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1 This article was downloaded by: [Wolf Linder] On: 30 April 2013, At: 00:47 Publisher: Routledge Informa Ltd Registered in England and Wales Registered Number: Registered office: Mortimer House, Mortimer Street, London W1T 3JH, UK Contemporary Politics Publication details, including instructions for authors and subscription information: Switzerland and the EU: the puzzling effects of Europeanisation without institutionalisation Wolf Linder a a Institute of Political Science, Department of Social Sciences, University of Bern, Lerchenweg 36, CH-3000, Bern 9, Switzerland Published online: 27 Apr To cite this article: Wolf Linder (2013): Switzerland and the EU: the puzzling effects of Europeanisation without institutionalisation, Contemporary Politics, DOI: / To link to this article: PLEASE SCROLL DOWN FOR ARTICLE Full terms and conditions of use: This article may be used for research, teaching, and private study purposes. Any substantial or systematic reproduction, redistribution, reselling, loan, sub-licensing, systematic supply, or distribution in any form to anyone is expressly forbidden. The publisher does not give any warranty express or implied or make any representation that the contents will be complete or accurate or up to date. The accuracy of any instructions, formulae, and drug doses should be independently verified with primary sources. The publisher shall not be liable for any loss, actions, claims, proceedings, demand, or costs or damages whatsoever or howsoever caused arising directly or indirectly in connection with or arising out of the use of this material.

2 Contemporary Politics, Switzerland and the EU: the puzzling effects of Europeanisation without institutionalisation Wolf Linder Institute of Political Science, Department of Social Sciences, University of Bern, Lerchenweg 36, CH-3000 Bern 9, Switzerland Switzerland is not a member of the EU and in 1992 refused to join the European Economic Area (EEA) treaty in a popular vote. A conservative majority preferred to keep utmost national autonomy, and consequently, relations between the EU and Switzerland are regulated by a series of bilateral treaties. This process of Europeanisation without institutionalisation has led to profound changes of Swiss politics over the last two decades. While many effects of economic liberalisation and internationalisation are similar to those found in EU countries, some specific problems like the acceleration of immigration present rising social conflict. Social cleavages between urban and rural regions, and between capital and labour are deepening. The continuous rise of the conservative nationalist Swiss People s Party and the growing polarisation between the political Right and Left have put the traditional political culture of accommodation and power sharing at risk. Twenty years after the No-vote on the EEA-treaty, Switzerland is a divided country. Why do Swiss politicians still practice consensus democracy, and what does the divide mean for the future relations between the EU and Switzerland? Keywords: Europeanisation; institutional development; political change; consensus democracy; Switzerland 1. Introduction Switzerland, in the past, was characterised by extraordinary political stability. For almost 50 years the same four political parties, representing about 70% of the electorate, formed the national government in a sort of grand coalition. Its politics of power sharing were characterised by negotiation and compromise. Federalism and direct democracy were substantial veto points that gave linguistic, religious and regional minorities effective voice, but allowed for continuous incremental political change. Taken all together, the institutional elements of power sharing, federalism and direct democracy led to modest growth of welfare policies and state consumption, and facilitated pragmatic choices between economic liberalism and protectionism. In addition, the Federation provided for economic equalisation between poor and rich regions of the country, accommodation between different social strata, and protection of linguistic minorities (Church 2004, Linder 2010). Switzerland, to a high degree, corresponded to the ideal type of consensus democracy which, according to Lijphart (1999), is a kinder and gentler system than its counter model of majoritarian democracy. This model, however, is challenged by a process of Europeanisation which is not only atypical but conflictual for several reasons. First, Switzerland is, for 20 years now, divided on Wolf Linder, Professor Emeritus, was until 2009 Director at the Institute of Political Science of the University of Bern, Switzerland. His research is mainly in the field of the Swiss political institutions and its features of direct democracy, power sharing and federalism. Linder s book Swiss democracy possible solutions to conflict in multicultural societies (third edition 2010) has been translated into several languages. wolf.linder@ipw.unibe.ch # 2013 Taylor & Francis

