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EXCLUSIVE INTERVIEW: Swiss Ambassador To UK Eyes EU Regulatory Reach, Says Financial Sector Is Robust

Tom Burroughes

24 October 2013

There may have been a time not so long ago when being a member of the Swiss diplomatic service was a job for those liking a quiet life. However, as the Alpine state has recently been attacked for its offshore status and taken big decisions such as capping the Swiss franc, that life has become noisier.

A man well qualified to put Switzerland’s case to a foreign audience is Dominik Furgler, who is the Swiss ambassador to the UK, having taken up his post this summer. He has plenty of experience in crucial economic and financial areas, having headed the London embassy’s economic mission between 1997 and 2001, a period spanning the dot.com boom, the Asian financial crisis and the 9/11 terror attacks on the US. And to round out his experience and perspective, Furgler took up his current job after four years as ambassador in Egypt, coinciding with the so-called “Arab Spring” unrest that has hit Egypt along with a host of other nations in the region.

So this publication was pleased when it became one of the first UK media organisations to get the chance to speak to Furgler at his office in London’s Montagu Place.

“The main challenges are in the economic field – to increase our economic exchange and investment,” Furgler said.

Clearly, any senior Swiss official is mindful that his or her country is renowned, some would say infamous, for its venerable bank secrecy laws and country’s status as an offshore financial centre. Furgler did not go into all the details of this, but he pointed out that, even though Swiss banking share of the country’s GDP might slip a bit in the shifting financial scene (it is around 10-11 per cent), the country has demonstrated a remarkable stability over the long term.

“I am confident that with all the changes on the financial business that we will not lose out too much. There is huge international competition. We think we have a very good position and advantage,” he said.

Switzerland has had a lot to contend with. Its biggest bank, UBS, famously in 2009 settled criminal and civil charges with the US over helping US citizens evade tax; its oldest bank, Wegelin, had to cease operating in the US and its non-US remnant now works under a new name; Switzerland signed a sweeping multilateral convention on tax co-operation a few days ago, which some reports have seen as a retreat from bank secrecy. On the other hand, it continues to have one of the world’s most stable economies with an unemployment and inflation rate most rival finance ministers would die for. The very appeal of its currency means the Swiss National Bank, to aid exporters, caps it at 1.20 against the euro. And cities such as Geneva and Zurich are hardly losing their international appeal – just ask any banker trying to get their children a school place, for example.

European Union

A big part of Furgler’s work is studying what goes on in the EU, both in terms of Switzerland’s own relationship with it and that of the UK’s as well.

A very current controversy are EU proposals to update the Markets In Financial Instruments Directive, or MiFID, to require non-EU countries’ banks that want to serve EU clients to have a branch in the bloc. The Swiss Bankers Association has warned that up to 7,000 jobs in Switzerland could be threatened by this proposal, as it will weigh particularly heavily on smaller Swiss banks. (To see more about this issue, click here.)

Furgler did not mince his words: “We are not happy about the branch requirement.”

“Our role will be to limit the negative impact of that requirement. It is not clear yet what it will mean in practical terms,” he said.

Such an issue highlights why Switzerland and the UK can often be on the same page when it comes to EU-inspired developments, particularly given the UK’s well-known scepticism and resistance to proposals such as a financial transaction tax, for instance. It is a point he accepts.

Furgler said his office regularly speaks to the City financial community in London and it has many interests in common, such as the extra-territorial impact of EU and other global regulatory/tax/other measures, he said.

“Another area of great interest to us is the whole EU discussion here in Britain. It is a priority of mine to follow what is going on in terms of what it might mean for our own relations with the EU,” he said, citing issues such as a mooted UK referendum on its relationship with the EU. Since before the 1992 Maastricht Treaty debates in the UK that rent the-then ruling Conservative Party asunder, “Europe” has been a hot issue in UK affairs and one that any Swiss diplomat has to follow closely. After all, if Britain were to leave the EU or substantially change its membership terms, where does that leave Switzerland’s own status with regard to it?

“Open access to the EU has always been an important issue for us and not just in the finance area,” he said, saying this applied equally as strongly to sectors such as energy.

“We have all the freedoms the EU has except with freedoms over services, and that’s an issue. It is something we are interested in. For the time being, there are no negotiations about that,” he said.

Beating the drum

“Our embassies have an important mandate to promote the Swiss economy in terms of trade and investment promotion,” Furgler said, pointing out that there are around 30,000 Swiss nationals living in the UK.

The embassy deals with Swiss firms that might have an issue in the UK or UK firms that have a point to make about a Swiss issue; recently, UK-based whiskey producers approached the embassy over the Swiss parliament’s proposed introduction of minimum pricing on alcohol.

“We have here a business hub dealing with trade promotion,” he said, explaining that the hub is a venue for business-to-business meetings, seminars and other gatherings around topics relevant for the Swiss economy.

“We have been allocated a staff position and are about to recruit an investment promotion officer. This is not part of a deliberate aim to change the profile of Switzerland because of what has happened in banking,” he said, referring to the pressures on the country’s banking sector from overseas.

“We aim at supporting the large number of competitive Swiss small and medium sized enterprises wishing to enter the UK market – and vice-versa,” he said.

“We do our best on one hand to correct any misconceptions about Switzerland by explaining how things are. There is the financial part; public diplomacy is also to show that there are other sides to Switzerland,” Furgler continued, citing examples such as prominent Swiss architects, innovative design and a rich cultural scene.

“I think there is still a role to support Swiss investment and in opening doors. Ninety eight, 99 per cent of Swiss firms are SMEs. We see a lot of potential for them to increase exports and are sure that a lot more can be done,” he added.

Furgler may have moved to a radically different position in London from Egypt, but his stint in London this time around is likely to be anything but uneventful.