Swiss Knife Sharpened to Cut Bosses’ Pay

Swiss voters will decide Nov. 24 on introducing a salary cap that would limit the wage spread in companies to 1:12. The economic lobby is nervous – success for the proposal in the referendum is not as unrealistic as once expected.

It wasn’t just the smallholders in the Swiss multinational pharmaceutical company Novartis who were disgusted by a 79-million-dollar farewell package to resigning CEO Daniel Vasella earlier this year. Public outrage was huge.

Two weeks later, Swiss citizens sent a clear message to executives that their increasingly excessive salaries and bonuses would not be tolerated: 68 percent of voters supported the “fat cat initiative” which promised to curb salary excesses and to ban big payouts.

That referendum was more about strengthening shareholder democracy. Once the initiative is fully implemented, shareholders of Swiss companies will have a veto right on payments to executives. Within a one-share-one-vote frame however, concerned shareholders usually get outvoted by large investors.

“The fat cat initiative includes some good aspects. However, it neither helps much in limiting big salaries, nor in providing a solution to unequal income distribution,” argues David Roth, president of the Swiss Young Socialists Party (Juso).

Juso therefore launched the 1:12-initiative which demands that executives’ salaries be capped at 12 times that of the lowest-paid worker in the same company. “No manager should earn more in a month than his employees get in one year,” Juso demands.

Switzerland’s powerful neoliberal lobby had worked hard to prevent the success of the fat cat initiative. After its expensive campaign failed and with the 1:12-initiative already on the horizon, it became increasingly nervous. Further, a referendum on the introduction of a national minimum wage is scheduled in 2014.

Once the poorhouse of Europe, Switzerland has transformed into one of the richest countries on earth. Today, it has one of the highest GDP per capita in the world and unemployment at just three percent.

In terms of income inequality, Switzerland ranks around Europe’s average. According to the freshest numbers, 3.5 percent of the employed in Switzerland are considered working poor, while 11,586 top earners make more than half a million Swiss francs a year.

According to Daniel Lampart, chief economist of the Swiss Federation of Trade Unions (SGB), the growing salary excesses over the past 20 years were caused by the fact that executives’ earnings were increasingly connected to profits and the stock prices of their companies. “The introduction of bonuses allowed managers to divert big amounts of money from the aggregate wages into their own pockets.”

In Switzerland, trade unions are comparatively weak and the number of collective bargaining agreements is low. A national minimum wage doesn’t exist, the relationship between employees and employers clings to the concept of social partnership, and strikes are rare. It is mainly the upper income segment that has been profiting from the increased individualisation of wage policies.

The campaigns for and against the 1:12-initiative have just reached the hot phase. In one corner, there’s Juso, the trade unions and the Social Democratic Party. The opposing side is led by the umbrella organisation of Swiss small and medium-sized enterprises (SGV), with the other economy-related organisations as well as the liberal and right-wing parties on their coat-tails.

If the 1:12-proposal is voted in, only 1,000 to 1,300 mostly big companies with about half a million employees would be affected directly. About 4,400 top earners would face a salary cut.

The opponents’ campaign, which is unable to explain why somebody should earn 30, 50 or 100 times as much as an employee, focuses on warning the public how everybody would be negatively affected if the 1:12-initiative succeeds.

Hans-Ulrich Bigler, director of the SGV, recently said that losses to the old-age insurance system and to taxes could amount to nearly 4.4 billion dollars per year. He argued that tax increases would become inevitable.

A closer look at the concerned study shows that this number is based on a rather unrealistic worst-case scenario. Juso believes the initiative would reduce income inequalities, and elevation of the lowest wages would minimise possible fiscal losses.

Nobody is able to estimate economic and fiscal consequences at this point, as everything will depend on how affected companies would react to a new 1:12-rule. Would they elevate the lowest wages? Would they cut the top wages and use the money for investments? Or would they leave the country, as for example Ivan Glasenberg, CEO of the commodities giant GlencoreXstrata, has threatened?

The Swiss government fears first and foremost for the country’s competitiveness. “There is a real danger that Switzerland-based companies could leave the country, while foreign companies searching for a new location could be deterred by the limitations on high wages and not settle here,” Swiss Economics Minister Johann Schneider-Ammann said at a press conference.

When in 2009 Juso, led by David Roth, began to collect signatures for the 1:12 initiative, nobody expected that the proposal could have real chances for success. “The approval of the fat cat initiative in spring represented a break with the past. After years of deregulation and liberalisation people again started to demand rules for the economy,” Roth says.

Roth is aware of the fact that only one in ten popular initiatives turn out successfully. Nevertheless, he is confident that on Nov. 24, David will win against Goliath.

This report was first published here by IPS Inter Press Service. 

Giant Companies Pinpricked by ‘Direct Democracy’

A Swiss village has decided to reject tax money from the firm Glencore and to instead donate it to charities. Other towns may follow, sending a strong signal to the government to follow the U.S. and the EU and introduce transparency rules for the extractive industry.
 
It’s rush hour in the city of Zug in Central Switzerland as Mrs Sandra Räppli struggles to raise her voice over the traffic noise. About 35 people listen as she lectures about commodity extraction and trading companies based in the city and the neighbouring town of Baar.

Räppli talks about complex company structures and tax optimisation, finally asking the audience: “Could you follow my explanations? Did you understand?” Then she smiles: “You couldn’t? No problem, because that is what those companies intend.”

Once a month, actress Maria Greco slips into the role of Sandra Räppli and guides groups of inhabitants and visitors through the streets of Zug. The canton counts 116,000 inhabitants and more than 30,000 companies, 105 of which belong to the commodity cluster formed by GlencoreXstrata, Northstream, Rusal and Gazprom, to name just a few.

Privileged taxation for holding, domicile and mixed companies brought these firms here. Holding companies are exempt from cantonal income tax, and pay almost no capital tax. Incomes of management companies generated abroad are hardly taxed, too.

Critics say Zug’s tax environment is an invitation to ‘transfer pricing’, a method to allocate a corporation’s net profit before taxation; in other words a means for tax evasion. Despite sales of 214.44 billion dollars in 2012, Glencore paid no tax on earnings at all in the canton of Zug last year.

The commodity cluster as a whole is estimated to have paid only 40 million dollars in cantonal and communal taxes.

Under official secrecy rules, exact taxes paid by Glencore and other companies are not available. Statistics on the number of companies or their employees is also lacking, even at the national level.

“That  lack of transparency is a major problem,” says Andreas Hürlimann, a parliamentarian with the Green-Alternative party in Zug. “Even as a member of parliament I can’t be sure that things are handled correctly if the government on any occasion hides behind the tax secret.”

Hürlimann finds Zug’s tax regulation deeply unfair. “It makes us rich, while people in extraction countries suffer, as the companies evade taxation there.” He says that Zug bears at least some moral responsibility.

At the end of her tour, Sandra Räppli stops in front of Zug’s town hall. “Our politicians are hand in glove with Glencore’s managers,” she tells her audience. “Only if people get active can something be done about these companies.”

Räppli has just ended her second season of city tours. She’s happy that the attendance has remained high – by Swiss standards. Media reports and a campaign run by the Swiss non-governmental organisation Berne Declaration have clearly increased popular interest in the commodity sector.

In the nearby canton of Zurich, these efforts have yielded fruits. Several villages are up in arms against Glencore. The corporation’s flotation on the stock market in 2011 had filled the pockets of CEO Ivan Glasenberg, leading to a huge one-time tax inflow for the canton. That money was redistributed to the communes.

But in several communes, residents were appalled by profiting indirectly from what they call “Glencore’s dubious business conduct abroad.” They collected signatures and demanded that at least 10 percent of the “Glencore money” be donated to charities who support affected communities in extraction regions.

