Despite a dearth of natural resources, Switzerland is one of the world's most advanced and prosperous nations. Per capita income is among the highest in the world, as are wages. Trade has been the key to prosperity in Switzerland. The country is dependent upon export markets to generate income while dependent upon imports for raw materials and to expand the range of goods and services available in the country. Switzerland has liberal investment and trade policies, with the exception of agriculture, and a conservative fiscal policy. The Swiss legal system is highly developed; commercial law is well defined; and solid laws and policies protect investments. The Swiss franc is one of the world's soundest currencies, and the country is known for its high standard of banking and financial services. Switzerland is a member of a number of international economic organizations, including the World Trade Organization (WTO), the International Monetary Fund, the World Bank, and the Organization for Economic Cooperation and Development (OECD).
The Swiss economy increased by 2.6% in 2010; its growth is expected to slow to 2% in 2011 as a result of various factors such as an appreciating Swiss franc. However, due to the successful government debt reduction (imposed by the so-called debt brake), Switzerland is not expected to be impacted by strict austerity measures imposed in other areas of Europe. Switzerland led the rankings of the World Economic Forum’s Global Competitiveness Report 2010-2011, reflecting the country's sound institutional environment, excellent infrastructure, efficient markets, competent macroeconomic management, world-class educational attainment, and high levels of technological innovation, which boost Switzerland's competitiveness in the global economy. The country has a well-developed infrastructure for scientific research. Companies spend generously on research and development (R&D), and intellectual property protection is strong. Business activity benefits from a well-developed institutional framework, characterized by the rule of law, an efficient judicial system, and high levels of transparency and accountability within public institutions. Higher education and training are rapidly growing in importance as engines of productivity growth.
Being a nation that depends upon exports for economic growth, and due to the fact that it is so closely linked to the economies of Western Europe and the United States, Switzerland's economic growth mirrors slowdowns and growth spurts experienced in these countries. During most of the 1990s, the Swiss economy was Western Europe's weakest, with annual GDP growth averaging 0% between 1991 and 1997. Beginning in late 1997, the economy steadily gained momentum until peaking in 2000 with 3% growth in real terms. The economy returned to lackluster growth during 2001-2003, but began growing at or above potential since 2004--2.5% per annum--until the recent global economic crisis, which impacted Switzerland's growth. The year 2008 was marked by a worsening of the financial crisis and the beginning of its spread to the economy as a whole. The growth of economic activity thus slowed down compared to previous years, but remained nevertheless positive (+1.8%). Long-run economic growth is predicated on structural reforms. In order to maximize its economic potential, Switzerland will need to push through difficult agrarian and competition policy reforms.
The economic upswing had some positive impact on the labor market, which has begun to fade due to the impact of the global financial crisis. Unemployment decreased from 4.1% in December 2003 to 1.5% in 2007, but was at 3.4% in March 2011. One-fourth of the country's full-time workers are unionized. In general, labor/management relations are good, mostly characterized by a willingness on both sides to settle disputes by negotiations rather than by labor action.
Tourism, banking, engineering, and insurance are significant sectors of the economy and heavily influence the country's economic policies. Swiss trading companies have unique marketing expertise in many parts of the world, including Eastern Europe, the Far East, Africa, and the Middle East. Not only does Switzerland have a highly developed tourism infrastructure (making it a good market for tourism-related equipment and services), the Swiss also are intrepid travelers. Per capita, more Swiss visit the United States every year than from any other country. In 2010, about 391,000 Swiss citizens came to the United States as tourists. Tourism is the most important U.S. export to Switzerland.
The Swiss economy earns roughly half of its corporate earnings from the export industry. The EU is Switzerland's largest trading partner (59% of exports and 75% of imports in 2010), and economic and trade barriers between them are minimal. After more than 4 years of negotiations, an agreement known as the "Bilaterals I" covering seven sectors (research, public procurement, technical barriers to trade, agriculture, civil aviation, land transport, and the free movement of persons) entered into force on June 1, 2002. Switzerland has so far attempted to mitigate possible adverse effects of non-membership by conforming many of its regulations, standards, and practices to EU directives and norms. Full access to the Swiss market for the original 15 EU member states entered into force in June 2004, ending as a result the "national preference". The Swiss agreed to extend these preferences to the 10 new EU members on September 25, 2005, with restrictions remaining until 2011. A referendum was held in February 2009 on the Bilaterals I and the extension of the free movement of persons to Romania and Bulgaria.
