Foreign Policy

Switzerland opts for austerity measures in comparison with life

Switzerland has overtaken Belgium and is well on its way to surpass the Czech Republic as Europe's top COVID-19 hotspot. Infections are around three times as high in Sweden and the USA as per capita and twice as high as the average in the European Union. And that's not because of extensive testing. Switzerland is on a par with the USA and is average in Europe in terms of test prevalence. The country's test positivity rate is a whopping 27.9 percent, compared to 8.5 percent in Sweden and 8.3 percent in the US. According to the World Health Organization, a test positivity rate of over 5 percent signals that the virus is out of control.

The group of scientific experts advising the Swiss government on the pandemic has been ringing the alarm for some time. The hospitals in the intensive care unit are expected to run out of capacity by November 13th. The challenge now is to keep the rationing time for intensive health care as short as possible, according to the expert group.

In normal times, celebrities and politicians from around the world, such as the former Italian Prime Minister Silvio Berlusconi, travel to Switzerland for treatment in the country's first-class hospitals. Now France is offering to admit Swiss COVID-19 patients to give the country's hospitals a respite.

What went wrong in the alpine country known for its pristine roads and known for its safety, reliability and good governance? In some ways, the answer is simple: the Swiss government has refused to take the restrictive measures necessary to contain the virus. The reasons for this resistance are a little more complicated, however, as the Swiss have long disguised the ideological motives that influence public order in purely pragmatic language.

Like Germany, Switzerland emerged relatively unscathed from the first wave in spring. A carefully calibrated national lockdown helped contain the virus. In contrast to Berlin, however, Bern did not see the success in the spring as an encouragement to continue on a cautious course.

Instead, the low death toll in the first wave seemed to confirm the widespread perception of Switzerland as a "special case" – a unique country disconnected from the worries of the world. Switzerland has never experienced a war or a major natural disaster in the last century. The Swiss have not seen a terrorist attack in this century, and their wallets have hardly suffered from the global financial crisis. The alpine country is immune to global crises – the Swiss believe, is the lesson from history.

The pandemic didn't seem any different. In contrast to the Belgians or the French, the Swiss knew how to deal with the virus – at least that was the mood. The government's marching orders to the Swiss were clear: let's focus on getting the economy going again.

After the first wave, Switzerland therefore relaxed the COVID-19 measures faster and faster than other European countries and the USA. Bars and clubs opened their doors again. There was no obligation to wear masks indoors. The Swiss Tourism Promotion Agency has resumed its campaign on French television. On October 1st, Bern even lifted a ban on events with more than 1,000 people. The Swiss spent the beginning of autumn as if nothing had happened.

But even now that the government recognizes that the health situation is critical, it has not yet pushed its way through the "soft lockdown" that most European governments have done. Studies by the Blavatnik School of Government at Oxford University show that Switzerland's anti-coronavirus measures are still much looser than in the rest of Europe and the USA – and only slightly more restrictive than in Sweden.

A stumbling block is federalism in an already small country. After the first wave, the federal government gave the 26 cantons of Switzerland the power to introduce their own containment measures. But these often tiny cantons (the smallest only covers an area half the size of Manhattan) are reluctant to take action. As a local politician, how can you explain to a restaurant owner that he has to close the shop if his colleague, who lives five minutes by car, can still serve? And the fact that the cantons are liable for the financial costs of the COVID-19 decisions they make does not help either.

The bigger problem, however, is that more restrictive measures are incompatible with Switzerland's distinctive small-government philosophy.

Due to the mountainous topography, the Swiss lack natural resources and little arable land. They have traditionally recognized trade as their only route to prosperity. The limited role of the state in public life is also the result of the creation of the country from a blanket of formerly independent countries. The main motivation for these cantons to unite was not brotherly love or the building of a European nation-state. It should prevent any of the continent's empires from being swept away and guarantee as much cantonal sovereignty as possible.

In Switzerland with a weak central government and a dependency on trade, business has long been king. The federal government in Bern has been dominated by business-friendly parties since 1848. There is no minimum wage and little occupational safety. Fiscal federalism is fueling tough tax competition between the cantons. Government involvement in business is generally frowned upon.

Today the Swiss are very interested in personal economic initiative. In 2012, 67 percent of the Swiss voted against extending their statutory vacation entitlement by two weeks. The country tops the list of weekly working hours in Europe. In surveys, the Swiss repeatedly state that they are primarily concerned about the effects of the pandemic on the economy and not about the collapse of the health system. They say Swiss hospitals are already postponing necessary surgeries like tumor removal for cancer patients in order to free up beds for incoming COVID-19 patients.

This penchant for market liberalism, fiscal conservatism and a strong work ethic could explain the resounding economic success and attractiveness of the country for global business.

It also explains why Swiss Finance Minister Ueli Maurer says things like: “We can't afford a second ban. We don't have the money. "Switzerland's debt ratio in 2019 was just 41 percent. The government estimates that the loss of economic activity and support programs at the first lockdown will mean the government will have to issue a debt of CHF 22 billion (3 percent of nationals) By comparison, even fiscally thrifty Germany will print debts amounting to 6.4 percent of GDP by 2020 in order to finance the fight against the pandemic.

Still, Maurer claims a new lockdown could sacrifice the economy and public finances on the altar of health. There are few setbacks against this view in the Swiss media or in politics. A finance minister's job is to keep spending in check and not fight a pandemic, commentators write. Meanwhile, no political party or senior political figure has publicly pressured the government to put in place a soft lockdown.

But keeping companies open and holding wallets tight can be a bad economy as well as bad health policies. With increasing fear of infection, the Swiss are reducing their social life anyway, as mobility data shows – restaurants remain open, but without customers. The Swiss learn that there is no compromise between health and business. Exploding case numbers have not prevented a sharp rise in corporate insolvencies.

During this crisis, you may have to pause life and parts of the economy for a while to get back on your feet stronger and healthier later. In an open letter, 50 economics professors asked the Swiss government to finally introduce a soft lock. The government is still wavering. Oscar Wilde remarked: "To do nothing is the hardest thing in the world." This is an even bigger challenge for a country that likes to work.

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