Can the European Union Learn from Switzerland? - An Essay by Till Rahn

I questioned this as well. Why shouldn’t a state or union such as the EU copy successful models. Till Rahn wrote an essay about this topic, which is right now more relevant than ever. With GB leaving the EU there are a lot of unanswered questions. I really enjoyed reading his essay. In order to preserve it I made a copy:

Can the European Union Learn from Switzerland? - An Essay

28 Nov 2014

The following is an essay I wrote for a class called The Idea of Europe taught by Prof. Dr. Dr. Galin Tihanov at the University of St. Gallen in the fall semester of 2012.

Introduction

…, die Welt wird entweder untergehen oder verschweizern.

These words from the 1985 novel The Execution of Justice (German: Justiz) by the Swiss author and dramatist Friedrich Dürenmatt mean as much as: the world will either go down or become Swiss - as in: adopt the Swiss way of doing things. Where Dürenmatt rather meant the primacy of the economy over politics, we will discuss in the essay at hand whether the European Union (EU) should actually adopt the Swiss way in other areas as well. In short: can the EU learn from Switzerland and, if so, what?

In light of the current Euro-crisis the question of how to cope with it and also of what to change within the current EU is an important one. Being on the verge of financial collapse in some EU-countries due to rising interest rates on government debt shows the urgency of the situation the EU is in. Also, nationalist movements in many EU-countries are rising - or at least they are more prominent in recent times. The current state of the EU begs the question of what needs to be changed to make the ‘European Idea’ a successful one - at least in the medium term. This is apart from the question of whether the ‘European idea’ is worth pursuing, which is not really of relevance here as our current reality is that it is being pursuit.

Switzerland is often glorified with its strong economy, save-haven currency, the Swiss Franc, low unemployment, long-term stable direct democracy, good living conditions, social security, and low government debt.¹ Thus, it offers a good example from which the EU might be able to learn in one way or the other.

In the following we will start by looking at the historical circumstances that led to Switzerland and the EU as we know them today, exploring their similarities and differences historically, and asking the question what the EU might learn from the Swiss history of nation building. Next, we will take a closer look at culture, politics, and economics separately and ask what could be adopted by the EU from the Swiss. Finally, we will conclude with consideration of prospects of the EU in light of the current crisis. So, in a sense we will start in the (far) past and end today.

Comparison Of Historical Circumstances Of Unification

To answer the question if and what the European Union can learn from Switzerland, we will need to start by looking at the respective histories - that of the nation building of Switzerland and that of building the EU. We will do so by first following the steps of the Swiss unification and that of the EU. The histories - the events leading to what we know as Switzerland and the EU today - obviously can only be looked at in brief with focus on the parts that seem relevant in our context. In a second step we will need to try to grab the reasons behind the formation of Switzerland and the EU respectively in order to find similarities and differences between the two processes and to answer the initial speculation: is the formation of the EU actually quite similar to that of Switzerland - just later in time and on a bigger scale?

Switzerland: From Autonomous Cantons To Confederation To Federal State²

The Swiss history goes as far back as 1291. One can essentially distinguish three eras from 1291 till what is known as modern Switzerland in 1848. The Old Confederation from 1291 was a loose confederation with the goal of protecting the liberties of the three inner-Swiss cantons Uri, Schwyz, and Unterwalden that were able to fight for autonomy from the Holy Roman Empire. The former autonomy of these cantons from nobility was aided by the dying off of the latter and the fights between emperor and pope. The core confederation of the three inner cantons was piecewise enhanced by adding other partners. Today’s multiculturalism of Switzerland can be seen as having its roots then: new areas were integrated into the confederation either through invasion or voluntarily through economic interests or the need for military protection. The beginning of the reformation, though, stopped the expansion and rather caused conflicts and thus inner weakness of the confederation. The Peace of Westphalia achieved autonomy by international law for the then 13 cantons.

The French invasion under Napoléon Bonapartes lead to a centralization of the area of the former Old Confederation into the Helvetic Republic in 1798 - the second big era. The former autonomous cantons were degraded to administrative units of a centralized state. When the French left in 1802, the Helenic Republic went down in a civil war between federalists and supporters of centralization, where federalists clearly went out ahead due to the federal tradition of the people.