In Hedingen, a village of 3,500, voters approved the donation of 120,000 dollars to charities. Samuel Schweizer, a member of the local citizens’ committee, explained that success to IPS: “Our proximity to Zug was crucial, people could relate to Glencore. Also, we’ve managed to build a broad committee.”

Schweizer explained that donating only 10 percent of the “Glencore money” instead of the whole amount further helped to find a majority.

At least five more communes will soon decide upon similar initiatives. In Affoltern for example, 180,000 dollars are at stake. In Hausen, it’s 80,000 dollars.

There, Franz Schüle of the local initiative committee is optimistic. “We live in a rural area. When I explain that in Colombia the surface of the land belongs to the farmers, while everything below can be owned by extraction companies, people can relate to the problem easily.”

“Direct democracy has hit Glencore,” says Oliver Classen, spokesperson of the Berne Declaration. He’s aware that these communal initiatives are only a drop in the ocean and a one-time effort. “However, Hedingen has a huge political signalling effect,” Classen tells IPS.

This summer, the European parliament introduced the Transparency and Accounting Directives that force mining, oil and gas companies to publish their payments to governments; country by country and project by project. The Swiss government has remained hesitant so far and will present its own measures next spring.

Oliver Classen demands transparency on payments and human rights obligations for commodities companies producing or trading abroad.

GlencoreXstrata neither commented on the tax initiatives nor responded to accusations ranging from tax avoidance to violating basic human rights in extraction countries. Its spokesperson Charles Watenpuhl sent IPS a statement.

“We believe that Glencore’s global presence and economic strength have a predominantly positive impact on the communities in which we operate. We seek out, undertake and contribute to activities and programmes designed to improve quality of life for the people in these communities.

“Glencore’s tax strategy and payments play a vital role in our intention to achieve long-term sustainable development. We are committed to full compliance with all statutory obligations, full disclosure to tax authorities and reporting transparently in the tax payments that we make to the governments of the countries in which we operate.”

This report was first published here by IPS Inter Press Service. 

Europe Failing Syrian Refugees

Refugee rights organisations are demanding an EU-wide temporary protection regime for Syrian refugees. The announcement by some countries that they can take a few thousand refugees is not enough, the groups say.

Sweden has announced a few steps after the number of Syrian refugees seeking shelter abroad has crossed the two million mark in early September.

“The conflict will continue for a long time ahead,” said Fredrik Beijer, director of legal affairs at the Swedish Migration Board. Sweden decided to grant permanent residence to about 8,000 Syrians who currently hold temporary residency permits, and to facilitate family reunification.

Germany and the Scandinavian country have between them received about two-thirds of the Syrian refugees fleeing to Europe. Since early 2012, approximately 14,700 Syrians have asked for asylum in Sweden. In August alone, 1,201 Syrian asylum-seekers arrived in the country.

On Sep. 11, 107 Syrian refugees were flown out of Lebanon to Hanover as part of a temporary admission programme announced by the German government earlier this year. Having committed to 5,000 places, Germany currently runs the biggest refugee relocation programme for the Syria crisis.

In June, the UN Refugee Agency (UNHCR) appealed for 10,000 humanitarian admissions. A group of countries including Denmark, Finland, the Netherlands, Norway and Spain have pledged 960 admissions for 2013 so far.

“Germany is setting an important example,” UNHCR spokesperson Dan McNorton told IPS. “We hope more countries will come forward with similar schemes to help Syrians fleeing the violence.”

Germany’s two smaller neighbours Switzerland and Austria have pledged to accommodate 500 refugees each. Austria’s foreign minister preference for Christian refugees recently drew harsh criticism.

Compared to the hundreds of thousands of Syrian refugees stranded in Turkey, Lebanon, Jordan, Egypt and Iraq, the estimated 40,000 that have applied for asylum in Europe since April 2011 is peanuts.

A comparison with the Bosnian war between 1992 and 1995 makes today’s numbers look dismal. At the time, Germany hosted 350,000 Bosnian refugees, Austria 90,000 and Switzerland nearly 30,000. During the Kosovo war, Germany evacuated more than 15,000 refugees, while Switzerland sheltered 53,000 and Austria 5,000.

The Swiss chapter of Amnesty International calls Switzerland’s present offer “a drop in the ocean.” Austrian and German refugee rights organisations have also criticised their governments.

“Germany’s contribution is yet too small,” Karl Kopp, director of European affairs at the human rights organisation Pro Asyl told IPS, “though, we appreciate that Germany has launched the debate.”

In addition to the 5,000, several German states have announced they will permit up to 1,000 Syrian refugees to stay with their Germany-based relatives. Kopp said that many of these have been trying desperately to get their relatives to come over.

Bureaucratic hurdles for family reunification are high, as Syrians already living in Germany have to prove they can provide for their relatives, host them and pay for their health insurance. “Most of them are unable to do so. But humanity mustn’t fail due to lack of money,” Kopp said.

While Switzerland is facilitating family reunification, too, Austria hesitates to do so. In Austria, upcoming parliamentary elections reduce the willingness of politicians to invite refugees to the country.

Meanwhile, thousands of Syrian refugees are trying hard to find a way into Europe. According to the Italian interior ministry, 3,000 Syrians have already arrived in Italy since the beginning of the year, most of them in boats. At Europe’s other entry gate, Greek coastguards have repeatedly been accused of pushing Syrian refugees back into Turkish waters.

“That is outrageous,” says Kopp. “Europe needs to open legal escape routes. Currently, Europe asks Syria’s neighbours to open up their borders, while its own borders remain closed.”

Anny Knapp, president of the Austrian refugee rights organisation Asylkoordination Österreich says refugees have to turn to the risky and expensive services of people smugglers, as no legal escape routes exist.

“In addition, the Dublin regulation forecloses that refugees can profit from family or community ties in other European states,” says Knapp. According to the Dublin regulation, immigrants may be sent back to the country through which they first entered the European Union.

Knapp’s German counterpart Karl Kopp therefore demands freedom of movement for Syrian refugees within Europe.

Judith Sunderland, senior researcher at Human Rights Watch told IPS that Syrians seeking asylum in other EU member states face a protection lottery, with their fate depending on which country they reach first.

“Those who make it to the EU through external border countries such as Greece, Bulgaria and Cyprus can face problems such as detention, failure to be granted any form of protection, problems with family reunification as well as poor or non-existent reception conditions.”

All refugee rights advocates agree that action at the European level is required urgently.

Kopp finds it “absolutely pathetic” that three years after the beginning of the Syria crisis the EU still doesn’t have an active admission programme. In June, the European Commission had called upon its member states to provide resettlement or humanitarian admission places, to facilitate family reunification and “to admit any Syrians arriving at the external borders of the Union.”

The European Commission also promised to continue efforts to ensure a greater degree of convergence between member states’ approaches to the Syrian refugee crisis. Yet it is far from providing a concerted solution like a EU-wide temporary protection regime, repeating its failure during the Libya war in 2011.
Instead, tons of tents and blankets are sent to Syria’s neighbour states. “Even though they think that the Syrian refugee crisis can be contained regionally, it has in fact long reached Europe,” says Kopp. “The catastrophe’s dimensions render such an approach not just absurd, but highly cynical.”

This report was first published here by IPS Inter Press Service. 

German Sun Beats Swiss Water

Water power is the backbone of Alpine countries’ energy supply. Despite its important role in Europe’s energy shift, further development of hydroelectric infrastructure in Austria and Switzerland is on hold.

On sunny, windy summer days in Germany, when millions of solar panels soak up the sun and wind turbines run at full speed, the German electricity network can’t cope with the overcapacity. Especially on Sundays, production often exceeds demand. The result is low prices, at times even negative ones; which means customers get paid for buying electricity.

