Federalism

Abstract

This chapter focuses on Swiss federalism. Federalism allows the division of power between one central and many regional governments and is therefore a widely used institutional arrangement in multicultural societies. But rather than just focusing on local and regional autonomy and differences, Swiss federalism also allows for collective participation and coming-together for the purpose of joint problem-solving. Federalism thus understood and practised has helped bridge the gap between different cultural communities. In difference to other countries, not so much competition and regional rivalries than rather solidarity and mutuality characterise Swiss federalism. Key expression of this solidarity is a sophisticated system of fiscal equalisation made up of both vertical (top-down) and horizontal (inter-cantonal) payments.

3.1 Institutions

3.1.1 The Swiss Interpretation of Federalism

Until the time of the French Revolution, Switzerland was not a nation, but an ensemble of cantons bound together by several treaties. In modern terms, we could define this as a system of small, independent states united by an international treaty. Since all the cantons claimed to be autonomous or sovereign states, common decisions in this loose confederation had to be unanimous. All the decisions proposed by the assembly of cantonal delegates, the Tagsatzung, had to be ratified by all the cantons. After the civil war of 1847, the question was how to create a single political unit out of this multi-state system in order to guarantee political autonomy whilst Switzerland’s neighbours were forming modern nation-states and to provide a common market for its growing industry.

An obvious answer could have been to fuse the cantons into a single, larger territorial state just like European monarchies—such as Italy and Germany—had in the mid-nineteenth century. This solution, however, was impossible for two reasons. First, the Swiss people had already experienced a unitary state between 1798 and 1803, when all power was in the hands of a central government. This model, imposed by revolutionary France, was at odds with the tradition of the Swiss people who were—and mostly still are—rooted in their cantons. The idea of such a system was therefore not feasible—it was inconceivable that the Swiss people, who had successfully re-decentralised in 1803, would (re)establish a unitary system 50 years later of their own free will.

The second reason why that solution would have been impossible to achieve is even more important. As described in Chap. 2, the creation of a common government for Switzerland was highly controversial. Fought out between Conservative Catholic andRadical Protestant cantons, the latter’s struggle for political unification succeeded only after the short civil war of 1847. A peaceful solution for successful nation-building, however, had to take into account the interests of the defeated Catholic minority (Bonjour 1948, Ch. 7; Kästli 1998, 23–176).

Thus, the creation of the Swiss state was destined to follow a middle path between the unsatisfactory status quo of a loose confederation and a unitary state desired by nobody. It was also an institutional compromise between Conservatives, who were hostile to centralisation, and Radicals, who favoured a federal government strong enough to take the necessary decisions in the common interest (Ernst et al. 1998). The Constitution of 1848 proposed the creation of a central authority by the cantons, who were to renounce part of their sovereignty as individual states. Nowadays, we would probably not accept the logic of such a divided sovereignty—logically there cannot be two supreme powers. Politically, however, it was the common understanding of the fathers of the Federal Constitution that the cantons had not lost their sovereignty, but merely part of their responsibilities. Crucially, they retained a substantial degree of autonomy as well as a say over future divisions of power between the federation and the cantons. This solution rested on three factors:

• 1. The Swiss people had already experienced a federal system, when in 1803 the Mediation Act imposed by Napoleon restored cantonal powers to the former unitary Helvetic state.

• 2. Between 1831 and 1848, some of the cantons had not only established revolutionary forms of direct and representative democracy, but also developed and realised the idea of ‘constitutionalism’ (Kölz 1992, 301–540). This meant the establishment of a basic political order voted by the people, granting limitations and separation of legislative, executive and judicial powers, personal rights and freedoms, and procedures for amending the Constitution. Cantons also kept their own constitutions, which form the basis of their political autonomy and statehood.

• 3. The American Constitution successfully combined federalism with democracy, a crucial issue at the time. Doing so required an adequate reconciliation of two different, even contradictory, principles of decision-making: democracy follows the idea of ‘one person, one vote’ whereas federalism seeks to grant equal influence to member states regardless of population size.

After the victory of the advocates of a Swiss federation in the civil war, the drafting of the Federal Constitution in 1848 and its ratification by a majority of people and cantons were achieved within a few months. Thus, Switzerland became not only the first continuously functioning democracy, but also the first modern federation in Europe.

Since 1848, the Swiss federal system has consisted of three levels: federation, cantons and communes. Each of them has a certain degree of autonomy, legal powers and responsibilities, the right to levy their own taxes, and the cantons have their own constitutions. Under the terms of the Federal Constitution, communes, cantons and the federation cooperate with each other. All are bound to guarantee the democratic election of their authorities and decision-making. Furthermore, they must respect the principle of separation of legislative, executive and judicial powers. Until today, the Swiss are citizens of their commune, their canton and the federation—in this order. They elect authorities and vote on policies at all three levels, exercising their rights and fulfilling their duties based on federal, cantonal and communal law (Aubert 1967, 510–894; Aubert and Mahon 2003, 379–455; Vatter 2018, ch. 4).

3.1.2 The Division of Powers Between the Federation and the Cantons

The cultural diversity of the Swiss cantons, their political power and their claims for autonomy set narrow limits to central authority. In 1848, the powers of the federation were limited to a few essential areas (Dardanelli and Mueller 2019). Its most important tasks were to handle foreign relations and protect Swiss independence by maintaining an army and to ensure peaceful relations among the cantons. Moreover, the federation wasauthorised to mount a federal postal service, provide a common currency and abolish cantonal customs duties. Looking at the current distributionofresponsibilities between the federation, the cantons and the communes in Box 3.1, we find that the responsibilities of the central government have considerably increased with the passage of time. Nevertheless, Switzerland remains one of the most non-centralised states worldwide.

Box 3.1 The Main Powersof the Federation, the Cantons and the Communes

• A. Division of powers between federation and cantons

	Exclusive legislative power with federation	Legislation by federation, implementation by cantons	Legislation shared by federation and cantons	Exclusive legislative power with cantons
Foreign affairs	X
Defence	X
Police				X
Civil and criminal law		X
Tariffs, currency and monetary system	X
Trade, industry and employment			X
Agriculture			X
Roads			X
Railways, aviation and nuclear energy	X
Postal services, communications and media	X
Utilisation of hydropower			X
Basic education				X
Professional training		X
Research and universities			X
Social security and health			X
Environmental protection		X
Churches				X

• B. Responsibilities of the communes

• Construction and maintenance of local roads

• Local public transport systems

• Gas, electricity, water supply and waste services

• Local land-use planning, construction permits

• Choice and employment of primary school teachers, building of schools

• Culture, theatres, sports facilities

• Budget responsibility, imposition of taxes

• Naturalisation of foreign residents

• Old age homes and mobile care services

Note that local government powers are determined by cantonal law, with wide variations from West to East as to how much they can actually do (Mueller 2015). The selection here comprises typical and most widespread functions.

3.1.3 Non-centralisation—Not Decentralisation

Even at an abstract constitutional level, the distribution of powers between central government and cantons can never be defined once and for all. A federal state must provide rules on how to deal with changes in the distribution of central and non-central power, and it must decide whom to entrust with new responsibilities that arise because of changes in the economy and society.

The question of what rules apply to the allocation of future responsibilities between central government and member states is crucial for federal systems because it implies shifts in power. In Switzerland, as in other federal states, centralisation or decentralisation is a constant political issue that prompts ideological, social, cultural and economic conflict. Centralisation is often urged by protagonists of a strong state, economic intervention,modernisation and extensive social programmes. Decentralisation, on the other hand, is preferred by interests which fear big government, by protagonists of decentralised autonomy or a ‘minimal state’, and by some minorities. In the nineteenth century, the principle of the division of powers among the three political levels prevailed. Since then, relations between the different levels have become far more complex. In most policy areas, we find some form of cooperation between the federation, the cantons and the communes.

The Swiss solution exhibits a marked preference for extensive cantonal and local autonomy, thus preventing any uncontrolled growth in the power of the federation. The Constitution in Article 3 says that all (future) powers belong to the cantons, unless the Swiss people and the cantons decide, by constitutional amendment, that they shall be attributed to the federation. Here we find similarities to the USConstitution, which says, in its 10th amendment, that all powers not delegated to the United States by the Constitution, nor prohibited by the Constitution to the states, are reserved to the states respectively, or to the people. Both federations, therefore, share the same idea: any major centralisation of power must take place via constitutional amendment, whereas in unitary systems, for example those of France and Britain, a simple governmental decision can create or eliminate local powers and even authorities. Thus, the US and Switzerland share a common institutional arrangement: federalism as a system of non-centralisation rather than decentralisation.

Note, however, that the same institutional arrangement is interpreted in fundamentally different ways. In the US, the 10th amendment proved to be a difficult way to shift powers from the states to the central government. Thus, US authorities developed the practice of ‘implied powers’ or the ‘interstate clause’, which allowed the federal government to assume new powers by mere interpretation of the existing Constitution. A strong Supreme Court assisted in this.

Not so in Switzerland. From the very beginning, the Swiss parliament has been reluctant to provide the federation with new powers and interpreted Article 3 of the Constitution in a strict sense. Not only the establishment of a national bank, any form of federal taxes, the creation of a social security system, the construction of federal highways, subsidies to the cantonal universities and the introduction of environmental policies, but also ‘small’ issues like subsidies for hiking trails all needed formal constitutional amendments and ratification. This is one of the reasons why in Switzerland constitutional amendments are proposed practically every year, while in the US they are rare events (Linder 1999). Switzerland also has a comparatively weak Supreme Court, which cannot review Federal Acts as to their constitutionality.

Every proposal to bestow new powers upon the federation needs not only a majority in both chambers of parliament, but also a majority of cantons and of the people in a popular vote. Many proposed amendments failed several times before being accepted. The requirement has had a braking effect on centralisation and partly explains why many controversial policies—like the introduction of a national pension system—took a long time to be realised. Another consequence is that central government expenditure is far lower in Switzerland than in other countries (Table 3.1).

Table 3.1 Central government tax and expenditure share, 2017

3.1.4 Relations Between the Federation and the Cantons

Although the role of the federation is in many ways restricted, within the bounds of its authority it exercises substantial legal control over the cantons and communes (cf. also Linder and Vatter 2001). The juridical foundation of this control is an important rule: federal law is superior to cantonal law. Key issues of federal control are the following:

• Cantonal political institutions have to be ‘democratic’, meaning in accordance with the principal rules governing the separation of legislative, executive and judicial powers. The Federal Assembly, by approving amendments to cantonal constitutions, ensures adherence to this standard.

• Cantons must grant their inhabitants all the rights provided for in the Federal Constitution. For example, they must guarantee basic human and civil rights, equal protection by the law, and due process. These rights can be claimed by everyone through different legal channels and brought before the Federal Supreme Court.

• Cantons are bound to respect and implement federal law. However, the principle that ‘federal law breaks cantonal law’ does not mean that ‘federal policy breaks cantonal policy’. The actual implementation of federal law through the cantons depends heavily on their political will (see Sect. 2.3).

3.2 Federal Elements in the Decision-Making Process

3.2.1 Bicameralism

The Swiss parliament consists of two chambers, the National Council and the Council of States. They reflect different ideas of representation.

