• It's Coming...

    MARKET EDGES

    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

In case you haven’t noticed, the Swiss do things differently. The country stays out of most military conflicts, is not part of the European Union, remains a “neutral intermediary” on the international stage, and the people speak any number of the country’s four official languages. So it should come as no surprise that their system of government looks different from the rest of Europe as well.

The governmental structure of Switzerland is important in the context of understanding yesterday’s election of conservative Ueli Maurer to the Swiss Federal Council, a seven-member (or four party coalition) executive council that operates as both a cabinet and collective presidency.

Switzerland’s Federal Council once represented all four major parties in the same ratio: two representatives each from the Free Democratic Party, Social Democratic Party, Christian Democratic Party, and one from the Swiss People's Party. This ratio changed in 2003 when Maurer’s People’s Party took an extra seat away from the Christian Democrats, having gradually amassed increased voting share to 29%, from 11% in 1987 to 22.5% in 1999.

Yesterday’s vote for Maurer was surrounded by considerable clout for his running mate for the People’s Party seat was Christoph Blocher, a sixty-eight-year-old billionaire industrialist who dominated political life for over a decade, transforming the Swiss People's Party from a small, rural party into a political machine firmly anchored to the far-right.

Blocher’s party emerged as the largest party in the coalition in 2003 and with it he was elected to a seat on the Federal Council. During his term he sparked much controversy in Switzerland and abroad with his anti-immigrant policies and musings. An example of the racism the party espoused is demonstrated in the below advertisement that shows three white sheep kicking a black sheep off the backdrop of the Swiss flag, with the bold black works “Create Safety”.

The racist suggestions in the message are clear; and this was a party poster that would have been displayed on any bus stop throughout the country.
Switzerland, a country known for its multicultural heritage nestled between France, Italy, Liechtenstein, Austria, and Germany has had its own cultural problems with immigrants. Much like the guest workers in Germany post WWII (see: ) Swiss society has integration problems with immigrant groups from the Balkans and Turkey in particular, with total foreigners living in Switzerland to be estimated at 20% of the population. Switzerland has some of the toughest naturalization rules in Europe. To apply you must live in the country legally for at least 12 years, pay taxes, and have no criminal record, making “integration” difficult. Although crime statistics are not definitive, many Swiss blame crime on the immigrants. In particular, the Swiss People's Party holds this to be true, and is their justification for deporting them and their families.

Returning to Maurer’s election to the Federal Council yesterday, it is important to understand that Maurer has been referred to as Blocher’s lackey over his political career. In 1996, at Blocher’s behest, Maurer was elected president of the Swiss People’s Party. His presidency saw the party double its voter base, establish itself in the French-speaking part of Switzerland, and in 2003 rise to the country’s strongest party. Maurer, who shares Blocher’s xenophobia, once said: “As long as I talk of negroes, the camera stays on me.” His conservative values have shown through with his comment, “"the downfall of our society."

Yesterday’s election of Maurer grabbed our attention for it confirms a current European thread of right-wing support. This was demonstrated in last week’s regionalism article on the legacy of Jörg Haider and the previous week’s look at multicultural tensions in Germany. The Swiss case further shows the integration problems of foreigners in continental Europe. The integration strain can be financial and cultural.

We’ll be following Maurer and Swiss politics in context of the Eurozone. We have recently sold our position in Switzerland on account of the country’s highly levered economy to the banking industry.

Matthew Hedrick
Analyst