Switzerland’s Growing Soft Power in SA
By Dr. Srimal Fernando
The ties of South Asian (SA) nations with Switzerland and countries of Oceania and the South Asian region’s economic dynamism and potential for world economic vitality has drawn worldwide attention in recent years. Diplomatic ties between Switzerland, India and its southern island neighbour, Sri Lanka have progressed at the working level in a wide range of fields while developing long-standing ties in the economic sphere.
Since establishing diplomatic ties, Switzerland and India have been sharing a multidimensional relationship of cooperation and friendship. Since India’s Independence, India and Switzerland have had cordial and friendly relations based on shared values of democracy and the policy of non-alignment. Foreign policy neutrality led to a close understanding between the two countries. The Indo-Swiss Treaty of Friendship, signed in 1948, laid the foundation for a strong bilateral economic relationship.
The Treaty of Friendship proposed by the First Prime Minister of India Shri Jawaharlal Nehru, is a sign of his appreciation for Switzerland which speaks of “perpetual peace” and “unalterable friendship”. Three years ago, in 2018, Switzerland and India celebrated seventy years of their Indo-Swiss Bilateral Friendship Treaty. As provided by the Treaty itself, it set the pace for further treaties: the Double Taxation Treaty in November, 1994; the amendment protocol in 2010; and the Promotion and Protection of Investment Treaty in July 1997. In the mid fifties, Swiss companies made their first major investment in India.
The India-Switzerland Joint Economic Commission was set up in 1959. While there are over three hundred Swiss companies operating in India, ninety per cent of these businesses came to India after 1991. Switzerland is home to high-end technology while India produces world class human capital. Switzerland is the eleventh largest foreign investor in India and India is one of Switzerland’s most important trading partners in Asia.
All Swiss investments in India are in the field of innovation and sustainability. In 2020, Switzerland’s exports to India were US$11.57 billion according to the United Nations COMTRADE database. Switzerland is the world’s largest and best gold refining center and transit hub with fine quality gold that consumers prefer to buy. Almost half of India’s imports of the yellow metal in 2020-21 were Swiss gold to the value of $16.3 billion.
Both nations have several mechanisms of bilateral dialogue in place. The fourth India-Swiss Financial Dialogue was held this year. In a bid to embolden the trade and economic cooperation between the two nations, India and Switzerland are in the process of negotiating the Trade and Economic Partnership Agreement (TEPA). Its key drivers have been the economic engagement along with innovation, science and technology. India, as one of the world’s arms importers is a big market for Swiss defence firms. As part of its Energy Strategy 2050, Switzerland has decided to take steps to improve energy efficiency and boost the share of renewable energy. The Swiss Development Agency’s sole focus in India is on climate change.
There is a thriving tourism industry between both nations. Prior to 2020, both India and Switzerland were great tourist attractions. While India’s tourism industry has been booming for decades, Switzerland is an immensely popular destination for tourists. Hence, tourism development policies merit greater diplomatic attention. In 2019-2020, there were 280,000 Indian tourist arrivals to Switzerland.
Founded in 1985 and having offices in Zurich, Switzerland and Mumbai, the Swiss-Indian Chamber of Commerce (SICC) is widely recognised as a key player in advancing economic ties between India and Switzerland. Swiss-Indian Chamber of Commerce has set up the Indo-Swiss Centre of Excellence in Pune which will focus on: low energy buildings; sustainable water and waste solutions; and renewable energy. Since establishing diplomatic ties seventy years ago, the relationship between India and Switzerland has seen a striking development.
Switzerland continues to promote firm relations with Sri Lanka in a broad range of fields. Since establishing formal diplomatic ties between Switzerland and Sri Lanka sixty-five years ago, both nations have undergone notable changes to their foreign policies. Reviewing the pros and cons of Switzerland and Sri Lanka’s existing ties will undeniably be of interest to foreign policymakers. From a bilateral point of view, it is vital that the two countries continue with a firm position on foreign policy which is not altered whenever there is a regime change.
A look at the current foreign relations shows that Switzerland remains among the principal investors in Sri Lanka with over 14,000 Sri Lankans working for Swiss companies (Swiss Agency for Development and Cooperation, 2015). The other important story worth mentioning in this age-old connection is that there are nearly 50,000 Sri Lankans living in Switzerland.
Sri Lanka’s post-conflict phase altered the nation’s approach in handling its foreign affairs with Switzerland which began a new era in bilateral relations. Economic diplomacy became an important feature in the strong ties between the two nations with Sri Lanka becoming more prosperous. During the past years, in order to promote prosperity and to create sustainability, Swiss companies have established various business ventures in Sri Lanka such as: A. Baur & Co. Ltd.; and Colombo Mövenpick Hotel owned by Mövenpick Hotels & Resorts of Switzerland.
In addition to trade and investments, Switzerland also plays a significant role in Sri Lanka’s tourism industry. Tourist arrivals from Switzerland have steadily increased with over 20,000 Swiss tourists visiting the island nation annually (Estimates, 2018). Recognising the need for close ties, a priority area of Switzerland’s assistance to Sri Lanka has been financial aid. A good example of this well-respected European nation’s aid diplomacy is its annual provision of about seven million Swiss francs (CHF) in foreign assistance and funding programmes to Sri Lanka during the post-war recovery period.
Switzerland in SA
In this context, with improved mutual understanding and enhanced interdependence in a broad range of fields. Under these circumstances, it is important that Switzerland plays a positive role in all spheres to attain peace and stability in the region while working to build much closer ties with India, Sri Lanka and other South Asian nations. Switzerland’s relations with India, Sri Lanka and other nations of South Asia have entered a new era.
About the Author:
Dr. Srimal Fernando received his PhD in the area of International Affairs. He was the recipient of the prestigious O.P. Jindal Doctoral Fellowship and SAU Scholarship under the SAARC umbrella. He is also an Adviser/ Global Editor of Diplomatic Society for South Africa in partnership with Diplomatic World Institute (Brussels). He has received accolades such as 2018/2019 ‘Best Journalist of the Year’ in South Africa, (GCA) Media Award for 2016 and the Indian Council of World Affairs (ICWA) accolade. He is the author of ‘Politics, Economics and Connectivity: In Search of South Asian Union