3 2 Wolf Linder the question of European integration. Unlike Austria, Norway, Sweden and Liechtenstein, Switzerland in 1992 did not join the European Economic Area (EEA-) treaty. Switzerland s relations with the EU, therefore, lack institutionalisation but are meanwhile regulated by a series of bilateral treaties. Second, from a Swiss perspective, the treaties rationale was to constrain relations with the EU on topics of common interest and to maintain utmost national autonomy. Europeanisation, however, developed far beyond the bilateral treaties. It is accompanied by rising conflicts and growing cleavages, and traditional mechanisms of power sharing were bypassed. Along with this second challenge for consensus politics we observe a third development: In the past two decades, the Swiss polity has undergone a fundamental transformation of its party system, accompanied by a rising polarisation. In the following, I give an account on these developments. In the last part of the paper, I discuss the question why, despite vanishing political consensus and moments of crisis of the Swiss Konkordanz, there is no substitute for political power sharing, and what the societal divide means for Switzerland s future relations with the EU. 2. The formal framework of Europeanisation without institutionalisation In 1992, the Swiss people said no to formal European integration. In a hotly debated popular vote, the Swiss rejected the EEA-treaty, which would have permitted the country to join the European market and profit from the full advantages of economic integration without becoming a full member of the EU. In the referendum campaign, the opposition vehemently defended national sovereignty and the political neutrality of Switzerland. These slogans did not fail to strike a chord with the electorate. Hence the result was a bitter defeat for the government and the majority of the political elite. Moreover, it left a divided country: the pro-europeans, still willing to go down the path of European integration, and the opponents, defending national autonomy and self-government. Even so, the intense economic relations between the EU and Switzerland led both parties to look for an alternative to institutional integration. This was found in bilateral treaties. After lengthy negotiations, the EU and Switzerland agreed on two series of treaties (Bilaterals I and II), which were accepted by the Swiss people in 2000 and The treaties comprise the domains of agriculture, air and road transportation, research, public procurement, free movement of labour, environment, statistics, taxation of savings, pensions, the Schengen/Dublin agreements on internal security, and some further policies. In all these domains, EU law and regulations began to apply in Switzerland (Church 2007, Cottier and Liechti-McKee 2010, Mach and Trampusch 2011). Formal bilateralism does not, however, give the full picture of relations between Switzerland and the EU. Through unilateral initiatives, the Swiss government sought to develop its relations with the EU so as to achieve further access to its markets. The most important element of this strategy was the internal harmonisation of Swiss commercial law with European Community (EC)-law and policies. There is now a general procedure by which every piece of economic legislation is checked for its Euro-compatibility. This leads to the transposition of EU law into Swiss law and is known as autonomer Nachvollzug (autonomous adaptation). Under this label, the Swiss government has unilaterally introduced the country of origin principle (Cassis de Dijon), which means that products admitted on the markets of EU countries have access to the Swiss market without the need for further regulation. Finally, Switzerland contributes 100 Million Francs annually to the EU-Cohesion Fund, for a period of 10 years. These bilateral and unilateral strategies have led to substantial integration of the Swiss economy into the European market (Freiburghaus 2009). In wider economic domains, Brussel s acquis communautaire thus applies in Switzerland. Some say that Switzerland is adapting to Brussels policies

4 Contemporary Politics 3 more than the average EU-member. However, compared to ordinary EU-members, we find a substantial difference: Switzerland lacks formal participation in EU-institutions and consequently has no influence on the EU decision-making. In other words, Switzerland is involved in what might be called Europeanisation without institutionalisation (Sciarini et al. 2004, Afonso 2010). 3. The economic effects of Europeanisation What are the consequences of such Swiss Europeanisation? In substance, the political agenda of Brussels is one of market liberalisation, market harmonisation, and privatisation. This agenda has profoundly changed Swiss economy, which traditionally was protective of domestic industries. Europeanisation, like globalisation, thus has its winners and losers. On the winning side, we find export industries like pharmaceutics and technology, or global service industries. They have better access to the European market, and at the same time have been able to become more competitive. On the losing side, we find not only agriculture but also many craft industries, formerly producing for the domestic market, which have disappeared because they were no longer competitive compared to foreign rivals. This process of modernisation thus implies new conflicts as some old cleavages have taken on new dimensions and have heated up. An instructive example is immigration. Immigration is an old and controversial issue and has been so since the 1960s, when Swiss enterprises started to hire a poorly qualified workforce from abroad. The social integration of immigrants and their families were not the concern of Swiss enterprises and, for a long time, official policies were not adequate either. Thus, the rising number of foreigners (today more than 22% of the resident population in Switzerland), the economic side-costs of immigration and social integration as well as fears that domestic cultural roots were being undermined all constituted a heritage of unsettled political conflict. Yet the 2005 agreement on free movement of persons with the EU has brought this issue to the fore as it opens the Swiss market of 8 million people to the market of the 27 EU countries with 500 million people, and indeed, some ,000 persons now migrate every year to Switzerland. This is an immigration rate of more than 1% of the population, the highest in Europe and a higher rate than those of classical immigration countries like Canada and Australia (Linder 2011). No wonder that this issue is politically more salient than ever. Together with other policies of market liberalisation, Europeanisation has led to a new social divide, with the unskilled working class and the old middle class on one side and foreigners on the other (Kriesi and Trechsel 2008). 