Strategic Choices for Switzerland in the US-China Competition

Abstract

This chapter explores the case of Switzerland as a “small power” in the currently emerging new world order. Particularly, we address the Swiss position amid the growing strategic competition between the United States (US) and the People’s Republic of China (PRC) and given its long-standing but evolving practice of neutrality. In our chapter, we set off by discussing Switzerland’s foreign policy positioning against the backdrop of three theoretical perspectives: Switzerland as a state like all others; Switzerland as a small state; and, finally Switzerland as a small neutral state. With the help of these three categories, we further locate Switzerland’s foreign policy firmly in the “hedging zone,” especially concerning the country’s China policy. The chapter then discusses four key documents, all of which have been released in recent years, drawing out the country’s foreign policy framework, before reaching some conclusions.

Introduction

An increased strategic competition and rivalry between the United States (US) and the People’s Republic of China (PRC) has been in the making for long, but has only more recently reached a point, where many small and middle sized countries in the international system have felt forced to rethink, recalibrate and sometimes even publicly communicate their own position vis à vis these two great powers. This is no less true for big powers like the Russian Federation (RF), the United Kingdom (UK) or the European Union (EU). While these processes are still ongoing, and the war in Ukraine is likely to change coordinates, the former two, i.e., the RF and the UK, seem to have more clearly aligned in the last few years with one of the competing great powers, while the EU has attempted to opt for “strategic autonomy.” But also smaller powers have found themselves in an increasingly difficult situation and are no less confronted with questions of alignment and autonomy than big powers, even if they might appear to have had less of a choice. The rivalry between the US and the PRC is likely to define the international system for years to come. Intuitively, smallness might suggest that autonomy is less of an option, while declaring and emphasizing neutrality seems to promise an attractive way out.

The positioning amid the US-PRC rivalry is not just a matter of bilateral relations, but also plays out prominently in multilateral institutions, traditionally conceived as venues that also small countries can use for their benefit. The recent creation of new global frameworks and multilateral institutions, such as in the context of the Belt and Road Initiative (BRI), the Asian Infrastructure Investment Bank (AIIB) or the Regional Comprehensive Economic Partnership (RCEP), and the PRC’s growing presence and influence in already established key international institutions have also impacted multilateralism and internationalism more generally (Hart and Blaine 2019; Grano 2021). It might be tempting to see the US as defending the liberal global order against the PRC’s attempt at installing an illiberal global order, but while not rejecting the relevance of this view modern historians portray a more complicated picture. In their assessment, internationalism has always been informed by mutually dependent and cooperating liberal and illiberal variants (Hetherington and Sluga 2020: 1–2). How the illiberal internationalism that Xi Jinping envisions (Weber 2022) depends and even accommodates with liberal internationalism (e.g., in terms of global capitalism) therefore constitutes an important angle to analyze the shifts in the international system and has important consequences for small and medium states and the choices they make.

Switzerland embodies such a state. While the US remains its second biggest business partner in terms of importance for its combined foreign trade (imports and exports),¹ the PRC’s importance for Switzerland has grown steadily in the past fifty and particularly in the past twenty years, most notably in the economic sphere.² In 2007, Switzerland officially granted the PRC market economy status. In 2014, Switzerland was the first country in continental Europe to have a free trade agreement (FTA) in place with China. In early 2016, Switzerland joined the Asian Infrastructure Investment Bank (AIIB) and in that same year in April 2016, President Johann N. Schneider-Ammann concluded an innovative strategic partnership with China.³ Notably, Switzerland has an almost even trade balance with the PRC.

The PRC is currently Switzerland’s third most important trading partner, after the EU and the US, and this situation is likely to pertain for years to come.⁴ In 2020, Switzerland exported goods worth 16.4 billion Swiss francs to the PRC while importing goods worth 16.6 billion Swiss francs (Aussenhandel der Schweiz 2020). Also in 2020, Switzerland exported goods worth 68.8 billion francs to the United States and imported goods worth 19.8 billion francs (ibidem).