Europe’s energy market is liberalised. What happens in Germany affects all its neighbours. Swiss hydropower stations are unable to compete under these conditions. The heyday of Swiss water power is over.

The energy source that covers 55 percent of the country’s energy supply faces drastically reduced profitability, as electricity prices have sunk 20 percent again compared to the preceding year.

In the light of this market environment, the biggest Swiss energy producers Alpiq, Axpo, BKW and Repower are less willing to invest in optimising and enlarging their infrastructure. Repower has announced a 35 percent cut in investments in the next 10 to 15 years.

Andreas Meyer, media person at Alpiq, told IPS that the massive subsidies for renewable energy have destabilised the market, putting in question the profitability of hydro and thermal power stations and blocking further investments. Currently, Alpiq runs a divestment programme. The company is worried that the price deterioration will continue.

Further development potential of Swiss water power is disputed. While the government estimated four to five terrawatt hours, the World Wildlife Fund assessed only 1.5 terrawatt hours. In any case, the potential is quite low.

Nevertheless, Switzerland subsidises small hydropower stations with a capacity of less than 10 megawatt massively, irrespective of their efficiency and the ecological damage they may cause.

Due to the subventions, small water power projects have become cash cows. The WWF demands that these subsidies be stopped. “Building new power stations at previously unspoilt waters is absolutely silly,” water expert at WWF Switzerland Christoph Bonzi tells IPS. Today, 95 percent of Swiss water is used for energy production.

For once, conservationists and the leading energy suppliers take a common stand on the Swiss subsidy model that favours small hydropower projects. “Isn’t it absurd that subsidising new renewable energy leads to a situation where even other systemic technologies need to be subsidised?” says Werner Steinmann, spokesperson for Repower.

The boom of solar and wind energy in Europe has lead to increased demand for electricity storage, as both energy sources are unsteady. Germany, Switzerland and Austria agreed last year to increase the capacities of pumped-storage hydropower plants in a concerted effort.

Several such plants are currently being constructed in the Swiss Alps. Whether these investments will finally pay off is more uncertain then ever.

Some Swiss energy companies don’t oppose all state subsidies for renewable energy. Repower’s biggest shareholder is the Canton of Grisons. Recently, the canton’s chief councillor Mario Cavigelli broke a taboo when he demanded subsidies even for electricity produced in big hydro power plants. Cavigelli asked for cutting money granted to small hydropower projects.

Within the energy sector, that demand is disputed however. Axpo’s media person Daniela Biedermann says that it can’t be a solution to solve the mistakes of the current subsidies regulation with additional subventions. “We need to discuss how to implement the new renewable energies into a market-oriented system instead,” she told IPS.

The Swiss Association for Water Management (SWV), which represents the industry, demands that subsidies for hydropower may no longer be limited to small projects and that instead the relevant criteria would have to be efficiency, an aspect that the current subsidy system completely ignores. The SWV wants promotion for those projects that produce the most electricity per subsidy-dollar.

Conservationists are less happy about the various further demands voiced by the water power industry though. In the name of “national interest”, water power companies have been trying to tap even nationally protected waters. Instead of using even the last drop of water for electricity production, the WWF prefers to increase energy efficiency.

Just across the border, the Austrian hydropower industry struggles with similar problems. Currently, about 60 percent of the country’s electricity supply is covered by domestic water power. The industry once intended to increase its capacity by seven terrawatt hours until 2020.

“We surely won’t be able to meet up with our expectations,” says Ernst Brandstetter, spokesperson of Oesterreichs Energie, which represents the interests of the Austrian electricity industry. According to Brandstetter, only an additional four terrawatt hours until 2025 are realistic. “Unfortunately, many projects are on hold. The industry is about five years behind its development plans.”

Brandstetter explains that regarding water power stations, the current market situation is characterised by acute insecurity. “Many planned projects are economically no longer justifiable.” Oesterreichs Energie doesn’t demand subsidies. It however wants a more investor-friendly environment.

“Most worrying is that even storage projects are about to become unprofitable,” Brandstetter adds. “Along with the electricity networks, pumped storage hydropower plants are the most important enablers of a renewable energy future.”

Ernst Brandstetter demands a stop to market distortions by introducing a European market design with rules granting all energy sources fair competitive conditions.

For Switzerland’s and Austria’s hydro power industry, much depends on developments at the European Union. On that level, a consultation on Environmental and Energy Aid Guidelines 2014-2020 is currently under way. Whether or not Alpine hydropower may profit from the new guidelines will be seen next spring.

This report was first published here by IPS Inter Press Service. 

Geothermal Energy Stuck in a Hole in Switzerland

An accident in a flagship project threatens the future of geothermal energy in Switzerland. The mishap that was followed by earthquakes has come as a warning that geothermal deep drilling still has a long way to go. It occurred in a project in the eastern Swiss city St. Gallen earlier in July brings a new setback, after earlier accidents.

In 2010, 83 percent of St. Gallen’s voters approved a 160 million Swiss francs (172 million dollars) credit for a flagship geothermal project. A geothermal power station was expected to cover the electricity needs of 3,000 to 5,000 households eventually and provide heat for half of the city’s buildings. In early July, drilling was concluded up to 4,450 metres depth, and extraction tests prepared.

On Jul. 19 around noon, the engineers’ nightmare happened: they unexpectedly encountered gas in the drilling hole, which raised the pressure. The leak was closed and water was pumped into the hole to reduce the pressure. Next morning, St. Gallen was shaken by an earthquake that measured 3.6 on the Richter scale, followed by dozens of micro-earthquakes.

Since then, all eyes are on the city in Switzerland’s east. Engineers have managed to stabilise the drilling hole. Further test drilling has been cancelled. Decisions on the project’s future will be taken after thorough review. Damage to earthquake-affected buildings and infrastructure was negligible, but the reputation of geothermal energy has suffered considerably.

Geothermal energy is significant in Switzerland’s energy shift. It has already found wide use especially for heating buildings. However, Switzerland wants to use its underground also for electricity production, expecting it to contribute 4.29 GWh annually by 2050, which is about 7.5 percent of the country’s electricity consumption. So far, no geothermal power plant exists on Swiss soil.

Switzerland is not Iceland, where the required heat can be found only a few hundred metres below the surface. Here, the necessary minimum temperature of 100 degrees Celsius is found at a depth of 3,000 metres or more. Drilling such deep holes is a technical challenge, and also costly.

“An average geothermal power station costs around 80 to 100 million Swiss francs, around 75 percent of which is for the drilling,” says Peter Meier, CEO of the Swiss company Geo-Energie Suisse AG. His company is pushing for pilot projects in order to prove technical feasibility and economic viability.

But Switzerland’s geothermal efforts have suffered several major setbacks. A first project “Deep Heat Mining Basel” in the northwestern city Basel led to a series of earthquakes reaching up to 3.5 on the Richter scale in 2006, causing damage to buildings and infrastructure. The project was aborted.

A so-called petrothermal system was used in Basel. This is applied if no adequate thermal water resources are available. Petrothermal systems create artificial underground heat exchangers by cracking rock.
 Alternatively, hydrothermal systems use natural thermal water resources in the depth. As such resources first have to be found, costly test drilling is necessary, and success is not guaranteed.

Following the abortion of the geothermal project in Basel, the city of Zurich invested 20 million Swiss francs (22 million dollars) into hydrothermal test drilling in 2009. The drilling did not cause seismic activity, but proved unsuccessful.

No water in the required amount and temperature was found; the hole could not be used for the anticipated electricity production, but only for heating.

Despite those two failures earlier, expectations of geothermal energy had remained high in Switzerland.
After the failure in Basel, experts had claimed that with improved technology, seismic activity caused by geothermal drilling would become insignificant. A different technique was used in St. Gallen, but that promise turned out to be false.