4. The push- and pull-mechanism of Europeanisation The question is why Europeanisation, despite such conflicts, has enjoyed much more momentum than one would expect from a consensus system which, in the past, was not known for rapid innovation. One explanation is pressure from the outside. The EU and Switzerland have common economic interests, which allowed bilateral negotiation. But, naturally, the negotiation process is asymmetric, so that Bern has to make more concessions than Brussels. The Swiss government became all too well aware of this during negotiations, as it had little influence either on the agenda or in the outcomes of conflicting issues. With regard to issues of fiscal legislation and the banking secret, Switzerland is under pressure not only from certain EU countries but also from the US. The bourgeois majority, which in the past had successfully defended the banking secret and fiscal privileges for foreign investments against the political Left, now has to give in.

5 4 Wolf Linder Figure 1. Proportions of domestic and international law issued by the Swiss federal authorities. Source: Linder et al. (2009, p. 40). Europeanisation, however, is not only the result of push and pressure from the outside. On the contrary, it relies also on a pull mechanism. Elements of Swiss export industries have an agenda of liberalisation similar to that of the EU. With a tailwind from Brussels, they have acquired more influence in Bern, and a better chance of overcoming domestic resistance from protected industries such as agriculture. Thus, Europeanisation is partly homemade (Mach et al. 2003, Trampusch 2010). These dynamics of push and pull not only explain the high momentum of European integration; they also go along with changes in the internal balance of influence and political power. Agriculture, crafts and small business of the domestic market are not only economic losers; these once powerful associations have lost considerable political influence and veto power. Last but not least, Europeanisation has led to institutional change. Decision-making on the highly internationalised economic policy is prepared and shaped by the executive and the high echelons of diplomacy. Parliament cannot take an active part in negotiations and finds itself in a reduced role of merely ratifying international treaties. Considering the fact that today, more than 54% of all federal legislation has introduced international law to Switzerland (see Figure 1), Parliament s loss of influence is considerable. The same is true for the cantons and domestic economic interest groups. Their veto points in the shaping of economic policies are devalued. We therefore observe a concentration of power in the hands of the executive. This is in contrast to domestic policy areas like public health or national infrastructure. Here, the traditional method of governmental power sharing with many actors being consulted so that a large consensus is reached, is still in force. We can speak, therefore, of two speeds of decisionmaking: a slower pace in domestic affairs, muddling through, incremental innovation, and a new, faster pace in internationalised policies, achieving more innovation, but bypassing many of the veto positions of domestic policies (Fischer 2003, Mach 2006, Papadopoulos 2008). 5. Europeanisation and the transformation of the party system In the last two decades, Switzerland s party system has been fundamentally transformed, and this transformation is directly linked to the conflict on EU-integration. It was induced by the rise of the national conservative Swiss People s Party (SVP), which has more than doubled its electorate and become the leading political force inside Switzerland (see Table 1). The SVP was

6 Contemporary Politics 5 Table 1. Electoral change and the distribution of seats in the bicameral legislature, 1991 and Votes (%) Seats in National Council Seats in Council of States Party Governmental parties Radical Democrats (RD) Christian Democrats (CD) People s Party (SVP) Social Democrats (SD) Bourgeois Democrats (BD) Total Non-governmental parties Green party Green Liberals (GL) Old Liberals Alternative Left Others Total Source: Federal Office of Statistics ( and Linder (2010, 50ff). opposed to the 1992 EEA-treaty and its victory in the popular vote against the rest of the political elite was the beginning of its success story. It has profiled itself as a new conservative Right, persistently mobilising against European integration, immigration and a growing welfare State, while also defending ideas of utmost national sovereignty, independence and neutrality. Under its charismatic and authoritarian leader Christoph Blocher, it dominated the political agenda, professionally organised referendum campaigns and elections and attacked not only the Left but also the bourgeois parties. The party refused parliamentary compromise and did not shy away from personal slander and blunt populism. It absorbed the electorate of small protest parties of the Right, but its success was also at the cost of the centre parties (Kriesi et al. 2005). The Radical Party (RD) saw its electorate shrinking, a fate which the grand old party shared with the Christian Democrats (CD), the traditional party of Catholics. On the left side of the political spectrum, the alliance of Social Democrats (SD) and Greens was able to consolidate their electoral strength, although at a lower level