The implications for Switzerland of the mounting strategic competition between the US and the PRC are the subject of some intense controversy domestically. Among the questions that are currently debated are: Can Switzerland afford to remain “neutral” between the US and the PRC? Can it do so, especially considering its newly issued governmental China Strategy (2021), highlighting economic cooperation and the continuation of a bilateral dialogue with the PRC while at the same time emphasizing the importance of the multilateral order and the Swiss commitment to human rights and democracy? Will Switzerland be able to resist pressure from both the US and the EU to choose sides, for instance, in view of continued Xinjiang-related sanctions on the PRC? The initial attempt by the Swiss Government to emphasize neutrality and good services and abstain from adopting EU sanctions against the RF for its war on Ukraine and the quick reversal of this position at the end of February 2022 has caught much attention and might offer interesting insights as regards the future of Swiss political neutrality. What are the choices offered to a small power squeezed in this competition, trying to balance out the choice between security, economic prosperity and commitment to liberal-democratic values?

This chapter first presents different theories that would explain the options available to Switzerland as a state, a small state and a small neutral state, respectively. Against that background, we then examine a series of key documents recently released by the Swiss Government. In the end, we offer a brief conclusion relating the discussion of key foreign policy documents to the theoretical IR part. Our findings indicate that Switzerland’s foreign policy strategy and positioning between the PRC and the US lies in the hedging zone, often shifting between the two subzones of “economic pragmatism” and “binding engagement”; these shifts illustrate the internal struggle Switzerland faces, between wanting to be perceived as a “connector” and a “bridge builder” among third countries while at the same time dealing with increasing demands among parts of the public and parts of the Parliament for a more unequivocal positioning firmly on the side of like-minded states.

Theoretical Framework

Basic international relations theory gives a rough framework for how to analyze a country’s foreign policy. Liberalism, for instance, tends to focus on interdependence between nations. When it comes to analyze the rise of the PRC and its growing influence in recent decades, liberal theories emphasize the importance of multilateral institutions (Philipps 2011) or how the PRC shall be pacified by trade (Reilly 2012). Realism, on the other hand, emphasizes the strength and fundamental interests of a country (Mearsheimer 2001; Waltz 1979). Leaders pay the greatest attention toward how they can maintain security and prosperity and gain political power on the international stage. The formulation of political, diplomatic and military posture occupies a higher place in realism than economic and cultural considerations (Rose 1998). Many studies on the rise of the PRC employ a realist perspective arguing, for example, that the shift in Sino-American relative power will lead to hegemonic conflict (power transition theory) or that the rise of the PRC is the most immediate threat to the US (Mearsheimer 2001, 2010).

It is unclear to what degree the abstract level at which international relations theory operates can capture the specific situation in which small states find themselves. Many scholars of International Relations have based their view on small states on the assumption that small states behave according to the same logic as great powers (among these, most prominently: Waltz 1979, 1987; Jervis 1978; Schweller 1992). Hugh White (2010), a realist scholar, deviates from this assumption and focuses specifically on third parties “caught in the middle” of the increasing competition. He argues that such countries (in White’s specific case, Australia) have three choices awaiting them. They can either capitulate and bandwagon with the PRC; they can balance aggressively against it; or they can attempt to convince the US, China, Japan, and India, to form a Concert of Asia (White 2010). According to White, the “Concert of Asia” option would have three immediate benefits: keeping both China’s and India’s rise in check as well as allowing Japan to exit the dead-end path it ventured on, since the end of World War II by creating a framework capable of enforcing limits on tolerated international behaviors (White 2011: 86). At the same time, such a framework would allow the US to continue to remain engaged in Asian affairs and would create a collective decision-making leadership process, so that control would not necessarily be claimed by the most powerful state (White 2011: 87).

While ideas such as a Concert of Asia might have an idealistic ring to them today, ten years after the publication of White’s article, we agree with him that small and medium sized powers require a theoretical framework that explicitly also takes their “smallness” into account. In what follows, we discuss three theoretical perspectives that focus, respectively, on Switzerland as just a state like all others, as specifically a small state, and as a small but neutral state.

Switzerland as a State: Hedging via Economic Pragmatism and Binding Engagement

Few responses of contemporary states to the rise of the PRC qualify as pure examples of balancing or bandwagoning (Kang 2007; He 2012; Bloomfield 2016). This is even true for the US, which has adopted different strategies under different administrations and in different realms. Not surprisingly, there is therefore no consensus regarding the appropriate terminology to be used to describe the US-China strategic competition. Earlier scholars tried to describe the US’s China policy by drawing on the classic distinction between containment and engagement (e.g., Shambaugh 1996). But this clear-cut manner has been out of tune with actual policies for some time. Goldstein has described mixed policies by coining terms such as “congagement” (Goldstein 2005: 12). Along similar lines, Shelley Rigger in Chapter 2 of this book talks about “coopetition” when defining the shifting balance between competition and cooperation between the PRC and the US.