The Swiss Government embarked in July 2001 on a second round of bilateral negotiations with the EU known as "Bilaterals II". Talks focused on customs fraud, environment, statistics, trade in processed agricultural goods, media, the taxation of savings, and police/judicial cooperation (dubbed the Schengen-Dublin accords). Amid a fierce political debate over the essence of Swiss-EU relations and populist warnings against EU workers and criminals entering Switzerland, the Schengen-Dublin package was approved on June 5, 2005 by 54.6% of Swiss voters and entered into force on December 12, 2008. Fears of cheap labor coming from new EU member states have prompted the government to provide for tripartite surveillance committees to ensure that decent wages are enforced. The Swiss federal government remains deeply divided over EU membership as its long-term goal, and in a March 2001 referendum more than 70% of Swiss voters rejected rapid steps toward EU membership. Switzerland nevertheless expressed interest in reaching a third layer of bilateral agreements that would involve energy, the Galileo satellite navigation system, health, and agriculture. But recent harsh criticism by the European Commission against preferential cantonal tax treatment for foreign holdings cooled the political climate with the EU.
The government also agreed on June 25, 2008 to propose an amendment of the Federal Law on Technical Barriers to Trade to permit implementation of the EU “Cassis-de-Dijon” principle. Parliament adopted this provision and it entered into force on July 1, 2010. As adopted, all EU products can be imported into Switzerland without meeting the burdensome Swiss certification and Swiss languages requirements. Given that retail prices in Switzerland are frequently 20%-30% higher than in the EU, the Swiss Government believes that domestic prices could drop by 10% if EU products could be imported through streamlined Swiss procedures, but there are no official figures yet available showing whether such a decrease of prices has actually taken place.
The government has reaffirmed its wish to strengthen ties with other, non-EU trading partners in Asia and America. Exploratory talks on a Free Trade Agreement between the U.S. and Switzerland failed to result in negotiations, due to Swiss problems with free trade in agriculture, but the two sides did agree to a new framework for economic, trade, and investment discussions. This agreement resulted in the Swiss-U.S. Trade and Investment Cooperation Forum (the "Forum") and is currently assessing areas where the two governments could facilitate greater trade and investment flows.
In 2010, Switzerland ranked 16th among the main U.S. export destinations, and 21st as a source of imports. The United States is the second-largest importer (9.75%) of Swiss goods after Germany (19.55%). In addition, the United States is the largest foreign investor in Switzerland, and conversely, the largest single destination of Swiss foreign investment. It is estimated that 300,000 American jobs depend on more than $165 billion in Swiss investments in the United States.
GDP (2010): $475.8 billion (495.8 billion Swiss francs [CHF]).
Government expenses (in GDP%, 2008): 38.3% (federal, cantonal, and local).
Annual growth rate (2010): 2.6%.
Unemployment (March 2011): 3.4%.
Per capita income (2010 est.): $66,367.
Avg. inflation rate: 0.7% (2010); 1.1% (2011 est.).
Natural resources: Water power, timber, salt.
Agriculture (1% of GDP): Products--dairy (21%), livestock (25%), grains (4%), fruit and wine (10%), and vegetables (14%). Arable land (1999)--26%.
Industry (est. 29% of GDP): Types--machinery, chemicals, pharmaceuticals, time pieces, precision instruments, textiles and clothing, pigment, transportation equipment.
Services (70% of GDP).
Trade: Merchandise exports (2010)--$195 billion (official exchange rate): food, beverages, and tobacco (4%; +8%); metal and chemical industries (44%; +10%); precision instruments (15%; +18%); watches (8%; +27%); machinery and electronics (22%; +12%); clothing (1.5%; -3%). Major markets--EU, United States, Canada, CIS, India, Brazil, Japan. Merchandise imports (2010)--$176 billion (official exchange rate): consumer goods (38%); equipment (19%); energy (7.1%); raw materials (28%). Major suppliers--EU, U.S., Canada, CIS, South Africa.
Exchange rate (March 2011): $1 U.S. = 0.9191 CHF or SFr.
