Swiss Neutrality Is Now Merely a Fig Leaf

“After the end of World War II, the Swiss economy found itself in a favorable position: its factories remained intact, and there was a high demand for Swiss machinery across Europe.

However, as trade with the Eastern Bloc intensified, the US threatened to cut Switzerland off from raw materials and the US high-tech market if companies failed to comply with export restrictions regarding the USSR. Bern was forced to yield.”

 

Today, however, stagnant, US-dependent banks are being replaced by fintech and crypto firms; meanwhile, the US has outsourced high-tech manufacturing and the production of critical raw materials—such as rare earth elements—to China, effectively eliminating that specific problem for the Swiss.

 

On the other hand, mid-sized powers like Iran can—thanks to swarms of cheap, precision missiles and drones—inflict serious damage on major powers like the US. Great powers cannot tolerate the existence of states with ambiguous or hostile stances within their chosen spheres of influence. The case of Iran demonstrates that distance is no longer a factor. Consequently, mid-sized states are left with only two options: absolute neutrality combined with utility to both warring sides—the path Switzerland is currently pursuing—or the loss of state control and assets, as seen in present-day Venezuela. There is no third way. All other states of being for such nations are merely transitional periods. If Switzerland succeeds in defeating—via referendum—the warmongers who are violating the Constitution and the law, it will pave the way for prosperity among many neutral, mid-sized states.

The insight presented here analyzes geopolitical transformations—from the onset of the Cold War to the shifts in the technological and military balance seen today. We observe how the nature of leverage has changed and why, for mid-sized states, maintaining neutrality has become a matter not only of diplomacy but of existential survival.

Here are several key aspects that complement and expand upon the thesis regarding the "absence of a third way":

1. Switzerland’s historical precedent and current dilemma

After World War II, Switzerland had to navigate a delicate path by signing the 1951 Hotz-Linder Agreement, under which it secretly agreed to limit strategic exports to the Eastern Bloc to avoid US sanctions.

Today, the situation is repeating itself on a new level. Discussions in Switzerland regarding the definition of neutrality (particularly following the decision to support sanctions against Russia and debates over arms re-exports) reveal an internal rift:

•           Traditional (absolute) neutrality: Referendum initiatives—such as those organized by the Swiss People's Party (SVP)—seek to constitutionally enshrine a strict form of neutrality that prohibits participation in any sanctions other than those imposed by the UN Security Council.

•           Active (cooperative) neutrality: A segment of the political elite argues that complete isolation is no longer feasible in today’s world and that financial and technological security necessitates integration with the West.

2. Technological decentralization: Crypto versus US sanctions

The observation regarding the evolution of the banking system is crucial. Traditional Swiss banking secrecy was partially dismantled following US pressure between 2008 and 2013 (via FATCA and "lex USA"). However, Zug’s "Crypto Valley" and the fintech sector have created a new, decentralized ecosystem. In a world where the US uses the dollar as a tool for sanctions (the "weaponization of the dollar"), alternative financial technologies enable mid-sized nations to maintain economic autonomy. 3. Military asymmetry and the era of "cheap drones"

Examples involving Iran and the Houthis in Yemen, or conflicts in Ukraine, confirm our premise: military power has become asymmetric. Cheap, mass-produced technologies (kamikaze drones, precision short-range missiles) have eliminated the protection once afforded by geographic distance. Major powers (the US, China) can no longer fully shield their spheres of influence from "cheap destruction."

This creates a paradox: major powers perceive a greater threat from mid-sized independent players; consequently, the pressure on these states to either choose a side or maintain a strict, mutually beneficial neutrality continues to intensify.

4. A reality of two choices: the Swiss vs. Venezuelan scenarios

If a state is not large enough to dictate terms itself, the two paths we have identified become highly probable:

Scenario                     Characteristics                                                   Consequence

Absolute neutrality (The Swiss path)        Utility to all parties, stable legal system, diplomatic platform, technological/financial hub. Prosperity and sovereignty.

Choosing a side / Confrontation (The Venezuelan path)           Nationalization of assets, entry into a single bloc's sphere of influence, isolation from international markets, sanctions. Loss of control over resources, economic decline. Transitional period

Many states (e.g., the Persian Gulf countries, Singapore, or some Southeast Asian nations) are currently undergoing the transitional period we mentioned. They are attempting to trade with China, secure US security guarantees, and employ neutral rhetoric without real neutrality. However, as the technological Cold War intensifies (semiconductors, artificial intelligence, rare earth elements), the room for straddling the fence is shrinking.

