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UKRAINE

How Covid, inflation and the Ukraine invasion has made Switzerland more expensive

Swiss prices are going up due to two inter-related factors: war in Ukraine and inflation, the latter of which is influenced by the lingering impacts of the Covid pandemic. Here’s an overview of some consumer goods that now cost more.

How Covid, inflation and the Ukraine invasion has made Switzerland more expensive
Coffee is one of the foods whose price increased due to war and inflation. Photo: Pixbay

Switzerland is known for being expensive, but in recent months the cost of living has risen higher. 

Uncertainty surrounding the Covid pandemic since the first lockdowns were imposed in early 2020 led to problematic economic consequences, which in turn led to inflation. 

READ MORE: How to protect your savings against inflation in Switzerland

More recently, Russia’s invasion of Ukraine drove up prices of raw materials, fuelling inflation and higher cost of consumer goods.

Inflation in Switzerland stood at 2.2 percent at the end of February, which is obviously not a good thing but it is still significantly lower than in many other countries. For example, inflation rate is 5.8 percent in the EU. 6.2 percent in the UK, and 7.9 percent in the United States.

So the situation in Switzerland is better than elsewhere, as it usually is during times of economic uncertainties.

“We have been confronted with rising energy and raw material costs since last autumn, but the war in Ukraine has made the situation even worse”, said Migros CEO Fabrice Zumbrunnen.

Which prices have increased the most?

The sector most impacted by the war  / inflation is energy — namely natural gas, petrol, diesel and heating oil.

The prices of petroleum products in Switzerland rose by 6.1 percent after the invasion, according to a report by SRF public broadcaster.

The increase is not surprising per se, as Switzerland imports Russian natural gas and oil for energy production. While the reliance on Russian oil is comparatively minimal, Switzerland has a heavier dependence on natural gas from Russia, which provides around an eighth of Switzerland’s total energy supply. 

READ MORE: Ukraine invasion: How reliant is Switzerland on Russia for energy?

As a result, a litre of unleaded grade 95 petrol, whose price hovered just below 1.90 francs before the war, now costs around 2.30 francs in many Swiss regions, and it likely won’t stop there.

According to the Economy Minister Guy Parmelin, the price of 4 francs per litre cannot be ruled out. “That is one possible scenario”, he said.

What about other prices?

Here the news is both good and bad — relatively speaking.

Food and non-alcoholic beverages cost only slightly more now (+0.2 percent) than they did in January. But compared to the same period last year, prices even fell by 1.1 percent,  according to SRF reports.

However, this is based on average prices ​​of all foods. When taken individually, some products, such as coffee and pasta, for instance, cost more, while others, like fruit, have become slightly cheaper.

Things could become more problematic when it comes to bread.

EXPLAINED: Why is Switzerland so expensive?

Ukraine is commonly known as  the breadbasket of Europe, and there is a good reason for that: 12 percent of the world’s wheat supply comes from the Eastern-European country. It is also among the largest exporters of corn.

But only 3 percent of Switzerland’s wheat comes directly from Ukraine, with the rest sourced either locally or from the EU.

However, if the Ukrainian crisis continues, prices of bread and other wheat-based products are likely to climb. One problem could be availability and price of fertilisers used in agriculture, as natural gas (from Russia) is needed to produce them.

“We don’t know what to expect, it’s all very vague”, according to Pierre-Yves Perrin, director of the Swiss Federation of Cereal Producers.

This assessment is shared by Zumbrunnen, who pointed out that  “it is currently very difficult to make predictions about price increases because the dependencies are so great worldwide”.

READ MORE: How will the war in Ukraine impact the cost of living in Switzerland?

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UKRAINE

‘Limited capacity’: How the Swiss right wants to shut out western Ukrainian refugees

With about 51,000 refugees from Ukraine currently in Switzerland, right-wing politicians argue in favour of introducing geographic vetting in regards to who can qualify for Status S, saying Switzerland has "limited capacity" for refugees.

'Limited capacity': How the Swiss right wants to shut out western Ukrainian refugees

After Russia invaded Ukraine on February 24th, the Federal Council activated, for the first time ever, the ‘S status’ authorising Ukrainians and Ukraine residents fleeing the war to live temporarily in Switzerland.

The special status is initially valid for a year, but can be extended. Anyone who is still in Switzerland after five years receives a B permit.

Included is also the right to work, as well as free health care and language courses. The refugees also have the right to free public transportation, but this perk will end on May 31st, with no word yet whether it will be renewed.

READ MORE: Switzerland’s special ‘S permit’ visa program: What Ukrainians need to know

Now, however, “the great solidarity with refugees from Ukraine is cracking”, according to SonntagsZeitung, which reports that rightwing politicians in Switzerland are “beginning to question our country’s culture of hospitality”.

The right-wing Swiss People’s Party (SVP), which has consistently opposed sanctions on Russia, is calling on the government to limit the S status  only to Ukrainians who come from the eastern part of the country, which is currently most impacted by Russia’s invasion.  

This movement is spearheaded by MP Martina Bircher, who argues that Switzerland is reaching its limits in terms of the number of refugees it can accommodate and support, and it should therefore grant S status only to those fleeing the most conflict-ridden regions of Ukraine, like the eastern part.

Other right-of-centre groups are in favour of this “regionalisation” as well. Andrea Caroni, president of the centre-right Liberal Party, supports the idea of granting the special status based on the geographical evolution of the Ukrainian conflict, saying Switzerland “ultimately has limited capacity” to absorb refugees from Ukraine. 

He said, however, that such a measure “must be coordinated at the European level.”

Not everyone, however, agrees with Bircher’s proposal.

According to Gerhard Pfister, president of the Centre Party, adopting geographical limitations “would create two classes of Ukrainians. This is not right”.

It is unclear how the SVP would seek to draw barriers to distinguish between the east and west of the country. 

As for the Conference of Cantonal Directors of Social Affairs, vice-president Marianne Lienhard said the organisaton will discuss the proposal at its next meeting at the end of May.

Cantons are directly affected by the influx of Ukrainians, as they will eventually bear the cost of supporting the refugees — the cost which is currently borne mostly at a federal level.

The “NZZ am Sonntag” calculated that in 2022, the costs of housing, health insurance, and general support will amount to between 1.25 and 2.25 billion francs. In 2023, these expenses could climb to 7.5 billion.

“Fake” refugees

In an article she wrote for the SVP website, Bircher also argued that some refugees pretending to be Ukrainian actually aren’t.

As an MP from Aargau, she claims that out of 12 people who received the S status in a small town in her canton, only seven were Ukrainian nationals. The other five came from Africa.

Among them are  “Kenyan and Lebanese men who claim to have lived in Ukraine or who actually lived there before the war, but who do not have a Ukrainian passport”.

The S permit scheme does not only provide protection for Ukrainian citizens, but also citizens of other countries who live in Ukraine. 

While reserved predominantly for Ukrainians, the S status has also been occasionally granted to citizens of other countries. 

According to the State Secretariat for Migration (SEM), about 1,000 “other” refugees received this status as well, including 238 Russians, and  people from Germany, France, Italy, the United States, Canada and Australia.

In such cases, children have a different passport from their parents, but it is the parents’ nationality and place of residence that defines whether the status is granted.

So it could happen that the parents have Ukrainian passports, while their children are citizens of other nations.

READ MORE: Swiss MPs call for Russian money to be used to reconstruct Ukraine
 

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