The National Councilrepresents the Swiss people. Its 200 members are elected on the democratic principle of ‘one person, one vote’. Thus, the 200 seats are divided among the cantons according to their population size. The fact that the National Council is elected in 26 electoral districtscorresponding to the 26 cantons has two consequences. First, the choice given to the electorate differs between small and large cantons. Citizens in the canton of Zurich can elect 35 MPs, since its population of 1.5 million represents about 18% of the total population, whereas citizens in Uri (36,000 inhabitants) can choose only one person. Second, the different size of cantons as constituencies is a relevant factor to the proportional mode of election. The proportionality rule, which replaced the winner-take-all majority system in 1918, should give smaller parties a better chance of winning seats. This objective is fully realised in large cantons such as Zurich, where a small party can win one of the 35 seats with less than 3% of the votes. But in a small canton with, say, two seats, the same party would need 34% of votes to be sure of winning a seat. For this reason, the effects of proportional representation are weakened in small cantons, where small parties risk being left with nothing. Overall, the proportional rule favours the larger, historical parties, while it leaves small parties underrepresented (Table 3.2).

Table 3.2 Composition of National Council and Council of States, 1999 and 2019

The Council of States, following the federal principle of equal representation of cantons, is composed of two members from every full canton, and one member from each half-canton. The election of the Council of States differs in two ways from that of the National Council. First, the cantons themselves determine the mode of election for their representatives. Before direct election by the people became the rule in the 1970s, many cantons allowed their parliaments to choose their councillors.

Second, the members of almost all cantons are elected by majority/plurality rule. This means that a candidate must gain at least 50% of votes to be elected, while in the second round a plurality suffices. This is again difficult for a candidate of a small party, even if she has a strong personality. On the other hand, if a party enjoys the support of a good 50% of the electorate, it can secure both seats, as was the case in small, rural Catholic cantons that were strongholds of the Conservatives (today the Christian-Democratic Party) for decades. Today, however, no party gets over 40% in a canton. A joint list of two parties, making a ticket of the two candidates to be elected, has the best chances for success. The most natural alliance is between the Socialists and the Greens, on the left; among the smaller centrist parties, including the Christian-Democrats; and between the Liberals and the national-conservative Swiss People’s Party, on the right. The result can be seen in Table 3.2. In 2019, the two main centre parties, thanks to their tickets, won a majority of 25 out of the 46 seats with only about 27% electoral strength nationwide. While the Socialists are proportionally represented in the Council of States, the Swiss People’s Party, despite being by far the largest party, remains clearly underrepresented because it is less able to form strong alliances.

Parliamentary law-making reflects the equal importance of democratic and federal principles (see Box 3.2). Both chambers may initiate constitutional amendments, new bills and regulations, as well as propose the revision of existing laws and regulations. All bills must be passed by both chambers in the exact same version, the common bureau deciding which chamber first considers a draft.

Box 3.2 The Powers of the Swiss Parliament

• A) Elections

The United Federal Assembly, which is the term for joint sessions of the two chambers—where the Council of States has one fifth of the votes—votes for the seven members of the Federal Council, the Federal Chancellor (administrative function), the members of the Federal Supreme Court, the Commander-in-Chief of the army in times of war and other major federal bodies.

• B) Legislation, budget,finance and controlling

Parliament is responsible for all political decisions of general importance. Three main categories exist: constitutional and legislative acts as well as parliamentary ordinances. In addition, the chambers decide on budgets and finance and approve international treaties of major importance. The pre-parliamentary stage settles many issues even before a bill arrives to parliament. Nevertheless, parliament remains the key legislative actor: it sets the political agenda through parliamentary initiatives, motions and propositions and thoroughly examines and modifies draft bills. A parliamentary reform in the 1990s introduced permanent committees, each having assured responsibilities in a defined policy area or in finance, auditing or the supervision of the federal government and its agencies. The reform considerably strengthened the political influence of parliament (Lüthi 1997).

If a bill fails to gain a majority in one of the two chambers, differences are sought to be eliminated through a procedure comprising different steps. If the second chamber proposes changes, the bill is sent back to the first chamber before being returned to the second. If both chambers insist on their version after three readings, each chamber appoints an equal number of delegates to a joint committee, which then tries to find a common solution. If the committee’s solution fails to be approved by either chamber, the bill does not go through.

This procedure reflects the rule of absolute equality of the two chambers in all matters of legislation. The desire of the founders of the Swiss Constitution for strong federalism went further than in other European nations. In Germany, for instance, the Bundesrat, which represents the sub-national states of the republic, is composed of members of the governments of the Länder. The number of members of each Land, however, varies according to population size, and theBundesrat is empowered to exercise its veto only for constitutional revisions or in matters concerning the Länder directly.

How does bicameralism work out in law-making? In the nineteenth century, the English constitutionalist Walter Bagehot noted that hot tea, poured from a first cup into a second, can be drunk cooler. Modern political science literature comes to the same conclusion: bicameralism produces decisions closer to the status quo (e.g. Vatter 2005; Tsebelis and Money 1997). In a federal system, bicameralism can have further effects. In Switzerland, where the second chamber represents the cantons, we note several dimensions of over-representation. First, by 2019 the 15 smallest cantons represent only about 21% of the population but can, with 25 votes, block every decision in the 46-member Council of States. This is more than theory because the small cantons have affinities: they are rather rural, Catholic, conservative and tending more towards the political right.

Second, these advantages of over-representation were used by different groups. In the early stages of the Swiss federation, the main cleavage was between the victorious Radicals, who favoured a strong central state, and the Conservative Catholic minority from small cantons who were resistant to the idea of central power. The Catholics’ deputation in the Council of States was therefore bound to prevent power shifting from the cantons to the federation. The rationale of these politics was evident: it allowed Catholics to maintain their conservative policies within the cantonal bounds of their majority influence. In the first half of the twentieth century, the main division was between bourgeois forces (often uniting Catholics and Protestants) and Socialists, who were concentrated in industrial and urban cantons. The bourgeois majority, who enjoyed almost total control of the Council of States, was not opposed to new federal powers in general. However, they weakened or blocked measures aimed at improving the conditions of the working class that had been proposed in the National Council, where the Socialists had much more influence. This only changed after World War II, when the centre parties accepted the development of a modern welfare state. During all periods, however, the over-representation of rural regions in the Council of States led to privileged subsidies and regulations for agriculture. For a long time, the small chamber had the reputation of being committed to eliminating inequalities between poor and rich regions and between urban and rural areas, rather than between upper and lower social classes.

One might conclude that the Council of States, despite its official mission and reputation in the larger public, does not primarily subscribe to the federal ideal of maintaining decentralisation and cantonal powers. Yet a more convincing perspective is that different political forces—the Catholics, then the bourgeois coalition and the rural cantons—used their over-representation in the Council of States to their own advantage. Thus, the Council of States has often played a conservative role, protecting the status quo against innovations proposed by the government and the other chamber. Yet this is an effect of the specific political composition of its majority, and not of the system itself. Indeed, between 2015 and 2019 the Council of States was a centre-left counterweight to the centre-right dominated National Council.

Those who say that the Council of States does not represent a truly federal point of view have strong empirical arguments. This assertion is corroborated by a theoretical perspective: the members of the Council of States and those of the National Council are elected in the same electoral districts, that is, the cantons, represent the same constituencies, and have the same interest of being re-elected. Thus, one must expect that the members of the Council of States defend the same group interests as those which dominate the National Council, and that they have no specific incentive to promote the collective interests of cantons as such. A systematic comparative analysis of the voting behaviour of both chambers during 1995–1999 (Wiesli and Linder 2000) confirmed this hypothesis, but with a surprising point: on issues concerning the cantons, the Council of States was not more active than the National Council, but both chambers were highly committed and successful in defending the collective interests of the cantons.

3.2.2 The People’s and the Cantons’ Vote

All constitutional amendments and some international treaties proposed by the Federal Assembly, and all popular initiatives proposing to change or amend the Constitution, have to be approved by both the people and the cantons. With (mandatory) referenda and popular initiatives, we thus again find that democratic and federal principles are co-equal elements of the decision-making process. Just like in parliamentary decisions, there must be a double majority: on the one hand a majority of all voters, on the other a majority of cantons. The latter is calculated in a simple way: what the popular majority within a canton decides counts as the vote of that canton. The votes of the 20 full cantons count as one vote each, the votes of the six half-cantons count half, which makes a total of 23 votes. If the result is tied (11.5:11.5), the proposal is rejected. As in the Federal Assembly, there can be a collision between the principles of democracy and federalism: a particular constitutional amendment may obtain a popular majority, but a majority of cantons rejects it, and vice versa (see Tables 3.3 and 3.4). However, unlike parliamentary proceedings, the popular vote does not foresee a negotiation process—in the case of conflicting majorities, a proposal simply fails and the status quo prevails.

Table 3.3 Constitutional revisions and amendments proposed by the Federal Assembly, 1848–2019, including direct counterproposals to popular initiatives

Table 3.4 Popular votes with different majorities of people and cantons, 1848–2020

Details of direct democracy are explained in Chap. 4. Here we should mention further ways in which the cantons participate in federal decision-making. First, every canton is entitled to hand in proposals for a federal bill or constitutional amendment. This is called the right ofcantonal initiative. Though, if only one of the two chambers rejects the proposal it fails. A collective of at least eight cantons also has the right to demand a popular vote on every bill passed by parliament (cantonal referendum). This provision was used for the first time in 2003, when cantonal governments were strongly opposed to a new federal tax bill—and won the subsequent popular vote by a landslide.

Second, the informal, most usual and effective way for cantonal influence lies in pre-parliamentary consultation and lobbying. Given the importance of power-sharing in Switzerland, consultations preceding formal decisions are a process of intensive negotiation, which we consider in Chap. 4. As implementation lies with the cantons, they are influential actors involved in both agenda-setting and drafting of federal legislation.

Box 3.3 Communes: The Cornerstone of the Swiss ‘Bottom-Up’ State

Why the communes are the foundation of the Swiss state can be illustrated by way of the following two topics.

1. Subsidiarity:The idea of subsidiarity is that a central authority should perform only those tasks which cannot be performed effectively at a lower level. It is a guiding principle of federalism. In the Swiss context, we find roots in Catholic social philosophy and liberal thinking which gave subsidiarity an additional meaning: the state should take responsibility only for tasks which cannot be performed by other societal organisations. Both meanings can be considered to form part of Swiss political culture long before subsidiarity became a constitutional guideline in 1999. In fact, surveys show that Swiss citizens expect less responsibility to be taken over by the state than do citizens from neighbouring countries, and that they prefer decentralised solutions whenever possible. This is exactly how the Swiss system reacts to new challenges: if state intervention is really necessary to solve societal problems—for example, regarding drug use or the integration of foreigners—solutions are first sought at the local level. A transfer of powers to the canton or federation happens only if and to the degree in which local solutions turn out to be unsatisfactory or incomplete.

2. Swiss citizenship:As already mentioned, the Swiss are citizens of a commune, a canton, and of the federation. If foreign residents want to acquire Swiss citizenship, they have to start at the local level. Local citizenship must be acquired before applicants are granted cantonal and finally federal citizenship. The whole procedure is burdensome, costly and time-consuming, and the highest hurdle is at the local level. Applicants must have lived in the same commune for a number of years; a local committee demands proof that the applicant speaks a Swiss language, has a basic knowledge of Swiss society and its institutions and is socially integrated. In smaller communes of some cantons, it is the full assembly of the citizens who ultimately decide on each application. In the late 1990s, when discrimination happened against applicants from certain countries, the Federal Supreme Court (1990) intervened, defining standards of fair procedure for the people’s assembly. While the decision was welcomed by Liberals, it was criticised by Conservatives: in their eyes, the court’s ruling was an offence against local autonomy. While the liberal view reflects a modern concept of the rule of law, the conservative position illustrates that several elements of traditional political culture are still highly valued: a bottom-up idea of the state, local autonomy and a high degree of legitimacy through direct participation (see also Hainmueller and Hangartner 2013; Hainmueller et al. 2019).