than in most European countries. The rise of the People s Party had consequences for the entire party system and its functioning. For decades, the SVP, the RD and the CD had maintained an informal coalition against SD and Greens. This Centre Right coalition was strong enough to control the political agenda and to dominate the much smaller Left/Green coalition. Now, when the SVP increasingly refused a common bourgeois compromise, attacked its centrist partners and won elections at the latter s cost, the bourgeois coalition weakened or even fell apart. This rupture was particularly visible at election time. In elections held on a proportional system, like those of the National Council, the SVP effectively converted its growing electoral strength into a larger number of seats. This, however, was not the case in elections based on the majority system, like those to the Upper House of Parliament and to cantonal governments. Radicals and CD began to refuse support to SVP candidates, with the result that the latter, despite enjoying almost 30% of the votes cast in 2011, emerged with a representation of 10% only in the Council of States. This contrasts with the situation of the political Left. The SD, despite a stagnating electorate, profited from the disintegration of the bourgeois block and almost quadrupled their representation in the Upper House between 1991 and 2011.

7 6 Wolf Linder We find two new parties, Bourgeois Democrats (BD) and the Green Liberals (GL), which are the product of secession from the SVP and the Greens. Leading figures in both disagreed with the extreme positions of their mother parties, split off and are now looking for a moderate electorate in the centre. Thus, the last elections confirmed the trend of a transformation of the party system from its formerly bi-polar nature into a tri-polar configuration with the camps of the Conservative Right, the Centre and of the Green/Left. The rise of the Conservative Right had important consequences for the composition of the Federal Council, the national executive. The seven members of the Council are elected by the Assembly of the two Houses of Parliament. The distribution of seats of the Council follows the principle of proportionality, which means that the four governmental parties are represented according to their electoral power. From 1959 to 2003, the Council was composed of two Radicals, two CD and two Socialists plus one member of the SVP. Consequently, when it became the biggest party, the SVP got a second seat at the costs of the CD. It was party leader Christoph Blocher who took this seat, but four years later, a Centre/Left group succeeded in the removal of Blocher from office and elected a less controversial member of the SVP. The latter perceived this as kind of a declaration of war. So the two SVP members of the Federal Council were excluded from the party. However, they remained and were to become the co-founders of the already mentioned Bourgeois Party. This split led to the ironic situation that the biggest party was no longer represented in the government while two members of the Federal Council were representatives of a party which never had participated in an election. This situation was partly due to the SVP s own manoeuvres. Even so, it meant a deep crisis in the system of Konkordanz (consensus government). The crisis was partly resolved in the following years. One of the BP Councillors resigned in 2008, and the vacant place was filled with a hardline SVP representative. When the entire Federal Council stood for elections for a new four-year period in 2011 however, the Centre/Left coalition barred the People s Party from obtaining a second seat at the expense of either the centre or the new BD. Thus, the Swiss government in is no longer elected on a consensual basis, and its composition does not correspond to the principles of proportionality. 6. Growing polarisation and the crisis of political consensus The SVP s search for a hegemonic position in Swiss politics was following a logical strategy. It consistently followed the programme we would expect of a new, conservative and nationalist Right wing force. Its Parliamentary Group systematically attacked governmental policy on European integration, reforms of the army, international engagements for collective security, and liberal civil and penal law reform. It fought against increasing growing social welfare, immigration and for restrictive regulations for asylum seekers. Aside from its provocative style and populist campaigns, it had a real instinct for new issues, influencing the political and media agenda as well. The SVP systematically took up the concerns of the losers from globalisation, and played on citizens discontent in its referenda campaigns. It had success with popular initiatives on highly emotional issues: banning the construction of minarets or insisting on the life-long detention of certain categories of criminals. The successes of these popular initiatives were not only a blow to liberals but raised doubts about their compatibility with international law. The SVP s propositions were the exact opposite of the Left and the Greens and, to a large extent, were too extreme for the political Centre. Thus, we can observe a growing polarisation in Swiss politics. This polarisation is more than the invention of the media and the political elite. In fact, a longitudinal study of more than 500 referenda and popular initiatives from 1874 to 2006 (Linder et al. 2008) is revealing. Based on historical accounts of the issues and the statistical

8 Contemporary Politics 7 Figure 2. Polarisation of the Swiss electorate, : (a) Catholics versus Protestants, (b) German versus French speakers, (c) urban versus rural, and (d) capital versus labour. Source: Linder et al. (2008).

