Back in the summer of 1291, a group of mountain farmers, descendants of Celts who had immigrated to the area a couple of millenia before, held a clandestine, illegal meeting on a secluded lakeside meadow. Tired of submitting to the rule and taxation of a family of despots, the Habsburgs who lived up by the confluence of rivers to the north, they mutually pledged life and honor and declared their own country. After a fierce war, the Confederates from the valleys of Schwyz, Uri, and Unterwalden managed to convince the Austrian troops that the Habsburgs that the were too much trouble and the tiny nation began to develop its idea.

In 2001, this 710 year old cooperative entreprenurial venture is a prosperous, stable, peaceful democracy, arguably one of the most successful nation states on the planet. But Switzerland is not free from problems nor it is able to live with the sense of isolated security that it has long cultivated. The questions of Europe, Globalization , the American Imperium, the whole accelerating process of change, exists as well here as elsewhere. But unlike some cultures, whose long term strategy s determined by the wind, Switzerland is attempting to preserve what it can of a unique culture while still adapting to global realities.


Switzerland has a reputation and a role in the world community that is all out of proportion to its size and population (41,300 sq km and 7 million). Gross Domestic Product, at over 40,000 $ per capita, is one of the highest in the world, unemployment is less than 1 percent. The country successfully integrates four cultural lingual groups and managed to remain a bystander in both the First and Second World Wars. The people are hard-working, honest and non-violent. Crime was extremely low but has risen with rising number of refugees and asylum seekers who are not often easily assimilated. The countryside is fantastically beautiful, exceptionally clean, the trains run on time and the cows are undeniably the most contented on Earth. It is definitely not what one would call a "basket case". So, what's the problem? In a word, it's Europe. Although Switzerland has other problems, most of which are a function of the inherent instability of the accelerating rate of change in our world - environmental pollution, increasing competition, spiralling government spending, excessive power of special interests, bureaucratic inertia, disaffected youth, drugs, grafitti, Aids, racism, illegal or unwanted immigration and so on - the real Swiss problem centers on the fact that it is the only island in the world entirely surrounded by land.


Early Swiss efforts to expand south of the Alps were not appreciated by the Romans. The Swiss then pragmatically and wisely decided to concentrate on building up their own resource-poor homeland rather than expending energy on empire building. The moderate expansion of the Confederation came through voluntary alliances with small neighboring who liked the advantages, independence and interdependence, that the Confederation offered.

But contrary to popular belief, Switzerland was, until quite recently, a very poor state and one of its main exports was mercenaries. It was also a country of emigration (pioneers to America, pastry cooks to Italy) as there was insufficient employment at home for the increasingly skilled population.

This situation did not change until early this century, when the Swiss economy was strong enough to absorb the domestic population and began to attract foreign settlers again. In 1910 the percentage of foreigners resident in Helvetia was 15 percent, nearly the same as today, and like today, was often the subject of heated discussion.

Mountain people tend to be somewhat introverted, and the Swiss were no exception. This national characteristic intensified during World War 1 and 11. The Confederation was twice the eye in the center of a hurricane. The rest of the world was plainly insane while the Swiss weren't. Naturally they began to see themselves as somehow different and unique.


In the eyes of the rest of the world, the Swiss myth is based on the Alps plus the five C's: Cows, Chocolate, Clocks, Cheese and Cash. Like most myths, the Swiss one has a certain degree of validity, but is woefully insufficient in supplying essential understanding. The most important failing of the myth is the Cash i.e. Bank aspect. Contrary to popular the Swiss did not, when digging in their gardens a few hundred years ago, discover hidden bank vaults filled with gold, nor did they send out four-color brochures to dictators. Rather, they built their society in a land of extremely limited resources through hard work and cooperation. Living on the edge of more violent worlds gave them a understanding of the need for security, and an idea that saving was preferable to spending on luxuries. This led to the creation of a solid, dependable, honest banking system with a stable currency.

Since this was so radically different than in most countries, the system began to attract deposits from elsewhere. Most of these deposits probably came from honest people living under dishonest governments who naturally wanted to protect the results of their work. Unfortunately the system also attracted funds from many of the dictators and ruling parties in those other countries whose strange financial philosophy was based on theft from the people and then sending the loot somewhere safe.

Since the Swiss believed in both neutrality and privacy this system attracted money without distinction as to its source. For the Swiss it built the service aspect of the economy and gave them huge sources of low priced funds (the stability and security was worth the high charges and the low interest paid) for investment in the local infrastructure and industry. In recent times the abuse has grown greater, particularly insofar as drug and arms dealers' money is concerned.

