Reforms set to spark revival

PUBLISHED : Sunday, 01 August, 1993, 12:00am
UPDATED : Sunday, 01 August, 1993, 12:00am

SWITZERLAND'S rejection of membership to the European Economic Area (EEA) may have dented the confidence of the business community, but many analysts believe it will herald economic reforms which will help revive the country from the recession-hit Continent.

One analyst said policy changes should give the country some of the benefits the EEA promised to deliver, including a Gross Domestic Product (GDP) growth of between four and six per cent over 10 years - a far cry from the estimated real GDP of -0.5 per cent growth this year.

Economic growth is expected to begin its recovery over the next few years, with real GDP expected to increase to 1.5 per cent next year and 2.5 per cent in 1995.

If Switzerland had joined the EEA, economic reforms would have been forced. By rejecting the membership, the country has opted for change but change implemented by internal, rather than external, forces.

Membership of the EEA can be seen as irrelevant as long as the country institutes what many say is a long-overdue process of reform.

The GDP annual increases are likely to be higher with any implementation of economic reforms.

With the prospect of healthy economic growth, and an estimated inflation rate of 3.4 per cent for this year (decreasing to 2.5 per cent by 1995), and unemployment at a reasonable 4.6 per cent, fundamental indicators point to recovery for the country.

The rejection of the EEA by the people of Switzerland points to the novel democratic system of the country, a system born out of a federation formed 702 years ago today.

Switzerland's present day federal system retains a strong emphasis on regional autonomy.

Possibly, more than in any other country, the notions of democracy are brought down to a human level.

Participation in the democratic process is not just relegated to general elections. Through referendum, Swiss people have a great say in the way their country is, and has been, shaped.

All Swiss voters have two special rights written into the constitution: the right of initiative and the right of referendum.

Through their right to initiate legislation, if 100,000 Swiss citizens sign a petition, they may propose amendments to the constitution and submit them for the judgment of the whole people and the cantons.

The Federal Council, the equivalent of the British cabinet, is obliged to consider the request and to explain its attitude to the proposal.

Even if the Federal Council and the Federal Assembly both reject the idea, it can still go to a referendum.

If it is then approved by the people and the cantons, it passes into law even without the backing of the Federal Government.

The second special right is to call for a legislative referendum. Within three months of the Federal Assembly reaching a decision on a new or amended law, a petition with 50,000 signatures can demand that the people pass judgment on it. A simple majoritydecides the outcome.

Switzerland has been a neutral country since the 16th century.

Nevertheless, it maintains a well-equipped and extensive army of about 600,000.

National service is mandatory. Armed neutrality is the guiding principle.

It is Switzerland's neutral status that has kept it voluntarily from joining the United Nations, the European Community (EC) and the World Bank.

Apart from its highly developed social systems, modern industry and vibrant participatory democracy, it also boasts some of the most stunning panoramas to be found anywhere in the world.