3.2.3 Local Governments: The Corner Stone of the Swiss ‘Bottom-Up’ State

So far, we have been mainly concerned with the federation and the cantons, but emphasis should also be given to the particularities of local governments (Horber-Papazian 2007). Communes are a corner stone of the three-level federal system (see Box 3.3). The political autonomy of communes is guaranteed by the Federal Constitution. Despite variations in the degree of local autonomy, which depends on cantonal law and politics (Mueller 2015), we can identify a common core that is characterised by the following:

• 1. A (constitutional) right to exist,including the freedom to merge with other communes or to remain independent, which cannot be withdrawn by the cantons. This means that a reform of local government ‘from above’, as happened in Germany in the 1960s when the Länder forced small communes to merge, would be rather impossible in Switzerland. Indeed, the number of communes, some 2200 by early 2020, had barely decreased until the 1990s. Since then, about 800 municipalities have merged into larger units on their own political will. This is not astonishing because more than half of the Swiss communes counted less than 500 inhabitants and had increasing difficulties fulfilling their tasks. Even though reasons of efficiency are strong political arguments for merging, citizens sometimes prefer independence and autonomy. Mergers can fail because the majority of citizens must accept the project in a popular vote in each of the communes concerned.

• 2. Thefreedomto choose, within the bounds of cantonal legislation, an adequate political structureand administration (see Box 3.4). There are cantons with numerous small communes and others with fewer but larger ones, and the degree of autonomy of the communes varies greatly from canton to canton. Furthermore, traditions of direct and assembly democracy are stronger in the German- and Romansh-speaking regions of Switzerland, whereas communes in the French and Italian-speaking regions favour representative democracy. Apart from culture, the most important factor defining the type of political organisation is population size (Ladner and Fiechter 2012, 440). In small communes, local government consists of a few elected part-time officials who are poorly remunerated. Citizens meet several times a year to approve or reject their decisions. Large cities, in turn, have an elected parliament and full-time executive heading professional services. This leads to somewhat strange proportions: the 30,000 local employees of Zurich, the country’s largest city with over 400,000 inhabitants, are almost double the number of inhabitants (15,500) of the smallest canton, Appenzell Inner-Rhodes.

• 3. The right to impose taxes for their own needs. The right to impose taxes and to decide on local tax rates is certainly the most important element in assuring the autonomy of local governments. Fiscal autonomy not only allows communes to decide on local infrastructure, services, land-use planning or other public utilities according to their own preferences. It also establishes responsibility on both sides of local government: authorities are held responsible for using their resources according to the people’s needs, and citizens have to contribute with their taxes to the services they demand and enjoy. Thus, decentralised governance brings the state closer to the people. Whereas in the UK and the US local taxes are mostly determined by the value of real estate, Swiss communes are entitled to impose an income tax. With some 30%, the local share of total state revenue and expenditure is considerable.

• 4. Freedom of actionin matters that are not in the competence of the cantons or the federation. The consequences of this principle are twofold. First, it defends local autonomy in situations of conflict. A corporation seeking a site, even for the purpose of a public benefit such as a nuclear power plant, cannot impose itself on a commune with the help of cantonal or federal authorities if the latter lack a formal competency in the issue. Therefore, depending on the circumstances, communes are also protected against their own canton. The Federal Supreme Court protects local autonomy in a similar way as it does individual human rights. Second, the principle can encourage political innovation, because communes are in the pole position to spot the need for new public services. Some social services, schools for social workers, AIDS prevention, controlled drug use or recycling of waste are examples of new public tasks that started in the communes. When those activities are further developed at cantonal or federal level, we can speak of a trial-and-error process, which permits the use of small-scale experiences for large-scale benefits.

Box 3.4  Local Government Institutions

Political structures vary considerably with the size of communes. This is the reason why we distinguish between small and large communes in the following description:

	Small communes	Large communes
Legislative body	Citizens assembly: A type of ‘assembly democracy’. All adult Swiss citizens living in the commune can participate.	Communal parliament: Elected by the people. A type of semi-direct democracy.
	The plenary assembly decides on propositions submitted by the executive of the commune and by ordinary citizens. All important communal questions can be discussed.	Important decisions must be approved by a popular vote submitted by the executive (mandatory referendum). Other decisions can be challenged by an optional referendum. In the communes of most cantons, citizens have the right to hand in initiatives leading to a votation
Executive body	Collegiate council, elected directly by the citizens (exception: canton Neuchâtel, where the communal parliament appoints the executive council).
	Part-time members as a rule, full professionals the exception.	Professional full-time members as a rule; part-time officials the exception.
Admini-stration	Relies partly or entirely on the non-professional services of local volunteers.	Professional administration in combination with resources of non-professional volunteers.

1. Note: In some French-speaking cantons, the traditions of ‘assembly democracy’ as well as of the referendum and the popular initiative are less known. Even small communes therefore rely on types of representative democracy with an executive and a legislative council

The main field of the Milizverwaltung is local government (Geser et al. 1987; Ladner 2008). In communes with less than 1000 inhabitants, there are often just two full-time professional posts: mayor and communal secretary or clerk. The other seats of the communal council, as well as positions in social services and the fire brigade, in committees for land-use planning and school administration, are occupied by volunteers or are part-time jobs. Even in larger communes and cities, the Milizverwaltung does not disappear entirely, but is combined with professional administration.

3.2.4 Citizens’ Self-administration

In many areas of Swiss administration, public tasks are not fulfilled by employed civil servants or administrators. Instead, ordinary people themselves manage these public affairs by part-time engagement of a few hours or several days per week. In German this is called Milizverwaltung, a form of self-administration by people who volunteer for the public good. This part-time work is sometimes remunerated, sometimes not, depending on the nature and volume of the work. In some cantons the system dates back to the Middle Ages. In the canton of Valais, for instance, the water-supply system in the high valleys was realised via the Gemeinwerk (community work) into which every adult man was periodically drafted for several weeks to help with construction (Niederer 1965).

In its modern form, Milizverwaltung has three functions:

• 1. It uses the professional skills of ordinary citizens for public affairs. This allows non-centralised self-administration and political autonomy even for small political units who lack the funds to hire professionals. By relying on the part-time involvement of their citizens, they can deliver their own community services.

• 2. Self-administration, with a great number of persons involved in part-time tasks, posts and committees, allows for more democratic participation. In their voluntary role, citizens become part of and personify the political and administrative institutions.

• 3. Communitarian traditions in Switzerland have been able to survive. There are many private organisations working for the poor, the handicapped, in cultural affairs, for the protection of the environment or the promotion of other public goods. These non-profit organisations fulfil public tasks outside of public administration, even though many of them are subsidised by the federation, the canton or the commune.

Milizverwaltung is found at the cantonal and federal level, too, for instance in the form of expert committees. In the 1980s, a first systematic inquiry found almost 400 federal expert committees with some 4000 persons involved (Germann 1981). A more recent study, taking into account only committees nominated directly by the Federal Council, illustrates the importance of the federal Milizverwaltung: 40% of the 181 committees have a consultative function, 43% are decision-making and appeal organs, while the rest fulfil leadership or representative mandates (Varone 2007). Moreover, many cantonal and district courts work on the basis of Milizverwaltung, and all members of all parliaments—federal, cantonal and local—formally exercise their mandate on a part-time basis. With the exception of executive members, most elected politicians in Switzerland work on another job besides their mandate.

Advocates of the Milizverwaltung claim that it is cheaper than professional administration, that the state remains in close contact with voters and that the system keeps the political elite from becoming an isolated class. Opponents, on the other hand, argue that it has led to too much amateurism and not enough professionalism in Swiss politics, as well as hidden transactions or even corruption if individuals do not carefully distinguish between private and public interests.

3.3 Federalism at Work

The actual functioning of federalism is best shown through concrete political processes and conflicts. This is the reason why we illustrate the working of federalism through five issues, all of them dealing with important political questions to be settled, regulated and implemented by federal, cantonal and communal actors. Two of these issues—energy policy and the creation of the canton of Jura—represent enduring and still controversial political questions. Their history is illustrated in the form of condensed case studies. Regarding the implementation of federal tasks, primary schools and financial compensation, we confine ourselves to describing the essential ideas and concepts.

3.3.1 Cooperative Federalism: How Federal Tasks Are Implemented by Cantons and Communes

In the middle of the nineteenth century, divisions between centralists and non-centralists led to a clear distinction and division of power between the federation and the cantons. This concept, however, has subsequently been overruled by the mechanisms of intensive cooperation between all three levels of the federal system. The complexities of modern infrastructure, economic intervention and social programmes stimulated the completion of federal legislation by the cantons, the implementation of federal programmes by cantonal and local authorities, and extensive finance- and revenue-sharing.

The Swiss social security system provides a good example of this kind of ‘cooperative federalism’. Its main element, which gives a minimum old-age pension to all retired persons as well as to widows and their children, was introduced in 1948 and has been regularly revised since then. The federation is responsible for legislation, regulates insurance contributions, and supervises the implementation of the programme. It also finances part of the costs and, through the Federal Supreme Court, guarantees equal application of the law.

While citizens may look to the national politics section of their newspaper to find the latest changes to social security payments, it is the local and cantonal authorities or even private organisations with whom they have to deal. The monthly contributions of employees and employers are collected by cantonal and regional agencies of the different industries, a reminder of the time when social security was based on private organisations. The same organisational scheme applies to other branches of social security, such as invalidity, maternity and unemployment insurance. The regional agencies and cantonal authorities are also responsible for most of the redistribution, along with the postman, who in earlier times took the money directly to pensioners. Indeed, the postal and telecommunication service, together with the federal railways (SBB), belong to the few federal services which deal directly with the public. Most federal programmes are implemented by the cantons and the communes, and there is no parallel federal administration, with its own regional services, agencies or even courts, like that in the US.

Where the social security system is concerned, the cooperation between the federation, the cantons and the communes goes even further. If a retired citizen is so poor that she cannot live on the federal pension, she may go to the local authority and apply for an additional benefit provided by the canton. The fact that the federal government pays a substantial part of that grant is an incentive for the cantons to run complementary social security programmes (otherwise they would not obtain a share of this part of the central budget), but the cantons are in sole charge of the programmes. Implementation, finally, is delegated to the communes, which are closest to inhabitants and therefore have better information based on which to evaluate the needs of claimants. Indeed, most of the other social services for which personal relations are essential—social aid to the poor, social work, homes for elderly people, mobile-meal and health services, childcare—are run by the communes, although sometimes they are delegated to private organisations and publicly subsidised.

This kind of cooperation again reflects the strong belief of the Swiss in the subsidiarity principle (see Box 3.3). Thus, public intervention and public help should only occur in situations where private means do not suffice to achieve a goal. Furthermore, if a public programme is really necessary, the Swiss start at the bottom, with the commune. Cantonal programmes kick in only when local programmes do not suffice, and only if a task exceeds the capacities of cantons do they relinquish power to the federation. Consequently, even in federal matters not all responsibilities are centralised. Whereas the federation has become responsible for legislation on many issues that once were under cantonal rule, the implementation of federal programmes is delegated back to the cantons and the communes whenever possible (Dardanelli and Mueller 2019). This applies even to the fiscal state: the cantons or in some places even the communes collect all income and property taxes from their inhabitants—not only their own but also those of the federal government.

