Swiss Arms Industry

A progressive policy shift on the part of the Swiss government from independence to interdependence in security affairs has affected both on the armed forces and industrial base. Under the Armed Forces XXI restructuring policy, the Swiss Army was cut to 200,000, half the size that envisaged for it in the mid-1990s. And the defense industry had to make up from other defense markets the resulting downturn in domestic defense business. Though facing diminished prospects at home, some Swiss-based defense contractors were actually expanding. Without prejudice to its neutral stance, Switzerland became a member of the UN and of the Partnership for Peace. While this more outward- looking posture led to a greater emphasis on equipment interoperability, Switzerland has joined neither NATO nor the European Union, and some Swiss defense industry executives are concerned that while they may have products that are acceptable within NATO, they lack the governmental and political support enjoyed by their European competitors to turn this to advantage.

Autonomy necessitated domestic weapons production. However, this seemed to be too expensive, and the Swiss armaments industry was further limited by various other factors. The export of weapons was strictly controlled and limited by the government for reasons of neutrality. Since the Swiss Army alone cannot generate large-scale demand, the domestic armaments industry was hard pressed to become cost effective. A history of unfortunate projects in the 1970s underscored the fact that the Swiss market is just too small and the costs too high to justify the production of certain sophisticated weapon systems. Another important aspect of the armaments problem is that a militia army requires rugged, simple weapons in large numbers rather than few oversophisticated systems demanding professional operation.

Direct employment in arms production in Switzerland fell from around 9,700 to 3,700 between 1990 and 2000, according to available estimates. Restructuring of the Swiss arms industry took off only in the late 1990s, involving significant changes in ownership and structure (corporatization, privatization, and internationalization) and further downsizing. The military vehicle company Mowag became part of General Motors (USA) and subsequently of General Dynamics (USA). Oerlikon Contraves, a producer of anti-aircraft systems, was sold to the German company Rheinmetall. RUAG Swiss/Suisse was established as a private stock company from the arms producing companies formerly owned by the Swiss federal government. The production of military-style small arms, however, was practically discontinued. In the autumn of 2000, the diversified industrial conglomerate SIG sold its small arms activities within SIG Arms to two German textile entrepreneurs. Employment cuts following the change in ownership drastically reduced the size of the Swiss-based facilities of the former SIG Arms group.

Weapons and munitions exports were 12 per cent lower in the first half of 2010 compared with the same period in 2009. However, the SFr 728 million ($725 million) worth of arms sold abroad in 2009 was a record high. The figure was an 0.8 percent increase on 2008, which itself was a 55 per cent rise on 2007.

Exporting military supplies such as arms, munitions and military equipment from Switzerland requires the approval of the State Secretariat for Economic Affairs (seco). The Federal Department of Foreign Affairs (FDFA) considers every application on its merits, ensuring that Switzerland meets its international obligations and that international law and the principles of Swiss foreign policy are respected.

By 2010 the Swiss defence industry said restrictive export laws introduced in 2008 had put it at a disadvantage compared to other European manufacturers. Exports were down in the first half of 2010, which some parliamentarians claimed was a consequence of the ban on sales to countries involved in armed conflict or those which “systematically and severely violate human rights”. Centre-right parliamentarians Bruno Frick (Christian Democrat) and Sylvie Perrinjaquet (Radical Party) both submitted motions to the cabinet asking for a comparison of Swiss arms exports laws with those of other countries and for proposals to eliminate any disadvantages.

The goal of the lobby group, Committee for Security and Defence Technology, is to convince the government to put in place a regulatory framework that contributes to the economic survival of arms manufacturers, both state-owned and private. Frick and Perrinjaquet, who are also co-presidents of the defence industry lobby group, say manufacturers are being unfairly punished. They note planned sales in the spring of 2009 to Egypt, Saudi Arabia and Pakistan that had to be scrapped due to the revision of the law. Bruno Frick rejected accusations that he wanted to enable Swiss firms to sell weapons to countries involved in armed conflict or where human rights abuses are common. “Switzerland would only be able to deliver to countries where the weapons will be used for defence purposes, and where human rights are respected. The export of defence technology contributes to security and self defence.”

The cabinet agreed to look into the motions of Frick and Perrinjaquet, a move which reinforced statements made by Economics Minister Doris Leuthard in 2009 ahead of the nationwide vote on a ban of all weapons exports. Campaigning against the ban (which was rejected), Leuthard argued that the Swiss arms exports policy was already “restrictive”. And she said Switzerland would continue to analyse carefully each and every request to sell arms abroad.

Not surprisingly, the prominent pacifist organisation, Group for Switzerland without an Army (GSoA), is opposed to efforts to give the arms lobby more ammunition. “Since the debate about arms exports is no longer in the headlines, there are moves to allow the weapons industry to do anything it wants – to the extent of exporting to states with poor human rights records,” said Tom Cassee of GSoA. According to Cassee, Switzerland is the European leader, per capita, when it comes to arms exports, particularly those to Pakistan. The GSoA initiative "for a ban on exports of war material" was clearly rejected on 29 November 2009 with 68.2 percent against [in the same referendum, a majority of the Swiss backed an absurd and xenophobic initiative to ban minarets].

Without exports, industry would not survive. So that Swiss industry can continue to provide services favourable to the safety of the country, it must be able to resort to exports. The internal market alone is too much small to ensure its survival. Without access to theinternational market, Swiss companies could not cover their costs of production and the costs per unit would be too much high. This is why the Swiss defense industry must necessarily turn to outlets abroad.