Plucky Little Switzerland Prospers By Staying Out of the EU

[Ognir]

Which two European states are doing best during the recession? Norway and Switzerland. Alright, Norway is a special case, with the huge fund it has built up from oil revenues. But Switzerland is a country one would have expected to have been especially badly impacted by what is, after all, a banking crisis. Happily, though, Switzerland has stayed out of the EU, which has shielded it from the worst of the storm. What follows is an English translation of an article I wrote recently for the main Swiss political weekly, Die Weltwoche.

Switzerland's decision to remain outside the European Economic Area - let alone the European Union - looks wiser than ever. Not for the first time, your country is a haven of stability while the rest of Europe is in chaos. My friends, you should honour the memory of the men who gave you your unique system of referendums. Had it not been for direct democracy, your politicians would have dragged you into the EU regardless of public opinion. It happened everywhere else.

Supporters of European integration like to use the metaphor of a convoy: the nations of the EU, they say, are separate, but they sail in the same direction. Well, to pursue their metaphor, the convoy has so far known only clear skies. This is its first storm, and the ships are scattering. While some used the good years to caulk their hulls and clear their rigging - that is, to reduce their deficits - others did not. Hungary is in an especially precarious state, its hull pressed low in the water by the weight of its accumulated debt.

The Hungarian Prime Minister, Ferenc Gyurcsány, recently demanded an EU bail-out of €190 million for Central and Eastern Europe. If he didn't get it, he said, millions of jobless Magyars would stream westward: "There will be an additional five million unemployed in the EU".

Not so long ago, the EU would have coughed up. But with national governments having to make painful spending cuts at home, no one is in the mood to subsidise more profligate states. Angela Merkel says there will be no more bail-outs.

Which brings the EU up against an uncomfortable truth. European integration has always depended on the sufferance of German taxpayers. Germany has been the largest net contributor to the budget in every year since 1956. It has paid out more under the EU's regional, structural, agricultural and cohesion funds than was demanded in reparations at Versailles.

Why do Germans put up with it? Partly from an unspoken sense of historical obligation, partly because "Europe" is presented as the only alternative to aggressive nationalism. Happily, though, younger Germans no longer fall for this: they can recognise self-serving cant when they see it. The money, in short, is drying up.

Until the late 1990s, every member state except Britain and Germany was a net beneficiary, which made it easy to support "the European ideal". Now, at every opportunity, people vote "No". The European Constitution has been rejected three times: by 55 per cent of French voters, 62 per cent of Dutch voters and 53 per cent of Irish voters. Yet the response of the EU has been to carry on with ratification. In the eerie words of Bertolt Brecht: "Wäre es da Nicht doch einfacher, die Regierung Löste das Volk auf und Wählte ein anderes?" ("Wouldn't it therefore be easier to dissolve the people, and elect another in their place?") As in the Comecon states, a governing apparat has lost the support of its people, but carries on for want of any better idea.

There are dangers here, even for you Swiss. A collapsing power is a dangerous neighbour. In Leninist terms, it exports its internal contradictions. The EU is angry with bankers. There is pressure to end the "parasitism" of Switzerland, Liechtenstein, the Channel Islands and other non-EU territories. The European Parliament recently censured Switzerland for offering "illicit state aid" to EU companies that relocate to the Helvetic Confederation. And what is the nature of this "illicit state aid"? You guessed it: lower taxes.

Expect a lot more along these lines over the next couple of years. You'll be bullied over financial regulation, free movement of labour, budget contributions. But I'll tell you this, my friends: I wish we had your problems.

http://blogs.telegraph.co.uk/daniel_han ... oin_the_eu