No Deal - No Surprise
Swiss diplomacy fails, but money does not...
Dear Insider,
What is dead is dead.
And the past weeks have made it clear that the long-discussed, long-negotiated economic framework agreement between the European Union and Switzerland is indeed…dead.
After failing to secure further assurances and clarifications on several key sticking points, the Swiss Federal Council announced - to no one’s surprise - that there would be no further pursuit of negotiations to secure a deal.
What does it mean?
At this point, it is still difficult to know. On the one hand, economic liberals have sounded the alarm against the protectionist and closed-mindedness of backing out of the deal. Their point is well taken - as a small country in the middle of Europe, Switzerland can hardly afford to simply ‘go it alone’ - come hell or high water.
On the other hand - this development comes as no great surprise. International cooperation and high-minded globalization are on a downward trend all over the world. With Great Britain recently departed from the EU and the United States putting renewed pressure on Europe over technology and its relations to China - Ursula von der Leyen and the European Commission do not find themselves in the strongest of positions.
A slow, quiet rot and increased red tape (on top of the already existing bureaucracy - see below…) are the most likely outcome, at least in the short term. Given a longer time horizon, cooler (more pragmatic) heads may prevail.
After all - where money can be made…deals can be made as well.
In the meantime, greater, nobler initiatives may suffer. With no framework deal, energy deals and other climate initiatives may be harder to advance.
As the saying goes - ‘once bitten, twice shy’. The next deal may be harder to pull off in this new era of mistrust.
But at least no one is surprised…
Feeling smarter (already)? 😀
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By the Numbers
Numbers that matter…
11'318
It was another record run for the Swiss Market Index (SMI) as it reached a new all-time high of 11’318. The strong upward trend brought the SMI to a higher level than before the painful, pandemic-induced market crash of March 2020.
What it means: Like most global markets, Swiss-trades shares have benefited from unprecedented economic stimulus and loose monetary policy. So far, the EU’s removal of stock market equivalence for Switzerland has not had a great effect.
11 billion
The year 2020 was a record year as well for the unemployment support system in Switzerland. A total of CHF 11 billion was paid out as part of furlough schemes to support workers during the two lockdowns the country suffered. More than one-fifth of the funds were paid to restaurants, bars and cafés in the hard-hit gastronomy industry.
What it means: Coordinated efforts among banks and the Swiss government have been helpful in difficult times. It remains to be seen whether Switzerland will face the same labor shortages as are currently afflicting the US economy.
80 million
The FIFA saga continues - or maybe it is slowly coming to a bitter end. For Julius Bär it would be hard to tell the difference. The Swiss bank agreed to a deferred prosecution agreement in which it admitted to charges of facilitating money laundering from soccer executives and agreed to a fine of CHF 80 million. The fine does not prevent the bank from being prosecuted in further cases where its admission of guilt might be used against it.
What it means: Swiss banks continue to behave badly. And the US continues to extend its long arm of justice across the Atlantic. A renewed focus on Asian customers will likely be the result, as the banking sector looks for new growth - and less legal risk.
10 million
Secure Swiss messaging platform Threema reached a milestone with over 10 million users. Its popularity was helped by the decision of the Swiss Supreme Court, which confirmed that Threema would not be treated as a telecoms provider, meaning that the service is not legally required to save and store its client data.
What it means: The high court decision is significant for Threema - and for other similar services such as Protonmail, which is based in Switzerland. Switzerland’s calling card is still tied to privacy and security - even beyond the now-tainted banking industry.
The Briefing
Burning news from around Switzerland - bit by bit…
Billions (and) millions under forty
Bilanz Magazine’s famous Richest People in Switzerland edition is usually published at the end of each year. But this month, the regular number includes a summary of the wealthiest men (and few women 😬 ) under the age of forty. Heading up the list is Checkout.com CEO Guillaume Pousaz with a fortune of over CHF 10 billion. A short overview of the young rich and famous reveals a heavy dose of athletes and cultural stars, led by Roger Federer - but also a sizable number of innovative entrepreneurs.
The question is: how will the up-and-coming generation of millionaires manage their wealth in the future? In a Swiss private bank…?
Unnecessary customs
The failure of the Swiss-EU framework agreement puts a renewed focus on the (uncertain) future of trade between the two sides. Many companies in Switzerland would be satisfied if their own government would simply reduce the complexity of the tariff rules that govern imports into the country. With hundreds of pages of paperwork and complex rules - even for imported goods that will not be subject to import duties - the regimen is enough to drive many businesspeople mad.
The question is: will protectionist lawmakers eventually come to realize that their zeal for preventing cheap imports will eventually ruin their own industries?
A study in (the) news
Swiss research universities - think EPFL, ETH Zürich, and the University of Zürich - are often the envy of the scientific community. So there should be no objection to any effort to promote their work on a broader scale - right? Not so fast… A recent partnership between publisher Blick Romandie and ETH Lausanne has drawn criticism for putting the work of professors front and center on the pages of a popular news portal. The concept of “fairness” and “neutrality” seem to be in question, according to the Swiss Association of Scientific Journalism. The very idea that one school could gain an advantage over another - even in the collective name of science - does not sit well in Switzerland.
The question is: can academics bring themselves to finally grasp the full impact of popular media on the public? If they can’t - the future of facts looks grim…