As well, the rules of the game have changed. Business, finance and banking are now internationally linked. Switzerland must play in this arena and thus must adapt its rules to the new game. Pressure has been particularly intense from the U.S., which sadly acts more and more as a crude and arrogant bully, to bend the rules or suffer the consequences. T here is also more competition, not only from a host of small countries offering hideaways or less than clean cash, but from the fact that there are many more countries today with sound money, good banking systems and plenty of investment opportunities. The Swiss banking system will have to become more like the multinational Swiss industrial companies to survive. In the future it will depend more on the quality, speed and flexibility of its offer than the depth and secrecy of its vaults.


There are certainly plenty of cows in Switzerland, and they are without doubt the most contented in the world, living peacefully on small farms surrounded by one of the loveliest landscapes on Earth. But, contrary to myth, Helvetia is not a farming country with a few artisans weaving watches and carving chocolates in the attic. It is a highly sophisticated industrial country with a higher percentage of its workforce engaged in manufacturing (34,4 percent) than any other western nation except Germany.

Yet the backbone of this industry are not the well known multinationals like Nestlé, Sandoz or ABB, but rather the exceptional number of small and medium size enterprises. It is these diverse enterprises which underpin Swiss prosperity and who also face the most difficult task in future years. The multinationals can easily implant themselves anywhere, shifting production employment and administration according to manufacturing costs or regulatory climate. In one sense they have become a new type of country, but one where loyalty is to a brand name, not the mother earth.

The economies of manufacturing (research, development and marketing) make it ever more difficult for smaller firms to compete. All too often they are forced to merge into the larger groups and then are rationalised out of existence. For the Swiss, this process could be an economic and social disaster, so the firms must adapt much more quickly to changing conditions, searching out market, niches and depending on flexibility and entrepreneurial spirit to keep from being swallowed up. This task becomes ever more difficult; high labor costs make it attractive, even imperative to shift production out of the country, but this creates imbalances in the labor market and tends to reduce the mix of skills that is so essential to a healthy economy.

The key to the survival of Swiss industry is applied human intelligence, closely linked with the most sophisticated robotics and computer integrated manufacturing. The great flexibility of these systems, and their suitability for small production-runs and ability to produce different products without investing in entirely new machine tools is the key to the future.

The interface between the mechanical skills so sharply honed here for centuries and the new electronic and even post-electronic fields is the natural niche for the smaller firms. And applying these combined skills to the new needs of the world economy, particularly pollution analysis and control technology, environmental restoration and appropriate, "non-invasive", energy efficient technology present a fantastic opportunity.


Although Swiss cows are contented, the farmers are concerned, especially when they hear the Swiss mentioning the possibility of adherence to the EC. Recent polls indicate between 48 and 54 percent of Swiss favor joining, with French Swiss much more in favor than their German or Italian compatriots. But among farmers the percentage in favor is, at 20 percent, somewhat less. The reasons are not hard to find. Farmers tend to be more conservative than city folk, thus in a country as conservative as the Confederation ... And farmers are practical. They have a very good deal. Swiss agricultural subsidies amount to more than 7 billion francs a year, so every resident pays more than 1000 francs a year for food than would be necessary in a "free" market.

These policies do not make Switzerland unique. The Common Agricultural Policy of the EC is notorious as an expensive and unsuccessful attempt to deal with the farm "problem". And the USA, despite daily free trade sermons, is hardly different, although some forms of subsidies like reduced property taxes and water supplied at 10 percent of cost they conveniently forget to mention. But food and farmers is a more complex equation than simple subsidies. There are several good reasons to consider keeping a healthy supply of farmers. One is food security. We can get by without a TV but not without food. In the 1988 drought, for the first time in history, the US produced less grain than it consumed. One might rely on their sense of fair play in such a situation but in fact they have several times cancelled export contracts when faced with shortages at home. There is also the policy of using food exports as a weapon. Although on-, could hardly imagine such a situation occurring vis a vis Switzerland, it certainly has with other countries.

Nearly as important is the social question. If the farmers leave the fields, who takes care of the land? What happens to the small villages? Do you hire park rangers who do the job without the incidental advantage of producing food' Do you abandon the small towns and replace them with inner-city ghettos? And what of the real environmental costs? Is it really better policy to buy cheap beef that grazes on slashed and burned Brazilian rainforests or that is destroying the natural vegetation of outback Australia? Does it make sense to buy American wheat whose low price is based on immense inputs of artificial fertilizers, chemicals and absurdly under priced oil? But the real problem in agriculture is twofold: the obstinancy of the farmers and the lack of transparency. Things are changing, if the farmers cannot begin to make a better case than simple resistance, they and the country will suffer. And the people need to knoa exactly what money they are spending or subsidies and why. There is a good case for subsidies to support social goals, such as road: and schools for example.