The third era is marked again by confederations: the first in 1803 with the help of Napoléon and the second in 1815, after Napoléon being overthrown, between the 13 old cantons and the nine new cantons. The ‘Bundesvertrag’ of 1815 gave back more autonomy to the cantons, including that over military, currency, and tariffs. Switzerland was then known as Swiss Confederation and was accepted by the Congress of Vienna with its principle of neutrality. Nevertheless, tensions between the liberal, reformed, and the conservative, catholic, cantons finally lead to the Sonderbund War - the last war on Swiss terrain.

The transformation into a federal state was only until after that war in 1848, where the Swiss Federal Constitution was agreed upon - though, Switzerland is still officially known as Swiss Confederation. Through the victory of the liberals the new state was marked by more centralization then in the former confederations, by the introduction of a common currency, and by abolishing tariffs between cantons. The democratic movement finally led to a revision of the constitution in 1874 establishing more direct democracy, a centralization of the military, and a homogenization of cantonal laws.

The Building Of The European Union³

Before looking at what the EU might learn from the history of Switzerland, we will briefly describe how the EU has been formed so far, where we will focus on the ‘European idea’ in post-war Europe.

The beginning of integration in post-war Europe can be thought to go as far back as the Bretton Woods system which included mostly European nations, respectively their currencies. Going hand-in-hand was the establishment of the International Monetary Fund and what is now the World Bank - both international organizations. Then, in 1950, the European Coal and Steel Community was established as the first supranational organization between western European countries to trade coal and steel without tariffs and it implicitly served to unify the democratic countries in the Cold War period. 1957 the European Economic Community (EEC) established by the Treaty of Rome followed to bring about economic integration in the form of a common market. Its members were France, Germany, Italy, Belgium, the Netherlands, and Luxembourg. At the end of the decade in 1959 the European Free Trade Association was formed by Britain, Austria, Denmark, Norway, Portugal, Sweden, and Switzerland as a counterpart to the EEC and to enhance economic development and collaboration, wealth, and trade. The main reasons for these various forms of economic integration between post-warEuropean countries were to eliminate new potential for conflicts and to enhance economic growth. With the years more and more countries joined the organizations.

Only after the end of the Cold War and the unification of Germany in 1990 European integration has gained its main traction with the world becoming ever more globalized. The Treaty of Maastricht coming into force in 1993 marks the birth of the European Union. With it integration shifted from being purely economic to involve other areas of politics also. Supranational competencies were intensified with the Treaty of Lisabon. 17 of the EU-member states make up the Economic and Monetary Union of the EU that introduced the Euro in 2002. Areas of collaboration within the EU besides the single market are a common foreign and security policy, free movement of people (Schengen-area), goods, services, and capital, domestic politics, and the judiciary. All this with the goal of a common area of freedom, security, and justice. In many areas the EU acts as one entity when other nations are concerned.

Comparing Swiss And EU History

In many ways one can find similarities of the histories of Switzerland and the EU, as outlined above. Switzerland roughly went from autonomous cantons to confederations to a federal state, just as the EU went from autonomous European nations to confederations in the area of economics to what could be described as somewhere between confederation and federal state today. Thus the question of the optimal size of a federal country comes up: should we confederate and federalize countries until we have one big world-confederation or even world-state? Similar to Habermas (2011) we would think that to be an honorable goal offering the possibility of peace for all countries. But maybe this is too idealistic. And it seems all but easy: we would need democratic legitimization for that - a subject we will elaborate on further in the chapter on politics.

The Swiss Old Confederation was piecewise enhanced by adding cantons or cities to the former three inner cantons - just as the EU developed from initially six nations in the European communities in the 1950s to 27 nations nowadays. Another similarity is the introduction of a common currency and the abolishment of tariffs between cantons when modern Switzerland was formed in 1848. Later, in 1874, the first revision of the Swiss constitution introduced more direct democracy, centralization of the military, and homogenization of cantonal laws. The latter is being done in the EU as well. The first, more (direct) democracy might be needed.

Now, let us look at the reasons that helped unify Switzerland as well as the EU. The Old Confederation was formed from the need to protect ones liberties against the various neighbors. The EU was just as well formed to protect - not from others but rather from the incumbent nations themselves, from war and history repeating itself. Even though the predecessors of the EU also helped to protect against others as well - in the Cold War against the Soviet thread. Besides invasion, reasons for enhancing the Old Confederation were also economic interests, that play a big role in the EU too. Third, one might add being a bigger entity in general both helped the Swiss and the EU in terms of economics, safety, and (world) politics. Here the question comes up, if the unification of Europe is more difficult due to bigger national egos. But the cantonal unification of Switzerland also seems to have happened mainly out of reason as well, not because the different cantons and cities were somehow having a sense of belonging together in the beginning of the Old Confederation.