3.3.2 Energy Policy: From Federal Deadlock to Cantonal Experiments

When the first oil crisis in 1973 shocked the industrialised world, the Swiss became aware of their extremely vulnerable energy supply. While water from the Alps can meet a good deal of electricity demand, this constitutes the only major renewable energy resource of Switzerland. For about 80% of its energy consumption, it is dependent on international markets: oil from the Middle East and Africa, gas from northern Europe and Russia and uranium from Canada and the US. In the view of the Swiss government, a national energy policy was then considered urgent and necessary. A committee of experts was appointed to provide long-term forecasts of energy supply and consumption. Its report on a national energy programme to the government made three key recommendations: substitute oil, boost research into alternative sources and encourage energy savings. In 1980, the Federal Council proposed a constitutional amendment which would have enabled a national energy policy to be developed. The two chambers of parliament approved yet in a referendum in 1983, the amendment gained the people’s consent but failed to muster a cantonal majority.

It was not until 1990 that the federal authorities presented a new proposal for a national energy policy that survived the referendum process. This constitutional amendment contained only a few moderate suggestions. In the following decade, protagonists of effective energy saving policies handed in three popular initiatives proposing taxes on non-renewable and subsidies for alternative energies. None of them was successful, and two similar bills taking up the idea of subsidies for renewable energies were rejected by the people in 2000. In 2001, parliament accepted a law setting standards for the reduction of CO₂emissions. Thus, it took the federation almost 30 years to acquire a mandate for a national energy policy whose limited ambitions were far from the original hopes of the government. A more ambitious plan—the ‘Energy Strategy 2050’—was approved at the polls only in 2017 (SFOE 2018 and below).

This long delay may be exceptional. The example of energy policy, however, is typical of the difficulties the central government faces if it wants to acquire new competencies under the conditions of direct democracy. There have been other occasions when the people have rejected federal projects several times, before finally accepting them in a different version. Even then it should be noted that the people may reject bills to implement a new policy when they have already approved the underlying constitutional amendment. This was the fate, for instance, of the maternity insurance bill that was successfully challenged in popular referenda in 1987 and 1999, although the constitutional principle had been approved as early as 1945.

The combination of federalism with direct democracy, therefore, gives the cantons high veto power and amounts to a considerable obstacle for federal innovation. One of the most common arguments against national policies is mistrust of the federal government and defence of cantonal autonomy. Anti-state, anti-centralist, as well as conservative and neo-liberal motives fit equally well into this pattern. They also played a role in the votes on energy. It was argued that new federal powers to intervene in the market were not necessary. Such activities would weaken regional competences, and it was said that the cantons were already doing all that was necessary. Thus, federal innovation attempts are far from being guaranteed success. And even if they do, it may take a long time because of the high consensus required by the double majority of people and cantons and because of the two stages of legislation, constitutional base and statutory enactment. Table 3.3 shows that over a quarter of all constitutional amendments proposed by the Federal Assembly between 1848 and 2019 were rejected.

The case of the national energy policy, however, needs further explanation. It involved a most controversial and polarising issue: nuclear energy. In the 1970s, the anti-nuclear movement successfully stopped the construction of a power plant after several months of occupying the site. When first the Greens and then the Social-Democrats opposed the construction of new nuclear power plants, the issue divided parliament, parties and the people. Nuclear power was controversial where technical risks and gains were concerned, but underneath lurked a fundamental conflict of values. Proponents of nuclear power considered that economic growth and technical progress were at stake; opponents were deeply concerned about the protection of nature and of future generations against the dangers of nuclear technology.

A popular initiative against the construction of new power plants failed in 1979, but 49% of the people voted in favour—the anti-nuclear movement had successfully reached the masses. The protagonists of nuclear power were equally unable to win enough support for the continuation of the programme. When in 1985 the federal chambers authorised the resumption of the construction of the nuclear power plant in Kaiseraugst/AG, it encountered unanimous protests by the two neighbouring half-cantons of Basel. Public opinion throughout Switzerland to a large degree disapproved of the resumption of works, and some federal authorities were convinced that completion would be impossible without police guards or even military protection. The work was thus not resumed, and in 1989 the federal parliament dropped the project, paying 350 million CHF in indemnities to the electrical company that had been licensed to undertake the work. This was two years after the nuclear accident at Chernobyl, whose radioactive fall-out reached large parts of Western Europe.

Thus, neither the opponents nor the protagonists of nuclear power could win the argument. In this deadlock, a compromise was found. In 1990, the cantons and the people accepted a popular initiative for a ten-year moratorium on the authorisation and construction of new plants. When the moratorium ran out, opponents of nuclear power launched two popular initiatives: one to renew the moratorium, the other to pull out fully from nuclear energy within ten years. Both initiatives failed to muster the required cantonal and popular majorities in 2003, as did a third in 2016.

At the same time, the industry launched plans for the replacement of two existing nuclear plants, which led the anti-nuclear movement to reorganise. Thus, as in other countries, the deadlock over nuclear energy seemed to continue—until in May 2011 the Federal Council announced the complete withdrawal from nuclear energy production, just two months after the Fukushima catastrophe (SFOE 2018; Kammermann and Freiburghaus 2019). To compensate for the losses in domestic production accruing from this decision while at the same abiding by the targets of the Paris Agreement, it was decided to invest heavily in renewable energies as well as efficiency increases. A referendum against the new law was again called but this time unsuccessfully, in 2017 (ibid.).

For a long time, the deep conflict on the question of nuclear power had overshadowed and paralysed all other issues in national energy policy. The deadlock of federal politics in the 1980s and 1990s, however, did not prevent important innovations in some cantons (see also Strebel and Widmer 2012). In Basel-Countryside, for instance, where opposition to nuclear power was particularly strong, the authorities found a constructive way out of the dilemma: future energy shortfalls resulting from the rejection of nuclear power should be compensated for by effective energy-saving programmes. The authorities mandated experts with analysing the potential for energy-saving in all household appliances, and in industry, public buildings and transport.

In the 1980s, Basel-Countryside then pioneered energysaving policies, with considerable success. The new regulations for housing insulation, for instance, stimulated innovation in the construction industry. Within ten years, energy consumption for heating in new houses dropped by nearly 40% because of better insulation and more efficient heating. Other cantons followed, and their laws further encouraged energy saving technologies to be applied in businesses and private homes. Thus, decentralised energy policy was an early experiment. Cantons became laboratories for solving the problem of how to live with less energy without renouncing on comfort. Their experiments were realistic and allowed for the risk of failure. Decentralised experimenting and coordination allowed Switzerland to keep the costs of failure low, but let all participants benefit from successful innovation. Cantons became testing grounds not only for new technologies but also for the federal authorities. When finally a national energy savings programme was passed, it could draw on cantonal lessons learned.

The success of these measures should not, however, be overestimated. Some cantons flatly rejected energy-saving programmes, others were reluctant or constrained by the national controversy about nuclear energy. Those who did participate had to realise that stabilising overall energy consumption was not an obtainable goal. Cantons are not authorised to raise gas or oil prices through taxation, which more than any other measure would seem to stimulate a reduction in consumption. Cantons were able to stimulate the use of new technologies, such as solar or wind energy, but cantonal markets are much too small to hope for economies of scale by mass production. There was no national policy helping the small innovative enterprises to become competitive at an international level, and for some even the ‘Energy Strategy 2050’ falls short of this.

Meanwhile, other countries like Denmark or Germany have taken the lead in solar energy and other fields where Swiss firms were once pioneers. Even so, the cantonal experience was not in vain. It was a substitute for the long times blocked federal policy, contributed to overcoming some of the deep conflicts on the energy issue, and helped to develop ends and means of energy savings policies by a process of decentralised trial-and-error. Learning from decentralised or even competitive innovation processes may be one of the most important advantages of federalism (see also Sager 2003).

Yet in the face of accelerating global warming, this might not be enough anymore. A series of school demonstrations—inspired by the Swedish teenager Greta Thunberg—for stricter climate change policies helped produce great wins for the two Green parties in the 2019 federal elections (see Table 3.2). The federal counterargument that cantons could already do a lot to encourage energy efficiency and careful land use proved unconvincing. With the warnings of global climate change, ‘decarbonisation’—that is, policies for the substitution of oil and gas by renewable energy—has caught the attention of the larger public. It will require heavy interventions and high investments by the central authorities. At the same time, even the most progressive, interventionist national policy to curb Swiss CO₂-emissions will need to rely on the cantons for actual implementation (Dardanelli and Mueller 2019). Looking at the past, this won’t be an easy way.

3.3.3 Coping with Inequality: The Example of Swiss Primary Schools

While travelling in rural regions or hiking in the Alps, visitors to Switzerland are often astonished to see pretty and well-maintained school buildings even in small and evidently poor villages. Indeed, having their own schools for their children and a good school teacher is the pride of each commune. Another story, linked again to federalism, is how even small and poor villages are able to live up to this ideal.

In the middle of the nineteenth century, education differed from canton to canton. In some cantons, primary schools were run by the (Catholic) church, others were public. In mountain regions, school lessons were given only in winter, when children were not needed in the fields. Curricula and the length of children’s basic education varied considerably. The Radical majority of 1848 wanted education to remain a cantonal matter. This allowed for cultural diversity. Aware of the importance of education for a young nation and its democracy, however, the Radicals stipulated that there should be a federal benchmark. Thus, a constitutional provision required that ‘the cantons provide sufficient basic education’. This regulation was, firstly, a plea for the (cantonal) state monopoly over schools and directed against the Catholic Church, which then controlled parts of the educational system. Second, the regulation obliged the cantons to offer a minimum standard of basic education, with a minimum number of years of schooling free of charge and compulsory.

These requirements greatly influenced the evolution of the Swiss educational system. Providing equal-quality education and training became the common concern of the cantons. In earlier times, there was a ‘brain drain’ of the best teachers to rich communes offering better salaries. Although in most cantons still nominated and paid by the communes, teachers today receive an almost equal salary throughout a canton. Curricula are more and more coordinated by inter-cantonal bodies. Poor communes receive subsidies for the salaries of their teachers and the construction of their school buildings—but these have to follow construction standards that prohibit both luxury buildings and sub-standard classrooms.

Moreover, for long times, inadequately coordinated curricula created difficulties for schoolchildren when parents moved from one canton to another. Whilst it makes sense, for example, for Bernese schools to concentrate on the cultural specificities and history of their own canton, the argument for federalism is less strong when there are 26 different cantonal teaching programmes in mathematics. Thus, many of the old particularities of cantonal curricula have been eliminated—not by dictate of the federal government but rather by means of inter-cantonal coordination (Schwab and Surdez 2007; Schnabel and Mueller 2017).

Sixty years ago, access to higher education was highly unequal. Students from rural regions, from lower social classes and women were underrepresented. This changed with federal programs—subsidies for the new, decentralised cantonal institutions, and top-ups for cantonal scholarships—that gave a big boost to higher education. Today, women as well as students from rural regions have equal chances. Class inequality, however, remains as big as it was then, and is a black spot in the Swiss welfare state. One has to consider, though, that social differences in access to higher education are more difficult to overcome than barriers erected by distance or gender (Vellacot and Wolter 2004; Becker and Schoch 2018).

3.3.4 Swiss Federalism: Solidarity Is more Important than Competition

The federal policy of minimum standards is not limited to schooling; other public services work in the same way. Public transport now reaches practically every commune, even those in high mountain valleys. A dense and decentralised network of public infrastructure has helped to maintain the private services of doctors, local banks or grocery stores even in small villages. If Swiss statistics define communes with 10,000 inhabitants as ‘cities’, there is a reason for this: one can find lawyers and other professional specialists, computer and bookshops, theatres and swimming pools, various other commodities and services, and even a local industry producing a particular product.