9 8 Wolf Linder data of every vote, an analysis of the classical cleavages of Lipset and Rokkan (1967) shows some significant developments of growing polarisation of the electorate. As can be seen from the first two Figure 2(a) and (b), the Protestant versus Catholics and German versus French Speakers cleavages (the Swiss interpretation of Lipset/Rokkan s Centre versus Periphery conflict line) have cooled over the long run. Historically, their historic culminating points date back to the early twentieth century and these have never reached since. This corresponds well to Lijphart s theory, which argues that power sharing and consensus democracy are especially capable of overcoming multicultural conflict. The two other cleavages however, reveal a quite different picture. Despite consensus politics in the last decades, the polarisation of Swiss voters has sharply increased in the socio-economic cleavages of Rural versus Urban and in that of Capital versus Labour (Figure 2(c) and (d)). Indeed the social divide between voters in the urban and rural regions has never been as deep as it is today. Given these developments, we have to ask if power sharing is still possible. Indeed, in the two years crisis of a Swiss government without the People s Party, many politicians and journalists announced the end of the long-standing Konkordanz. Before discussing the institutional questions, let us take a look at the culture of power sharing. Power sharing and consociationalism require mutual respect amongst political elites, the ability to listen to other positions and both the willingness to negotiate for a compromise and then to defend the common political decision in front of one s own clientele. Baechtiger (2005) compared deliberative behaviour of legislatures in consensual and majoritarian systems. Comparing parliament committees of the USA, Germany and Switzerland, he found that power sharing indeed makes a difference to political culture because the deliberative quality of the discourse was lower in the majoritarian settings of the USA and Germany. The members of the Swiss committees were reported to be more respectful to each other, more responsive to the arguments of the opposite side, and more prone to make compromise propositions. The bad news on Swiss power sharing however is that not all parties practiced these virtues of power sharing politics to the same degree, the representatives of the two pole parties, the SVP and the SD scoring significantly lower in terms of the quality of their deliberative discourse. Against the background of these empirical findings, concerns about the loss of the culture of power sharing seem to be justified. Moreover, those critics who deplore that polarisation goes hand in hand with a loss of consensus culture have a good point. 7. The prison of direct democracy or: why power sharing persists Political polarisation, thus, is found in the articulation of the political elites and in people s voting behaviour as well. Under these conditions, and given the loss of political consensus in many important issues, one would expect an institutional change of the polity towards majoritarian politics. In terms of Ljipharts theory, an evolution from a consensus to a majoritarian model could be characterised by the following characteristics: (1) Two-party instead of multiparty patterns (2) Cabinet concentration instead of sharing of executive power (3) Executive legislative relations: from balance of power to executive dominance (4) Electoral system: from proportional towards majority and plurality methods (5) Interest groups: from corporatism to pluralism (6) Division of power: from federalist to unitary patterns (7) Parliament: from bicameralism to concentration (8) Constitution and judicial review: more flexibility (9) Central bank: less independence from central government

10 Contemporary Politics 9 Vatter (2008), re-analysing the comparative study of 36 countries of Lijphart (1999) indeed finds some signs of such an institutional change. Comparing Lijphart s data of 1997 with similar data of 2007, Vatter shows that institutional indicators of the party system, of government coalitions, of the relations between executive and legislative, of elections and pluralistic interest groups, and of centralisation in the relations between cantons and the federation have slightly moved into the direction of a majoritarian system. In the last three items (concerning parliament, judicial review, and central bank), Vatter observes no alteration. All the changes are marginal, however, and in comparison with 35 countries, Switzerland, together with Belgium, still ranks as the most consensual democracy in Europe (Vatter 2008, p. 35f). It is astonishing, moreover, that two major changes did not materialise: despite its non-proportional composition since 2007, the Federal Council is considered as a Konkordanz-Regierung as before, and parliamentary decision-making is still characterised by co-operation and compromise between all political parties. Systematic analyses of the National Council s decisions from 1996 to 2005 (Schwarz and Linder 2006) show some surprising results. In contrast to intuitive guesses, the SVP could not transform its electoral success in into an enhanced influence in