by Diccon Bewes
In the past few years, barely a month has gone by without Switzerland having a tax dispute with someone. With the Americans it’s the UBS client list, with the Germans it’s tax havens, with the French it’s transparency, with the EU it’s corporate tax incentives, and so the list goes on. In 2009 it all came to a head and Switzerland bowed to international pressure to cooperate over tax affairs. It agreed to help in cases of evasion, not merely fraud, and signed revised double-taxation treaties with other countries. Does that mean the end of Swiss banking secrecy? Probably not, though Swiss banks may have to change the way they do some business. The days of truly anonymous accounts and suitcases full of cash are long gone anyway, so now it’s more a question of not marketing the banks as tax escapes, as UBS did in the States, and of being seen to be whiter than white. But cracking down on tax evasion isn’t the same as declaring open house on privacy. There is a big difference.
Client confidentiality isn’t, or at least shouldn’t be, the issue. That’s crucial for any bank in any country; you couldn’t just walk into a British bank and get details of my accounts. And almost every country has its offshore places where the rich and powerful stash their cash out of the taxman’s reach. Britain has the Channel Islands, France has Monaco and the US has the Caymans (or even Delaware, one of its own states). The issue is cooperation, and the Swiss should be good at that; they’ve been practising it at home for centuries. However, the problem lies in the fact that the Swiss hate others telling them what to do and how to run their country. It’s Kantönligeist on a national scale, and is one of the main reasons Switzerland is not in the European Union. Letting Brussels run their affairs would be invasion of Swiss privacy on a grand scale. Being bullied by bigger countries usually has exactly the opposite effect to the one intended; the Swiss are nothing if not stubborn.
MONEY TALKS, BUT VERY QUIETLY
Whatever you do, don’t mention the money. As we’ll see, talking about the war isn’t such a good idea in Switzerland either, but money is the love that dare not speak its name. The Swiss have it, and many have plenty of it, but they don’t talk about it. Polite conversation never ventures down the road to riches, meaning that house prices are not discussed, sale bargains are not compared and the cost of living is not a talking point. Money is just there, in the background, seen but not heard. And often not seen either. In Switzerland, if you’ve got it, hide it. Flaunting is so not Swiss. Brash displays of wealth can be seen in Zurich more than most other places, but there it’s as many Russian tourists as chavvy locals wearing fur coats and dripping bling. As for betting shops, nothing so vulgar can be seen on Swiss high streets, for one thing because the Swiss don’t need to gamble to be rich, and for another if they did, they wouldn’t want any of their neighbours to know about it. Betting is something best done in the privacy of your own home or in a casino – there are 20 legal ones dotted all over Switzerland.5
This aversion to mentioning money includes not putting any salary details in job adverts, because doing that would mean everyone else would know how much you earn. And that wouldn’t do at all. So instead, as a prospective employee you must know how much the job should pay and how much you think you’re worth. At the end of the interview comes the moment for discussing your monthly salary, and it’s a surreal one for those not used to the Swiss system. You have to make an offer, which is met with a counter-offer, with both sides bearing in mind that most Swiss companies pay monthly salaries 13 times a year, not 12 – the 13th is for paying your tax bill (see below). Eventually you agree on a figure acceptable to both parties. It may sound more like bartering in a bazaar than a job interview, and very odd behaviour for people who don’t like talking about money, but it’s actually very Swiss. The subject may be money but the system is the same as always: communication and compromise are used to reach a consensus so everyone is happy.
Maybe the Swiss don’t talk about money because Switzerland wasn’t always rich. As a landlocked country with few natural resources and no empire, it couldn’t compete with the great European powers. That all changed in the late nineteenth century with the advent of the railways and tourism, but well before that the Swiss had a reputation as good bankers. Even though, as a nation, they didn’t have much money, they could be relied on to look after other people’s. That had little to do with bank secrecy, which only became Swiss law in 1934, but was all about stability, honesty and security. In fact, it was all about trust.