“Deep heat mining plays a significant role in Switzerland’s energy shift,” Elmar Grosse Ruse, project manager for climate and energy at the World Wildlife Fund (WWF), told IPS. Along with all other major environmental organisations, the WWF supports geothermal energy.

Ruse said that the future of the technology in Switzerland depends on whether and how the project in St. Gallen continues.

“The worst case would be if the project was aborted or if no adequate thermal water resources could be found,” he said. Drawing the curtain over geothermal energy after a few unsuccessful efforts would be premature, he said.

“Honestly, no drilling, not even in tunnel construction, is entirely without risks. If we as a society decide to pull out of much riskier technologies such as nuclear power and to drastically reduce our CO2 emissions, we have to accept the minor risks of alternative technologies,” the WWF project manager said.

Meanwhile, Peter Meier’s Geo-Energie Suisse AG is searching for locations for petrothermal power stations. “We have learned from Basel,” he told IPS. Geo-Energie Suisse has always said that with drilling seismic activity may occur. “Our advanced technology leads to reduced seismic activity though, as our drilling technique disperses the pressure on many, already existing fissures in the rock.”

Technically, the incident in St. Gallen will not affect Meier’s projects. “We use a different method in a different rock.” Unlike in St. Gallen, most Swiss geothermal projects target crystalline rock.

Nevertheless, Meier is aware that in the near future, he’ll have to do a lot of additional persuading.
WWF’s Grosse Ruse said that it might be better to plan geothermal power stations further away from densely populated areas. The dilemma however is, that waste heat users may then be too far away.

“Heat can be easily transported, hence that’s not a decisive factor,” countered Meier. His company nonetheless targets such less populated areas, but for other reasons. The CEO stressed that it isn’t about using nearby inhabitants as guinea pigs, but points at another factor: “Insuring potential damages in cities would be way more expensive.”

This report was first published here by IPS Inter Press Service. 

Swiss Doorways to Refugees Narrow

Once more, Swiss voters have lashed out against asylum seekers, further tightening the country’s already strict asylum law. The government has meanwhile announced a radical restructuring of the asylum procedure.

Switzerland’s asylum law exists since 1981. Since then, one reform chased the other, all of them to the disadvantage of those seeking asylum in the country. The aim of the ten law revisions so far is evident: make Switzerland as unattractive as possible for poor immigrants.

On Jun. 9, 78 percent of Swiss voters approved new measures to keep asylum seekers out. Switzerland had been so far the only country in Europe to allow asylum seekers to apply at Swiss embassies. Now, Swiss voters have closed that unique door.

The facility had offered a safe path to exile, especially for endangered women and children who could avoid dangerous trips and people smugglers.

The government says the provision attracted too many requests, leading to a huge administrative effort. In 2012 Switzerland registered 7,667 such applications. Since 2006, Justice Minister Simonetta Sommaruga has said, only 11 percent of these asylum seekers were allowed to travel to Switzerland, and 40 percent of these were finally granted asylum.

Since 2005, thousands of Eritrean refugees have found a way to Switzerland. In 2012, they filed 15.4 percent of all asylum requests. Many young, male Eritreans fled the dictatorship of Isaias Afewerki and compulsory, sometimes infinite military or state service. About two-thirds of them were granted asylum for being conscientious objectors. Now that will no longer be a sufficient reason for asylum.

Swiss voters have also paved the way for a major restructuring of the asylum process. As Swiss cantons struggle to accommodate asylum seekers, the state has demanded extra powers to provide accommodation in its own infrastructure such as unused military bunkers. The government can now use its infrastructure as asylum centres for three years without the approval of the concerned cantons and communities.

On Jun. 14 Sommaruga laid out the details of her restructuring project. Its main aim is the acceleration of the asylum procedure. Under the new procedure, 60 percent of all asylum requests should be conclusively dealt with within 140 days, the remaining 40 percent within a year.

The Swiss Justice Minister intends now to centralise the system that’s now scattered all over the country. Transporting asylum seekers from cantonal accommodations to the federal interrogation bureaus and back has been costing money and time.

Taking the Netherlands as an example, Sommaruga’s vision is to build a small number of big asylum centres, where all concerned administrative actors are present. Also, 60 percent of asylum seekers would be hosted by the government and only 40 percent by the 26 cantons. For that, the government needs to create at least 3,000 more accommodation places.

The Justice Ministry will carry out a two-year test phase at a centre in Zurich, starting 2014. “It makes sense to probe the new procedures in practice and collect experiences, before it is introduced comprehensively,” Sommaruga said at a press conference earlier on Mar. 25.

The details of the test system aren’t entirely clear yet, but it is being ensured that no more than 300 asylum seekers stay in a centre. The centres are likely to consist of detention cells to facilitate direct deportation of those denied asylum.

Human rights groups are watching the ministry’s efforts closely, and with concern. They agree on a need to accelerate procedures. “However, the Justice Minister’s project will mainly speed up Dublin cases and asylum requests with potentially low chances,” Moreno Casasola, secretary general of the refugee rights organisation ‘Solidarité sans frontières’ tells IPS. The ‘Dublin cases’ are asylum-seekers who can be sent back to the first European country where they were registered, under an EU agreement reached earlier in Dublin.

Casasola thinks that speeding up is needed for those asylum seekers who have a good chance of being granted asylum. Such asylum requests are often suspended for months or even years. “If the government wants more efficiency, it should simply decide upon these requests instead of leaving them in the drawer.”

In Casasola’s view, the government doesn’t want positive asylum decisions because it fears a pull effect that may attract even more immigrants. “Sommaruga plans to accelerate only unpromising, baseless asylum requests for one sole purpose: deterrence.”

Along with the accelerated procedure, the Swiss Justice Minister plans to offer asylum seekers free legal advice and representation. “In principle, that’s a good idea,” Melanie Aebli, secretary general of the ‘Democratic Lawyers Switzerland’ (DJS) tells IPS. But Aebli fears that the government will place the legal advice office in the new centres “probably right besides the bureau for return advice.”

DJS and other refugee rights groups want the legal support promised to asylum seekers to be situated far from the asylum centres, and be identifiable as clearly independent. Aebli says the accelerated procedure will put a lot of pressure on the asylum seekers, because they will hardly be given enough time to collect evidence to present their case and to organise themselves.

Further, the government plans to cut the appeal period for original asylum decisions. “Already 30 days meant a lot of stress for legal representation, cutting it to ten days is highly problematic as there’s hardly time to work out a substantial appeal,” says Aebli.

This report was first published here by IPS Inter Press Service.  

Asylum Seekers Housed Where Eagles Dare

Struggling to accommodate all its asylum seekers, Swiss authorities have turned to unused army quarters. Some of these lie on mountain passes, far away from inhabited areas.

Last year, 28,631 persons asked for asylum in Switzerland, nearly twice as many as 2010. Most applicants came from Eritrea, Nigeria and Tunisia. At the end of March 2013, 44,478 persons were registered at the Federal Office for Migration (FOM), which is responsible the asylum process.

Swiss authorities struggle to accommodate all the immigrants. It’s a home-made problem however, as former justice minister and prominent right-wing politician Christoph Blocher initiated a drastic reduction in the country’s asylum infrastructure in 2006.

Reacting to the shortage, the Swiss government in March 2012 ordered the Federal Department of Defence, Civil Protection and Sport (DDPS) to provide accommodation for 4,000 asylum seekers. The DDPS oversees the Swiss Armed Forces, which have plenty of unused infrastructure.

Nevertheless, the DDPS efforts were slowed by political adversities, building restrictions and non-conformance with communal spatial plans. The parliament therefore passed a resolution allowing bypass of communal and cantonal permission procedures.

Swiss army quarters often are located in very remote areas. However, many citizens are glad to see asylum seekers accommodated far away from populated areas. That atmosphere is the result of more than a decade of right-wing populist campaigns against foreigners and asylum seekers in special.

