Corporate Switzerland’s darkest hour since the national airline collapsed two decades ago has given parties on the left and right the scent of an opportunity before October elections.
(Bloomberg) — Corporate Switzerland’s darkest hour since the national airline collapsed two decades ago has given parties on the left and right the scent of an opportunity before October elections.
This week’s showdown in parliament offered a glimpse of their playbook. Building on public discontent over the takeover of Credit Suisse Group AG by UBS Group AG, the right-wing Swiss People’s Party and left-wing Social Democrats joined the Greens in voting down a bill to provide 109 billion francs ($120 billion) in government guarantees.
That rejection was symbolic — given the money had been already granted — but it highlights the risk of a populist turn in a country whose executive is traditionally driven by pragmatism. Criticism of the shotgun bank rescue by governing parties also threatens to further dent Switzerland’s battered reputation as a haven of stability.
“This will influence public discourse and will harm the open, business-friendly climate in Switzerland,” said Michael Hermann, head of the Zurich-based research institute Sotomo.
Both the Swiss People’s Party and the Social Democrats have sought to distance themselves from a deal widely perceived as toxic.
“Once again, taxpayers have to bail out a major Swiss bank,” the People’s Party said in a April 11 statement, bemoaning the failure of the Federal Council.
Like the Social Democrats, the People’s Party has two seats in Switzerland’s governing seven-member executive.
“They play this card very cynically, especially the People’s Party because normally they support big banks,” said Rene Schwok, director of the Global Studies Institute at the University of Geneva. “This is very Swiss because we all accept it: you can belong to government, but can then criticize it.”
Over half of the Swiss population disapproves of the deal and all major parties have a credibility deficit, according to a snap poll after the takeover. More than four in five Swiss also want to see UBS spin off Credit Suisse’s domestic bank to ensure healthy competition in retail banking.
“I don’t see any party profiting from the Credit Suisse issue,” said George Lutz, director of research center FORS and professor for political science at Lausanne University. “In fact, I perceived all parties primarily as helpless.”
Perhaps the party with most at stake is the Greens, whose breakthrough performance in 2019 followed a campaign that tapped into concern about extreme summer heat and melting Alpine glaciers.
With those issues eclipsed by a cost-of-living crisis and the war in Ukraine, the party is seeking to revive its flagging fortunes — and gain a seat on the Federal Council for the first time — by criticizing the bank rescue.
“If climate was a bank, the government would already have saved it,” Green lawmaker Balthasar Glaettli said this week.
Typically in national elections, not many seats change hands, with the main political blocs in Switzerland remaining stable over the past 100 years, according to Lutz of Lausanne University. The contentious banking takeover could also fade from view by October, unless UBS shows early signs of cashing in on its ownership of Credit Suisse, he said.
While public discontent may temporarily squeeze parties of the center-right — such as Finance Minister Karin Keller-Sutter’s FDP — the reverberations from Credit Suisse’s collapse are likely to be less profound than those that followed the grounding of national carrier Swissair in 2001.
“The collapse of Swissair was a much larger and more passionate discussion,” said Schwok.
–With assistance from Zoe Schneeweiss.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.