The Swiss People's Party, which holds the most seats in parliament, says it will fight the continuation and extension of a labour treaty with the European Union.
Wednesday's decision is an about face for the leadership of the rightwing party, which only this summer said it would not support a referendum opposing the free movement of people accord and extending it to Bulgaria and Romania.
Swiss voters will have the final say on February 8, 2009, and three of the four parties in the government, as well as the business lobby, are recommending they accept the deal.
Leading opposition to the agreement is the youth wing of the People's Party and small rightwing groups, which had collected enough signatures to force the referendum.
But overcoming the 50,000-signature hurdle was not easy since the People's Party's leadership did not support their campaign financially or logistically.
However, the party has had a change of heart and on Wednesday, party president Toni Brunner went on public radio to announce that it stood behind the campaign, calling on voters to say no to the deal.
At stake is the continuation of the labour treaty with 25 EU states and the extension of the accord to the two newest members, Bulgaria and Romania.
Both issues were put to parliament as a single package earlier this year since a majority of politicians were convinced that a rejection of the extension could prompt Brussels to stall existing bilateral treaties with Switzerland.
Brunner on Wednesday claimed that this had been an "undemocratic" move, and therefore the People's Party leadership would now oppose the deal.
It was the party figurehead and former justice minister, Christoph Blocher, who argued this summer that the party should not support the referendum.
But Brunner said this position should not have been confused with a recommendation for a yes or no vote.
The People's Party, according to its president, has always spoken out against the extension of the free movement of people deal with Bulgaria and Romania.
"We must say no to the package presented by parliament," Brunner said.
"This decision by the People's Party leadership is not really surprising," political analyst Hans Hirter told swissinfo. "The People's Party is rather divided on this issue.
"Many members are of the opinion that the vote on the free movement of people contains two elements important to the party; the EU [membership] and immigration criticism." Hirter said the party has to stand united on these two issues.
But the decision of the seven-member party leadership to now support a no vote was not unanimous. Brunner refused to say who the two dissenters were only saying that Blocher, as party vice-president, "wholly backed" the new position.
The party rank and file will have the final word at a meeting on November 29.
"The most convincing argument during the summer was that the party should not go against Swiss economic interests fearing that if it did it could lose potential sponsors," Hirter explained.
"That was a rational decision but perhaps a bit too distant from the attitude of the party rank and file. But now the overriding fear is that the party could lose voters particularly to the [smaller, rightwing] Swiss Democrats."
The analyst added that a good portion of People's Party supporters are protest voters who have no qualms about switching allegiances.
The move to support the referendum could close party ranks again, even if the impression given by the leadership now is one of uncertainty.
"The leadership would rather be at odds with party members representing business interests than disappointing the rank and file," Hirter said.
It could now be up to Blocher to smooth over differences between the different factions, and return to his old role as someone who is not afraid to stand up to the political establishment.
"He is capable of convincing the business wing that the about face was necessary in order not to lose voters," Hirter said. "And it's a good chance for him to take centre stage again – as a man of the people and not the banks – who is always prepared to defend the fatherland."
In this way, Blocher would return to his old role in the knowledge that in the short term at least he will not get his cabinet seat back.
swissinfo, based on an article in Italian by Andrea Tognina
Parliament approved the extenstion and continuation of the labour treaty in June.
It decided to lump both issues into one bill.
The cabinet which also approved both issues came out in favour of two separate bills.
The vote in February 2009 will be the sixth time the Swiss will be voting on bilateral treaties with the EU.
Voters in 1992 narrowly rejected joining the European Economic Area treaty, a halfway house to EU membership.
Instead Switzerland and the EU concluded 16 bilateral accords, which came into force in 2002 (extended in 2006) and 2005 respectively. They mainly cover trade and labour as well as asylum, customs and tax issues.
Under the terms of the first package of bilateral treaties with Brussels, Switzerland can review the labour deal by mid-May 2009. Refusal to continue the deal would result in the whole set of accords being suspended.
Negotiations are underway on an electricity agreement. The Swiss government is also seeking to conclude a free-trade accord on agriculture.
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