Before they are distributed to the cantons, the FOM hosts asylum seekers in its own collective centres. Due to the urgent need, remote accommodations seem right for the FOM, even if they pose logistical challenges.

One of these temporary accommodations was opened last October near the village Sufers in the Grison Alps 1,400 metres above sea level. “The asylum seekers live in an old, bleak bunker in a narrow valley,” says Denise Graf of Amnesty International, who recently was allowed to visit the place. “There are no houses nearby, just trees and heaps of snow.”

As in all FOM centres, asylum seekers may only stay outside between 9 am and 5 pm. An army barrack serves as a recreation room. For the weekend, they may leave the centre. “To compensate for their spatial isolation, they are given free tickets for public transportation on weekends. However, the next bus stop is several kilometres away from the bunker,” Graf tells IPS.

“Contact between Sufers’ 130 residents and the 80 asylum seekers is rare,” says the village’s mayor Thomas Lechner. “The centre is two-and-a-half kilometres away from the village.” Asked if he considered an underground bunker a suitable place for asylum seekers, the mayor says: “People are in there for a maximum of 35 days. For army troops, it was handled this way as well, so I guess it’s also reasonable for asylum seekers.”

As the centre in Sufers was closed in the end of April, IPS couldn’t speak to any of its inhabitants. However, former inhabitants of other remote asylum centres have spoken of extreme boredom, which sometimes raised the potential for conflicts.

“It is very difficult to live in bunkers, especially with limited freedom of movement,” says Moreno Casasola, secretary general of the refugee rights organisation ‘Solidarité sans Frontières’. “As you can also see from soldiers’ experiences, it negatively affects your mind quickly.”

The FOM was aware of that, so Sufers and other villages in the valley were asked to provide work opportunities. “It was a win-win situation for the asylum seekers as well as for our commune,” says mayor Thomas Lechner. “They prepared firewood, renovated hiking paths and cleaned wood pastures.

“Indeed, many asylum seekers have welcomed work opportunities. It has raised their acceptance and improved their reputation among locals,” says Amnesty’s Denise Graf. “However, it’s definitely no solution to place asylum seekers in such remote areas in the mountains.”

Because the centre in Sufers has closed, another temporary centre will be opened on the Lukmanier Pass, which connects the cantons of Grisons and Ticino. There, up to 100 asylum seekers will be accommodated once the snow has melted.

“We decided to lend a hand to the FOM,” Peter Binz says. He is the mayor of nearby Medel, the municipality to which the mountain pass belongs. Medel has 400 inhabitants, its main village Curaglia is 15 kilometres away from Lukmanier Pass.

“We approach the issue with a certain respect and openness,” Binz says. Currently, he collects ideas for work opportunities. “They’ll use the bus and our shop, but besides that there won’t be many contacts with the asylum seekers,” he estimates.

Quite soon, the FOM may announce the opening of yet another asylum centre at Lago della Sella 2,256 meters above sea level. The artificial lake is located near Gotthard Pass, which connects Switzerland’s North to the Italian-speaking South.

Lago della Sella belongs to the municipality of Airolo. Its mayor Franco Pedrini is worried: “Nobody lives up there. It’s a beautiful place just fine for a one-week holiday camp, however the climate is rough. It’s not suitable for asylum seekers.”

Even though the centre at Lago della Sella would only be used in summer, it isn’t unusual that snow falls even in July or August. “A little remote would be fine and please citizens who fear the asylum seekers’ presence,” Pedrini says, “but that’s just way too far from any civilized area.”

‘Solidarité sans Frontières’ radically opposes remote asylum centres. “These are human beings, not cows that are brought to the mountains in summer,” its secretary general Moreno Casasola says. He points at other options. “The FOM only relies on the DDPS to provide accommodations. They need to expand their range of partners and include for example clerical institutions, which own plenty of suitable real estate,” Casasola argues.

André Durrer, who works for the relief organisation Caritas, also shakes his head. He prefers asylum centres in urban agglomerations. “For 20 years, we have run asylum centres within populated areas without fences around them and private security standing guard. And it has worked,” he says.

“By providing good assistance and conditions for the asylum seekers, no increased security arrangements are needed like at FOM-centres,” Durrer argues.

This report was first published here by IPS Inter Press Service. 

Commodities Trade Haven Faces Protests

The powerful Swiss commodity sector is under fire here, as citizens fed up with government inaction on charges of corporate corruption, tax evasion and lack of transparency gear up for major protests.

Switzerland is anything but a country rich in raw materials but it is, nevertheless, a major hub for international commodity trade, hosting some of the world’s biggest commodities companies such as Glencore (which specialises in power generation, steel production, oil and food processing); Xstrata (copper, zinc, aluminium, nickel and coal-fired electricity), Vitol (which ships oil products like gasoline, diesel, jet fuel and metals, as well as ethanol and chemicals) and Mercuria (dealing in oil and energy products).

Swiss-based companies are estimated to have a share of 15 to 25 percent of the global commodities trade.
Data provided by the industry reveals that 60 percent of the global metals and coffee trade is done in Switzerland. In sugar, the Swiss sector has a market share of 50 percent and in crude oil and grains it makes up 35 percent of global trade.

Against this backdrop, Swiss critics are preparing for a chance to voice their grievances with these massive commodities giants at the second annual Financial Times Global Commodities Summit to be held in the city of Lausanne, about 60 kilometres northeast of Geneva, on Apr. 15.

Organisers describe the official conference as an “unparalleled” opportunity for executives of the world’s biggest investment banks, trading houses and natural resource entities to come together and debate, network and strategise about the future of world trade.

But protestors say the summit “is a symbol of exploitation and speculation”. “While the companies’ profits increase, the local population in mining countries suffers from environmental damage, expulsion, tax avoidance and anti-trade union measures,” Yvonne Zimmermann of MultiWatch, a broad coalition of NGOs, trade unions and anti-globalisation organisations, tells IPS.

An alliance of two-dozen organisations is calling for a demonstration to coincide with the arrival of businessmen in Lausanne on Apr. 15. Speaking on behalf of the protest organisers, Alwin Egger tells IPS the march, which is expected to draw hundreds, will move towards the Hotel Beau-Rivage Palace, where the summit takes place.

A member of the anti-globalisation Association for the Taxation of financial Transactions and Aid to Citizens (ATTAC), Egger says, “In our opinion, it’s the people who should have control over extraction and trade of raw materials, not profit-oriented companies.”

Over the last decade, the commodities business has grown exponentially in Switzerland. In 2011, its net receipts from trade added up to 20 billion Swiss francs (or 21 billion dollars), contributing 3.5 percent to the country’s gross domestic product (GDP). While some corporations are only involved in either commodity trade or extraction, most of them offer services throughout the entire supply chain.

For more than a century, commodity companies have flocked to Switzerland to avail themselves of the country’s low tax rates and the privileged corporate taxation system. Holding companies, for example, are exempt from corporate income tax on cantonal and communal levels as long as they own shares in foreign companies only. Besides, Switzerland offers strong banks, political stability and a high standard of living.

That the country wasn’t a member of the United Nations until 2002 was another factor behind its popularity, as it allowed Switzerland-based companies to avoid U.N. embargoes and sanctions.

The commodities business is known for its discreetness. But as of late, that peace has been disturbed by NGOs such as the Berne Declaration (BD), which published a groundbreaking book in 2011 to shed light on some of the dubious practices the sector constantly engages in.

Accusations range from human rights abuses, ecological destruction, exploitation, to corruption and tax avoidance in developing countries. In 2012, for instance, NGOs accused Glencore of buying copper from intermediaries in the Democratic Republic of Congo that was extracted partly using child labour and under precarious conditions.