But in an evolving democracy the case need to he made in the open, not obfuscated through impenetrable regulation. At some point, payments will have to be made more directly. Th farmers don't like direct payments, because somehow reduces their sense of independence. But that is already a fiction. But the best hope for the rural community is moving towards organic or biological food production. Subsidizing chemically intensive production makes no more sense. But subsidized production that restored the health of the land and produced better quality food would be much easier to justify. The farmers must move to the forefront of this process rather than hiding in the barn. It is the only way to insure the viability of their culture.


It has often been said that Switzerland does not have an army, but that it IS an army. Therein lies a certain truth. In 48 hours the Swiss can muster 650,000 men into position ready to defend the homeland. That makes it one of the larger armies in the world. And, it is probably the only real militia on the planet, a citizen army where each soldier keeps his weapon at home and whose permanent infrastructure is supervised by an extremely small group of professionals. In a way, the Swiss army doesn't exist except when needed. But in another sense, it is perhaps the nation's most fundamental institution. In England the old boy network runs up through the private schools, in the US it is centered on the golf course, but in Switzerland, the network is built through the army. This is where people from different cultures and socio-economic groups first have intensive interaction, and relationships are formed and renewed throughout the many years of obligation. You can learn a lot about your fellow citizens by tramping through the mountains and engaging in mock warfare. It's a good way to learn about group dynamics and train for leadership positions. But now the army also faces a crisis, brought about by the absence of an enemy. It first became apparent with the vote of 1989. Thirty-five percent of Swiss voters, in a national referendum, voted to abolish the army. For a non-Swiss the idea that citizens could ever have such an opportunity is nearly inconceivable. And the result was a blast of icy water to the military establishment, reminding them that in Helvetia, the army is part of the community, not something separate and above it. But there are already positive signs of intelligent response. Some of the more outlandish plans for weapons acquisitions have been reduced, and in May the authorities announced plans to reduce service obligations and the eventual size of the army to 400,000.


There was never enough space nor resources to allow Switzerland the luxury of an American style culture based on the cult of individual freedom. Here, freedom had to develop within the context of responsibility to the group. Commitment to quality, order, precision and cleanliness are all part of the Swiss psyche, but the fundamental ideas and reasons for success are those of responsibility and consensus.

In contrast to most countries, where power flows from the top down, in Switzerland it has traditionally flowed from the bottom up. The basic unit is the commune, then the canton, then the confederation. This is gradually, and not necessarily to the benefit of the country, changing, but the principle is still relatively intact. Each person is engaged at the local level to participate in building the community, to develop his skills and to take an active role in decision-making.

With the limits on space and resources, an organised, stable society also depended on an unwritten social contract, that of consensus. Without this commitment to resolve problems the country would never have worked. Things had to be built to last. Roads and other common infrastructure had to be constructed to serve everyone as equitably as possible. Not only do the trains run on time, but public transport serves the entire country. Swiss offspring at work elsewhere in the world can be, assured that their parents in the home village will always have the necessities of civilisation. This principle of equality is part of the constitution, but more importantly, an inextricable part of the common ethic.


One might say that the real Swiss problem is success, for without it there never would have arisen the complacency which now seems so threatening to the society. But looking clearly at the situation, it becomes apparent what is the path towards a sustainable future. Switzerland isolated itself by necessity, to protect its relatively simple but satisfactory way of life from the plagues infecting most of its neighbors. It became prosperous only recently and the prosperity was essentially based on hard work and cooperation. But as elsewhere, so much prosperity in such a short time can quickly ripen, then begin to rot. Natural pride can stiffen into arrogance. Necessary caution can become rigid isolation. Europe is fundamentally changing. The world of today is more interdependent than ever. No one can live as an island. The environment, the life of the planet and all its species are in danger. The Swiss cannot sit this one out. Earlier, they used responsibility and consensus to carve a prosperous humane society out of a mountain wilderness.

Complacency, arrogance and fear should not be allowed to snuff out this essential spirit of creative adaptation, which was manifest in the original pact of the Confederation those 700 years ago on the Rütli meadow. The Swiss are smart enough to remember the value of their heritage without getting stuck to it. They don't need, indeed cannot, continue to live in a shell. The Helvetians are part of Europe and the World. This is no longer a matter of choice but of necessity. They have ample reason, from past accomplishment, to be confident enough to relax, open up and again employ their talent for successfully resolving complex problems. The future demands no less.

By Sterling Doughty, Revised 2001