Immigration dispute threatens aid to Eastern Europe

In Romania, Switzerland is taking part in, among other things, the financing of a feasibility study into the expansion of the Bucharest underground train system Keystone

Switzerland has budgeted CHF1 billion ($1.07 billion) over the past decade to support the European Union’s eastward expansion, but more such help is uncertain due to tensions between Bern and Brussels over the free movement of people.

This content was published on May 22, 2015

When the EU’s expansion towards the east began in 2004, Switzerland chipped in to reduce economic and social disparities in ten new EU members. Brussels asked for an initial CHF1 billion and promised Switzerland – itself not part of the EU – that in return for the contribution it would gain market access to 75 million new consumers, thanks to bilateral accords.

The conservative right Swiss People’s Party tried to block the initial “cohesion billion”, as it was called, but voters approved the package. Since then parliament budgeted CHF300 million more for several countries.

Over almost ten years, Switzerland funded more than 300 projects to boost business, health, tourism and several other aspects of Eastern Europe.

External Content

Switzerland’s contribution brought resultsExternal link, says Hugo Bruggmann of the economics ministry, which helps manage the projects. Others say it fulfils a desire to help former Eastern-bloc countries transition to democracy after the Berlin Wall fell in 1989.

“The vote on enlargement was indirectly a democratic form of support for Europe,” said Gilbert Casasus, a European studies professor at the University of Freiburg in Germany.

Positive results

The largest amount of the package – CHF489 million – went to Poland, where its effect was felt widely for things such as 400 entrepreneurial startups, 31,000 tonnes of asbestos removal and improved border security with Belarus. In smaller countries like Lithuania, Swiss funding helped lower infant mortality as part of health initiatives.

Proponents say the success is partly due to Swiss participation in the financing and evaluation process, though Bruggmann notes that not all has gone as planned. Some projects were cancelled halfway through because of poor quality, for example, while others were delayed by the lack of qualified staff, affecting a number of countries.

There have also been indirect benefits for Switzerland, says Bruggman, such as opening doors for Swiss companies or academic exchanges in the field of research, discouraging immigration through job creation and better border surveillance.

Now what?

When the Swiss-backed projects end in May 2017 for the first ten countries, and two years later for Romania and Bulgaria, Bern has long maintained that it will determine for itself whether to continue such support rather than rely on an EU decision.

Georg Dobrovolny, director of the East-West Forum, says it makes sense for Switzerland to go on. The projects have met with success, he says, and there are “considerable needs” in the region due to Europe’s financial woes and the Ukrainian conflict.

The timing is not ideal. Swiss voters imposed immigration quotas and ceilings in February 2014, pitting the country against EU policy and accords on the free movement of people. The Swiss government, facing a delicate balancing act, has said future contributions will hinge on talks over the “crucial” factor of Swiss-EU relations.

Leaving a door open

The government in December moved to extend the timeframe for a decision to 2024, allowing more time for relations to improve without budgeting new money. Reaction in Switzerland has been deeply split.

The leftwing Social Democrats are sceptical, saying Switzerland must help Eastern Europe regardless of relations with Brussels. The Swiss People’s Party, which was behind the immigration vote and remains opposed to the financial help for transitions in Eastern Europe, says the money is wasted on bureaucrats who oversee “a Socialist redistribution programme”. 

Aid to the South?

An end to the contributions is unlikely but possible, says Gilbert Casasus because Switzerland has “a weak position” in the negotiations over free movement of people, a principle widely supported in Eastern Europe.

Another unknown is whether Switzerland might consider using the money to promote European integration in other ways. The Swiss, for example, could be asked to help austerity-hit countries like Greece and Spain that have been damaged by the eurozone’s political and economic crisis. If this turns out to be an issue, it will almost certainly ignite a lively debate in parliament.

Strong franc means more money 

The increase in value of the Swiss franc means that credits approved by Switzerland in 2006 and 2008 for the most recent members of the EU will go further. It’s estimated that CHF70-CHF100 million in additional money is available for Switzerland to extend existing programmes or finance new projects. The beneficiary states are: Poland, Slovakia, the Czech Republic, Hungary, Latvia, Lithuania, Estonia, Slovenia, Malta, Cyprus, Romania and Bulgaria.

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