THE WAR THAT NEVER WAS
Nevertheless, talking about money is infinitely preferable to talking about the war. The Swiss don’t talk about that at all. Admittedly they weren’t directly involved, but it’s almost as if it never happened, as if it’s the elephant in the room whenever Germany, or recent Swiss history, is discussed. Neither are there jokes or common cultural markers: traffic wardens aren’t called ‘Little Hitlers’, TV sitcoms aren’t made about the French Resistance and posters aren’t often defaced with toothbrush moustaches. With Nazi insignia forbidden and Mein Kampf banned, the rules are the same as modern Germany, even though the Swiss weren’t part of the Third Reich. The question is, why? It’s as if they feel guilty about the past, ashamed of what they did, or didn’t do. Better not to talk about it than have an uncomfortable conversation. How Swiss.
Part of the reason is Switzerland’s love–hate relationship with its big neighbour to the north, which is often more hate than love. Germany is often referred to, half-jokingly, as the ‘big canton’ and the recent influx of thousands of Germans into Switzerland6 has raised the tension rather than helped relations. The Germans seem to be the only ones who can make the Swiss feel inferior, and that’s not an easy feat. It’s partly about language. High German, as spoken by the newcomers, is much more direct and less fluffy than the Swiss German dialects so its speakers seem arrogant and rude, at least to Swiss sensibilities. German speakers sometimes face snide comments or worse, and that includes English people who have learned High German. But given that High German, rather than dialect, is the official national language, most Swiss are willing (albeit reluctantly in some cases) to switch.
The rise in German immigrants is thanks to a series of bilateral agreements negotiated between Switzerland and the EU. After repeated referendum defeats, the Swiss government hasn’t been able to fulfil its wish of joining; instead, it negotiated itself into the unique position of being an almost member. These bilaterals, each approved by referendum, cover a whole raft of issues (mainly trade and working relations), giving the Swiss many of the benefits, and the costs, of membership without the integration. As a result, Switzerland is part of the Schengen area, where there are no border controls, and signed up to the free movement of people, meaning that EU citizens7 can live and work in Switzerland and vice versa. This didn’t prompt a flood of Polish plumbers, as feared, but a wave of German doctors, nurses, teachers and thousands of others. The Swiss repelled one German invasion in the Forties but have succumbed to another in the Noughties.
As much as language and immigration the problem is history, specifically the Second World War. The Swiss did what they had to in order to survive. For sure, it wasn’t perfect behaviour, but the Allies were hardly angels and many Swiss did try to help. However, it’s their behaviour after the war that the Swiss perhaps feel most uncomfortable about. That boils down to two words: Nazi gold. They cover a multitude of things, but mainly refer to the gold shipped to Switzerland by the Nazis and the unclaimed Jewish assets sitting in Swiss banks long after the war ended. The issue with the former is that the Swiss didn’t question where the gold originated – it’s that whole trust–privacy thing again – so got their hands dirty with millions of francs in stolen loot. Acting in good faith can only be believed up to a point, after which it looks like being opportunistic. Which is exactly what it was. The Swiss have a saying, Geld stinkt nicht, which translates literally as ‘money doesn’t smell’ or, better yet, there’s no such thing as dirty money. Never truer than in this case.
Luckily for the Swiss
, the victorious Allies needed their money after the war, both to rebuild Europe and to help fight the Soviet threat. Trifles like $444 million8 in gold were brushed under the communal carpet in the name of defending democracy. What happened to the gold? Who knows. Having dodged that bullet, the Swiss did the same with the second by ignoring it. Nevertheless, 50 years later it struck right where it hurt most, the Swiss banks. In 1995 the World Jewish Congress (WJC), backed by the US Senate, sued for the return of all unclaimed assets from dormant Swiss accounts. And that’s when the Swiss made their biggest mistake. Instead of coming clean the banks fought back, denying responsibility, throwing up endless red tape, and generally making themselves look far worse than they already did. Then they asked for death certificates from concentration camp victims. Oh dear.