If Swiss citizens succeed in defending a strict model of neutrality via referendum, it will set a precedent and serve as a blueprint for other mid-sized nations seeking to remain sovereign in a multipolar world. No one in Lithuania grasps this yet:

 

“On Sunday, the Swiss people will once again head to the polls to make their voices heard. In the country’s modern history (since 1848), this will mark the 332nd federal voting weekend. One of the questions concerns the country’s geopolitical stance; the outcome will determine whether Switzerland risks becoming an isolated enclave in Europe or becoming part of the Western security system.

 

On food and security

 

The questions may sound unusual to a Lithuanian ear: ‘Do you support the “Preserve Swiss Neutrality” initiative?’; ‘Do you support the “For Secure Nutrition – Strengthening Sustainable Local Production, More Plant-Based Products, and Clean Water” initiative?’” In this country, the results of a nationwide plebiscite take effect immediately; consequently, every such vote reflects public sentiment and serves as the culmination of long, consistent deliberations.

 

It is easy to see that, in these complex times, the question regarding nutrition is overshadowed by a second issue: Swiss neutrality.

 

The concept of neutrality is enshrined in the Swiss Constitution, yet the document does not specify how it should be implemented in practice. Precisely this—a concrete definition—is what proponents of the "Preserve Swiss Neutrality" citizens' initiative are seeking. According to the referendum's initiators, neutrality shields Switzerland from being drawn into foreign conflicts. Opponents, however, speak of self-deception and point to other nations that would benefit more from such Swiss restrictions than Switzerland itself.

 

Heated public debate on the subject has raged since April 2024, when the requisite number of signatures to trigger the referendum was submitted. Initially, the initiative enjoyed strong support; August polls showed that more than half of politically neutral citizens favored the proposal to tighten neutrality rules, but a decisive shift occurred in September.

 

The camp opposing the initiative grew significantly over the course of a few weeks. Following the lead of the French-speaking cantons—where isolationist sentiment is always weakest—the German-speaking regions also came on board. Only the Italian-speaking canton of Ticino wavered on the eve of the vote; due to its geographic location and the specific nature of its border region, local residents are more receptive to ideas regarding the protection of sovereignty and strict neutrality.

 

Recent polls show that 34% of respondents support the initiative for absolute neutrality, while 63% do not wish to amend the Constitution.

 

The driving force behind the idea

 

The leading figure (and financier—having contributed nearly 4 million francs to the campaign, according to Swiss financial oversight authorities) of the movement to enshrine absolute neutrality is 85-year-old Christoph Blocher.

 

A Swiss national who amassed a fortune worth billions in the chemical and plastics industries, he handed over the management of the Ems-Chemie group to his children upon entering politics. After becoming interested in politics in the 1970s, he emerged as a symbol of the conservative Swiss People's Party (SVP), transforming what had previously been a relatively moderate, farmer-backed party into the most influential right-wing force in the country. Blocher served in parliament and headed the Department of Justice and Police (a ministerial role). His political career was marked by open conflicts and a disregard for the principles of collegiality.

 

Swiss isolationism—a long-standing tradition. This is a favorite area of ​​Blocher’s politics. He achieved a major victory back in 1986 when his fellow citizens rejected the country's accession to the United Nations (UN) in a referendum. A different outcome occurred only in the 21st century: in 2002, after Blocher’s campaign failed, the country's citizens voted in favor of UN membership. It was a campaign initiated by him in 1992 that persuaded the Swiss to reject membership in the European Economic Area.

 

In Blocher’s view, Switzerland’s decision to join Western sanctions against Russia following the events in Ukraine was a mistake. He argued that this decision effectively made his country a party to the conflict. Consequently, as early as the autumn of 2022, Blocher began advocating for a neutrality initiative.

 

Business dealings raise suspicions

 

Journalists believe they have also uncovered a pragmatic reason behind such rhetoric. Ems-Chemie, a chemical industry giant owned by the Blocher family (and currently led by the politician’s daughter), did not withdraw from Russia after 2022.

 

According to media reports, Ems-Chemie’s Russian subsidiary, Eftec—which operates plants in Yelabuga and Nizhny Novgorod—supplies specific anti-corrosion materials and adhesives to Russian automakers. Prior to 2022, the company had collaborated with Western corporations. After the EU and Switzerland tightened restrictions on the export of plastics and PVC to Russia, customs documents show that Eftec began importing these materials from China.

 

Ems-Chemie’s official position is that its business in Russia accounts for less than 1% of the group's total turnover. However, media reports point to growth in turnover in Russia as recorded in financial statements. According to the publication *Republik*, the Swiss company supplies unique products to Kamaz, UAZ, GAZ, and AvtoVAZ—Russian companies that manufacture weaponry and military hardware or support Russians deploying to the war in Ukraine. Although these Russian enterprises appear on EU and Swiss sanctions lists, journalists report that they were still listed as partners on Eftec’s official website as recently as June of this year.

