Russian oligarch applies for Swiss social assistance due to sanctions

A Russian oligarch in the Swiss canton of Geneva has applied for state social assistance after losing access to his bank accounts due to sanctions imposed after the war in Ukraine. Switzerland denied the application.

A Russian oligarch has applied for social assistance in the Swiss canton of Geneva due to Ukraine sanctions. Photo by Terence Burke on Unsplash
A Russian oligarch has applied for social assistance in the Swiss canton of Geneva due to Ukraine sanctions. Photo by Terence Burke on Unsplash

Swiss newspaper Tribune de Genève reported on Wednesday that the oligarch, who has Swiss citizenship, complained he would soon be unable to buy his groceries at Swiss supermarket Migros due to the sanctions. 

The social welfare office in the canton of Geneva told the paper the application was rejected as oligarch had other assets, including real estate. Geneva is one of the world’s most expensive property markets. 

EXPLAINED: The hidden costs of buying a home in Switzerland

Social assistance is only made available to those who cannot afford to cover costs, rather than those who are experiencing liquidity issues as a result of international sanctions. 

The man is one of more than 1,000 individuals subject to sanctions in Switzerland due to Russia’s invasion of Ukraine. 

The State Secretariat for Economic Affairs (Seco) said sanctioned assets or blocked accounts can be unfrozen in exceptional situations due to cases of hardship, although no such unfreezing has taken place in this case. 

“Each case is examined individually”, Seco told Swiss news outlet Watson. 

The sanctions, which were controversially imposed by neutral Switzerland in the days after the Russian invasion, do not only impact the mega rich in Switzerland. 

Sanctions on Russia: Is Switzerland still a neutral nation?

Ordinary employees of Russian companies hit by sanctions have also had their wages frozen. 

Natalyia, an administrative assistant, told Watson she and many others had been indirectly impacted by the sanctions. 

“We are Swiss citizens and ordinary employees with ordinary wages, we have families and financial obligations,” Natalyia, who did not want to give her real name, told Watson. 

Companies hit by sanctions can similarly apply for hardship exemptions, Seco said, which are subject to approval in exceptional cases. 

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Inflation in Switzerland hits 3.4 percent for June

Switzerland’s inflation rate hit 3.4 percent in June, due largely to the lingering impact of Covid, the Ukraine war and a spike in fuel prices.

Inflation in Switzerland hits 3.4 percent for June

Switzerland’s Federal Statistical Office made the announcement on Monday, July 4th. 

The 3.4 percent figure was higher than expected, although some experts indicated it was within their broad predictive models. 

This was an 0.5 percent increase compared with May. 

Despite the increase however, the inflation rate is far lower than that in other parts of the world. 

The Eurozone is currently experiencing a 8.6 percent inflation rate. The United States is also seeing similarly high inflation figures, with a current rate of 8.6 percent. 

The combined impact of Russia’s invasion of Ukraine along with the lingering effects of the Covid pandemic have pushed fuel prices higher, which have in turn further driven cost increases. 

Fruit and vegetable prices have risen, as have prices for things like grain. 

READ MORE: Seven products that are becoming more expensive in Switzerland

Why is the Swiss rate so much lower than elsewhere?

There are a number of explanations for this phenomenon:

Strong currency

In good times and bad, the Swiss franc remains strong, sometimes even reaching parity with the euro. This acts as a defence mechanism of sorts by keeping import prices low.

As Switzerland relies on imports much more than many other countries, including the United States and Germany, lower costs of imports have a ‘cooling effect’ on inflation. 

 “This makes imports cheaper across the board. The strong franc helps the Swiss have high purchasing power internationally. And imported goods are the main drivers of inflation,” according to the Neue Zürcher Zeitung.

Less reliance on Russian energy sources

Energy prices are “fundamental in explaining the differences in inflation, especially between Switzerland and the eurozone”” according to an analysis by EFG private bank.

“This is almost totally due to differences in the price of electricity. In February and March, the price of electricity in Switzerland rose by only 2.4 percent, while in the eurozone it surged by 34.3”, the bank reported.

The reason for this, EFG found, are different technologies used to produce electricity.

Data from the International Energy Agency shows less than 1 percent of the electricity consumed in Switzerland comes from oil and natural gas, while 58 percent originates from renewable sources like hydroelectric and nuclear power.

“By comparison, in the European Union over one-fifth of the electricity is produced with natural gas and over one eighth with coal”, the banks’ analysts found.

 The gap was even wider for electricity prices: in February, the wholesale price of electricity in Switzerland was 3.1 percent higher than a year before, while in in the eurozone the increase was as much as 83.2 percent.

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