Europe to review ties with Switzerland after immigration vote

Mon Feb 10, 2014 6:18am EST

* Referendum was initiated by right-wing SVP party

* Swiss business says vote creates toxic uncertainty

* Large neighbour Germany sees "considerable problems"

By Katharina Bart

ZURICH, Feb 10 (Reuters) - European partners threatened on Monday to review their relations with Switzerland after voters in the Alpine nation narrowly backed a proposal to curtail immigration from the EU in a referendum that has also unsettled Swiss business.

French Foreign Minister Laurent Fabius described the vote, initiated by the right-wing Swiss People's Party (SVP) and opposed by the government in Berne, as a "worrying" move that showed Switzerland was withdrawing into itself.

"We're going to review our relations with Switzerland," Fabius told RTL radio.

Chancellor Angela Merkel's spokesman said that while Berlin respected the result, it would create "considerable problems" for Switzerland's relationship with the EU. The European Commission said it went against the principle of free movement between the Alpine nation and the EU that has existed for over a decade.

"The EU will examine the implications of this initiative on EU-Swiss relations as a whole," the Commission said.

Switzerland is not a member of the 28-nation EU, but a pact with Brussels has ensured the free movement of citizens to and from the bloc since 2002.

The vote to reintroduce immigration quotas, backed by a razor-thin margin of 19,526 voters on Sunday, threatens that pact, and with it a key pillar of the Swiss economy, which relies on the EU for nearly one-fifth of its workforce.

Switzerland is home to food and beverage giant Nestle, drugmakers Novartis and Roche, as well as a host of major commodities dealers such as Glencore Xtrata and Louis Dreyfus Commodities.

"What's the point of investing in Switzerland, when in the end it's not certain whether you can get qualified staff to carry out your plans," Valentin Vogt, president of the Swiss Employers Association, told the NZZ newspaper.

He said the vote created toxic uncertainty for Swiss businesses, which already face pressure amid a foreign crackdown on banking secrecy and an outcry over the favorable tax rates some Swiss cantons offers to multinationals.

Swiss banks including and Credit Suisse are especially dependent on the flow of foreign workers, employing up to 25 percent of overall staff from the EU.

"We fear that the pool of available workers will dwindle," said Sindy Schmiegel of the Swiss Banking Association. "It could become much more difficult for banks to meet their staffing needs."

Although the Swiss government had urged voters to reject the introduction of EU immigration quotas, it is now obliged to write the results of the referendum into law. It will have a degree of flexibility as the referendum did not set specific quotas.

Justice Minister Simonetta Sommaruga said on Sunday that the government planned to draft a law by the autumn, before approaching the EU with its plans.

Anger among parties that had opposed the vote was palpable on Monday, with the Swiss Liberal Democrats suggesting that Christoph Blocher, the billionaire industrialist and SVP lawmaker who poured his own money into the quota campaign, be sent to Brussels himself to explain the vote.

"He has an obligation to find a good solution, together with the other parties," the FDP said in a statement. (Additional reporting by Caroline Copley and Oliver Hirt in Zurich, Michelle Martin and Stephen Brown in Berlin, Alexandria Sage in Paris,; Editing by Noah Barkin)

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