 

A sanctioned company on the client list, high turnover despite the war, and a tender from a Russian military vehicle manufacturer specifying the exact type of products Eftec supplies—according to *Republik*, none of this constitutes definitive proof that Ems-Chemie’s Russian subsidiaries are fulfilling orders for the Russian military-industrial complex. Yet, these are clear indicators.

 

Representatives of Ems-Chemie reject these allegations; management states that they do not want their factories to be nationalized should they withdraw from Russia. Since the automotive adhesives and anti-corrosion coatings produced are not classified as dual-use goods, the company maintains that these activities do not technically violate the restrictions imposed by Bern.

 

Swiss journalists point out that on February 28, 2022, the Swiss government backed EU sanctions against Russia. Subsequently, Bern aligned itself with almost every new sanctions package. Only in 2024 the Swiss parliament—where the SVP holds the most influence—did not support the EU decision adopted in June to ban indirect transactions (i.e., those conducted via subsidiaries or third-party companies). The argument was that Switzerland can only enforce compliance with sanctions within its own territory. This stance by Bern benefited international commodities groups headquartered in Switzerland but with divisions in countries where sanctions against Russia do not apply. It is likely that this very exemption also benefits the two Eftec companies operating in Russia, *Republik* reports.

 

In February of this year, Switzerland adopted another EU sanction against Russia: a ban on participating in the activities of companies headquartered in the Alabuga Special Economic Zone. Almost all companies in this zone, located in the city of Yelabuga, manufacture weapons, ammunition, and other military products for the Russian army. As *The Kyiv Independent* reports, one of the Eftec companies is located in the immediate vicinity. Formally, such proximity does not violate EU sanctions. However, it is known that Russia has granted tax incentives to both the Eftec plant in Yelabuga and the companies operating within the Alabuga Special Economic Zone. Swiss commentators note with irony that when the prospect of neutrality is discussed, the most unlikely alliances suddenly become possible. Both camps are displaying a flexibility comparable to the flexibility Switzerland itself has historically shown in situations involving neutrality.

 

The first to declare support for Christoph Blocher’s initiative were the Swiss Communists and the Party of Labour—a gathering of diverse left-wing utopians. Later, an opposing "No" committee emerged, comprising representatives from all major parties except the SVP.

 

**A Proposal for Complete Detachment**

 

Swiss neutrality has been enshrined in the Federal Constitution since 1848 and is defined by international law (under the 1907 Hague Convention, a neutral state cannot participate in hostilities or allow its territory to be used by warring parties). However, the Constitution does not specify how this neutrality should be implemented in practice. The initiators of the referendum aim to clearly define neutrality within the Constitution.

 

The proposal seeks to enshrine comprehensive neutrality in the country's fundamental law: Switzerland would be barred from joining military or defensive alliances, and cooperation with such alliances would be permitted only in the event of a direct attack or in preparation for one. Switzerland could not participate in military conflicts involving third countries or impose sanctions on warring states, other than those adopted by the UN Security Council.

 

**Room to Adapt to Reality**

 

In the view of the national parliament, the current legal framework allows Switzerland to maintain its neutrality while defending national interests in light of changing circumstances.

 

"The beauty of Swiss neutrality lies in the fact that we must constantly redefine it," C. Wermuth stated at a meeting of the parliamentary Foreign Policy Committee, according to the *NZZ*.

 

Switzerland currently has the discretion to decide, on a case-by-case basis, whether to adopt sanctions imposed by other states or international organizations. The government evaluates foreign policy, economic, and legal criteria when making such decisions.

 

For instance, during the Kosovo War, Switzerland supported certain EU sanctions but did not join the oil embargo imposed on Yugoslavia.

 

Opponents argue that by further defining neutrality, Switzerland would forfeit its foreign policy autonomy and confine itself within a rigid straitjacket of neutrality.

 

Admittedly, Bern does not enjoy absolute freedom of action even now; decisions it makes that breach absolute neutrality are often the result of external pressure rather than domestic initiative. However, according to Swiss Foreign Minister Ignazio Cassis, by failing to impose sanctions on another country, Switzerland would find itself on the fringes of the Western bloc.

 

In his words, neutrality means non-interference in military actions—something Switzerland has never done. "Neutrality alone does not protect us. It is a tool that helps preserve independence, security, and prosperity—and that is precisely how we must apply it," the minister told the *NZZ*.