Finally, a note on the above principle of neutrality adhered to in Switzerland: neutrality is a nice and honorable principle and might work for a country as small as Switzerland. After all, if all countries in the world decided to be neutral, we would not have any wars. But probably it is not the right way to go for an entity as big as the EU, as the EU - or its member states - might be needed to assist the USA in its function of world police to lastly protect liberty and human rights.

Culture: Focusing On Commonalities Rather Then Differences For A Sense Of Affiliation

What is culture? Edward B. Taylor defined culture in 1871 as > “that complex whole which includes knowledge, belief, art, morals, law, custom, and any other capabilities and habits acquired by man as a member of society.”⁴

Switzerland can be described as quite diverse culturally: there are four official languages - German, French, Italian, and Romansh, where the respective culture is somewhat affected by the language - 26 cantons, and with over 20% a quite high share of foreigners. Compared to other nations this cultural gap is quite evident. Nevertheless the Swiss think of themselves as one nation. Certainly there are also prejudices among the different regions (maybe Swiss-Germans think of the Welsh (French-speaking) to have a less productive work ethic, and vice-versa others) but Switzerland seems to be able to better manage and live this cultural diversity. Despite their language, when asked for their nationality, the Swiss would all first say they are Swiss, not the respective canton they come from (obviously only few people would know the Swiss cantons). Still, regional affiliation with ones canton is quite high. This is similar to the EU: the dominant feeling of affiliation is with the nation-state. A EU-national almost certainly introduces himself with his respective nation. This shows the currently prevailing difference between the feeling of identity of the Swiss and EU-nationals.

The question now is: how to distill a feeling of solidarity or common identity into Europeans? One might think of focusing on tradition and European culture. Although European culture and tradition is quite different when comparing EU-nations directly, it is quite similar when portraying them against other cultures worldwide, e.g. the US or Asian countries. But this feeling of a common European identity can only come from the people within and not be dictated by politicians. What politics can do is help further educate their people in this respect and also the necessity of a unified Europe for the future with respect to Europe’s history. On a global scale Europe can only exercise its weight to form world politics if it holds together. Possible ways to arrive there are shown in the next section on politics.

After all, national egos will not disappear from one day to the other, but it rather takes time to arrive at a common feeling of solidarity or affiliation to Europe. It seems that feelings of identity are very much influenced within one generation. So if generations grow up that are living within a unified and collaborating Europe, they are likely to feel more European as previous generations did, growing up in a more nationalistic environment. An example of this principle is Nazi-ideology living on in older generations that lived in the era in Germany, but not in younger ones.

Also, the EU needs to arrive at a sense of appreciation within the European people for what the EU has helped bring about: the longest period of peace within centuries, which is taken for granted, especially by younger generations, but actually is not as natural as it may seem. Although, one might argue that peace is somewhat granted through today’s various interdependences - may it be in economics, politics, or culture. But the Nobel Price committee has seen this aspect of the EU as notable as being worthy of the Nobel Peace Price in 2012.

Overall, the question of culture may even be not that important. As Rahn⁵ (2010) points out: “The Swiss are practical rather than ideological, but they do revere liberty.” So, maybe for the EU the question is not that of overcoming or laying aside their national identities, but of tolerating each other for the common good. The Swiss understand themselves as a ‘Willensnation’ (German), which means as much as a nation formed by the will of the people and not necessarily their common culture. This is likely where the EU needs to go as well.