Entitled “Commodities – Switzerland’s Most Dangerous Business”, the book found that “trade in oil, gas, coal, metals and agricultural products – particularly via deals made in Geneva and Zug – has grown by an incredible 1,500 percent since 1998…The result: Seven of the twelve corporations with the highest turnover in Switzerland trade in…or mine commodities.”

“As more information becomes available, attentiveness to the issue grows” — and so does criticism, observes Zimmermann, adding that a media spotlight on these practices has dealt a harsh blow to the industry’s public image.

But Economics Minister Johann Schneider-Amman opposes specific, national regulations for the commodities sector. “We don’t want to treat our companies any stricter than other, competing locations do,” he said at a press conference, echoing the standard argument issued every time the corporate tax system is in the line of fire: that Switzerland cannot afford to have companies relocate elsewhere.

For critical experts like Classen, this excuse is not valid since “there are no unregulated alternative business locations” anywhere else in the world.

The Swiss Federal Council has proposed a consultation draft for a transparency regulation similar to the 2010 Dodd-Frank Act in the United States, section 1504 of which obliges companies to disclose their payments to governments for access to oil, gas and minerals. It is still unclear, though, whether payments of commodity trading companies will be included in the Swiss draft regulation.

Fearing new regulations, the Swiss commodities sector has ramped up its lobbying efforts. Associations representing the industry have popped up in the main commodity trading hubs of Geneva, Zug and Lugano.
Glencore recently invited Swiss parliamentarians to hear an explanation of its “engagement for sustainable business, for the health and safety of its employees and for the environment”. Media and NGOs were denied access to the closed-door meeting.

“The sector is concerned that it has become the subject of attentiveness and debates,” says MultiWatch’s Zimmermann, who protested against the recent lobby event.

“As a reaction to criticism, these companies have started to publish sustainability reports”, she said, which whitewash their practices and portray themselves as charities.

Voluntary Regulations “Inadequate”

BD Media Director Oliver Classen says these companies also put Switzerland's reputation at risk. “The negative image of Glencore, Vitol or Mecuria affects Switzerland the same way that the misconduct of the Union Bank of Switzerland (UBS) and Credit Suisse have in the past.” UBS alone has coughed up 1.5 billion dollars in fines for its part in the fraudulent fixing of the Libor rate, the agreed international rate of exchange between banks.

The Swiss Federal Council’s recently published “background report” dedicated to Switzerland's commodity sector has been criticised as “inadequate” for failing to suggest serious measures for solving or preventing fraudulent or criminal activity, though it does identify “challenges” such as human rights violations or fighting corruption.

“The report proposes only voluntary corporate initiatives, which is politically naïve,” the Bern Declaration claims.

For example, the Federal Council highlights the importance of the international Extractive Industries Transparency Initiative (EITI), which promotes revenue transparency on a local level by asking companies to publish their transactions with governments of member states, who in turn are expected to disclose how much they receive.

Calling the initiative “necessary, but insufficient”, Classen laments that the EITI is voluntary, with only 20 member states.

“Many important mining countries – such as Angola or Colombia -- where Swiss-based companies are very active, aren't EITI-members,” explains Classen.

Furthermore, the transparency initiative only deals with commodities extraction, but not with trade.

“Misconduct such as Glencore's aggressive tax avoidance in Zambia is neither covered, nor sanctioned by the EITI,” according to the Berne Declaration.

 This report was first published here by IPS Inter Press Service.

Switzerland Checks Mercenaries, Partially

The Swiss government has presented a draft law regulating the private military industry but critics argue the law is toothless.

On Mar. 24 2010, a newly founded holding company was registered in Basel’s commercial register. Its name was Aegis Group Holdings AG. A few months later, on Aug. 2, it was noted that the holding had taken control over the London-based Aegis Defence Services Ltd.

AEGIS describes itself as “a leading private security and risk management company.” As such, it has been providing its services worldwide, including in war-torn countries such as Iraq and Afghanistan.

The company’s relocation caught the government as well as the public by surprise. More private military companies (PMCs) were expected to move to Switzerland, trying to profit from the country’s political stability, low business taxes and its peaceful and neutral image.

PMCs do not differ legally from any other security provider, and firms active in conflict zones are hard to identify in the commercial register. The Federal Department of Justice and Police estimates that the country is home to 20 such companies.

Switzerland has a long history of sending poor farmers as mercenaries to European battlefields. In the late Middle Ages, Swiss cantons took the role of the brokers. The decline of the mercenary business started in the 18th century and ended with the introduction of Switzerland’s federal constitution in 1848. From 1859 on, fighting on foreign battlefields was no longer permitted.

Thereafter, ‘neutrality’ became a fundamental element of Switzerland’s foreign policy and in a mythologised way a central piece of Swiss collective identity. The arrival of Aegis was seen by many as a threat to the country’s neutrality.

Swiss politicians pushed for establishment of a new legal frame for registration and licensing of private security companies. Josef Lang, then national councillor and a leading voice in the Group for Switzerland without an Army (GsoA) demanded a national ban of PMCs.

Swiss Justice Minster Simonetta Sommaruga announced a national “ban on mercenary companies” on Jan. 23. She said Switzerland would no longer serve as a base for activities that violate human rights. But what was announced as a ‘ban’ turned out to be an ineffectual regulation.

The draft law provides for notification and a ban on certain activities – but not of PMCs themselves. It forbids firms or holding companies based in Switzerland to “directly take part in hostilities within an armed conflict abroad.”

“In plain language, this means that the new law allows so-called security companies to act within armed conflicts abroad and to indirectly take part in hostilities,” says Josef Lang. “Anyone believing that in the heat of the battle anyone will differentiate between ‘direct’ and ‘indirect’ participation has no clue of today’s wars.”

Ulrich Petersohn, senior researcher at Zurich’s Centre for Security Studies (CSS) says that in international law the definition of ‘direct participation in hostilities’ is vague and subject to debate. “And where does self-defence end?” he asks. “Obviously, there’s a twilight zone.”

Petersohn points to a realistic dilemma: “What applies when a military compound guarded by PMC personnel is attacked?”

The new draft law also bans PMCs from “conducting any activities which encourage the commission of serious violations of human rights.” Josef Lang says: “Does that mean that encouraging light human rights violations is permitted?”

The Green Party politician believes the law cannot force Aegis to leave Switzerland. “They’ll simply promise to not directly take part in hostilities in conflict zones and to do nothing to encourage serious human rights violations.” It remains unclear how Swiss authorities could control mercenaries’ activities on the ground.

Albert A. Stahel, Director of the Institute for Strategic Studies based in the town of Wädenswil near Zurich believes that Switzerland’s attractiveness to foreign PMCs may get reduced, but that those already present will not be constrained. “The Federal Council should have proposed a clear a priori ban of PMCs, thereby clearly stating that we don’t tolerate any companies which take part in wars,” he tells IPS.

Petersohn also does not see significant legal constraints coming up for Aegis. “However, the sharpest weapon of the draft law is that on suspicion, lawsuits can be filed.” Companies are eager to avoid negative publicity, and that could put them under pressure, Petersohn says.

Lang holds up the strict regulation in Norway as example. “Instead of forbidding certain hardly definable activities, it would be more feasible to apply a more controllable criteria. Norwegian companies aren’t permitted to carry weapons in foreign countries.”

At the international level, Switzerland along with the International Committee of the Red Cross had launched a process leading to the ‘Montreux Document’ in 2008. This intergovernmental document signed by 44 states contains a compilation of good practices but is not legally binding.

Unexpectedly, the law proposed by the Swiss government does not stick to the suggested good practices. The Montreux Document advocates measures to guarantee transparency in authorisation such as oversight by parliamentary bodies. The Swiss draft law leaves out all transparency measures.

The law would, though, oblige Switzerland-based PMCs to sign the International Code of Conduct for Private Security Service Providers (ICOC-PSP), a self-regulatory framework that 592 PMCs have signed.