the National Council. On the contrary, the rate of defeat of its propositions in plenary proceedings rose until it was became comparable to the traditionally low success rate of the SD. This partly corresponded with the SVP s own tough and uncompromising strategy. At the same time, however, this strategy strengthened the position of Radicals and CD despite their electoral losses: in the new tri-polar setting, the two centre parties alternately formed coalitions with the pole parties of the Left and the Right, thus taking the lead in parliamentary politics. Consequently, changing issue-specific coalitions between the governmental parties seem to be more frequent than decades ago. CD, for instance, are on the side of Radicals and the SVP in financial affairs but support Green/Left social or energy policies. From an institutional point of view, changing coalitions among the parties are essential. If within a grand coalition it is always the same actor who finds itself in a minority in all decisions, power sharing does not work. This produces the situation of an eternal majority which in the words of Deutsch (1967), can afford not to learn. In Swiss power sharing, this was exactly the case in the 1980s, when the bourgeois block systematically minorised Green/Left forces in financial and economic affairs. In contrast, changing coalitions make power sharing of a grand coalition work for several reasons. One is that the outcome of many decisions is uncertain and open. This makes learning processes and innovation possible. Two, changing coalitions stimulate respect between politicians because the party which loses today can be a winner tomorrow on another issue. Under these conditions, three, cross compensations and compromise become more likely. Indeed we could conclude that, despite polarisation, Konkordanz is working better than it did decades ago. Even so, the tri-polar system is asymmetric. In important issues, political differences between Centre and Right are much smaller than those opposing the entire bourgeois block and the Left-Green camp. A Centre Right coalition, having a comfortable majority in both chambers, could therefore easily abandon power sharing and move to majoritarian politics. The question is why they do not do so. The answer lies in institutional particularities. Swiss parliamentary groups, in contrast to their Dutch colleagues for instance, do not have a free choice between consensus or majoritarian regimes. The reason for this is that, in the most important parliamentary decisions, the people have the last word. Every constitutional amendment is subject to an obligatory referendum while the people can launch a referendum to challenge most new pieces of legislation. Under these conditions, laws passed by bare majorities in parliament run high risks of being defeated in a popular vote. In order to minimise this risk, Parliament tries to find large majorities. Direct democracy, therefore, pushes political parties to co-operate

11 10 Wolf Linder and to find, in the ideal case, a large consensus among all relevant political forces. This is the reason why, despite polarisation, all political parties claim that they are sticking to the principles of Konkordanz-Politik. In a way, the Swiss parliament is the prisoner of direct democracy: it cannot escape practising power sharing without cutting the people s rights of direct democracy (Linder 2010). 8. Dead ends of Europeanisation without institutionalisation We have seen that Switzerland, while not being a member of the EU, adopts EU economic law to a large degree (Mach and Trampusch 2011). The government and most political parties consider the bilateral way to be a great success. And indeed, Switzerland has developed well under the conditions of integration without membership. According to statistics of the Organisation for Economic Co-operation and Development (OECD), its per capita revenue is still one of the highest in the world. The Swiss economy has remained internationally competitive, and its unemployment rate is still one of the lowest in the West. The Swiss still enjoy a high quality of public services but pay lower taxes, while the public dept is modest. This bright picture is darkened by several developments. The first question is the future of bilateral negotiations with Brussels. The Swiss Government regularly declares its firm intention to stick to the strategy of bilateralism and is looking for a third package of Bilaterals. Brussels, however, is less eager to do so. The EU has other political problems and priorities than negotiations with Switzerland, and advantages of any additional arrangement must outweigh the high transaction costs. As a precondition for future bilaterals, the EU insists on an institutional arrangement by which all treaties concluded are subject to automatic modification in line with the evolution of the acquis communautaire. From a Swiss point of view, this unilateral imposition is against the principle of pacta sunt servanda, and the government wants to be involved in the future modifications of the content of the treaties. Thus, the prospects of a third package of bilateral treaties are anything but bright. In its economic relations, Switzerland depends more from the EU than vice versa, and