Politics: Allowing For More Democracy Involves People

Switzerland is known worldwide for its high degree of direct democracy. That means that the people have quite the high say in everyday political questions through so-called people’s initiatives (German: Volksinitative) and plebiscites. This has a feedback effect on politics as a whole: politicians always seek out solutions, often compromises, that are viable with the people as a whole, as they know they can be overturned by the people anyway. Thus, Switzerland is closer to a real democracy, in the true sense of the word, then many other democratic countries. Obviously, as a democracy, Switzerland has a separation of powers into legislative, executive, and judiciary. The interesting part about the legislative - consisting of the Nationalrat, elected by the people directly, and the Ständerat, made up of representatives of the cantons in equal part - is that it is designed to not have full-time or career politicians, but rather regular people having another occupation besides politics. Thus, politicians themselves should be closer to the people. The executive is made up by the Bundesrat, which consists of seven elected politicians, usually coming from different political parties and having equal-rights (!). So, there is no real head of state, such as a prime minister, known from many other democracies. This is known as principle of collective responsibility (German: Kollegialitätsprinzip).

In many EU-countries today, we can see a sense of disenchantment of the people with politics. Though, if we look at voter turnout for e.g. the German federal election of 2009 we had a rate of 70.78%, as opposed to only 48.5% for the last elections of the Nationalrat in Switzerland.⁶ This may be due to the fact, that the Swiss political system is perceived to be quite slow and that the people know they are able to overturn politician’s decisions anyways.

For the EU as a whole we often hear about a democratic deficit. According to Pollak (2007) it can be differentiated between a structural and a institutional democratic deficit. The structural argumentation is based on the observation that there is no common European people due to the plurality of languages, the lack of common European media, and thus the impossibility of a common European political debate. The critics of the institutional setup of the EU are more common. They are mainly concerned with the Council of the EU that is made up of members of the national executives and is the main legislative body of the EU. Thus, the EU parliament, the supposed legislative elected by the European people directly, is somewhat disempowered and there is no real separation of powers. This circumstance has been somewhat relieved though. The voter turnout of the last elections of the EU-parliament was at 43% only.⁷ Further, one can separate intergovernmental and federal institutional critics. Intergovernmental critics are mainly based on the principle of subsidiarity: politics should be made by lowest entity reasonably able to do it. Thus, matters that can be regulated at the national or even sub-national level, should not be delegated to the EU. A populist example of a breach of subsidiarity has been the so-called provision on cucumbers (German: Gurkenverordnung) that regulated the amount of curvature of cucumbers being sold in the EU, but is not in effect anymore. Where the intergovernmentalists seek less EU, the federalists aim for more EU, but also more democracy. Habermas could be counted to the latter. He predicts the European project to stagnate as long as the heads of state of Europe treat the EU as their own elite project disfranchising the people of Europe.

A solution to more democracy in the EU could be bicameralism as practiced in Switzerland - or many other democracies for that matter - as proposed by federalists. Here the people of Europe would be represented in one body of the legislative and the nations in equal parts in the other. Also, adopting the Swiss way, one could think of more direct say of the people of Europe through plebiscites - which is in the time of the internet not as unthinkable as it was one or two decades ago. Nevertheless, the principle of subsidiarity should be held high as its breach disembarks the European people from European politics and thus the EU. When the European people feel they have made the political choices themselves, they on the one hand have nobody else to blame for dissatisfactory results and on the other should feel more connected to Europe.

Economics: Working Globalization In Ones Own Favor

The economic wellbeing of people largely dictates their satisfaction with politics as well - at least in the sense that we do see little revolutionary tendencies in economically well off countries. Switzerland is one such country: its nominal GDP is the fourth highest in the world, it homes major international companies, but still has a considerable number of specialized small and medium sized companies, with a still quite large industry sector, although services play the major role. Despite its close economic connections to the EU in terms of exports, it has survived the crisis considerably better then most EU-countries. It has pretty much full employment and no debt problem. The Swiss prosperity is often associated with economic liberalism, a small government in general, low taxes, and an open economy.

When in turn looking at the EU the economic environments are quite heterogeneous: we have economically strong countries such at Germany and currently very weak countries such as Greece. This is where the Euro-discussion comes into play - to which a solution is not really found yet.

The EU could certainly learn from Swiss tax competition between cantons. Otherwise, the tendency seems to be of ever increasing taxes over time. As Rahn (2010) points out Swiss taxes are mainly due on the cantonal lever or below - with about two thirds. This again shows the confederate way with subsidiarity being applied. Further, they are considerably lower then in most other western countries and are enough to support a good social system with almost no public debt.

A final note on the assumed primacy of economics over politics in Switzerland as marked by Dürenmatt in the introductory quote: if that is the case in Switzerland, it is self chosen by the people of Switzerland, as it is theirs to dictate politics - and they have the means to do so. In general Switzerland has learned to cope and adopt to the globalization of economies and by opening up itself has actually profited from it. The EU is probably not very different in this aspect, but on the other hand has to cope with economic heterogeneity and the current euro-crisis in its inner.

