Switzerlands Cheesy Economy

Switzerlands Cheesy Economy

Switzerland's Cheesy Economy
In a​ series of​ referenda in​ 2003-5, Swiss citizens transformed their country forever, economically aligning it​ with the​ European Union and​ opening it​ up to​ work migration .​
It was an​ uncharacteristic response to​ increasingly worrisome times.
In March 2003, Switzerland's annual rate of​ inflation dipped to​ 1.3 percent .​
Once a​ cause for​ celebration, it​ is​ now construed to​ be a​ worrisome sign of​ lurking deflation .​
Growth has been below trend for​ years now .​
Demand is​ ever-weakening and​ capacity is​ idle .​
Taxes are high, the​ national debt soaring.
Interest rates are vanishingly low, having been chopped by half a​ percentage point in​ March 2003 .​
But the​ Swiss franc, impervious to​ these monetary gambits, is​ at​ a​ five year high against the​ dollar .​
Switzerland depends on exports and​ tourism - they constitute more than half its gross domestic product .​
The almighty currency does its trade balance no favors.
National economic emblems are crumbling left, right and​ center .​
In an​ interview to​ the​ daily Blick, Andre Dose, chief of​ Swiss International Air Lines, the​ tottering successor of​ the​ bankrupt Swissair, begged for​ tax exemptions, lower insurance premiums and​ a​ waiver of​ airport charges as​ well as​ soft loans and​ subsidies from both government and​ banks .​
The airline lost more than $700 million in​ 2002.
A study recently released by Agrarplattform - a​ group representing farmers, processors and​ retailers - disabused the​ Swiss of​ their long held conviction that their cherished agricultural sector - notably milk, potatoes and​ meat - is​ profitable .​
Indigenous armaments technology firms - such as​ the​ state-owned Ruag group - besieged by anti-war protesters, saw their profits slashed.
In 2002-5, Switzerland's leading brand names - Roche (pharmaceuticals), Credit Suisse (banking), Adecco (manpower) and​ Zurich Financial Services - have announced record losses and​ job cuts.
And then there is​ Severe Acute Respiratory Syndrome (SARS) and​ avian (bird) flu .​
Switzerland has been struck with ten suspected cases of​ the​ former .​
It tightened inspections at​ its airports, cancelled flights and​ allocated funds for​ research into the​ new pandemic .​
Swiss pharmaceutical company, Roche, produced a​ diagnostic kit by end-2003.
No sector is​ spared the​ slump .​
Swiss banks, much-decried over the​ last few years for​ their alleged complicity in​ money laundering, are being pried open by assertive United States regulators and​ a​ zealous, mainly European, Financial Action Task Force.
In 2002, Swiss banks begu​n to​ repatriate to​ Nigeria more than $670 million looted by late dictator Sani Abacha and​ deposited with them .​
In the​ run-up to​ the​ war in​ Iraq, the​ government froze $368 million in​ Iraqi financial assets at​ Washington's behest, repeating its act in​ 1990.
Mobsters, terrorists, scammers, venal politicians and​ tax dodgers now look for​ anonymity and​ discretion to​ Lebanon and​ Cyprus, or​ even to​ Austria, the​ USA, the​ United Kingdom and​ Luxemburg .​
Switzerland's reputation as​ a​ safe pecuniary haven is​ in​ tatters.
This was only the​ latest in​ a​ series of​ upsets suffered by the​ ailing banking industry.
In August 1998, following intensive public pressure by Jewish organizations - and​ a​ thinly-disguised anti-Semitic backlash -Switzerland's two major banks, UBS and​ Credit Suisse, agreed to​ set up a​ $1.25 billion fund to​ settle claims by holocaust survivors and​ their relatives .​
The red-faced Swiss government threw in​ $210 million .​
It seems that the​ banks were in​ no hurry to​ find the​ heirs to​ the​ murdered Jewish owners of​ dormant accounts with billions of​ dollars in​ them.
A settlement was reached only when legal action was threatened against the​ Swiss National Bank and​ both public opinion and​ lawmakers in​ the​ USA turned against Switzerland .​
It covers owners of​ dormant accounts, slave laborers, and​ 24,000 of​ 110,000 refugees turned back to​ certain death at​ the​ Swiss border - or​ their heirs.