In the end they struck a deal with the WJC and handed over $1.25 billion. The Swiss government stayed out of it, but then had the decency to set up a commission to investigate every aspect of Switzerland’s wartime behaviour. The critical Bergier report wasn’t easy reading for anyone Swiss, but for once it made them talk about the war and their role in it. Soul-searching doesn’t come naturally to them, but at least when they do it, they do it with the same thoroughness as everything else.
MATTERS OF LIFE AND DEATH
The strange thing is that the death certificate debacle won’t have seemed so ridiculous to many Swiss people, not for moral reasons but because Switzerland is a bureaucracy as much as a democracy. Swiss red tape makes all others look pink. They love pieces of paper. To the Swiss mind, if it doesn’t have a paper record, it doesn’t exist. Job applications don’t just need a CV and letter, they need copies of all relevant qualifications and work references. Every training course, every exam, every apprenticeship, every job, everything ends with a piece of paper to prove it. For any fairly normal application, registration or permit you have to copy countless bits of paper: school reports, degree, tax return, passport, visa, inside-leg measurement, dental records, etc., etc. And I’m only half-joking.
You sometimes even need to prove that you are unmarried, have no parking fines or live where you say you live. And for those, it has to be an official stamped piece of paper, not only your photocopy. Of course that’s easy to get (for a fee) from your local community office because every person living in a community has to register with the authorities; you can’t simply live somewhere without telling the powers-that-be. For a nation that relishes privacy, it’s rather odd to live with such control. It feels almost like living in a police state, albeit a good-natured one that’s officious but not vicious. Solzhenitsyn is said to have complained that the bureaucracy in Switzerland was worse than Russia.9 It really is that omnipresent, but for the Swiss it’s normal; they’ve been living with it ever since their birth certificate was issued.
Among all the many papers that every Swiss person needs, some of the most important are for insurance, another Swiss obsession. Taxes may be low, but insurance makes up for that by consuming 22 per cent of the average household budget.10 There’s insurance for almost everything, not just to give people yet more documents, but also to make sure they are prepared for any eventuality. Be prepared, and have the papers to prove it, is pretty much the Swiss ethos. Obligatory insurances cover old age, invalidity, accidents and unemployment, making them similar to the catch-all National Insurance in Britain. Then there’s personal liability insurance which is almost mandatory, just in case, for example, you break someone’s window and they sue you. But the killer is health insurance, with premiums so high, and still rising, that it’s possibly the one reason Swiss people are moved to talk money. Only the US and Norway spend more per head on health than the Swiss.11 That’s how expensive it is.
There’s no national health system in Switzerland. Instead everyone is obliged to take out basic health insurance, with those on low incomes getting some state help. All insurers must offer the same minimum cover and cannot refuse anyone basic cover, but the prices can vary hugely, even for the required legal minimum. For example, in Bern I have the choice of about 200 basic policies costing from 2500Fr to 6500Fr a year12 (about £1600 to £4300). This being Switzerland, health services are a cantonal matter, so every canton has different rates, some nearly half the price of others. Live in Appenzell and you’re laughing all the way to the (blood) bank; live in Basel and the insurance costs might bleed you dry long before you die.
Unfortunately, high insurance premiums don’t make the system any cheaper. Every visit to the doctor is charged per minute and drugs cost more than abroad despite many of them being made in Switzerland. Supermarkets are not allowed to sell medicines, not even painkillers, so everything has to go through the doctor or the chemist. No surprise, then, that Switzerland is full of chemists: in my ten-minute walk into town, I pass seven and that’s without going through the city centre. Entering a Swiss chemist is a daunting experience because everything is behind the counter, stored in drawers and cupboards. You have to ask a white-coated assistant for the simplest thing, and then try not to faint when you’re charged seven francs for seven headache tablets. Enough to induce a migraine.
