Russian money in Switzerland: now the G7 countries are taking on the Federal Council

After the international criticism of the strict interpretation of neutrality, namely the ban on the re-export of weapons and ammunition produced in Switzerland, new problems threaten the Bundesrat. Specifically, it concerns the implementation of the sanctions against Russia. Several sources confirm to this newspaper that the G7 countries, led by the US, are currently doing business with Switzerland.

The G7 is the informal association of the major Western industrialized countries consisting of the US, Canada, Germany, France, Great Britain, Italy and Japan. Apparently, the powerful septet feels that Switzerland is behaving passively and can do much more to implement the sanctions. A letter is being prepared, they say. This includes: many questions for the Federal Council.

For example, to search for assets of sanctioned Russians. Scott Miller, the US ambassador to Bern, recently complained in an interview in the “NZZ” about what he says is a lack of commitment from Switzerland. In addition to the currently blocked CHF 7.5 billion, Switzerland could freeze another CHF 50 or CHF 100 billion in Russian funds, according to Miller. The American focused specifically on the economic department of SVP federal councilor Guy Parmelin.

To be precise: Parmelin’s Secretary of State, Helen Budliger Artieda of the Secretary of State for Economic Affairs (Seco). He was “concerned” about some of their comments and hoped “we can continue to count on Seco as a partner,” the US ambassador said. The Swiss ambassador to the United States, Jacques Pitteloud, also warned this newspaper that relations were “bustling” and that something could be brewing.

The signals from the most powerful economic and military power in the world to Switzerland are clear. The fact that the Federal Council announced in mid-February that no frozen assets of Russian oligarchs would be seized in Switzerland should also have caused problems, according to insiders. A federal working group came to the conclusion that the Swiss legal system does not allow such a thing. In hindsight, this statement was probably clumsy and unnecessary in its ultimate clarity, it can be heard. Also because the Federal Council did not ask anyone about it at the time.

Internationally, the trend is exactly the other way around. Both the US-led “Repo” task force (“Russian elites, proxies and oligarchs”) and the so-called “Freeze and Seize” task force (freeze and confiscate) at EU level are exploring options, Russian funds blocked from use to make them available to Ukraine for reconstruction. Although the legal challenges are known, the political will to find a solution is clearly present, according to Brussels.

The EU is already in the process of creating the right legal basis: Ursula von der Leyen proposed last December to declare attempts to circumvent sanctions an EU-wide crime. Anyone guilty should have their assets confiscated in a simplified manner. The Swedish EU presidency is pushing the bill with determination. EU member states could agree on a position as early as June.

But there is also a lot going on with the intention to use the more than 300 billion euros in blocked reserves of the Russian central bank. In an internal draft document, the European Commission set out variants this week. The most likely is not to seize the central bank’s billions directly, but to invest in the financial markets and skim off the profits. EU officials estimate that with a smart investment strategy a return of around 2.6 percent could be achieved, generating several billion more.

But the most important is the political signal that Russia must pay for its war of aggression against Ukraine.

Seco defends: EU would praise Switzerland for enforcing sanctions

Switzerland, for its part, has so far shown no interest in joining the repo task force despite pressure from the United States. The reason: since the launch of the body, which is still under construction, no other country has joined besides the G7, the Seco writes when asked. In contrast, the EU Freeze and Seize Task Force “regularly participates actively in sub-group meetings”. No further action appears to be necessary: ​​”The European Commission has expressly stated that it very much appreciates Switzerland’s contribution to strengthening the effectiveness of sanctions enforcement across Europe,” said a Seco spokesperson. As for the use of the billions of the Russian central bank, one cannot comment.

Until recently, Seco did not consider it necessary to find out how much Russian state money is in Switzerland. It wasn’t until the Federal Council approved the tenth package of EU sanctions on Wednesday, more than a month after it was approved by EU states, that the Russian central bank was given a new obligation to report local assets. Persons or organizations that own or control such funds must notify Seco before April 12.

Is that enough to absorb the anger of the Americans and the G7 at Bern’s slowness? In the “NZZ” interview, US Ambassador Miller also spoke outright. When asked if Switzerland would be under pressure if it did not want to participate in international efforts to seize Russian funds, he replied: “Of course! Switzerland is used to that. You cannot be a leading international financial center without under pressure from all sides.” (bzbasel.ch)