The Debate over Swiss Investment Control Intensifies
In response to growing concerns over foreign acquisitions of Swiss companies, the Swiss Federal Council reluctantly submitted a draft law for state investment control to Parliament in late 2023. This move was prompted by a motion from Parliament calling for stricter oversight, particularly in sensitive sectors where foreign takeovers could pose risks to Swiss national security and supply chains.
Expanding the Scope of Control
While the Federal Council’s initial proposal was limited in scope, the National Council significantly expanded the draft legislation in September of this year. The key development was the extension of the control regime to cover all foreign buyers, not just those with close ties to foreign governments.
This legislative initiative aligns with a global trend towards prioritizing national security over economic openness. Recent geopolitical tensions, such as the conflict between China and the West, Russia’s actions in Ukraine, the COVID-19 pandemic, and the energy crisis, have heightened the need for investment controls.
Unexpected Opposition in the Senate
Despite the momentum behind the Swiss investment control project, it now faces unexpected resistance in the Senate’s Economic Affairs Committee. A majority of the committee members, with an 8-4 vote, have recommended against further consideration of the draft law. Their rationale includes concerns that the proposed control measures could hinder foreign direct investment in Switzerland, invite retaliatory measures from other countries, infringe on cantonal autonomy, and overlook the fact that critical infrastructure is already predominantly publicly owned.
This shift in stance raises questions about whether there has been a change in sentiment among senators since a narrow majority supported investment control in 2019, or if the committee’s position is not reflective of the Senate as a whole. Expert testimonies during the hearings primarily featured critics of the legislation, suggesting that in specific cases, such as the acquisition of Syngenta by a Chinese company, the proposed law may not have been applicable.
Uncertain Senate Dynamics
Despite the committee’s opposition, the outcome in the Senate remains uncertain. The pivotal role may be played by centrist senators, led by Pirmin Bischof, who chairs the Economic Affairs Committee. While Bischof advocates for consideration of the draft law, he favors scaling back its scope, particularly by focusing on acquisitions involving state-affiliated foreign investors.
There is ambiguity within the centrist group regarding their stance on the legislation. However, there is a leaning towards supporting the bill, potentially with amendments closer to the Federal Council’s initial proposal. The origin of the investment control project can be traced back to a motion put forth by Beat Rieder, a centrist senator from Valais, who also advocated for restricting the control regime to state-affiliated foreign investors.
Call for Assistance for Steelworks
Amidst the debate on investment control, another pressing issue has emerged – the crisis facing Swiss steelworks. The acquisition of the Gerlafingen steel plant by the Italian Beltrame Group, which has owned the Swiss facility for nearly two decades, has been relatively uncontentious. However, both Gerlafingen and the Swiss Steel-owned Emmenbrücke steel plant are struggling due to global steel market challenges, EU trade barriers, high energy costs, foreign subsidies, and economic downturns.
Unlike the investment control debate, the majority of the Senate’s Economic Affairs Committee supports state intervention to aid the steel industry. Several proposals for government assistance have been endorsed, ranging from immediate measures for Gerlafingen to a broader transitional financing scheme for the steel sector’s ecological transition.
As discussions on safeguarding Swiss steelworks intensify, questions arise about the extent of state protection needed for large-scale enterprises. While some advocate for comprehensive support for all firms with a significant workforce, others argue that national security considerations make the steel industry a special case, and current overcapacities could be reversed with strategic interventions.
Possible measures to support steelworks include reducing electricity grid fees, prioritizing environmentally friendly suppliers for public contracts, including steel and aluminum plants in climate-friendly investment programs, and exploring alternatives to winter energy reserves.
Conclusion
The debate over Swiss investment control and state support for steelworks reflects the complex interplay between economic interests, national security concerns, and global market dynamics. As Switzerland navigates these challenges, the decisions made by the Senate will have far-reaching implications for the country’s industrial landscape and foreign investment landscape.
FAQs
1. What sparked the debate over Swiss investment control?
The debate was triggered by concerns over foreign acquisitions of Swiss companies, particularly in sensitive sectors, prompting calls for stricter oversight to safeguard national security and supply chains.
2. Why is there opposition to the draft law in the Senate’s Economic Affairs Committee?
The committee members cite potential negative impacts on foreign direct investment, retaliatory measures from other countries, infringement on cantonal autonomy, and the predominantly public ownership of critical infrastructure as reasons for opposing the draft law.
3. What measures are being considered to support Swiss steelworks?
Possible measures include reducing electricity grid fees, favoring eco-friendly suppliers for public contracts, integrating steel and aluminum plants into climate-friendly investment programs, and exploring alternatives to winter energy reserves to support the struggling steel industry.