Healthcare in the US, or the lack thereof, may make headlines around the world, but no one is interested in the Swiss system. Apart from one issue: assisted suicide. Helping someone to end his or her own life is not illegal in Switzerland,13 as long as it is done by an individual who isn’t a doctor and has no vested interest in the outcome. So bumping off Great Aunt Hildegard to get her money isn’t allowed, but volunteering to help a stranger who has chosen to end their suffering is okay. Two Swiss organisations, Exit and Dignitas, interpret the law, or lack of one, in such a way that since the 1980s organised assisted suicide has been an option in Switzerland. Exit only helps Swiss residents whereas Dignitas is open to anyone, a policy that has been a tad controversial, initially abroad but then in Switzerland.
So far over 100 Britons, and many more Germans, have travelled to Zurich and swallowed the lethal dose of barbiturates, having first paid Dignitas about 10,000Fr to cover costs14 (Dignitas is a non-profit organisation). It’s this ‘death tourism’, especially for patients who are paralysed rather than terminally ill, that prompted the Swiss government to call for a change in the law. In October 2009 it published two proposals for consultation, one for a total ban, the other for tighter restrictions, particularly regarding the patient’s medical condition. Almost at the same time, the pressure for change in Britain, where assisted suicide is banned, increased when the Director of Public Prosecutions issued new guidelines on the subject. Both moves are only the first step of many.
What is interesting is that in Switzerland the debate is far less emotionally charged than in Britain. There are few newspaper editorials from writers with more compassion for their pets than a dying relative. And certainly no hectoring from men chosen by God rather than the people; Switzerland may still be quite religious in many ways, but the church stays out of politics. The focus is much more on making sure the law is followed properly, which is very Swiss, and that assisted suicide shouldn’t become a money maker, unusually not very Swiss. It remains to be seen which country will have the more constructive debate.
A SINGULAR CURRENCY
The one aspect of money that all Swiss have in common is pride in their franc. Before that came along in 1850, the Swiss money market was a mess. Every canton had its own currency, but there were also ones from the old Helvetic Republic, the monasteries, Italian city-states and a clutch of other countries. In total, around 8000 different coins were legal tender. Then someone had the bright idea of creating a single currency for the new federation, and the Swiss franc was born. Unfortunately, the cantonal mints couldn’t cope with the demand, so the first Swiss coins were minted in Paris and Strasbourg. Not the best beginning for a national currency, although the Swiss franc has never looked back. It’s one of the world’s strongest currencies and the Swiss love it. So much so, they use it whenever possible.
Most Swiss pay the old-fashioned way, i
n cash. Perhaps that’s why they have such big notes. Go to a cashpoint in Switzerland and it will give you your money in 100-franc notes, while a sure sign of being a tourist is that you apologise when paying for a drink with a 200-franc note. What to others is a small fortune in one note, for the Swiss is normal. Cashiers do not hold them up to the light, or call for a manager or bat an eyelid when presented with three or four together. And even 1000-franc notes are accepted in most shops every day all across the country without a second glance – that’s over £650 in one purple piece of paper.
I’ll never forget waiting in my bank in Bern one December, and trying not to stare open-mouthed at the elderly woman in front of me, who had asked for 17,000Fr in cash. It didn’t take long as the cashier only had to count out 17 notes and pop them in an envelope. The woman picked up her money, put it in her bag and said she was off to do her Christmas shopping. Only in Switzerland.
Compare that to when I was in Britain a couple of years’ ago to organise the deposit for my flat in Switzerland. Before I could withdraw my money from my account, I had to give 24 hours’ notice and provide two forms of ID, not just for security but because the bank didn’t have that much cash all at once. I had to take the money to the building society but when it came, it was in bundles of tens and twenties, all badly sorted and rather worn. The second cashier had a minor heart attack when I handed over the bag of notes. I felt like a bank robber.