Switzerland’s long-standing and well-deserved reputation as one of the last bastions of individual and financial liberty has been recently vindicated and reaffirmed. It was a much-needed boost of confidence for Swiss citizens like myself who had come to worry over the last years whether the governmental trespasses of our neighboring nations and the way they rule their people might one day come to influence or even corrupt our own system of governance and our way of life. This development, especially considering the present geopolitical pressures and threats, served to renew faith in our small alpine nation, not just my own and that of many of my fellow countrymen, but also that of countless international investors who have chosen this jurisdiction precisely because of its history and reputation.
Since the war in Ukraine broke out, there has been considerable pressure from Europe and from the US for nations to “do more” to cripple Russia’s funding mechanisms. Apart from entities and assets owned by the Russian state, sanctions soon came to include many wealthy individuals that are known or suspected to be connected to the Kremlin. Unsurprisingly, a lot of these targeted individuals, as well as other Russian HNWIs, have accounts and other assets in Switzerland; and a lot of them. In fact, according to a report by Switzerland’s State Secretariat for Economic Affairs (SECO), by June 2022, the entity was notified of CHF46.1bn held just in bank deposits by Russian nationals and legal entities.
As the Financial Times reports, “Until now, Bern has moved in line with the EU in freezing the assets of high-profile Russians connected to the regime of president Vladimir Putin…But as calls in Europe intensify for the seizure of Russian wealth held abroad to help fund Ukraine’s defense and reconstruction, Switzerland has made clear that any permanent moves against assets held in its borders would be illegal.” Indeed, in mid-February the Swiss government clearly declared that “the expropriation of private assets of lawful origin without compensation is not permissible under Swiss law”, as “the confiscation of frozen private assets is inconsistent with the constitution,” and “violates Switzerland’s international commitments”.
As one might expect, this stance, being worded this clearly, wasn’t exactly well received by many of the allied nations, or by the mainstream press. Yet this is precisely why it was so important and so courageous. As is also true on a personal and social level, on a political level too, it’s easy to do the popular thing, but it’s much harder to do the right thing. But on the long run, it is those who have the fortitude to do the latter who are remembered and who leave behind a lasting legacy.
Switzerland’s neutrality has been one of the indispensable building blocks that helped this tiny nation survive and thrive against all odds. And it not only benefited the country itself, but the rest of the world too. During times of geopolitical conflict and turmoil, Switzerland, thanks to this unique stance, has been trusted by belligerent forces and that trust has helped in the facilitation of diplomatic talks and back-channelling. This has in turn aided in reaching agreements and compromises that ultimately brought hostilities to an end.
Our constitution is another essential cornerstone, and our respect for it was also loudly reaffirmed with this move. There is a long and proud tradition of respect for private property and the fact that the government unflinchingly refused to make an exception this time shows that this is one the last jurisdictions on earth where the State still has lines it will not cross. In fact, even if the government was tempted to, it simply couldn’t: that’s thanks to our system of subsidiarity and direct democracy. A proposal to “make an exception” for the Russians would have to be voted on and agreed upon by the public. And for all our faults, we still maintain some common sense: We know very well that if you start making exceptions to such an all-important rule about private property protections, soon there will be no rule left, and no private property either, and certainly no credibility on the domestic and International stage.
The Swiss system might be far, very far, from perfect. But for its citizens and for the countless foreigners who trust this nation and its people with their investments and their savings, it is the best there is.
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