it is clear that the future of bilateral treaties is defined in Brussels and not in Bern. Moreover, the domestic opposition against further bilateral treaties is growing. The People s Party criticises the bilateral way as an informal strategy of the government to prepare EU-membership. Even strong supporters of the bilateralism admit that given the scope and intensity of Europeanisation this strategy falls short of the expectations to protect national autonomy. Free movement of labour is the most controversial part of the arrangements with Brussels; it has led to more social problems of immigration than ever, and the People s Party is preparing a popular initiative to break up with freedom of movement. Such a proposition is a play with the fire because Brussels would not accept such a demand and could call all bilateral treaties in question. Brussel s position and internal opposition make the continuation of the bilateral way highly uncertain. Finally, in questions of the banking secret and fiscal law, Switzerland is under political pressure from the side of the USA, Germany and the EU and has to give in; in a lone position, the country has become vulnerable. For the moment, the position of the Swiss government is all but comfortable: Additional bilateral arrangements with the EU are uncertain. The government must accept that in the future, the EU insists institutional solutions for the modification of the existing bilateral arrangements. De facto Europeanisation goes far beyond the treaties. The government cannot exclude that one day, the EU will ask Switzerland to accept its entire acquis communautaire. If so, the bilateral way would really be revealed as a dead end (Freiburghaus 2009), producing the second worst of all worlds, having to accept all EU regulations without having any say in Brussels. The worst situation, however, would be the defeat of a future bilateral treaty in a popular vote. This is

12 Contemporary Politics 11 a real possibility, and it would mean that Switzerland is stepping into a position of economic and political isolation. In this situation, one would expect the Swiss government to abandon the policy of bilateralism and to look for other options. One could imagine Switzerland joining Norway, Iceland and the Principality of Liechtenstein in the EEA, or even reconsidering membership in the EU. Yet so far, the government has not come up with a third way between non-splendid isolation and integration without membership. The reason is simple: any decision on EEA- or EU-membership is subject of a popular vote, and all opinion polls show that the people would reject such propositions. One can ask why Switzerland, geographically situated in the centre of Europe, is against membership in the EU. If 26 European countries, in the past 60 years, were eager to join the EU, why did Switzerland refuse to do so? Rodrik (2011) seminal concept of the globalisation paradox offers some insights. According to Rodrik, the globalisation paradox consists in a difficult choice: National governments would like to grant strong globalisation, sovereignty and democracy all together but can have just two of them. Strong globalisation and sovereignty are at the cost of democracy, strong sovereignty and democracy restrict globalisation, while strong democracy and globalisation interfere with sovereignty. In the case of the EU, the particular expectations of the 27 countries joining the Union may have been very different. But all of them sought economic advantages by joining the common market, many of them were interested in consolidating their national democracies, and for these advantages, they all accepted a partial loss of national sovereignty. This equation looks different for Switzerland. It cannot expect substantial net economic advantages by joining the common market, but fears that in the case of EUmembership direct democracy would be less effective and political neutrality of the country compromised. Thus the Swiss preference, in the past 20 years, has been strong democracy, strong sovereignty, weak globalisation. But what happens if Swiss economy suffers from isolation, becomes weak and needs better access to the European market? Pro-Europeans hope that in this case, priorities would change for stronger globalisation. Yet this is all but certain because the preference for strong sovereignty and democracy is deeply rooted in the political culture. It comprises not only the highly valued armed neutrality and the instruments of direct democracy but further elements. The British observer of Swiss politics Clive Church lists, among others, the preference for decentralist and federalist institutions, the desire for decisions to be made directly, a strong sense for patriotism and independence, a cautious attitude to policy change, and a belief that the country is fragile (Church 2004, p. 183). In other words, Swiss citizens, in their majority, mistrust big government, bureaucracy, centralised power, top-down politics and the ability of judges to overrule parliamentary enactments and it is exactly this that they expect from the EU. Rightly or wrongly, they associate the negative effects of globalisation with Brussels. These include the concentration of politics in the hands of experts and