Instead of people flocking to where the money is, Swiss federalism has seen to it that the money is sent to where the people are, thus maintaining a decentralised economic and social structure. In the 1970s, when young people from mountain valleys found better jobs by moving to the cities, a large federal programme for public investment in the mountain regions was launched. Subsidies were provided on the condition that different communes agreed on a joint regional development plan. This plan had to demonstrate the development potential of the region¹ and to coordinate federal investments in roads, schools, sports sites and other facilities. The programme helped to develop new tourist industries and, together with other instruments, provided agriculture in mountainregions with a better chance of survival. In many areas the population drain was stopped. While evaluations of the programme were sometimes critical about its direct economic effects, its socio-political success was undeniable. The programme provided the communes with an incentive to get together to analyse their own situations with a wider horizon and find shared perspectives of development. Encouraging this social activity of ‘endogenous development’, some experts say, was even more important than money (Bassand and Hainard 1985).

With globalisation and the opening of the Swiss economy in the 1990s, this kind of regional policy became more difficult and less effective. It was therefore cancelled. Even so, equalisation policies for the different cantons and their regions are still at the core of Swiss ‘cooperative federalism’ (Vatter and Freitag 2004). The idea is that of a commonwealth of all regions, and of mutuality. At its heart, we find a broad system of financial compensation between the federation and the cantons (and, within the cantons, the same for communes) comprising revenue-sharing as well as financial compensation by block grants and subsidies (see Box 3.5 and Fig. 3.1) (Gaudard and Cudré-Mauroux 1997; Messerli 2004, Vatter 2018, 186 f.).

Fig. 3.1

Net compensation transfers in 2020. Note: Own, simplified figure with data from Eidgenössische Finanzverwaltung (EFV) (2019), in CHF

Box 3.5 Mechanisms of Financial Compensation

Financial compensation serves to adjust differences in financial revenue and expenditure between rich and poor cantons or communes. There are two main reasons why Switzerland has such a policy. First, supposing that people in mountain cantons do not wish to leave, we are confronted with the problem that these cantons cannot compete with the urban cantons, where the economic opportunities are much greater. Besides different resources, the cantonal tax system can worsen the unequal starting position: tax revenues in the mountain cantons are very low whilst tax rates are rather high. Financialcompensation seeks to strengthen ‘poor’ cantons and communes and to enable them to offer basic public goods of a quality similar to those of ‘rich’ communes. Second, there is what economists call the ‘externality problem’. Some cantons or communes carry out tasks for others. They offer infrastructural services, for example universities, theatres or hospitals, which are used by residents of other cantons and communes. Instead of pricing these services differently for these individuals—which is not always feasible—cantons or communes look for mutual compensation.

Thus, the federal system of financial compensation is based on two ideas:

• 1. Financial compensation of resources: compensating for differences of resources between ‘rich’ and ‘poor’ cantons.

• 2. Financial compensation of spillovers: compensating the externalities of public goods between the cantons or between the different levels of the federal system.

As can be seen from Fig. 3.1, financial compensation has two dimensions: vertical between the federation and the cantons, and horizontal amongst the cantons. The same two-dimensional system can be found in the relations between a canton and its communes. The equalising policies of cooperative federalism are not uncontested. Some complain that shared responsibility makes actors less responsible, or that cooperative federalism encourages too much public spending. The critique was taken up in a major reform of Swiss federalism that started in the 1990s. Its most important element comprised a disentanglement of responsibilities between the federation and the cantons. It followed the principle of fiscal equivalence: as much as possible, the territorial circle of a public good should coincide with the circle of both its beneficiaries and payers. Better coincidence should strengthen political responsibility. It was the baseline for a reform of the system of financial compensation that was meant to become more transparent and subsidiary in its character.

It was crucial, therefore, to clearly define objective criteria of relatively ‘poor’ or ‘rich’ cantons, which in the end are decisive if a canton ends up being a net beneficiary or contributor of equalisation payments. Even so, it was not easy to overcome the opposition of the rich cantons, all the more so as the fiscal system is characterised by strong cantonal autonomy (see Box 3.6). We now see the political reason for the substantial financial participation of the federation: allowing that only a few cantons ended up as ‘losers’, it eased political conflict enough to guarantee success in parliament and the ensuing popular vote in 2004. Federal subsidies, leading to overconsumption in the past, were mostly discontinued in favour of block grants (Vatter 2005, 2018; Frey 2005).

Box 3.6 The Fiscal State: Paying Taxes in Switzerland

Every year, each household gets a tax form from the cantonal or local tax office. The responsible persons in the household are required to declare the salary earned last year and their fortune by the end of it. On the basis of their own declarations and after control by the authority, taxpayers get their bill. The commune or canton not only collects its own taxes but is mandated to also collect those of the other two levels. This demands much trust in the taxpayer and the collecting authority but is considered to be efficient for all parties involved.

The decentralised system allows cantons and communes to vary definitions of income and fortune, and to apply different tax rates. Households with the same revenue may pay different taxes depending on where they live—even within the same canton. Thus, Swiss federalism allows for competition, traditionally limited in its extent to prevent a ‘race to the bottom’. Even so, differences can be considerable. A family with two children, having a gross annual income of 150,000 CHF, pays 42,000 CHF in (poor) Delémont but only about 20,000 in (rich) Zug (ESTV 2019). This reflects how the different economic situation of two regions can affect taxpayers. Tax competition became a political issue when the Canton of Obwalden, in order to attract rich taxpayers, was the first to introduce a flat rate. This was considered unfair competition because all other cantons use progressive tax tariffs.

Two other aspects of tax competition have become controversial on the international stage: local ‘tax treaties’ and the national ‘banking secrecy’. Both were legally defined offers to save taxes and attract rich people and/or their wealth from abroad. While defenders of these privileges claimed legal and fiscal autonomy, the opponents, raising moral questions or inequality of treatment, were not much heard in the Swiss political discourse. As to the banking secret, things changed when the biggest Swiss bank was accused in the US of systematically violating UStax legislation, and when in 2009 the OECD placed Switzerland on a grey list in order to change its banking secrecy and thus fight tax evasion. Meanwhile, banking secrecy is dead. While an international harmonisation of rules of tax competition seems to be logic and reasonable in times of globalisation, the Swiss government is worrying about who sets the rules, and what these rules as well as their implementation are going to look like.

This notion of cooperative federalism is different from other ideas of federalism. Economic theory, for instance, relates federalism to competition. Some economists prefer many decentralised authorities to the monopoly of one central government. According to this view, the ideal situation is one where governments constantly compete and where citizens have the option to ‘vote with the feet’ for the government they prefer. One could say that USfederalism is, and probably always was, influenced by this idea. The variety of US states is considered as something amongst which one chooses. Individuals migrating from East to West or North to South are trying to make the best choice they can. US cities and communities are in strong competition with each other. Living in a wealthy residential area or a poor suburb can mean all the difference between excellent or poor public services. People who find that the local public school is not good enough for their children send them to private schools or move to a better area. This can lead to vicious cycles where poor communities get poorer and rich ones richer.

‘Voting with the feet’, then, may be part of the American political culture that favours individual liberty, and is a heritage of people who once took the ‘exit option’ to leave their home countries as emigrants. The attitude of the Swiss is different. The Swiss passport does not mention ‘place of birth’, but the commune of family origin, dating back generations. In older times, this kind of citizenship was of great importance: before the creation of the modern welfare state, the commune of origin was legally obliged to care for ‘its’ elderly, homeless and destitute. Today, the place of origin has lost its importance. But most Swiss are strongly sedentary, emotionally attached to the communes and regions in which they grow up and live. This collective notion of freedom is in stark contrast to US-American understandings of liberty (Basta Fleiner 2000).

Many Swiss feel that choosing to make a living in another canton means the loss of familiar surroundings and mentalities. One finds Swiss people of all professions who prefer to stay in their own region rather than accept better jobs in other cantons or abroad. Moreover, there are the language boundaries. Only a very small proportion of the population changes linguistic regions. Many of those who do so for professional reasons later return to their region of origin. Things are changing, though. Under the pressure of globalisation, the Swiss economy is subject to rapid structural change, requiring workforce to become more mobile. University students are today offered mobility programmes to receive part of their education abroad. Nevertheless, living close to their native region is the first choice of most people.

Under these conditions, we can understand the great importance of regional solidarity in Swiss politics. Creating fairly equal living conditions in the different regions is vital if collective values of local cultures are to be maintained and if people continue to feel emotionally attached to their place of living. In contrast to the US, then, the Swiss culture of federalism is not primarily based on competition, nor on voting with one’s feet by migrating, the ‘exit option’ in Hirschmans (1960) terms. By compensating for existing inequalities, Swiss federalism makes it possible for people to stay in their own region. It thus favours the ‘loyalty option’.

3.3.5 Dealing with Separatism: The Arduous Birth of a New Canton

The problems of the Jura region have already been mentioned in Chap. 2 (Sect. 2.4.3). The Jura represents an exception to Swiss integration of cultural minorities. Historical factors and worsening language, religious, cultural and socio-economic differences instead led to its separation from the canton of Bern (Aubert 1983; Jenkins 1986; Ganguillet 1998; Siroky et al. 2017; Vatter 2018, 230ff.). The Jura region, which is mainly Catholic and French-speaking, was incorporated into Protestant, German-speaking Bern at the 1815 Vienna Congress by arrangement with Prussia, England, Austria and Russia. As a minority located at the northern periphery of the canton, the people of Jura felt they were being discriminated against both politically and economically. An escalation of political clashes after World War II gave rise to a separatist movement, which triumphed in 1978 when the new Jura canton was created. Things were complicated by the fact that the population of Jura was itself divided: the three southern districts had been Protestant since the sixteenth century, were economically better off and had traditionally better relations with Bern. Thus, the deepening conflict was not only between Jura and Bern, but also between ‘separatists’ and (Bernese) ‘loyalists’ within Jura (see also Fig. 2.2).

How were the authorities to deal with a region that wanted to separate from an existing canton and form a new one? The founders of the federal state had not anticipated this problem, so before the game could be played the rules had to be invented.

As far as the game itself was concerned, it was clear that three actors would take part:

• 1. The people of the Jura region, who had to decide whether they wanted to separate or stay with Bern;

• 2. The people of the canton of Bern, who had to decide under what conditions they would accept the separation, if that was the will of the majority of the people of the Jura region; and

• 3. The people and cantons of the entire Swiss federation who would, following the amendment of the Constitution, have to accept the decision of the Bernese and Jurassian peoples to split up and recognise the new canton as a member of the federation.

If Bern had long underestimated the importance of the Jura question, showing little regard for the cultural minority, it eventually was responsible for taking the most important initiatives to settle the conflict. In 1967, the Bernese government presented the people of Jura with three options from which to choose: the status quo, a statute of autonomy, or separation from Bern through the creation of a new canton. In the following year, a task-force or ‘federal advisory committee’ was created: two former members of the Federal Council and two members of the Swiss parliament were appointed to investigate the implications of a statute of autonomy and of the separation of the Jura region from Bern. Institutionally, this meant not only the appointment of a neutral third party, but also the unofficial involvement of the federal government in a cantonal conflict that had acquired nationwide importance.

In the succeeding years, the separatist forces continued to espouse independence, so the Bernese government proposed a cascade system of popular votes:

• 1. In the first votation, a simple majority of the people of the canton of Bern had to decide on the right of the Jura region to hold a referendum on separation or not.

• 2. In the second votation, the people of the entire region Jura were asked whether they wanted to create a new canton or stay with Bern.

• 3. Whatever the outcome of this second votation (leave or remain), one fifth of the electorate of each district that had been overruled could demand a further vote on what the district would do, that is, remain or leave.

• 4. If at least one district decided to leave, one fifth of the electorate of every commune lying on the new border could demand a final vote on whether to join the new canton or leave its district and remain with Bern.