Conclusion And Prospects In Light Of The Euro-Crisis

No state, confederation, or empire has lasted forever in history. Nevertheless, the European project is still worth pursuing. For that purpose the EU needs only look on the white patch in the middle of its map: Switzerland as an example of living diversity. Surely, in the sense of the introductory words of Friedrich Dürenmatt it does not need to become like Switzerland in all aspects but in some it can certainly take ideas from this small European nation. Maybe if it does, it might lead the Swiss themselves to contemplating joining the EU which would certainly enrich the latter.⁸

To sum up, learnings from Switzerland might include: historically it takes time from autonomous entities to a confederation to a federalized entity, but the key is to include the affected people. I.e. allowing for more democracy in the EU while adhering to subsidiarity. Europeans need to understand themselves as at least a ‘Willensnation’ as the Swiss do - maybe not a nation per se but a confederation. Remembering that the period of peace within Europe spans more then six decades now and that it needs the EU to gain traction in world politics is of utter importance. Nevertheless, the EU needs reforms: in terms of democratizing its institutions and giving back powers to the nation-level where EU-wide solutions are not needed severely.

In general the EU is necessary since we have to follow the globalization of economies and also cultures with a globalization of politics. One often hears that the EU has to decide between ‘full integration’, e.g. being a United States of Europe, or its decomposition. But actually the considerations above have shown: there is a third way through the middle, one could say the Swiss way.

In light of the current crisis the EU’s standing is quite bad. Obviously, the introduction of the Euro was too early an endeavor - or spanning too many economically unequal countries too fast. In hindsight it would have been wiser to steer towards more homogeneous economic realities before introducing the common currency. As the past years have shown, in times of crisis one common monetary policy for economies that different is hard to shape. But there is a point of similarity to Swiss monetary policy: just as the European Central Bank (ECB) is somewhat neglecting its foremost goal of price stability, the Swiss National Bank (SNB) does so too. The ECB is helping its economies by basically pumping liquidity in the markets. The SNB is stabilizing the Swiss economy by supporting the Swiss Franc/Euro exchange rate - thus giving liquidity to markets as well - to support its export industry. Although, a difference likely lies in the independences of the two national banks: where the ECB seems to act on politics’ behalf, the SNB does not. So, where to go from here? We believe a break-up of the Eurozone is not an option as it is likely to be too costly and would somehow resemble a declaration of bankruptcy to the ‘European idea’. Rather the EU now - with the pressure in its back - needs to undergo the desperately needed reforms - maybe similar to those outlined above.

Footnotes

[1] As the author is not of Swiss nationality there should be little to no patriotic feelings in this certainly subjective observation.

[2] The section on Swiss history draws mainly on Maissen (2010): Geschichte der Schweiz.

[3] The section on the post-war ‘European idea’ draws mainly on discussions in the class ‘The Idea of Europe’ by Prof. Dr. Dr. Galin Tihanov, taught at the University of St. Gallen in the fall semester 2012 and on Judt (2010): Postwar: A History of Europe since 1945.

[4] As taken from the Encyclopaedia Britannica Online Edition.

[5] Not affiliated with the author.

[6] As taken from the respective national statistical agencies’ websites.

[7] As taken from Eurostat’s website.

[8] The discussion of Switzerland joining the EU is a whole different subject that shall not be addressed here.

Bibliography

Habermas, Jürgen (2011). Zur Verfassung Europas. Ein Essay. Berlin: Suhrkamp Verlag.

Judt, Tony (2010). Postwar: A History of Europe Since 1945. London: Vintage Books.

Pollak, Johannes (2007). Repräsentation ohne Demokratie: Kollidierende Systeme der Repräsentation in der Europäischen Union. Vienna: Springer.

Maisen, Thomas (2010). Geschichte der Schweiz. Baden: hier + jetzt, Verlag für Kultur und Geschichte.

Rahn, Richard (2010, March 31). Switzerland as an Example for the World. The Brussels Journal.

Schneider, Hans-Peter (2012, September 6). “Die Welt wird entweder untergehen oder verschweizern.” DER HAUPTSTADTBRIEF.