks had acted to protect their customers from Nazi actions, they were condemned anyway. The world is not a fair or rational place.

In the end the Swiss resorted to that most reliable method of solving difficulties, they threw money at the problem and bought their way out of it – the pragmatic, Swiss option. That quick fix may have allowed the banks to go on trading, but it meant the issue was never really resolved. Nowadays the phrase 'Swiss bank' still gives off a repellent odour for many people in the world. In the mid-nineties, several of my British customers made half-joking, half-serious references to having to pay my invoices by transferring money to a Swiss bank account.

Why was this event so important for the Swiss?

Firstly, it was important because the emerging, globalised world-order ganged up on the Swiss and coshed them into obedience with sanctions. That great principle of discretion had to be abandoned and nowadays Swiss banks are just like any other European banks, having adopted all the agreements on money laundering and transaction tracking to which every other bank in most western countries is bound.

In the end the Swiss did what they had to and stepped back from one of those pillars of their independence. They are now quite prepared to rat on their customers if a foreign government comes sniffing around. The old Swiss banking traditions have all gone, too. The big banks may appear to be still Swiss, but they are run on American lines.

Secondly, it was important because many Swiss felt morally soiled by this episode. Some of the immense amount of mud that was slung at them stuck. Their self-image as the goody-two-shoes among nations – rich, peaceful, clean, orderly, the clean-vested, honest brokers who can deal with everyone impartially – even their somewhat 'complex' role in the Second World War was being re-examined by critical Swiss historians and even entering the schoolbooks as discussion material. Even the heroic isolation of Switzerland during the Second World War came under the microscope and found plenty of historians with 20-20 hindsight.

After this moment, step by step, the globalising world outside that paradise would change the Switzerland of the 1970s for ever.

Alone in Europe

Switzerland found itself encircled by the nations of the developing European project. In this project the external pretence was always that the group was an economic association of nations. In reality, the project was from its inception a long-term voyage to a single European State.

How can any of this economic or political hegemony be reconciled with that sturdy Swiss independence we met in the 1970s? Where in the constitution is there a vassalage to European parliaments, courts, laws, economics, currency and a single market with its four freedoms? How can the people exercise direct democracy and call a referendum on a diktat from the EU? Switzerland would cease to exist.

The Swiss voters in a referendum in 1992 rejected the first step on the escalator that would take them to full union, the European Economic Area (EEA). In 2001 voters roundly rejected the start of negotiations for the membership of the European Union. But after that, what is left to them? Schizophrenia. Despite the overall rejection, the small steps that are actually precursors of membership have all skipped over the referendum hurdle, admittedly with not very impressive majorities. These measures have been represented as the equivalent of harmonising summer time, all those years ago.

The Swiss government has spent decades negotiating bilateral agreements with the EU, but, as the EU gradually transforms itself into a single, unitary state it is getting tired of the Swiss special case: a country is either in the EU or it is out. Switzerland is massively dependant on the EU in all sorts of ways and the EU knows this and has not failed to play tough with this midget it surrounds. The Swiss are even paying a 100 million Francs every year to the EU in the cause of 'cohesion'.

Currently the Swiss are trying to replace their many unwieldy bilateral agreements with a single 'framework agreement', but this violates so many of the shibboleths of Swiss politics that its ratification looks politically impossible. Just to help things along, the EU is applying the cosh in encouraging ways.

The latest stroke of the cosh is a hint that Switzerland will soon be excluded from the European electricity capacity market if the framework agreement isn't signed PDQ.

The Swiss government decided to follow the clean, green energy path into the golden future of renewable energy. In order to do this it needs to buy in large amounts of electricity from the European grid and, when it has plastered Switzerland with solar panels, to sell the occasional noonday surplus back to them. Exclusion from the capacity market would effectively kill the Swiss energy strategy dead. There would be unicorn blood all over the walls.

In trying for 100-percent clean energy, goody-two-shoes has sacrificed its energy independence and chained itself to the European Union. The fact that the Swiss could sacrifice their energy independence so casually on the basis of a promise of 'cooperation' says a lot about how much the country has changed since the 1970s and how little cultural value is placed on that island state of the 1970s.