41,285 sq. km. (15,941 sq. mi.); about the size of Vermont and New Hampshire combined.
--Bern (population about 123,000).
--Zurich (359,000), Geneva (180,000), Basel (164,000), Lausanne (119,000).
40% mountains, the remainder hills and plateau. Switzerland straddles the central ranges of the Alps.
Temperate, varying with altitude and season.
Switzerland is a federal state composed of 26 cantons (20 are "full" cantons and six "half" cantons for purposes of representation in the federal legislature) that retain attributes of sovereignty, such as fiscal autonomy and the right to manage internal cantonal affairs. Under the 2000 Constitution, cantons hold all powers not specifically delegated to the federation. Switzerland's federal institutions are:
The Constitution provides for separation of the three branches of government.
The Federal Assembly is the primary seat of power, although in practice the executive branch has been increasing its power at the expense of the legislative branch. The Federal Assembly has two houses--the Council of States and the National Council. These two houses have equal powers in all respects, including the right to introduce legislation. Legislation cannot be vetoed by the executive nor reviewed for constitutionality by the judiciary, but all laws (except the budget) can be reviewed by popular referendum before taking effect. The 46 members of the Council of States (two from each canton and one from each half canton) are directly elected in each canton by majority voting. The 200 members of the National Council are directly elected in each canton under a system of proportional representation. Members of both houses serve for 4 years.
The Federal Assembly meets quarterly for 3-week plenary sessions. The parliamentary committees of the two houses, which are often key in shaping legislation, meet behind closed doors, but both majority and minority positions are presented during the plenary sessions. The Federal Assembly is a militia parliament, and members commonly retain their traditional professions. Individual members of parliament have no personal staff.
The Assembly can be legally dissolved only after the adoption of a popular initiative calling for a complete revision of the Constitution. All citizens 18 or older have the right to vote and run for office in national, cantonal, and communal elections unless individually disqualified by the relevant legislature.
A strong emphasis on ballot votes arises out of the traditional Swiss belief that the will of the people is the final national authority. Every constitutional amendment adopted by parliament is automatically brought to the ballot and has to carry a double majority of votes and cantons in order to become effective. The voters themselves may actively seek changes to the Constitution by means of the popular initiative: 100,000 voters may with their signatures request a national vote on a proposed constitutional amendment. New federal legislation also is subject to popular review, under the so-called referendum: 50,000 signatures suffice to call a ballot vote on any federal law adopted by parliament. The Assembly can declare an act to be too urgent to allow time for popular consideration, but this is rare. At any rate, an act passed urgently must have a time limit and is later subject to the same constitutional provisions on popular review as other legislation.
The top executive body is the seven-member cabinet called the Federal Council. The Federal Assembly individually elects the seven Federal Councilors in a joint session of both houses at the opening of a new legislature. Federal Councilors are elected for 4-year terms; there are no term limits and no provision to recall the cabinet or individual members during the legislature. Each year, the Federal Assembly elects from among the seven Federal Councilors a president and vice president, following the principle of seniority. The member who is vice president one year traditionally is elected president the next. Although the Constitution provides that the Federal Assembly chooses and supervises the cabinet, the latter has gradually assumed a preeminent role in directing the legislative process as well as executing federal laws.
Under an arrangement between the four major parties called the "magic formula" which was introduced in 1959 but ended in December 2003, two Federal Councilors (ministers) were elected each from the Christian Democrats, the Social Democrats, and the Free Democrats and one from the Swiss People's Party. Starting in 2004, the party composition of the cabinet changed as a consequence of parliamentary election results and other political factors. The current party composition of the cabinet is: two Social Democrats, two Free Democrats, one Christian Democrat, one representative of the Conservative Democratic Party, and one representative of the Swiss People's Party.
The Constitution requires that Federal Councilors act collectively in all matters, not as individual ministers or as representatives of their parties. Each Councilor heads one of seven federal departments and is responsible for preparing legislation pertaining to matters under its jurisdiction. The president, who remains responsible for the department he or she heads, has limited prerogatives and is first among equals.
