Swiss route poses a challenge for Brexit UK

Micheline Calmy-Rey, a former Swiss president, thinks she knows what lies in store for Britain after its historic vote to leave the EU last month. She believes the UK has little option but to follow Switzerland itself.

“There isn’t what you can call a ‘Swiss model’; there is a ‘Swiss way’,” says Ms Calmy-Rey, who now teaches at Geneva university, referring to the more than 120 bilateral deals that provide Switzerland access to EU markets without some of the burdens of membership.

“I think it is inevitable that the UK will go the same way,” she adds. “I can’t see any other alternatives working.”

Such a path might prove highly attractive for a UK government pondering life after the EU and keen to establish controls over European immigration while minimising economic damage. The Swiss are one of the wealthiest nations in the world, their 8m strong country a stable, low-tax democracy.

Christoph Blocher, a veteran Swiss People’s party politician, argues that there are clear parallels between Brexit and his own successful campaign against Switzerland joining the European Economic Area — a waystation to membership — two-and-a-half decades ago.

“It was the same in our 1992 referendum,” he says. “All of the experts had predicted it would be our downfall. It would be an economic disaster, we would be isolated. None of that happened.”

And yet Switzerland’s arrangement with the EU may be difficult for Bern to maintain, let alone for the UK to replicate.

While Europe’s leaders scramble to deal with the UK, Swiss politicians are frantically seeking ways to preserve a web of trade and other agreements while implementing the outcome of a referendum that has caused problems of its own.

In February 2014 the Swiss voted narrowly for quotas on EU immigration — in direct contradiction with the EU’s cherished principle of the free movement of people across the continent.

“Like in the UK, nobody has a plan,” says Max Stern, co-founder of Foraus, a Swiss foreign policy forum. “There are ideas about what we might do but we don’t know how the EU will react. It’s a super high-risk situation.”

UK Brexiters might in any case object to the way Switzerland pays into EU programmes and has to adopt many of the bloc’s rules — without having any say over them.

But with Switzerland formally abandoning its goal to join the EU, Brussels has refused to deepen ties any further until the country has signed up to a broader deal to adopt EU rules as they evolve. Swiss voters would almost certainly reject any agreement to obey rulings of the European Court of Justice — also one of Brexiters’ chief causes of complaint.

If Bern also reneges on the principle of free movement of people, many of the most important existing bilateral deals with the EU could also become void.

Already, the stand-off has cast doubt over the future participation of Swiss universities in European research projects. To the dismay of Swiss banks, talks have been shelved on a financial services agreement.

Some Swiss see the UK vote as helpful in finding a way out. “Great Britain is a bigger power, it has leverage,” says Ms Calmy-Rey. “Switzerland could benefit from Brexit because it gets a de facto ally in its negotiations with the EU.”

When it comes to scientific research programmes, “the EU will not want to exclude the UK’s world-class universities”, argues Thomas Aeschi, one of a new generation of Swiss People’s party leaders. So there would be concessions too for top Swiss institutions, he says

The debate over the UK could open possibilities that would work for Switzerland, Mr Aeschi adds. “The EU has to recognise that it needs models which allow different countries to move at different speeds — including on the free movement of people.”

But the timing of the UK vote was bad for Switzerland. A three-year deadline for implementing the 2014 referendum result expires next February.

It will penalise Switzerland because we don’t know the policy trade-offs that will be decided for the UK — and won’t for some time

“Brexit will mean a bumpy ride because of the spillovers,” says Alexis Lautenberg, former Swiss ambassador to the UK. “Short term, it will penalise Switzerland because we don’t know the policy trade-offs that will be decided for the UK — and won’t for some time.”

Swiss officials are working on compromise solutions, such as introducing an “emergency brake” procedure to halt immigration if the country becomes overwhelmed. A solution might have to be temporary pending resolution of the UK’s own immigration concern. To break the stalemate, however, Switzerland will probably need another referendum on its relationship with the EU.

“Up until now we could always find compromises that were in the interests of both sides,” says Christa Markwalder, a senior politician in the liberal FDP party. “I don’t know whether the pragmatism on the EU side is still there.”