executives, top-down decision-making, the elimination of local markets and the destruction of the environment. A similar critique of both the present EU regime and of globalisation is developing in many parts of Europe. While in EU countries it comes from the margins, in Switzerland it emerges from political majority based on shared convictions and political cultural values. Euro-scepticism will not disappear quickly, and it is not the only obstacle for developing institutional relations with the EU. Direct democracy obliges parliament to entrust all its major decisions to a popular vote. Referendums are obligatory both for all amendments of the Constitution and for important international treaties, while most new laws can be challenged by an optional referendum if demanded by 50,000 citizens. Pro-Europeans see the referendum as the most important obstacle in the way of Switzerland becoming a member of the EU. Indeed, the hurdle seems to be insurmountable. At federal level, a decision on membership requires not only the majority of the people, but also of the Cantons. In the past, a majority

13 12 Wolf Linder of small, rural cantons voted strongly against EU projects. This means that in practice only a two-thirds majority of the people could overturn the veto power of the rural cantons. Therefore the pro-europeans are rather unlikely to succeed. In recent opinion polls, those who would like to join the EU represent a minority of only some 30% of the electorate. Hence the popularity of the EU is unlikely to rise quickly even if the Union were to see better times than those of today. More than 20 years ago, the political scientist Germann (1991) proposed to overcome this hurdle by attacking it from the other side: In a first step Switzerland should eliminate the referendum or at least the requirement for the double majority of people and cantons, which would make European integration easier in the future. However, it is clear that doing this would be even more difficult: for citizens, direct democracy is the most precious element of the Swiss polity, and they would not renounce on them. Instead, direct democracy has led to the defeat of the EEA-treaty and to a puzzling way of Europeanisation without institutionalisation. While the bilateral way seems to come at its end, the perspectives of an institutional solution with the EU are not bright as long as the country is divided on the European question. Does direct democracy, then, condemn Switzerland to become ever more isolated in Europe and ever more vulnerable in an internationalised world? Pro-Europeans at least feel so, and in many respects, their fears are justified. As we have seen, there are many signs pointing to the country s growing vulnerability and isolation, even if many citizens, impressed by economic wealth of the country, may underestimate these risks. Euro-sceptics, however, are confident that these risks can, and must, be run. They see popular initiatives and referenda as a necessary and most legitimate means to oppose globalisation, Europeanisation and loss of national autonomy. However, we do not know whether direct democracy, partly under the influence of populism, will lead Switzerland into not so splendid isolation or into promising possibilities differing from those of mainstream globalisation. References Afonso, A., Europeanisation. New political cleavages and policy concertation in Switzerland. European Journal of Industrial Relations, 16 (1), Baechtiger, A., The real world of deliberation. A comparative study of its favourable conditions in legislatures. Bern: Haupt. Church, C.H., The politics and government of Switzerland. Basingstoke, Hants: Palgrave. Church, C.H., ed., Switzerland and the European Union: A close, contradictory and misunderstood relationship. New York: Routledge. Cottier, T. and Liechti-McKee, R., eds., Die Schweiz und Europa. Wirtschaftliche Integration und institutionelle Abstinenz. Bern: vdf. Deutsch, K., The nerves of government. New York: Free Press. Fischer, A., Veto players and the enforceability of side-payments. The Swiss decision making process on the flanking measures to the agreement on free movement of persons with the European Union. Swiss Political Science Review, 9 (2), Freiburghaus, D., Königsweg oder Sackgasse? Sechzig Jahre schweizerischer Europapolitik.Zürich: NZZ-Verlag. Germann, R., Die Europatauglichkeit der direkt-demokratischen Institutionen in der Schweiz. Schweizerisches Jahrbuch für politische Wissenschaft, 31, Kriesi, Hp. and Trechsel, A.H., The politics in Switzerland. Continuity and change in a consensus democracy. Cambridge: Cambridge University Press. Kriesi, H.P., et al., Der Aufstieg der SVP. Acht Kantone im Vergleich. Zürich: NZZ-Verlag. Lijphart, A., Patterns of democracy. New Haven, CT: Yale University Press. Linder, W., Swiss democracy. Possible solutions to conflict in multicultural society. 3rd ed. Basingstoke: Palgrave/Macmillan. Linder, W., Multicultural Switzerland and the challenge of immigration. Journal of Minority Studies, 5 (3), Linder, W., Zürcher, R., and Bolliger, C., Gespaltene Schweiz-Geeinte Schweiz. Gesellschaftliche Spaltungen und Konkordanz bei den Volksabstimmungen seit Baden: Hier+Jetzt.

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