Stahel considers this approach useless, because there’s no sanctioning mechanism. Petersohn is hopeful that such codes may lead to development of norms that get some degree of compulsion.

ICOC-PSP primarily serves the image of its signature companies and keeps other service providers at a distance. Petersohn stresses that violations of the code nevertheless risk naming and shaming campaigns.

The Swiss parliament will debate the draft law, but isn’t expected to make it any harsher. “A step in the direction was taken,” says Stahel. “However, the glass is still only half full.”

This report was first published here by IPS Inter Press Service.  

Davos Puts Protests Behind

Barbed wire and safety fences are dismantled, the police and army are withdrawn and freedom of movement is restored. The 43^rd annual meeting of the World Economic Forum (WEF) ended last month with negligible protests against the ‘global leaders’.

Every year in late January, the Swiss mountain town Davos is temporarily turned into a fortress. On the streets, policemen, soldiers and bodyguards outnumber unarmed citizens by far.

More than 2,500 ‘global leaders’ met in Davos this year “to improve the state of the world.” as the WEF claims. It’s difficult to make much sense of this year’s motto ‘Resilient Dynamism’. Nevertheless, a lot was discussed, much optimism spread but no decisions taken; at least in front of the cameras.

Even though temperatures were frosty, sunshine reigned at this year’s annual meeting. At least from the business perspective, the global economic crisis is receding. “The worst is behind us. The optimism for recovery is there,” Axel Weber, chairman of the board of directors of the scandal-ridden bank UBS proclaimed.

Meanwhile Davos mayor Tarzisius Caviezel couldn’t stop raving about the WEF’s economic importance for Europe’s highest city: “The pictures broadcast throughout the world are invaluable advertising for Davos.”

Indeed, visual publicity was much worse a decade ago – trashed fast food restaurants, broken windows, a martial police presence, clouds of tear gas, peaceful protesters beaten and showered by water cannons.

This year, barbed wire was cleverly covered by large white canvas. The security personnel’s only challenge was to guide the countless SUVs and limousines through the town’s narrow streets.

A decade ago, thousands of protesters challenged the ‘global leaders’, threatening to shut down the World Economic Forum. It wasn’t just about expressing alternative opinions in Davos, but about chasing the rich and powerful out of town. “Wipe out WEF” was their slogan.

In past years the police did everything possible to keep protesters away from Davos, and put up with riots in other Swiss cities. Whoever tried to travel to Davos was stopped; trains and coaches were blocked in the lowlands.

About 50 people joined a rally in Davos. Rolf Marugg, secretary of the local Green Party was pleased, though he had expected more. “It’s important that we as locals protest against the meeting, the order of the globalised economy and the often dirty doings of the WEF participants,” Marugg said.

Pointing at the WEF’s rather vague motto, the Green politician said that the world doesn’t need dynamism and resilience but a slowdown and change. “The current crisis proves that those self-appointed global leaders’ only ability is to drive economy, society and the environment against the wall. ‘Resilient Dynamism’ therefore only means to keep up the current crisis system by any means possible.”

Over the last few years, small demonstrations are tolerated in Davos; they no longer constitute a threat. The rally went almost unnoticed. Additionally, Greenpeace temporarily shut down a Shell gas station, criticising the company for planning to drill for oil in the Arctic. In another token protest, three activists approached the congress centre with smoke flares to protest against the exploitation of women in the global economy.

A decade ago going up to Davos in late January was on every left-wing activist’s agenda. David Böhner, now in his forties, was a leading figure in Switzerland’s anti-globalisation movement. “Our protest was fundamentally anti-capitalist and directed against the increasingly powerful multinational corporations,” he said.

“Any social movement needs some kind of point of reference. In our case, the World Economic Forum provided a suitable projection screen.” At that time, no meeting of the G8, the European Union or the WTO was safe from resistance protests.

Böhner didn’t travel to Davos this year. “The demonstrations against the WEF don’t interest me any more.” The political capacity to ignite has long gone, he said, and a ritualised form of protest carries little potential.

It was in the early 2000s that opposition was loudest and most radical. Even though the authorities were quick to deflect from political content by nurturing a debate on violence at the protests, it was then when the activists’ arguments were most heard.

“Another major reason for the decline of the anti-WEF movement surely was the police repression,” David Böhner added. The turning point was in 2004, when 1,082 demonstrators were held in the freezing cold in the town Landquart, 40 kilometres from Davos, after violently being pulled out of a train by the police.

The authorities succeeded, because disputes flared up within the movement. Mobilising for demonstrations in Davos became senseless, unwise and unattractive. In the following years, increasingly smaller rallies were held in other Swiss cities.

Meanwhile, the WEF facilitated media access and invited ‘civil society leaders’ to their debates to counter critique. The Open Forum to run parallel to the WEF was invented.

But despite its polished image, the World Economic Forum remains a dubious platform for politicians and business leaders to consult behind closed doors, far from any accountability. The official programme is just one side of the coin.

On behalf of the World Economic Forum, Nicholas Davis argues that if every meeting was made public, nothing would get decided. “Some conversations – over delicate or sensitive issues – frankly have to be held behind closed doors. Our aim is to be as open as possible without jeopardising our mission to improve the state of the world.”

This report was first published here by IPS Inter Press Service. 

Dubious Awards Presented at Davos

Only a stone’s throw from the Davos World Economic Forum meeting, a group of non-governmental organisations presented the annual Public Eye Awards this week to Goldman Sachs and Royal Dutch Shell.

Every year in late January, a pilgrimage of a special kind can be observed in Grisons, Switzerland’s easternmost canton. Limousine after limousine, SUV after SUV and helicopter after helicopter head to Davos, the highest city of Europe. At the local congress centre, the preciously dressed pilgrims unite to renew their belief in unregulated, free market capitalism and to “improve the state of the world,” as the World Economic Forum (WEF) proclaims.

This year, ‘Resilient Dynamism’ is the motto of the global leaders’ gathering. Besides the official programme though, many participants will use the platform to hold informal meetings. Business and political interests mingle behind closed doors.

Only a ten-minute walk from the Davos congress centre, a few dozen people attended the presentation of the Public Eye Awards, a critical counterpoint to the WEF since 2000. “On the occasion of the WEF, we annually put the spotlight on corporations who cause problems, violate human rights, destroy the environment, act corruptly and push people into poverty and misery,” says Andreas Missbach on behalf of the organisers.

In order to take the wind out of the Public Eye sail and to slightly open up to the public, the WEF started in 2003 to organise its own counter event, the Open Forum. Nevertheless, the Public Eye has survived and this year once again presented two recipients for their ‘awards’.

As a result of an online voting process, the public award went to the Anglo-Dutch oil and gas company Royal Dutch Shell. Shell’s search for oil in the Arctic drew voters’ criticism. “There is no safe drilling under sea ice conditions, Shell gambles with the wildlife and beauty of one of the last unspoiled regions on our planet,” said jury member Andreas Missbach before handing the award over to Greenpeace executive director Kumi Naidoo.

Naidoo, whose organisation had nominated shell for the voting, said he didn’t want the award sitting in his office in Amsterdam. He promised to find Shell’s CEO Peter Voser at the World Economic Forum to present him the award.

Greenpeace is running a major campaign to prevent oil drilling in the Arctic. Naidoo addressed the Anglo-Dutch company directly: “We as Greenpeace will come after you peacefully, but aggressively until you get out of the Arctic.”

Christian Brütsch, an independent political analyst specialised on energy issues doubts that Shell can be pressured to disengage from the Arctic region soon. “The U.S. Geological Survey assumes one-fifth of the global undiscovered conventional oil and gas resources to be in the Arctic, and Shell has invested 4.5 billion dollars to prepare offshore drilling in Alaska so far.”