The clean Swiss don't want nuclear reactors – that's Fukushima; they don't want electricity from coal or oil – that's dirty (and they don't have any of the stuff anyway); they don't want electricity from gas – ditto. Renewable unicorns and pixie-dust will not do it. In sum: they have nowhere to turn, leaving the current, hopeless meme in Switzerland as: 'The cheapest energy is unused energy'. God knows what Alfred Escher would say, let alone William Tell.

Now what?

Every day there is news from the globalised world outside that the sturdy Swiss independence of the 1970s is totally and irreparably bust. Is there any way that they can survive outside the EU? There may be – and that would be a good thing – but no one is making the argument. Is there any point to an army, in an era of cruise missiles and smart bombs, that can barely afford a handful of second-hand fighter planes for a landlocked little island of a country?

It seems that half of Switzerland wants to return to 1970, the other half wants to dump everything from before then and transform themselves into another Luxembourg. How has this come about?

At the most basic demographic level of analysis, more than half of the current population of Switzerland will have no or only slight memories of the Switzerland that once was. The true figure is greater, since in those forty years the population has also increased by about a third, largely as a result of immigration – in other words, strangers without Swiss roots.

The question is, therefore, how many people in Switzerland, apart from the odd, ancient Briton, have really any idea of that Switzerland before the great 20th century turning points – and why would they even care about that time? Your author finds himself in the strange position of being more Swiss than most of the Swiss.

The result is that there is no political unity and thus no political will to frame a strategic vision for the country. The constitution of Switzerland and its complex political structures that were intended to maintain a wonderful local autonomy are strategically feeble by design. The seven members of the executive, the Bundesrat, the Federal Council, are generalists who have had all thoughts of strategy ground out of them during their ascent to the top. They hide behind a doctrine of consensus that inhibits all strategic thinking.

That famous sentence from Giuseppe Tomasi di Lampedusa's novel 'The Leopard' applies, with a small correction: 'If we want things to stay as they are were, things will have to change.'

Update 18.04.2019

On the tenth anniversary of the end of the Swiss Banking Secrecy rules, the Zurich Tages-Anzeiger reflects on what happened.

In February 2009, as a result of pressure from the USA, the Union Bank of Switzerland (UBS), the biggest bank in Switzerland, was permitted by the Swiss government to send the names of 255 of their customers to the US authorities. There was no long discussion: the Federal Council just did it.

That bit of Realpolitik was the first major crack in the rules, but once that crack was there, like all cracks it propagated itself unstoppably. In March the Federal Council announced that Switzerland would now sign up to the OECD standard for inter-governmental cooperation for taxation issues.

Up until then, the Swiss government had distinguished between tax fraud, for which one could go to prison, and tax evasion, which was dealt with administratively using repayments and possibly fines. Whereas in the good old days the foreign tax authority had a mountain to climb in order to prove tax fraud before information from a Swiss bank account could be given to them, now merely the suspicion of a taxation issue is enough. What the IRS wants, the IRS gets (ditto France, ditto Germany).

That was the end of legally enforced Swiss banking secrecy. After that, in the matter of customer confidentiality, Swiss banks are now just like every other bank in every other developed country. If another country comes calling, your ever-so-confidential Swiss bank will rat you out.

Ten years later, Holger Alich, the Tages-Anzeiger Business Editor, is astonished that banking secrecy was given up without gaining anything in return. There was no negotiation: the government and the banks simply rolled over and allowed it to happen.

Those readers who read our account above closely will not be in the least surprised, however, because the Swiss held no cards at all in this game. They had no option but to give in to the overwhelming forces, political and economic, that were ranged against them. Every action the Swiss might take to defend their banking secrecy would have been an act of utter self-harm. They were then and they are now, powerless.

Update 20.04.2019

That 'green energy' thing

Those Swiss people who voted for their bright, clean green energy future in the recent Energy Law are starting to get a hint of just what they have done. The new law requires all cantons and towns and villages to support the new green dictatorship, so resistance and all that wonderful Swiss local autonomy is futile. There are now as good as no grounds for locals to decide they don't want a wind turbine next to their house or school.

