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Why hasn’t Switzerland imposed sanctions on Russia?

While the European Union, the US and the UK has imposed sanctions on Russia for invading Ukraine on Thursday, why has the Swiss government so far resisted this move?

President Ignazio Cassis said Switzerland will join the EU in imposing sanctions on Russia. Photo by Fabrice COFFRINI / AFP)
Swiss President Ignazio Cassis. Photo by Fabrice COFFRINI / AFP)

Although the European Union has approved a far-reaching economic and financial round of sanctions on Russia, Switzerland, which is not a member of the EU or NATO but maintains close ties with both, abstained from taking similar measures.

While the Federal Council announced that it condemns “in the strongest way” the entry of Russian troops into Ukraine and urges Russia “to withdraw them immediately”, Swiss president Ignazio Cassis said Switzerland will refrain from imposing its own sanctions.

READ MORE: Ukraine conflict: Will Switzerland impose sanctions on Russia?

“The Federal Council decided not to adopt the European Union’s sanctions against Russia, but to take all necessary measures to ensure that Switzerland would not be misused to circumvent the sanctions.”

“Switzerland may adopt compulsory measures to enforce sanctions adopted by the United Nations, the Organisation for Security and Co-operation in Europe, or Switzerland’s main trading partners in order to ensure compliance with international law, in particular respect for human rights”, it added.

The Federal Council is already evaluating the possibility of preventing Swiss banks from accepting new funds from Russia (see below).

But why is Switzerland not imposing its own sanctions on Russia?

While some critics have said Switzerland is hiding behind its neutrality, there are other reasons, according to Livia Lieu, an official at the Federal Department of Foreign Affairs (FDFA).

She said that Switzerland exercises the role of “protective power “in certain international conflicts — for example, it represents Russian interests in Georgia, and vice versa.

EXPLAINED: Why is Switzerland always neutral?

For that reason, Switzerland’s delicate role as intermediary would be in peril if the country were to act against Russia.

“Unacceptable hesitation”

Meanwhile, the government’s position is inciting criticism from members of the parliament.

“The Federal Council must take a clear position. Any other attitude would mean that Switzerland tolerates open war in the heart of Europe”, said MP  Fabian Molina.

Another deputy, Jon Pult, is also critical of Switzerland’s stance.

“Putin is waging war on Ukraine against the UN charter. There is no neutrality that holds in the face of such violations of international law”, he said on Twitter. “The Federal Council’s hesitation is unacceptable”.

MP Jürg Grossen is also calling for Swiss participation in EU sanctions. “I expect the Federal Council to show solidarity with its European partners and to participate in EU sanctions”, he said.

All the political parties echo this call, except one. The right-wing Swiss People’s Party (SVP) urges Switzerland to practice restraint, remain neutral and “not copy EU sanctions”, said party president Marco Chiesa.

READ MORE: UPDATE: How Switzerland could be impacted by the Russian invasion of Ukraine

Financial links

Switzerland has been one of the top ten investors in Russia since 2014, according to federal data cited by the RTS public broadcaster.

At the same time, according to estimates from the Swiss embassy in Moscow, Switzerland has for years been the main destination for wealthy Russians to manage their wealth.

In 2020, people residing in Russia transferred 2.5 billion dollars to Switzerland and 1.8 billion for the first two quarters of 2021. This corresponds to a five-year record, as shown by the latest economic report from the embassy.

The analysis underlines that the Swiss financial center is considered attractive for Russians, in particular because of the the political stability and neutrality.

Switzerland also plays an important role for Russia in the commodity trade. According to the report, about 80 percent of Russian commodity trade passes through Swiss financial services centers.

This explains why the largest Russian companies in the energy and raw materials sector, as well as renowned credit institutions, have a subsidiary in Switzerland.

READ MORE: OPINION: Why Switzerland is failing in its fight against money laundering

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LATEST: Moscow says Switzerland can’t represent Kyiv in Russia

Ukraine had asked Switzerland to represent it diplomatically in Russia, but the Kremlin claims the Swiss have 'lost their neutral status'.

LATEST: Moscow says Switzerland can't represent Kyiv in Russia

Russia said on Thursday that Switzerland has lost its neutral status and cannot represent Ukraine diplomatically in Russia, blaming Bern’s decision to impose sanctions on Moscow.

Switzerland had stated earlier that Ukraine asked Bern to represent it in Russia.

The Swiss foreign ministry said that Ukraine had requested that Switzerland “assume a protecting power mandate” for Kyiv in Russia, confirming a story in the Luzerner Zeitung newspaper.

“The corresponding negotiations have been completed,” a ministry spokeswoman told AFP in an email on Wednesday.

READ ALSO: Switzerland bans imports of Russian gold

But the spokeswoman had stressed that “in order for the protecting power mandate to come into force, Russia still has to give its consent” – which the Kremlin didn’t.

Switzerland has lost neutral status’

“Unfortunately, Switzerland has lost the status of a neutral state and cannot act either as a mediator or as a representative of interests,” Russian foreign ministry spokesman Ivan Nechayev told reporters.

He confirmed that Bern had asked Russia if it would agree to Switzerland representing the interests of Ukraine in Russia and vice versa.

Nechayev stressed that Switzerland had been supporting the Kyiv government and slapped sanctions on Russia.

READ ALSO: MAP: Which Swiss cities will be most impacted by a gas shortage this winter?

“It is completely incomprehensible how one can offer mediation, representation or other goodwill services with such behaviour,” he added.

Ever since Russian President Vladimir Putin sent troops to Ukraine on February 24, Switzerland — renowned for its neutrality — has said it stood ready to provide diplomatic assistance and to serve as a go-between.

Moscow has been angered by Bern’s decision to follow the neighbouring European Union in imposing sanctions on Russia.

Switzerland has a long tradition of acting as a protecting power, first playing the role during the Franco Prussian War in 1870-71.The wealthy Alpine country, which has held such mandates hundreds of times
since then, currently represents the diplomatic interests of a range of countries including Russian interests in Georgia and vice versa.