Brütsch said that if activists really wanted to prevent the exploitation of natural resources in the Arctic, they should target consumers. “Energy companies will only leave the region if the demand for oil sinks to a level where Arctic adventures would become unprofitable.”

However, as long as the current situation prevails, Brütsch prefers to see big energy companies in the Arctic. “Statoil, Exxon Mobil or Shell are much more capable of financing ‘same season relief wells’ (needed if leaks appear) than smaller corporations.”

Andreas Missbach stressed that Shell has been the only company so far to win the Public Eye Award twice. Back in 2005, the multinational was shamed for its activities in the tropics.

Missbach said that Shell’s investments in extremely damaging tar-sand extraction in Canada and the fact that the company had dropped renewable energy from its long-term strategy had further contributed to again nominate Shell for the prize.

The American investment bank Goldman Sachs received the jury award. The Public Eye jury argued that the company bears a large share of responsibility for the Euro-crisis.

“Goldman’s derivative deals, which fudged Greece’s way into the Eurozone, pawned the future of the Greek people,” said Missbach.

Former bank regulator and academic William K. Black, who attended the awards presentation, stressed that Goldman Sachs wasn’t just a singular rotten apple in a healthy bushel of banks. “Goldman Sachs is the norm of systemically dangerous institutions,” he said.

Black blamed the World Economic Forum for spreading the myth that fraud by corporate elite was rare. “They have pushed deregulation, de-supervision and de facto decriminalisation.”

Expert on business ethics Ulrich Thielemann said the dogma of profit maximisation itself leaves no room for moral integrity. “It’s the paramount cause for irresponsible corporate behaviour,” he said. “Ruthless competition that disregards human rights and environmental standards via non-regulation and the race to the bottom in standards of good corporate conduct must come to an end.”

Does naming and shaming companies have any use? Missbach admits that such an award by itself changes nothing. But within a campaign, he says, such a shame prize might be a useful tool. “Those organisations who nominated the award winners may use the prize to attract attention.”

Political analyst Christian Brütsch is far less convinced about naming and shaming campaigns. He points out that the names of the decried companies always remain the same. “Some corporations can afford to simply ignore criticism,” he says. Others would just increase their PR budgets, Brütsch argues.

Greenpeace’s Naidoo regards the awards as a means contributing to reduction of a company’s relational and reputational capital. He’s sure though that none of these powerful corporations will react to the criticism. “However, the failure to respond is a very loud confirmation that our accusations are true.”

This report was first published here by IPS Inter Press Service.

Wage Dumping Hits Switzerland

The Swiss parliament has decided to tackle wage dumping in the construction sector. With the introduction of chain liability, general contractors can soon be held accountable for labour agreement violations by their subcontractors.

Eight euros per hour instead of 27.5 euros guaranteed by the collective labour agreement is what some technicians of a Slovenian company working at Messe Basel have declared they earn. A new exhibition hall is being built there at a cost of nearly 360 million euros.

Time pressure is extreme, delays are considered a catastrophe. Up to a thousand labourers work day and night with the new hall due to open its doors at the end of April when Messe Basel hosts ‘Baselword’, the globally leading exhibition in the watch and jewellery sector.

The Slovenian technicians working on the façade are at the bottom of a chain of several subcontractors. Swiss general contractor HRS Real Estate has been charged with the work. But HRS denies accountability for the wage abuse, claiming it can’t control the payroll of its subcontractors. The owner of the building, MCH Messe Basel, holds HRS, responsible as its prime contractor.

The buck is passed around, and there are several victims: The workers don’t earn what they deserve, correctly employed labourers face pressure on their wages, and properly operating companies are confronted with unfair competition.

In Switzerland, that phenomena is called ‘wage dumping’. Labour unions say it has drastically increased over the past few years. It’s a result of the opening of the Swiss labour market to EU citizens which started in 2002 when the Agreement on the Free Movement of Persons came into force.

The agreement allows EU citizens to reside and work in Switzerland. Employees and self-employed persons working in Switzerland for less than 90 days don’t need permission, but they have to register with cantonal authorities. Since 2002 immigration from EU countries is on the rise.

In 2004 the Swiss government introduced ‘accompanying measures’ to protect employees from violations of labour and wage agreements. These include observation of the labour market and on-site controls of work conditions. However, several legal gaps remained.

This summer the Swiss parliament cracked down on fake self-employment. For the labour unions that wasn’t enough, as the problem of wage dumping by subcontractors remained.

Swiss minister for economic affairs and former entrepreneur Johann Schneider-Amman admits that the problem is getting bigger and bigger. “Interventions in the liberal principles of the free labour market are only permissible in cases of massive malpractice,” he says. “Unfortunately that’s the case.”

Swiss labour unions have demanded laws making general contractors legally accountable for misconduct by its subcontractors, so-called ‘chain liability’. General contractors are only freed from responsibility if they can show to have ensured that their subcontractors abide by the law.

The neo-liberal lobby along with the Swiss Employers’ Association has launched a much weaker counter-proposal. They want general contractors to be freed of any legal responsibility if their direct subcontractor simply signs a contract pledging to respect Swiss wage and labour conditions.

Last summer, Switzerland’s Council of States adopted chain liability. Then, it was the National Council’s turn. In the debate, advocates of chain liability could not only count on support from the Federal Council, but also from a number of liberal entrepreneurs.

One of these was Hans Grunder, a Bern representative of the Conservative Democratic Party (BDP). He explained that not quality, but prices had become the most important criteria in bidding procedures. “As a result, subcontracting assignments often go to foreign companies, leaving our enterprises at unfair competition,” he said.

Grunder was supported by the Green Party’s Alec von Graffenried, who works for a major construction company. He argued that since general contractors are already accountable for prices, schedules, quality, safety and environment protection, it was only logical that they would also assume responsibility for their subcontractors’ conduct.

Corrado Pardini, Social Democrat and unionist, said that strengthening instruments against wage dumping would ensure public support for free movement and residence of EU citizens, which is crucial for Switzerland’s economic prosperity. “Continuing abuses of wage and labour conditions will increase xenophobia,” he warned.

The right-wing Swiss People’s Party (SVP) again played an ambivalent role. Its representatives rejected chain liability. The strategy is well-known: public outrage against foreign workers is exactly what the SVP utilises to draw support for their populist policy and their latest popular initiative ‘Stop mass immigration’.

Finally, the National Council adopted chain liability. Labour unions applauded. Nico Lutz, responsible for the construction sector at Switzerland’s largest inter-professional trade union Unia said that companies as well as workers would profit. “It’s important however, that chain liability won’t be watered down during implementation.”

His opponents at the Swiss Association of Builders (SBV) hope for limited additional bureaucracy and promised to play a constructive role in the implementation process, even though they still doubt the practicability of chain liability. “It remains unclear how prime contractors can check the payrolls of their subcontractors’ subcontractors,” SBV media officer Matthias Engel says.

Engel also thinks that chain liability could lead to less law-abiding subcontractors because they know that for any violation the general contractor would be held responsible. “Chain liability will be like the sword of Damocles hanging over the general contractors,” he said.

Both employers as well as labour unions call for better controls on construction sites. On behalf of the builders, Matthias Engel calls for a badge system for workers which would regulate access to construction sites and in addition tackle problems such as fake self-employment and black labour. Unia’s Nico Lutz demands that sanctions should be aggravated and that in case of well-grounded evidence of wage dumping, entire construction sites could be halted.

In Basel, chain liability seems to find premature appliance. For the Slovenian façade technicians, the story may end well. In order to polish their image and avoid any delays of construction, MCH Messe Basel and its general contractor HRS promised in late December to step in over the outstanding salaries their subcontractor is supposed to pay.

This report was first published here by IPS Inter Press Service.