Swiss Government To Stand Firm Over Banking Secrecy

by Ulrika Lomas, Tax-News.com, Brussels

26 April 2002

In a statement released following a regular meeting of the Swiss cabinet, the government announced that it would: 'like to underline that Swiss banking secrecy is not negotiable'.

This comes in response to demands from the European Union that Switzerland, a non-member, comply with EU rules on banking secrecy and tax evasion.

Negotiations on a second set of bilateral treaties - which are a very important element of Swiss foreign policy, and are seen as a politically acceptable alternative to EU membership - ground to a halt last week when the government refused to budge, although there has since been speculation that the cabinet was divided on the issue.

The announcement will be welcomed by the country's banking community, and also by the far-right Swiss People's Party, which this week launched a campaign to protect Swiss banking secrecy by enshrining it in the constitution. However, the government is still very keen to move forward in the 'Bilaterals II' negotiations when they begin again in May, and some experts doubt that they are as resolute on the issue as they would like to appear.

Speaking to the Swissinfo news service on Thursday, Professor Julian Hottinger of the University of Fribourg suggested that the government is playing for time:

'Just repeating the 'non-negotiable' policy is the government's way of trying to gain time,' he told Swissinfo. 'They are a bit confused, and they don't have a real strategy, or a plan to present possible alternatives.' He added that: 'The feeling we get in Switzerland is that the government knew this issue was on the agenda, and didn't do much to prepare the major political parties.'

Despite the seeming rigidity of the Swiss authorities on banking secrecy, something has got to give in this dispute. With so much at stake, many feel that it is unlikely to be the European Union's resolve.

And indeed, Cabinet Secretary, Annemarie Huber's speech, given following the cabinet meeting, could be interpreted as somewhat ambiguous, given the government's parallel proclamation on the issue:

'I'm confident that we will reach an agreement. But we need time to discuss it in the government, to discuss how we will reach a solution that is good for Switzerland and good for the European Union,' she explained.

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