Embassy of Switzerland in the United Kingdom – Written Evidence (BSP0009)

 

SWISS SANCTIONS POLICY

 

 

In response to the request from the House of Lords of 1 August 2017, the Swiss authorities can provide the following information about the Swiss sanctions policy:

 

 

Current regime

 

  1. Based on the Federal Law on the Implementation of International Sanctions of 22 March 2002 (Embargo Act), Switzerland can decide to take measures in order to implement sanctions issued by the United Nations, the OSCE or by its most important trading partners which serve to secure compliance with international law, in particular the respect of human rights. The Embargo Act gives autonomy to the Federal Council (the Swiss Government) to decide on the full, partial or non-alignment with sanctions but does not provide a legal basis for unilateral sanctions by Switzerland alone. As sanctions decided by the UN Security Council under Article 41 of the UN Charter are binding, Switzerland always translates these measures into its national law. Regarding sanctions taken by the EU, Switzerland’s most important trading partner, the Federal Council decides on its own measures in each situation individually.
  2. In its decision, the Federal Council takes into consideration all relevant legal, foreign policy and foreign economic policy considerations. As a European nation, Switzerland shares the basic values of the European Union and mostly concurs with its political and legal analysis as well as with its objectives in particular contexts. Consequently, Switzerland decided to align itself with the measures taken by the EU in the majority of cases in the past (e.g. Syria, Libya, Belarus, Myanmar/Burma, etc.). A full alignment with EU sanctions also results in enhanced legal security for Swiss companies, which often have close economic relations with companies in the EU.
  3. In some specific cases, due to legal and foreign policy (e.g. neutrality, good offices) considerations, the Federal Council decided to issue measures not identical with those of the EU. In the case of Iran for example, the Federal Council decided in 2012 to adopt the enhanced EU sanctions without a full oil embargo and without listing of the Iranian Central Bank, given Switzerland’s special position as a protecting power of the United States in Iran. Similarly, in 2014, as chair of the OSCE and in order to preserve its capacity as a mediator, Switzerland preferred not to adopt a full-fledged sanctions regime against the Russian Federation in view of the situation in Ukraine, but instead to take all necessary measures to prevent the circumvention of international sanctions over Swiss territory. This consideration is of great importance to Switzerland in all circumstances: even if Switzerland does not issue sanctions in a given context (for example, because of its neutrality), it makes sure not to benefit economically from the sanctions imposed by its main trading partners.

 

 

Cooperation with EU and others

 

  1. As a non-member country of the EU, Switzerland is not involved in the policy dialogue and the decision-making process of EU sanctions. However, it coordinates the implementation and enforcement of sanctions with the EU and third countries formally and informally. The dialogue with the EU, in particular the European External Action Service (EEAS) and the EU Commission, takes place via diplomatic channels and direct exchanges between Swiss and EU sanctions experts.
  2. A regular dialogue on various sanctions-related topics is also maintained with the United States. Contacts with other countries, including the targeted countries, are also frequent.

 

Impact on businesses

 

  1. Due to the geographical proximity, transport routes through the EU, business interests in the EU and the fact that EU sanctions are also legally binding for EU citizens living in Switzerland, many Swiss companies decide to consider EU sanctions in their business policy. In order to mitigate risks, multinational companies in particular often choose to respect further sanctions regimes, such as US sanctions.
  2. Such voluntary application of third country sanctions by Swiss companies often implies that their business policies are more restrictive than they need to be according to Swiss law. Increased costs and risks in dealing with sanctioned countries can result in “over-compliance”, so that a bank might for example decide not to engage in transactions with certain sanctioned countries at all. As a consequence, legal business opportunities can be negatively affected.
  3. The importance of Switzerland as an international financial centre is taken into account by the Federal Council when deciding on the alignment with EU sanctions. The Government gives great importance to an effective implementation of financial sanctions. As Switzerland does not impose unilateral sanctions in isolation, there is no specific impact of unilateral sanctions on the Swiss financial centre.

 

Implementation

 

  1. Switzerland can only comment on its own implementation and enforcement of international sanctions. Its experience shows that effectively implementing and controlling sanctions requires sufficient numbers of highly educated staff from political, economic and legal backgrounds.

 

 

 

4 September 2017