The purpose of this cascade system was clear. The first votation would provide canton-wide democratic legitimacy for the subsequent procedure. The second would establish whether the Jurassian people did indeed wish to create their own canton but, given the internal division of the Jura people between separatists and loyalists, no district or commune would be forced to stay with the old canton or go with the new one against its will. Thus, the third and fourth votations would protect regional and local minorities on either side of the debate.

In 1970, the Bernese people accepted the cascade system as a constitutional amendment by an impressive majority of six to one (first votation). In 1974, the people of Jura voted with 37,000 for and 34,000 against independence (second votation). The cleavage between separatists and loyalists was clear: the Northern districts voted for separation by three to one, the three Southern districts voted to stay with the old canton by almost two to one. In 1975, the three Southern districts confirmed their preference to stay in the canton of Bern (third votation). Later that year, the fourth and final round of votations was held: Moutier, the main city of the Southern part of Jura, decided to stay with Bern whilst some other communes in that district chose to join the new canton.

After these votations the boundaries of the new canton, Jura, were known. In 1976 its people elected a constituent assembly which then drew up a draft constitution for the new canton. The constitution was accepted by the people of Jura in 1977, and one year later the Swiss people and the cantons accepted Jura as the 26th canton of the federation with effect of 1 January 1979. The result of the national vote (1,310,000 for and 280,000 against, with a large majority in all cantons, including Bern) was interpreted as revealing the great respect and understanding of the Swiss people for its minority groups.

The creation of the new canton had split the Jura region, which was contrary to the political objectives of a good part of the separatist movement which, on grounds of ethnicity, culture and language, had embraced the idea of independence for the whole of Jura. They had proposed other procedural rules, for instance that the right to vote for the creation of the canton should be given to all persons originating from Jura, regardless of their present place of residence. Instead of the separatists’ dream of uniting the entire ethnic group within a single boundary, three districts remained with Bern. Yet this solution was modern in the sense that it rejected the nationalist formula of ‘one people, one language, one culture, one state’, which always leads to insoluble minority problems. In fact, migration and industrialisation have made mono-cultural societies and their states more and more an exception. In this respect, all boundaries are artificial. In Jura, they were founded on the principle of territorial self-determination on the smallest possible scale: first the region as a whole, then its districts and finally the (border) communes.

We could have witnessed quite a different outcome to the Jura question. Bern, instead of opening the door to separation, could have continued a policy of oppression against the separatist movement, as we have seen lately in the case of Madrid against the Catalans. Further escalation of the conflict between the Bernese majority and the Jurassian minority without any realistic hope for a solution could have made federal intervention inevitable. Instead the Jura minority, despite discrimination, profited from individual and political liberties that were broad enough to allow it to organise its successful separation. Federal intervention was limited to an informal task-force that was able to gain the confidence of both sides, and the majority of the Bernese people, while anything but enthusiastic about the Jura minority, were willing to allow the Jurassians to leave the ‘grand old canton’ if so wished and expressed direct-democratically.

Fleiner (2012) rightly calls this procedure ‘creative minority protection’ (kreativer Minderheitenschutz) and regrets its non-application to other contexts. Indeed, thought through until its very end, self-determination stops with individuals, but the lowest-level community is the municipality. The other lesson to be learned from this case is that just because ‘the people’ have decided to leave or remain with Bern, this does not mean that future generations are forever bound by that decision. In fact, after much political agitation within and amicable discussions between Jura, Bern and the Swiss Federation, it was decided to let the people vote again. In 2013, the electorates of Jura canton (North) and the Bernese Jura (South) were asked whether they wanted start proceedings for a merger into a new, common canton. Just like 40 years before, the North overwhelmingly approved and the South rejected—with the exception of the Bernese city of Moutier, where 55% voted in favour of leaving (Siroky et al. 2016, 447). Since again every municipality was given the right to vote anew, Moutier held what was billed as the ‘final’ referendum on the entire Jura question, in summer 2017. On a record turnout of 88%, a narrow majority of 52% voted to join Jura (SRF 2019). However, two years later the courts cancelled that referendum because of several irregularities and so Moutier will—probably—vote anew.

3.4 The Limits of Swiss Federalism

3.4.1 Limits of Implementation: Why Some Foreigners Can Buy Real Estate in Switzerland But Others Cannot

People living abroad can acquire real estate in Switzerland only within certain legal restrictions. The history of this federal law goes back to the 1960s. Xenophobes then complained not only that the foreign resident share of 15% was too high, but that there was reason to fear a ‘sell-out of Swiss real estate’ (Ausverkauf der Heimat) to foreigners. When the xenophobe movement announced the launch of a popular initiative to stop this development and the price of land soared, the government had to react. It thus adopted a regulation limiting the acquisition of real estate by persons and firms residing abroad. The issue was highly controversial. Liberal forces were against any state regulation of the real-estate market. The political left, on the other hand, wanted new regulations on land-use planning and the protection of tenants, but not in the sense of the xenophobe forces. Yet the government felt forced to do something to curb the political growth of the movement, which had begun to make demands going much further than their original ones. Because of the highly controversial nature of the question, the regulations were many times revised. The bill contains exceptions and leaves room for complementary legislation by the cantons, which also have to implement the programme.

Twenty years after its start, the success of the programme was hardly convincing. Whereas in some cantons the sale of land and houses to foreigners stabilised or even fell, it rose sharply in others. What had happened? A closer analysis (Delley et al. 1982) revealed that the cantons had made full use of their legislative and implementing powers, thus adapting the federal law to their own needs. In some cantons, the objectives of the federal law coincided with their own strategies, as in Lucerne which aimed at a slow and gentle development of tourist sites. The federal programme and its cantonal complements were protective of the environment and implemented in Lucerne without reservation. In the canton of Geneva, the result was somewhat ambiguous. The city’s most urgent need was to provide housing, especially for low-income residents. Thus, the city said no to foreigners who wanted to buy existing villas. But it said yes to foreign investors willing to co-finance large apartment blocks on condition that some of the apartments were let to families on low incomes. In a third canton, however, the federal objectives were completely distorted. Ambitious development plans for new tourist sites in the canton of Valais were financed by foreign capital. At that time, one could find advertisements in the business section of foreign newspapers saying: ‘For foreigners, it’s still possible to realise their dream of a Swiss Chalet’. Indeed it was, because Valais offered much laxer conditions for authorisation than other cantons, thus attracting more foreign capital to finance its plans.

Whereas it is common for the cantons to adapt federal legislation to their own needs, it is rare for them to go as far as inverting its objectives. Yet, the Valais example shows what many other studies (cf. Kissling-Näf and Wälti 2007; Rüfli and Sager 2004) confirm: the implementation of central government programmes in a federal system cannot be taken for granted. First, it depends on political will. If the political consensus is large, cantons and communes will make it a success, even if there are technical problems with implementation. Second, in a federal system consensus is required at different levels of government, but this condition may not be forthcoming. Programmes almost unanimously welcomed in the Federal Assembly may be controversial in particular cantons. An analysis of the federal housing programme, for instance, has shown that its subsidies were not used where housing was most needed, but in cantons where political forces willing to protect tenants were the strongest (Bassand et al. 1984). Third, lack of administrative resources at sub-national level can hinder a federal programme. For example, small cantons and communes are often unable to implement complex environmental policies because the necessary resources and expertise to analyse, implement, control and report are beyond their reach (Linder 1987, 224–227; Sager et al. 2018, 119–22).

3.4.2 The Weakness of Federal Authorities: How a Canton Can Deny Human Rights to Its Citizens

In the nineteenth century, Switzerland was one of the first countries to attain a level of democracy free from property and other restrictions on an adult male’s right to vote. The realisation of women’s voting rights, however, was a long and difficult process. The first attempts to introduce women’ssuffrage at the cantonal level failed in the 1920s in Neuchâtel, Basel, Glarus, Zurich, Geneva and St. Gall. In 1929, a petition demanding women’ssuffrage at the federal level was handed in with a quarter of a million signatures. The petition led to nothing. In a 1959 a popular vote, Swiss men voted two to one against women’s suffrage. In 1971, Switzerland became one of the last countries to give women the right to vote, but it took another ten years before women were given equal rights and constitutional protection against discrimination.

People often wonder why in Switzerland the recognition of women’s political and civil rights took so long. One answer may be that women’s organisations, after their early setbacks in the 1920s, had lost much of their motivation and energy to demand equal rights (Mesmer 1988). Another reason may be that Swiss society is generally more conservative than others. In fact the Swiss, who never had to militarily defend their traditional values and autonomy during World Wars I and II and who never suffered a social revolution in the twentieth century, were particularly late in recognising the need for a change in women’s societal position (Held and Levy 1974). When in 1958 Iris von Roten published Frauenim Laufgitter—a very critical report on the economic, political, sociological and sexual situation of Swiss women—the author and her feminist work were destroyed by the media and effectively silenced (Köchli 1992). Only in 1991, when the almost forgotten book was re-edited, was Frauenim Laufgitter hailed as the Swiss equivalent of Simone de Beauvoir’s Le deuxième sexe (1949) or Betty Friedan’s The Feminine Mystic (1963). This clearly illustrates the late change of mind about the position of women in Swiss society.

From the perspective of political science, another factor should be recalled. The problem with the direct-democratic introduction of women’s suffrage was that women were not able to participate in the decision. Men alone decided whether they were willing to abandon their historical privilege and share their political rights with women. In parliamentary democracies, such a situation is easier to deal with. A party that wishes to introduce women’s suffrage can combine this proposition with other issues, for instance job security or minimal wages, in its election programme. Thus, a worker fearing for his job would probably vote for that party, even if he was at odds with the idea of women’s suffrage. Should that party win the election, the introduction of women’s suffrage would be likely, because once introduced the new voting power of women would most probably support the government that had enfranchised them. This procedure was not possible in Switzerland, where women’s suffrage had to be introduced by popular vote—an all men’s vote.

Moreover, in order to prevent one issue from riding on the back of another, and to ensure that voters have the opportunity to express their preferences clearly, the Constitution prohibits the combining of different questions in a single popular vote. Thus, when attempting to introduce women’s suffrage in 1959, the federal authorities were unable to offer men some sort of incentive to share their electoral monopoly with women. All that the government could do was try to convince men that women were equal and that human rights should be universal. The most helpful thing, however, was the example provided by the cantons and a number of communes which, during the 1959 votation and later, introduced women’s suffrage at the lower level. When in 1971 the federal government tried again, it could point to these successful ‘experiments’ (see however Banaszak 1991).

A few bastions of all-male democracy withstood all attempts at persuasion, which they perceived as outside interference. The Landsgemeinde (citizen assembly) of the canton of Appenzell Inner-Rhodes steadfastly refused to introduce women’s suffrage until 1990. Finally, when deciding on an appeal brought by a number of Appenzell women, the Federal Supreme Court ruled that this situation was unconstitutional. The court thus intervened drastically: it redefined Appenzell Inner-Rhodes constitution in such a way that it gave women the right to participate at the next Landsgemeinde.²

One may again ask why this process took so long. Was there no possibility of the federal government intervening earlier to end the unconstitutional situation in Appenzell? Theoretically the answer is yes. The Swiss federation has several means of intervening if cantons fail to comply with federal law. In the event of public disorder, it can even send in troops. Under certain circumstances it can also withdraw subsidies. Both sanctions, however, would not have been of much help in this case. Moreover, they are used very rarely. Federal authorities deal with the cantons with almost as much respect as they deal with foreign states. More common is intervention by the Federal Supreme Court. Since every cantonal decision can be challanged with the charge that it violates federal law, the Court’s role in implementing equal protection is vital. Indeed, as the Federal Supreme Court deals with basic rights—freedom of the press, freedom of speech, the right to own property, freedom of association, equal protection by and due process of the law, and habeas corpus—it is probably the strongest authority of the central state with regard to the sub-national level. It says what can and cannot be done under the flag of federal autonomy. In defining common standards of constitutional law and equal protection, it acts as a counterbalance to the political variety of the cantons.³

The case of women’s suffrage, however, was rather special. When introduced at the federal level in 1971, the amendment allowed for a certain delay on the part of cantons to give them time to adjust their own regulations. This was done for two reasons. First, the delay clause was likely to improve the chances of success in the popular vote. Second, it symbolised the hope that the male majority in those cantons that still resisted women’s suffrage would change their minds more quickly if the federal authorities refrained from exerting pressure. This hope was fulfilled in several cantons, but not in Appenzell Inner-Rhodes. Here, the Federal Supreme Court (1990) had to decide and declare that the transitional period, after almost 20 years, had finally run out.