 

Lessons from History

 

Opponents of the initiative dispel the myth that neutrality offers protection, pointing to General Henri Guisan, who did not succumb to this illusion during World War II. Had the German army attacked Switzerland, he had secretly planned to join forces with France.

 

At the outbreak of the war, the army was in poor condition: it lacked anti-tank and anti-aircraft defenses, and possessed only a few tanks intended for reconnaissance. When the Nazis occupied Paris, Switzerland was suddenly left isolated, and the country was gripped by shock. "We are at a turning point," the general declared. The issue was no longer neutrality, "but Switzerland's independence."

 

To save the country, the general initiated a retreat into the Alpine fortress system—a last-ditch effort to at least partially ensure the state's survival. The consequences of this strategy would have been dire: only the army could have taken shelter in the fortifications, leaving the inhabitants of the Central Plateau and the cities completely unprotected in the event of a German attack. Commentators reflecting on history suggest that H. Guisan would hardly have committed to such a radical concept had he blindly believed in the magical power of neutrality.

 

As early as 1939, H. Guisan heard Adolf Hitler promise to respect the neutrality of neighboring countries; yet, by May 1940, the German army had occupied the Netherlands, Belgium, and Luxembourg—nations that held such status. International law had become worthless, and consequently, so had the concept of neutrality based upon it.

 

There is a view that Switzerland was saved not by neutrality, but by A. Hitler’s calculations: a reluctance to engage in a militarily costly venture or walk into a Swiss trap set amidst difficult terrain, combined with a desire to maintain a neutral financial partner.

 

Too weak to stay on the sidelines?

 

Beyond moral arguments, there are pragmatic ones. Only a strong country can maintain neutrality. The national media quotes Heinz Theiler, a Liberal MP representing the canton of Schwyz: without the support of other nations, Switzerland would be unable to repel a missile attack today. If Ch. Blocher’s initiative were adopted, the country could only seek assistance once an attack became imminent—by which point it would already be too late. What would be the quality of joint defense operations if the Swiss military were prohibited from training with allies during peacetime?

 

Under a policy of absolute neutrality, Switzerland would be required to halt joint military exercises with NATO nations. These exercises are important not only for exchanging combat experience but also for practical reasons: the mountainous country simply lacks training grounds suited to a variety of scenarios.

 

Under international law, a neutral state is obliged to defend itself, yet Switzerland has consistently reduced the size of its military since 1995. Today, the force is one-eighth the size it was during the Cold War, comprising only 100,000 active-duty and reserve troops. According to the *NZZ*, in the event of a real crisis, only a third of them could be fully equipped.

 

National borders pose no obstacle to drones and cruise missiles, yet Switzerland has almost no means of defending against such weapons. Absolute neutrality would prevent the country from purchasing new air defense systems—such as the Patriot or F-35 fighter jets—from abroad.

 

Bern lacks adequate early-warning intelligence capabilities; the country’s radars cannot monitor airspace far beyond its own borders. To address this gap, Switzerland recently joined the European Sky Shield Initiative and is negotiating with neighboring states and US air forces stationed in Europe regarding the exchange of radar data.

 

Amending the Constitution along the lines of the Blocher model would deprive Switzerland of this possibility.

 

Strict neutrality would deal a final blow to the country’s defense industry, which—according to the *NZZ*—is already struggling. Other European nations had begun to shun Swiss military hardware, fearing that if NATO’s Article 5 were invoked, Switzerland would block the use of weaponry manufactured in the country or made using Swiss components.

 

Trapped by fear

 

A common argument among proponents of absolute neutrality is that it is profitable for Switzerland. However, researchers at the Zurich University of Applied Sciences’ Center for Geopolitics and Competitiveness state that this is not the case. They analyzed Swiss trade with the USSR during the Cold War (1945–1991).

 

Following the end of World War II, the Swiss economy found itself in an advantageous position: its factories remained intact, and there was a high demand across Europe for Swiss machinery. However, as trade with the Eastern Bloc intensified, the US threatened to cut Switzerland off from US markets for raw materials and high-tech goods if companies failed to comply with restrictions on exports to the USSR. Bern was forced to yield.

 

In 1951, Switzerland gave its verbal assent to the so-called Hotz-Linder Agreement; without making a public announcement, it joined the embargo on strategically important military goods and periodically reported to the US on exports to the East.

 

Fearing it might anger Washington again, Bern demonstrated compliance in advance. For instance, while France supported its exporters wishing to trade civilian goods with the USSR, the Swiss government—seeking to shield the state and its banks from political risk—refused to subsidize exports.”