The administration of justice is primarily a cantonal function. The Federal Tribunal is limited in its jurisdiction. Its principal function is to hear appeals of civil and criminal cases. It also hears complaints of violations of the constitutional rights of citizens and has authority to review cantonal court decisions involving federal law as well as certain administrative rulings of federal departments. However, it has no power to review federal legislation for constitutionality. The Tribunal's 30 full-time and 30 part-time judges are elected by the Federal Assembly for 6-year terms. The Federal Criminal Court is the court of first instance for criminal cases involving organized and white-collar crime, money laundering, and corruption, which are under federal jurisdiction. The Court's 11 judges are elected by the Federal Assembly for 6-year terms.
The cantons regulate local government. The basic unit of local government, which administers a village, town, or city, is the commune or municipality. Citizenship is derived from membership in a commune and can be conferred on non-Swiss by a commune. Cantons are subordinate to federal authority but keep autonomy in implementing federal law.
- A bicameral legislature--the Federal Assembly;
- A collegial executive of seven members--the Federal Council; and
- A judiciary consisting of a regular court in Lausanne--the Federal Tribunal--and special military and administrative courts. The Federal Insurance Tribunal is an independent division of the Federal Tribunal that handles social security questions; its seat is in Lucerne. The Federal Criminal Court, located in Bellinzona, is the court of first instance for all criminal cases under federal jurisdiction.
Principal Government Officials
Federal Council (Swiss Cabinet)
Home Affairs--Didier Burkhalter (Free Democrat)
Finance--Eveline Widmer-Schlumpf - Vice President (Conservative Democratic Party)
Foreign Affairs--Micheline Calmy-Rey - President (Social Democrat)
Justice and Police--Simonetta Sommaruga (Social Democrat)
Defense, Civil Protection and Sports--Ueli Maurer (Swiss People's Party)
Economic Affairs--Johann Schneider-Ammann (Free Democrat)
Transport, Communications and Energy--Doris Leuthard (Christian Democrat)
Federal Chancellor--Corina Casanova (ex officio)
Ambassador to the United States--Manuel Sager
Switzerland maintains an embassy in the United States at 2900 Cathedral Avenue NW, Washington, DC 20008. Consulates General are in Atlanta, Chicago, Los Angeles, New York, and San Francisco. Consulates are in Boston, Buffalo, Charlotte, Cleveland, Dallas, Denver, Detroit, Honolulu, Houston, Indianapolis, Kansas City, Las Vegas, Miami, Minneapolis, New Orleans, Oklahoma City, Orlando, Philadelphia, Phoenix, Pittsburg, Salt Lake City, San Juan, and Seattle.
Switzerland has a stable government and a diverse society. Quadrennial national elections typically produce only marginal changes in party representation. In recent years, Switzerland has seen a gradual shift in the party landscape. The rightist Swiss People's Party (SVP), traditionally the junior partner in the four-party coalition government, almost tripled its share of the popular vote from 11% in 1987 to 22.5% in 1999, to 26.6% in 2003, and finally to 29% in October 2007, thus overtaking its three major rivals. In the 2007 parliamentary elections, the SVP picked up an additional seven seats in the 200-seat National Council (lower house). This brought the SVP to 62 seats total. The Greens gained more than 2 percentage points and seven seats in the National Council, bringing their total shares to 9.6% and 20 respectively. They also for the first time gained seats in the Council of States (upper house). The Christian Democratic Party (CVP) booked modest gains of 0.2% and three seats, for a total of 14.6% and 31 seats in the National Council. This halted a downward trend that had cost the CVP a seat on the Federal Council to the SVP in 2003. The FDP lost 1.7% and five seats in the National Council, dropping to 15.6% of the votership and 31 seats in the National Council. Total voter turnout was 48%, a gain of 2.8% over the 2003 elections.
On December 12, 2007, the center-left parliamentary caucuses refused to re-elect the SVP's Christoph Blocher (then-Justice Minister) to the Federal Council, and instead elected Eveline Widmer-Schlumpf, a SVP cantonal minister from Graubunden. As a result Eveline Widmer-Schlumpf was excluded from the SVP parliamentary caucus and joined instead the Conservative Democratic Party (CDP). On December 10, 2008, SVP Ueli Maurer was elected to the Federal Council and replaced former Federal Councilor Samuel Schmid (CDP) as defense minister. Following the retirement of Federal Councilors Hans-Rudolf Merz and Moritz Leuenberger, a mid-term election in September 2010 resulted in two new Federal Councilors (Johann Schneider-Amman and Simonetta Sommaruga) and a reshuffling of the Federal Council.