The belief of Swiss political culture that it is better to refrain both from coercive power and direct confrontation between cantonal and federal authorities seems to be indestructible, at least among the political elite. It is significant that the women’s suffrage case was brought to the Federal Supreme Court by a few ‘ordinary women’ who had the guts to resist threats of harassment when doing so. The Swiss political elite, on the other hand, was not very creative in finding means of helping the Appenzell women. They even renounced symbolic politics. When it was the turn of an Appenzell Inner-Rhodes member of the Federal Council to become president in 1989, parliament could have said: we do not wish a representative of this canton to be the head of our state as long as it denies their womenpolitical rights. Nobody did. When it comes to its member states, the federation speaks softly and does not carry a big stick. The reason in this case is simple: federal intervention in the realm of the cantonal autonomy would have been perceived as an infringement by the Appenzell (male) voters to decide ‘independently’. It would probably not have helped women getting their voting rights sooner either.

In a more general way, the question of how to enforce and implement human or civil rights poses problems in every federal state. Its central authorities have to guarantee equal rights, but they also have to protect minority rights and the historic particularities of local cultures. If equalisation is a question of money, it poses less problems. Money is divisible, and economic equalisation can therefore be negotiated through compromises. This is not always so with the equalisation of human or constitutional rights. Politically, problems of ethical values are often perceived as binary questions. In the view of many people, there is either the right to have an abortion or there is not, and the death penalty is either constitutional or it is not. Because of the fundamental nature of these questions, parliaments and supreme courts sometimes decide them constitutionally for the whole of society.

But is there in sub-national units a right to difference in the name of federalism? Given the perspective that human rights are fundamental and universal, there can be no tolerance for federal particularities which deny those. Member states should then be forced to comply with the solution decided for all. But such solutions can evoke fundamental conflicts. If the ethical question is highly controversial, the conflict can threaten other values—social peace for instance. In federal systems, it may therefore be prudent to avoid single solutions when the issue is highly controversial. Moreover, if human rights are perceived as a historical product of economic, social and cultural development and not as God-given, there may even be an argument for different solutions in federal states.

Autonomous solutions for particular member states may not only prevent conflicts, but also allow the development of endogenous cultural patterns that are necessary to make human rights effective in daily life. According to the constitutionalist Walter Kälin (1987, 187–200), the Swiss Federal Supreme Court has followed both lines: after an initial ‘unifying’ period, it has later tried to valuate not only the federal, but also the cantonal tradition of constitutional rights, allowing regional and particular solutions. During the past ten years, however, there is a renewed tendency to impose stricter standards upon cantons when it comes to electoral systems and naturalisation procedures, or human rights in general.

3.5 Challenges

3.5.1 Federalism Versus Democracy: Why One Citizen from Uri Outweighs 35 Citizens from Zurich

Chapter 2 argued that federalism was an important institutional mechanism in Swiss democracy for protecting minorities and dealing with cultural divisions. However, this also implies a conflict between two principles of decision-making. Democracy insists on the equal weight of every individual, that is, ‘one person, one vote’, whereas federalism guarantees equal representation to the member states of a federation, that is, ‘one region, one vote’. If the two modes of decision-making are used to decide the same question, they can lead to conflict (Germann 1991; Linder and Mueller 2017; Mueller 2020). In Switzerland, such collisions happen not only in parliament, if the Council of the States and the National Council disagree, but also in popular votes on constitutional questions, if the majority of the cantons and the majority of the people point in opposite directions. Table 3.4 shows all 14 instances of this occurring.

Most of these collisions are recent. The number of referenda on constitutional matters has considerably increased. Before World War II, we count about ten referenda per decade. In the period after, this number quadrupled to more than 40. Constitutional amendments, once an exception, have become the norm for the introduction of all substantial new activities by central government. This leads to a greater risk of collision between the popular and cantonal majorities.

Also the differences in population size between cantons have increased because of migration from rural to urban regions. This has had an effect when more popular votations require a double majority. In 1848, one person from the small canton Uri cancelled out 17 persons from the largest canton when the majority of the cantons was counted. Today, among eligible voters between the cantons of Uri and Zurich, the relationship is 1:35. When the 11.5 smallest cantons vote together, they constitute a blocking federalist majority representing only a tiny democratic minority. Theoretically, the smallest federalist veto power (51% of voters in the 11.5 smallest cantons against all others) represents just 10% of the Swiss electorate. This means that some 500,000 citizens, if ideally distributed territorially, could decide to keep all 8.5 million inhabitants in the constitutional status quo. In reality it is unlikely to find a 51% majority against a proposal in all small cantons and 100% in favour everywhere else. We can, however, determine the practical ‘minimal veto power’ from the votes in Table 3.4, where in ten out of 14 cases the cantonal majority blocked a democratic majority. This is done for the last nine votations, calculating the sum of no-votes from the 11.5 or 12 smallest cantons as a percentage of all votes cast (Table 3.5). We see that the practical veto power of the small cantons represents a democratic minority of just 14–25%.

Table 3.5 Federalist against democratic rule: practical veto power of small cantons in nine referenda

The above cases were important and controversial, and the veto power of the small cantons has further consequences. Political analyses show that the voting behaviour of the cantons on specific issues is relatively stable. One of the issues where small rural cantons vote differently from large urban cantons is foreign policy. When voting on a trade agreement with the European Communities (1972), on the first project for membership in the UN (1986), and on the Bretton Woods institutions (1992), the small cantons maintained classical attitudes of neutrality or autonomy and preferred non-engagement in foreign policy, whereas the large cantons were more open to Swiss participation in international affairs and organisations. As political scientists had predicted (e.g. Germann 1991, 269), this pattern also held in the votation on Swiss membership of the European Economic Area in 1992, when 50.3% of the people and 19 cantons rejected the treaty. But a mere 30% of all votes, coming from the small cantons, were enough to block a federal vote in favour. For a ‘yes’ to the treaty, on the other hand, a very strong majority of 59% of the people would have been necessary to reach a majority of 12 cantons. The same pattern—but this time with a positive result—was seen during the second referendum on UN membership in 2002: 54.6% said yes to the UN, and this vote produced the smallest possible majority of 12 cantons. It is evident, therefore, that substantial decisions in foreign policy—such as joining the EU, for instance—will meet a particular difficulty when it comes to a vote. If such a decision is a constitutional matter, a simple majority of the people will not suffice. A rather strong preference of 55–60% of the people will be necessary to achieve the double majority required.

To what extent is it justified that thanks to the federal principle a small minority can overrule the democratic majority? ‘Do not mix up two different things’, would say protagonists from small cantons. To protect minorities against a democratic majority is the very aim and legitimacy of federalism. If you accept the principle of ‘one region, one vote’, you have to accept a federalist majority no matter how small a part it may be of the democratic electorate. ‘Of course, minority rights are important’, others might say. They will object, however, that a federalism weighing the votes of some persons 35 times more heavily than those of others is denying democracy and its principle of ‘one person, one vote’ too much. Theoretically, every federal democracy faces this problem. There is a contradiction, and a trade-off, between the principle of equal rights of member states and of citizens as such.

It is impossible to find a general answer to the question as to the extent to which federalism may legitimately be allowed to outweigh democracy. Different solutions depend on a country’s historical situation, and on the importance a federation gives to minority rights or to the autonomy of its member states. The collision between democratic and federal majorities may be settled more easily in bicameral parliamentary decisions, where there are ways of negotiating between the two chambers, than in popular votations which lack this possibility. Some countries may not be worried by and therefore not become aware of the problem of the collision between federalism and democracy. In the US, the difference between the smallest and the largest states can reach a ratio of 1 to 50 or more. But small states such as Alaska, Wyoming, Vermont and Delaware do not often form themselves into a coalition as in Switzerland.

There is, however, an important lesson to be drawn from the Swiss example. Because of migration between the cantons, the weight of the principle of federalism has increased in comparison with democratic majority rule. One could argue that this is against the logic of Swiss history, because the importance of classical federal cleavages such as religion and language has diminished over the past 100 years. Why not therefore reassess the relative importance of federalism and democracy? Why not go back to the equilibrium, for instance, of 1848?

Theoretically, many solutions are possible. One could redistribute the seats in the Council of States. Given the increasing difference in the population size of cantons, one could modify their equal representation, for instance, giving large cantons three seats, the middle-sized ones two and the small cantons one seat. The majority of cantons in a popular votation could be calculated in a similar way. Or one could imagine rules for a division of power that would allow the federation to undertake new activities without amending the Constitution in every single case. Some such attempts have been made, but their failure was to be expected. Changing the rules of federalism is a game to be played under the existing rules, and there is no reason for minorities to renounce on their long-held veto rights when asked to do so.

More generally, the constitutional design of federalism has to be considered carefully. A simple democratic majority may grant over-representation to its small units. But the institutionalisation of such rights is a one-way street: federal minority rights, once introduced, cannot be revoked by a simple democratic majority.

3.5.2 Urban Regions—The Forgotten Dimension of Swiss Federalism

Urbanisation in Switzerland followed the same pattern as in other countries. It crystallised around historic centres, once complete microcosms where the same people were working, shopping, living and spending their free time. With the development of public transport and the spread of cars, the ‘complete’ historic city has been torn apart: its centre attracts the service industry, and the more services concentrate in the centre, the more they can specialise and the more they attract people from far away to use them. The service industry is able to pay higher rents than residents. Land prices rise. Residents are driven out. They may still work in the city, now a central business district, but they have to find an apartment in the suburbs. Old industrial plants, too, move out of the city into its surrounding areas. Consumers buy their commodities in shopping centres built close to motorways. Traffic grows faster than anything else. Urban people become commuters. Part of their growing income and leisure has to be spent on longer daily travel between workplace, shopping and recreation areas and home. The old city is transformed into an urban region, or an ‘agglomeration’, as it is called in Switzerland, which overruns traditional communal boundaries and is composed of a central city with perhaps 30 or more surrounding communes.

Swiss agglomerations may be smaller than those of other countries, but according to official statistics about 70% of the Swiss population live in them. However, there is no political organisation for the common needs of their inhabitants. For defence matters, there is the federation. For hospitals, there are cantons, and for sports facilities the communes are responsible. When it comes to the infrastructure of agglomerations, there is no common authority. Other ways have to be found to finance and run public facilities of common interest. For public transport systems, several organisations may work together: federal railways, private railways, buses run by the postal services and communal trams and trolleybuses. In some agglomerations this kind of cooperation works well. In others it fails because every single suburban commune may exercise a kind of a veto on most issues (e.g. Koll-Schretzenmayr and Schmid 2003).