In a side panel to that article, the Tages-Anzeiger gives us an inkling of this bright future for which the goody-two-shoes of Switzerland voted:

The expansion of wind power in Switzerland is proceeding only very slowly. At the moment, wind installations provide only just about 0.2 percent of the annual electricity demand. That corresponds approximately to 0.1 terawatthours per year. In comparison, the Confederation considers a production of 4 terawatthours by 2015 as feasible. During this period the energy strategy for which the people voted has to be implemented. In order to reach this goal the construction of several hundred wind installations will be required, So far only a small proportion of these are in operation.

Der Ausbau der Windkraft in der Schweiz geht nur langsam voran. Windenergieanlagen decken heute knapp 0,2 Prozent des jährlichen Stromverbrauchs ab. Das entspricht ungefähr 0,1 Terawattstunden Strom pro Jahr. Zum Vergleich: Der Bund erachtet bis im Jahr 2050 eine Produktion von 4 Terawattstunden als machbar. In diesem Zeitraum soll die vom Volk an der Urne bestätigte Energiestrategie umgesetzt werden. Um das Ziel des Bundes zu erreichen, ist der Bau von mehreren Hundert Windenergieanlagen nötig. Heute ist erst ein Bruchteil davon in Betrieb.

Update 28.07.2019

Energy dependence

The dream of the renewable energy pioneers in Europe is of a giant power network that will distribute energy between the far ends of the continent. The theory – more of a pious wish – is that when the wind isn't blowing in A, then it is (hopefully) blowing in B; when the sun isn't shining in A, then it is (hopefully) shining in B. The giant power grid will balance out supply and demand across the continent.

The key elements in this plan are the interconnectors between the national power grids. These are the channels through which electric power is being shuffled around Europe. The whole scheme has been kept going up until now not by power from wind and/or solar, but by old-fashioned rotating iron, steady-state generators: principally coal, nuclear and a bit of hydroelectric. These have provided the base load that can be used to fill in the frequent gaps in the erratic supply by renewables. But these steady-state, inertial generators are gradually coming offline, either as a result of deliberate policy and/or for maintenance. As a result the European supergrid is becoming ever more unstable.

According to the Tages-Anzeiger on 24 May this year, on the previous Monday the Swiss electricity grid came very close to having to carry out selective, progressive blackouts. This would have been bad enough for Switzerland, but the consequences of a cascade of shortages in neighbouring grids such as Italy, France and Germany would have propagated the problem across Europe.

During those few days it also began to dawn on the Neue Zürcher Zeitung that Switzerland had abandoned all hope of energy independence and had set its hopes for future energy supplies on the connectors with its neighbours. Not only are the neighbours unreliable suppliers in themselves, they too are hoping to top up their demand with power from other countries.

Worse: for Switzerland even this dependence has come at a price, since the EU is now demanding that Switzerland agree to the controversial Framework Treaty with the EU in order to be able to participate fully in the European energy market.

Another example, if one were needed, of the weakness of the small state surrounded by much larger neighbours.

Update 28.07.2019

Swiss banking on the rocks

Under the short heading 'The dam has broken' the Neue Zürcher Zeitung marked the final chapter in the demise – the submission – of the once proudly independent Swiss banking system.

The Swiss Federal Court has pushed aside the objections of the Union Bank of Switzerland (UBS) to supplying the data of their French customers to the French tax authorities.

The rules that have been introduced in the last few years that permit the release of customers' banking data in response to a specific request founded on a justified suspicion have turned out to be a Trojan horse. Those rules were supposed to outlaw 'fishing expeditions' by the tax authorities of foreign countries.

A recent request by the French authorities, however, contained a list of 40,000 UBS account references, only a few of which had raised justified suspicion. For most normal intellects this French request was clearly a fishing expedition with a few minnows as bait. But three of the great intellects sitting in the Swiss Federal Court have ruled that not every request in a list has to be justified – it is sufficient if only a proportion of the entries in the list are associated with concrete suspicions.

A further telling detail is that a number of the entries on the list submitted by the French relate to German citizens and have been added into the list at the request of the Germans without any pretence of evidential research. From this fact alone it is clear that the EU is a legal monolith and its constituent countries mere underlings. Against that monolith, Switzerland has no chance of maintaining its own national rules.

Switzerland is free… to roll over on command. If it is lucky, it will get its tummy tickled.

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