The Constitution limits federal influence in the formulation of domestic policy and emphasizes the roles of private enterprise and cantonal government. However, the Confederation has been compelled to enlarge its policymaking powers in recent years to cope with national problems such as education, agriculture, energy, environment, organized crime, and narcotics.
Type: Federal state.
Independence: The first Swiss Confederation was founded in August 1291 as a defensive alliance among three cantons. The Swiss Confederation established independence from the Holy Roman Empire in 1499.
Constitution: 1848; extensively amended in 1874; fully revised in 2000
Branches: Executive--Federal Council, a collegium of seven members, headed by a rotating one-year presidency. Legislative--Federal Assembly (bicameral: Council of States, 46 members; National Council, 200 members). Judicial--Federal Tribunal.
Administrative subdivisions: 26 cantons (states) with considerable autonomy.
Political parties: Swiss People's Party (SVP), Social Democratic Party (SP), Free Democratic Party (FDP), Christian Democratic Party (CVP), and several smaller parties representing localities or views from extreme left to extreme right.
Suffrage: In federal matters, universal over 18.
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Originally inhabited by the Helvetians, or Helvetic Celts, the territory comprising modern Switzerland came under Roman rule during the Gallic wars in the 1st century BC and remained a Roman province until the 4th century AD. Under Roman influence, the population reached a high level of civilization and enjoyed a flourishing commerce. Important cities, such as Geneva, Basel, and Zurich, were linked by military roads that also served as trade arteries between Rome and the northern tribes.
After the decline of the Roman Empire, Switzerland was invaded by Germanic tribes from the north and west. Some tribes, such as the Alemanni in central and northeastern Switzerland, and the Burgundians, who ruled western Switzerland, settled there. In 800, the country became part of Charlemagne's empire. It later passed under the dominion of the Holy Roman emperors in the form of small ecclesiastic and temporal holdings subject to imperial sovereignty.
With the opening of a new important north-south trade route across the Alps in the early 13th century, the Empire's rulers began to attach more importance to the remote Swiss mountain valleys, which were granted some degree of autonomy under direct imperial rule. Fearful of the popular disturbances flaring up following the death of the Holy Roman Emperor in 1291, the ruling families from Uri, Schwyz, and Unterwalden signed a charter to keep public peace and pledging mutual support in upholding autonomous administrative and judicial rule. The anniversary of the charter's signature (August 1, 1291) today is celebrated as Switzerland's National Day.
Between 1315 and 1388 the Swiss Confederates inflicted three crushing defeats on the Habsburgs, whose aspiration to regional dominion clashed with Swiss self-determination. During that period, five other localities (cantons in modern-day parlance) joined the original three in the Swiss Confederation. Buoyed by their feats, the Swiss Confederates continuously expanded their borders by military means and gained formal independence from the Holy Roman Empire in 1499. Routed by the French and Venetians near Milan in 1515, they renounced expansionist policies. By then the Swiss Confederation had become a union of 13 localities with a regularly convening diet administering the subject territories. Swiss mercenaries continued for centuries to serve in other armies; the Swiss Guard of the Pope is a vestige of this tradition.
The Reformation led to a division between the Protestant followers of Zwingli and Calvin in the German and French parts of the country respectively, and the Catholics. Despite two centuries of civil strife, the common interest in the joint subject territories kept the Swiss Confederation from falling apart. The traffic in mercenaries as well as the alienation between the predominantly Protestant Swiss and their Catholic neighbors kept the Swiss Confederation out of the wars of the European powers, which formally recognized Swiss neutrality in the Treaty of Westphalia in 1648. The Swiss remained neutral during the War of the First Coalition against revolutionary France, but Napoleon, nonetheless, invaded and annexed much of the country in 1797-98, replacing the loose confederation with a centrally governed unitary state.