A high level international commission, headed by Paul Volcker, a​ former chairman of​ the​ Federal Reserve Board, identified 54,000 accounts opened by holocaust victims - not before it​ inspected 350,000 accounts at​ an​ outlandish cost, borne by the​ infuriated banks, of​ $400 million .​
To compound matters further, the​ Bergier Commission, set up in​ 1996 by the​ Swiss parliament, revealed, in​ March 2002, that Swiss banks provided the​ Axis powers with interest free loans.
Wall Street dealt Swiss financial intermediaries and​ their US-based brokerages, another blow .​
Recently, they settled with US regulators over charges of​ issuing biased stock analyses and​ recommendations .​
But this did not prevent former star investment banker with Credit Suisse First Boston, Frank Quattrone, from being charged with obstructing justice and​ destruction of​ evidence .​
Many mid-size and​ large Swiss firms are exiting the​ tainted capital markets altogether.
In April 2003, according to​ Swissinfo, the​ news Web site of​ Swiss Radio, Jean-Pierre Roth, chairman of​ the​ Swiss National Bank (SNB), warned, in​ its annual meeting, against undue optimism .​
Deteriorating trading conditions, stagnant consumption and​ diminished government spending heighten the​ risks of​ a​ renewed worsening of​ the​ situation .. .​
Compared to​ the​ previous year, conditions for​ our companies have worsened.
The country is​ still hobbled by red tape and​ anti-competitive cartels .​
Growth in​ 2003 was lower than the​ Bank predicted only five months ago, he admitted .​
The Organization for​ Economic Cooperation and​ Development (OECD) concurs .​
In its outlook, it​ warned that subdued conditions abroad and​ an​ inexorably appreciating franc continue to​ threaten the​ country's recovery.
GDP grew by an​ imperceptible 0.6 percent in​ 2003 and​ 1.9 percent in​ 2004 .​
The International Monetary Fund (IMF), more upbeat, projected a​ 0.3 percent uptick in​ 2003 and​ 2.4 percent the​ year after .​
In 2002 the​ economy froze at​ zero growth .​
Unemployment stood at​ an​ unprecedented 3.9 percent in​ February 2003.
Not all is​ bleak, though .​
German chipmaker, Infineon, is​ considering to​ relocate to​ Switzerland .​
In April 2003, San-Diego based Netrom's Tempest Asset Management inaugurated a​ currency trading center in​ Zurich to​ gain access to​ the​ multi-trillion dollar financial markets in​ Europe .​
Swiss firms, from gourmet baker Hiestand to​ computer peripherals manufacturer, Logitech, are showing record sales and​ surging profits.
The UBS Index of​ Investor Optimism, maintained by Swiss mammoth bank, UBS and​ the​ Gallup Organization, climbed 61 points in​ March 2003 - albeit to​ reach only one third its size in​ January 2000 .​
Half the​ population foresee a​ recovering economy and​ two fifths believe in​ improving employment prospects .​
Moreover, globalization has coerced Switzerland into abandoning its splendid - and​ costly - isolation .​
In March 2002 it​ voted to​ join the​ United Nations - something it​ has resisted for​ decades .​
Swisspeaks, a​ two month festival promoting Switzerland, took place in​ April 2003 in​ New-York .​
Ten million visitors attended Expo.02 - a​ national exhibition in​ Neuchatel .​
Seven agreements with the​ European Union came into force in​ June 2003 .​
Incredibly, Switzerland is​ poised to​ join the​ Schengen agreement, leading to​ the​ scrapping of​ internal borders with the​ EU .​
Banking secrecy will be partially lifted in​ line with Union directives.
With 7 million inhabitants (one fifth of​ which are immigrants) - Switzerland is​ among the​ richest polities on Earth .​
Income per capita is​ more than $38,000 .​
The economy's openness - its weakness - is​ also its fount of​ strength .​
It endows Switzerland with enviable resilience and​ flexibility.
The country survived intact the​ first and​ second world wars, fought on its doorstep .​
It has reinvented itself, metamorphosing in​ the​ process from a​ backward rustic landlocked domain to​ a​ financial cum engineering global empire .​
It will emerge, as​ it​ always does, invigorated and​ ready for​ new challenges.

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