Swiss Face Dilemma In Pushing Sanctions vs Russia

Russia’s invasion of Ukraine has put Switzerland’s much-vaunted neutrality to the test — and along with it, the country’s traditional role as international intermediary and reputation as a safe haven for the assets of Russia’s richest and most powerful, Jamey Keaten reported for the Associated Press (AP).

Photo Insert: The report states that Switzerland has been the most important destination in which Russian manage their wealth.

The Swiss executive branch stopped short of announcing unilateral sanctions against Russian interests after Moscow’s blistering military action in Ukraine.

Instead, the Federal Council opted to fall in line with the European Union (EU) and pledge that Russian individuals and companies hit with EU sanctions won’t be able to evade them in Switzerland, which is not one of the EU’s 27 member states.

The government said Friday that financial “intermediaries” in Switzerland were now banned from starting new business relationships with 363 Russian people and four Russian companies. Any existing business must be reported to the Swiss economic affairs secretariat.

Further steps are under consideration. The June report by the Swiss Embassy in Moscow said roughly 80 percent of Russia’s commodities trade goes through the Swiss financial services centers of Geneva, Zug, Lugano, and Zurich.

Major Russian energy and commodities firms have offices in Switzerland. According to the Bank of International Settlements, Russian deposits in Swiss financial institutions totaled the equivalent of nearly $11 billion at the end of the third quarter last year.

That represented about 30 percent of the total Russian deposits overseas of nearly $36 billion, according to BIS figures.

While hardly a crackdown compared to other Western sanctions aimed at punishing Moscow for its invasion of Ukraine, the impact could be felt.

The rich Alpine nation has been the biggest recipient of transactions by Russian private individuals — ahead of Britain, Spain, Luxembourg, and the United States, according to a report compiled by the Swiss Embassy in Moscow.

“Switzerland has for years been by far the most important destination worldwide for rich Russians to manage their wealth,” the report said, adding that net transfers of Russian taxpayers to Switzerland totaled $2.5 billion in 2020. The Swiss news agency SDA-ATS reported net transfers of $1.8 billion in the first half of 2021.

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