The Congress of Vienna in 1815 re-established the old confederation of sovereign states and enshrined Switzerland's status of permanent armed neutrality in international law. In 1848, after a brief civil war between Protestant liberals seeking a centralized national state and Catholic conservatives clinging on to the old order, the majority of Swiss Cantons opted for a Federal State, modeled in part on the U.S. Constitution. The Swiss Constitution established a range of civic liberties and made far-reaching provisions to maintain cantonal autonomy to placate the vanquished Catholic minority. The Swiss amended their Constitution extensively in 1874, establishing federal responsibility for defense, trade, and legal matters, as well as introducing direct democracy by popular referendum. To this day, cantonal autonomy and referendum democracy remain trademarks of the Swiss polity.
Switzerland industrialized rapidly during the 19th century and by 1850 had become the second most industrialized country in Europe after Great Britain. During World War I serious tension developed between the German, French, and Italian-speaking parts of the country, and Switzerland came close to violating its neutrality but managed to stay out of hostilities. Labor unrest culminating in a general strike in 1918 marked the interwar period, but in 1937 employers and the largest trade union concluded a formal agreement to settle disputes peacefully, which governs workplace relations to the present day. During World War II, Switzerland came under heavy pressure from the fascist powers, which after the fall of France in 1940 completely surrounded the country. Some political and economic leaders displayed a mood of appeasement, but a combination of tactical accommodation and demonstrative readiness to defend the country helped Switzerland survive unscathed.
The Cold War enhanced the role of neutral Switzerland and offered the country a way out of its diplomatic isolation after World War II. Economically, Switzerland integrated itself into the American-led Western postwar order, but it remained reluctant to enter supranational bodies. Switzerland did not for many decades join the United Nations, even though Geneva became host to the UN's European headquarters and the country played an active role in many of the UN's specialized agencies. Switzerland also remained aloof in the face of European integration efforts, waiting until 1963 to join the Council of Europe. It still remains outside the European Union. Instead, Switzerland in 1960 helped form the European Free Trade Area, which did not strive for political union. Following the Cold War, Switzerland joined the Bretton Woods institutions in 1992 and finally became a member of the United Nations in 2002.
Switzerland sits at the crossroads of several major European cultures, which have heavily influenced the country's languages and cultural practices. Switzerland has four official languages--German, French, Italian, and Romansch (based on Latin and spoken by a small minority in the Canton Graubunden). The German spoken is predominantly a Swiss dialect, but newspapers and some media broadcasts use High German. Many Swiss speak more than one language. English is widely spoken, especially among the university educated.
More than 75% of the population lives in the central plain, which stretches between the Alps and the Jura Mountains and from Geneva in the southwest to the Rhine River and Lake Constance in the northeast. Resident foreigners and temporary foreign workers make up about 21% of the population.
According to the Swiss Federal Office of Statistics, the population in Switzerland was 7,701,900 at year-end 2008 (up from 7,593,500 in 2007), of which 21.7% were resident foreigners. Three-quarters of this growth was attributable to net immigration, largely from the European Union (EU). Roughly 60% of the foreigners residing in Switzerland are from European Union member countries, while another 30% are from non-EU European countries. Almost all Swiss are literate. Switzerland's 12 universities enrolled 150,680 students in the academic year of 2007-2008, of which roughly 23% were foreigners. In addition, another 57,181 persons were studying at technical colleges and 42,383 were in other forms of higher education (e.g., specialized training academies). About 31% of the population aged 25-64 holds a diploma of higher learning.
Switzerland consistently ranks high on quality of life indices, including per capita income, computer and Internet usage, insurance coverage, and quality of available health care. For these and many other reasons, it serves as an excellent test market for businesses hoping to introduce new products into Europe.
Nationality: Noun and adjective--Swiss (singular and plural).
Population (year-end 2009 est.): 7.8 million.
Ethnic groups: Mixed European.
Religions: Roman Catholic 42%, Protestant 33%, Muslim 4.3%, others 5.4%, no religion 11%.
Languages: German 63.7%, French 20.4%, Italian 6.5%, Romansch 0.5%, other 9.4%.
Education: Years compulsory--9. Attendance--100%. Literacy--100%.
Health: Infant mortality rate--3.9/1,000. Life expectancy--men 79.4 yrs., women 84.2 yrs.
Work force (4.0 million in fourth quarter 2009): Agriculture and forestry--4.0%. Industry and construction--23.5%. Services sector and government--72.5%.