The balance between the quality of life in cities and suburbs has been disturbed. Central cities are worried about the concentration of pollution and noise, and about the runaway cost of public services such as theatres and schools, which are supported by city taxpayers alone even though residents of the whole region use them. Through social segregation, the poor concentrate in the cities, whereas rich taxpayers—including firms—move into suburban residential areas. Over the last 30 years, the idea that wealthy cities are the motors of their surrounding areas has changed considerably. Scholars differ in their assessments of the extent to which central cities are losing out economically to suburban communes. There is evidence, however, that in today’s urbanisation process Swiss cities are living through a difficult period. They are hampered in their development and are running out of planning options that do not extend into surrounding communes. They risk being overrun by barely controllable commuter traffic. Some of them are becoming increasingly indebted, despite levying higher tax rates than in suburbia. No wonder political tensions between central cities and the surrounding communes are growing. Moreover, we see a revival of historical conflicts between the urban and the rural. Rural and urban societies seem to be faced with different problems. They develop different preferences in lifestyles and vote for different parties: Greens and Social-Democrats in the city, Liberals and Conservatives in suburbia and the countryside, respectively (Kübler 2017, 171ff.; also Scheuss 2013; Maxwell 2020).

Should there be a kind of a metropolitan authority for all shared services and public goods in urban areas? There is a strong theoretical argument for it in the idea that electoral and fiscal responsibility for a public good should coincide with those who benefit from it. Yet metropolitan governments who decide on all public goods, from transport and planning to health and culture, are rare in Europe. Instead of one political authority we find a multitude of special agencies, each dealing with one particular metropolitan service. In Switzerland, the idea of a political statute for agglomerations runs counter to the tradition of local autonomy (e.g. Koch 2013). One could argue that the country does not need a fourth tier in a federal system that is already too complex. But the problem remains. European urbanisation is transgressing national boundaries and pushing for larger dimensions. These pressures will probably help the Swiss to find their own solution (e.g. Sager 2002).

So far, the inauguration of a ‘Tripartite Agglomeration Conference’ is an interesting innovation because it brings together all three federal levels in order to deliberate on common problems. A stronger institution-building could follow two courses. Either cantons and communes will see a revitalisation of historical districts,⁴ with the advantage that the old geographical patterns of common political culture can be utilised. Or the consolidation of urban government will be achieved by the statutory creation of a special region. Urban regions can be designed to effectively cover the entire geographic range of public goods. Yet people may consider them artificial because their boundaries do not represent patterns of common political culture or reflect a sense of political community. If both ways are unsatisfactory, a third option may be considered. It consists of a flexible organisation in which just those communes cooperate who are willing to share part of their facilities and public services. Prices for common public services are higher for non-members than for members. This organisation helps to restrict the benefits of cooperation to members and creates incentives for initial non-members to join (Arbeitsgruppe 1992; Lehmann et al. 2003).

3.5.3 The External Challenge: Federalism in a Period of Globalisation

The last few decades have been characterised by a rapid liberalisation and globalisation of national economies. Some Swiss industries—like agriculture or small trade—came under great pressure because the opening of markets meant the end of national tariff and non-tariff boundaries that had protected them from international competition. For the export industry, however, internationalisation was nothing new. Swiss banks, Nestlé, and the chemical and pharmaceutical products of Roche or Novartis are known on all continents. While political neutrality and stability have attracted capital to Switzerland, its firms have invested all over the world, and a great part of their working places are located at production sites and services centres abroad: according to official statistics, in 2018 employment in Switzerland numbered 5 million, among them 1.6 million non-Swiss workers (BFS 2020). At the same time, Swiss-controlled companies employed some 2.1 million people abroad, mainly in Europe (44%) and Asia (26%) (SNB 2018, 4). And with 120% of gross domestic product (GDP), international trade is more important than in most other industrial nations (average for 2015–2018; EU average: 84%; World Bank 2019). No wonder that Swiss export industries welcome globalisation which gives them wider options and access to new markets.

Yet globalisation is more than an economic process. It has become profoundly political. For many problems, the nation-state has become too small. International or supranational organisations are taking part in the political functions and responsibilities that were once the domain of the nation-state. The political dynamics of globalisation have deep consequences for Switzerland. First, they question its traditional foreign policy, which consisted of active participation in international economic affairs but saw neutrality as the guiding principle and refrained from engaging in international conflict. In the 1990s, the Swiss government redefined the idea of neutrality, allowing a more active foreign policy and engagement in international affairs (Goetschel et al. 2005). This prepared it to become a member of NATO’s Partnership for Peace and later the UN.

Second, the pronounced liberalisation policy of the WTO made it impossible to continue Switzerland’s double-faced economic policy: protecting agriculture and some domestic branches of industry and trade from international competition while fostering liberal world trade for its own exports. Third and most important: despite the fact that the Swiss people in 1992 refused to join the European Economic Area (EEA), which would have offered comprehensive access to the EU’s single market, Switzerland is in a process of constant ‘selective Europeanisation’. Because of their intense economic relations, Switzerland and the EU have concluded a series of bilateral treaties. Forced by circumstances, Switzerland adapts most of its economic regulations to EU standards. Switzerland is in fact ‘Europeanised’ without being a member of the EU (Linder 2011; Jenni 2016).

How do globalisation and ‘Europeanisation’ affect federalism? Does Switzerland, in a process of international centralisation and harmonisation, have a chance to keep its national federalism and decentralised governance? To answer these questions, let us discuss some challenges resulting from outside pressure (cf. also Sciarini et al. 2004; Church 2007).

A first challenge is the different rhythm of decision-making. One of the characteristics of European integration is its rapid evolution, and the great scope of many of Brussel’s decisions. This flatly contrasts with Swiss policy-making, where federalism and direct democracy require time and allow for marginal innovation only. Moreover, as EU regulations and other international treaties can affect also cantonal responsibilities, cantonal governments have pushed for more participation in foreign policy. As a result, it is difficult for the Swiss government to formulate a foresighted and proactive policy.

A second challenge is the overruling of federalism. The majority of the Swiss people, for the moment, do not want to join the EU. But Switzerland cannot afford to cut itself off from the common market and have different economic regulations. Export industries and consumer organisations push for the opening and liberalisation of Swiss markets. The Swiss government ‘autonomously’ adopts many EU regulations and seeks the ‘euro-compatibility’ of new domestic regulations (Linder 2014, 229). Contrary to proactive policy, in which we observe weaknesses, the Swiss government is quick and alert in reactive adaptation. Some even say that the Swiss government adopts more EU standards than many EU members themselves.

How is this possible? Political analysts see two reasons. Firstly, pressure from the outside can go hand in hand with certain domestic interests. As already mentioned, many Swiss industries are interested in liberalisation, deregulation and open markets. Pressure from the outside and from the EU is ‘instrumentalised’ by a strong coalition of government and part of the economy (Mach et al. 2003; Trampusch 2010). This coalition, secondly, legitimises shortcuts in the political process, whereby the government is given more powers to decide. This can be illustrated by traffic regulations. Before 1997, dimensions and weights allowed for lorries were regulated by a formal law. When in 1990 the government wanted to increase weights to European standards, opponents feared an invasion of lorries crossing the Alps and launched a referendum. In 1997, parliament revised the law, delegating the competencies for the adaptation of weights and dimensions to the Federal Council. Soon afterwards the government made use of this competency for the first time and ‘harmonised’ some regulations according to EU standards. Under this regime, referenda are no longer possible.

Thus, globalisation leads to a change of the internal power balances and strengthens the executive. This can go at the cost of parliament, of people’s rights—and of federalism as is illustrated by the following example. In 1999, the education ministers of 29 states signed the ‘Bologna treaty’ for the harmonisation of higher education in Europe. The Swiss minister also signed on, but without much consultation of parliament or cantons. This was remarkable, as most universities in Switzerland are cantonal and education matters are key domains of the cantons. The overruled cantons, formerly eager to defend their autonomy in educational matters, did not even protest, and the reform was implemented quickly. The example shows that federalism is ruled out not only in a formal but also in a substantial way. With the harmonisation of Bologna, Swiss universities cannot showcase cantonal or national particularities and offer an internationally standardised curriculum instead. University students rightly wonder if the promise of having a Europe-wide recognised MA degree will give them better job chances on the domestic market.

This points to a more general effect of globalisation. Many economic branches, for instance agriculture or crafts, see no future because given higher production costs domestically, they cannot compete in an internationally liberalised regime, nor can they outsource work to cheaper countries. These losers of globalisation are located primarily in rural regions. Cantonal regulations and regional policies cannot help them any longer: globalisation not only makes national but also cantonal boundaries obsolete. The cleavages between the urban and rural segments of the population, and between rural and urban cantons, become deeper. Modern Swiss federalism thus faces a completely new challenge: the domestic power balance is under threat from abroad (Linder 2016).

3.5.4 The Internal Challenge: Why Do the Swiss Want to Preserve Federalism?

Globalisation and especially ‘Europeanisation’ can put traditional Swiss federalism at risk. But there are more challenges. Some traditional cantonal particularities that have lost their significance, for instance judicial procedures in civil and criminal law, which have been abandoned and unified by federal law. While such incremental steps for unification sometimes pass without opposition, a more fundamental critique gets more and more attention: that the Swiss cantons have become too small to effectively exercise their responsibilities.

Indeed, a canton with a population of 30,000 inhabitants may not be capable of running a high-tech lab for food control or run a specialised hospital. Critics say that instead of having 26 cantons of different population size, it would be better to have only seven, each of them having a size of about one million inhabitants. These new federal units could benefit from economies of scale and offer a higher quality of public goods at cheaper prices. One could even object that one million inhabitants is still small for a federal unit, go further and create a seven-million unitary system with no cantons. Yet even then it would be considerably smaller than the Free State of Bavaria with 13 million inhabitants. Is Switzerland simply too tiny anyway?

We would deny that because the managerial argument for the advantages of big size overlooks one essential point: the smallness of political units is not only a disadvantage but can offer advantages, too. In smaller units, there is often less bureaucracy, better political integration, greater identification with the authorities and better responsiveness to the citizen preferences. Let us take up the last point, illustrating the example of the Swiss health care system. Partly regulated by the federation, health infrastructure and services are organised by the cantons, and therefore of a different level of specialisation. Naturally, small cantons are restricted in their possibilities, and most sophistication is to be found in the big urban cantons with university hospitals. Here, not only public health expenditure per capita is higher but also the health insurance premiums paid by residents. But while explaining differences, there is yet another dimension to be found: experts speak of an East-West difference, with St. Gall and Appenzell at the low and Vaud and Geneva at the high end of expenditures. Some interpret this as a difference of mentality: people in the French-speaking West have a higher appreciation of medical services and use them more intensely than people in the German-speaking East. Thus, a centralised health system would give less satisfaction to both parts: people in the East would pay more and get more than what they want, people in the West less.

Maybe the time will come when some cantons merge with others. But this can happen only as a bottom-up process. If you ask Swiss people how they feel about their canton, you get different answers. Some identify strongly with it despite critique or are attached to its history and natural beauty, others like the emblem of their canton on the car plate, which in traffic distinguishes them visibly from drivers of another canton. But most would say that the federal government in ‘Bern’ is far away and an anonymous bureaucracy, and that they feel more comfortable with the canton whose service they use daily. These may be traditional feelings or pure intuitions, yet not entirely unfounded. The Swiss strongly prefer non-centralised governance, which brings the state closer to the people. Thus far the Swiss are also willing to pay for it. In today’s welfare state, decentralised governance has modern meanings, as we have illustrated using the example of public health: it is more responsive to the different values and preferences of different peoples. This is the meaning of the saying: ‘federalism makes happy’.