Alan Bloomfield’s study of Australia-China relations (2016), borrowing from political scientist Cheng-Chwee Kuik (2008), also emphasizes an additional middle zone between the competitive “balancing zone” and the cooperative “bandwagoning zone.” The balancing zone, embodying opposition to the PRC’s power and efforts to counter its interests, is on the left; the bandwagoning zone, implying acceptance of Chinese power and bowing to its interest, is on the right, while the “hedging zone” is located in the middle (Bloomfield 2016: 262) (Fig. 4.1).

Fig. 4.1

The balancing-bandwagoning continuum. Adapted from: Alan Bloomfield (2016: 262)

As explained in Chapter 1 of this volume, Cheng-Chwee Kuik, who analyzed the responses of South East Asian states to the rise of the PRC, drew his definition of “hedging” from the literature on finance. According to him, hedging is a “behaviour in which a country seeks to offset risks by pursuing multiple policy options that are intended to produce mutually counteracting effects, under the situation of high-uncertainties and high-stakes” (Kuik 2008: 168). Seen in this light, countries that opt for a hedging strategy want to maximize their commercial prospects while at the same time protecting against possible threats (Bloomfield 2016: 263). Kuik further splits the hedging zone into five “sub-zones.” The three options located on the right side of hedging zone, close to the bandwagoning zone, are called “Return-Maximising options” (Fig. 4.2)

Fig. 4.2

The hedging zone continuum. Adapted from: Alan Bloomfield (2016: 264)

Given the fact of large-scale global economic integration and multilateral frameworks, in past decades almost all countries have adopted policies that are clearly in the hedging zone, trying to bandwagon on all sides when it comes to maximizing their commercial prospects, but balancing softer or harder in the realm of security against one side. Even the two contending great powers themselves, the US and the PRC, have done so. The conceivability, let alone the actually available policy, of bandwagoning on all sides is characteristic of a post-Cold War world that has seen global capitalism make the economic sphere run more disjointedly from the geopolitical and security sphere.

The Swiss China policy of the last twenty years or so is certainly and firmly planted somewhere in the middle of the hedging zone. Most suitable categories applicable to the Swiss situation would be the “economic pragmatism” option, which defines a country that trades with the PRC and is open toward Chinese FDI but abides by strict political and military neutrality, and/or the “binding engagement” option, which stands to indicate the behavior of those states that engage with the PRC and try to encourage it to participate in regional and international institutions therefore “binding it” to commonly accepted international standards (Kuik 2008: 165) (Fig. 4.3).

Fig. 4.3

Switzerland’s strategic choices in the hedging (accommodation) zone continuum. Adapted from: Alan Bloomfield (2016: 264)

Clear hedging options may not always be available to countries, particularly when the rivalry of the great powers intensifies, as it has in recent years. Some countries might eventually have to choose sides between the US and the PRC, either pursuing a “balancing strategy” or a “bandwagoning strategy”. Others will try to find a way to combine soft balancing in one area (security, values) with limited bandwagoning in another (economic sphere). While it is easy to understand how the post-Cold War world would have slipped into the hedging option of economic bandwagoning with some balancing in the security realm, the opposite movement is a much tougher proposition. Aligning the economic sphere more strongly with the geopolitical security sphere will be resisted by an entire range of non-state actors for very different reasons and also, in many regards, pose an unattractive option for governments, which rely on economic performance.

Switzerland as a Small State: Shelter Theory and Relative Strength

Switzerland is often discussed in the small-states literature. A common feature in most scholarly definitions of smallness hinges on the relative scarcity of capabilities, which unfavorably affects the state’s ability to sway domestic and external results (Thorhallson et al. 2019: 14). Defining criteria for small states are population size, territorial size, military might, economic capabilities (GDP) (Archer and Nugent 2002), but also diplomatic clout, etc. Some of these characteristics have been treated as more important than others. A huge territory, for instance, does not make a state powerful by itself, if other features such as a large population, appropriate resources and economic wealth are lacking. Moreover, a quick glance at history reveals that some missing characteristics and defining features can be acquired if absent; economic wealth, for instance, can be achieved when favorable conditions take place and the right policies are enacted (Thorhallsson 2018: 18). Clearly, if a state has a small population, certain disadvantages will have to be compensated for. A small state will, for instance, find it hard to establish a powerful military force and its economy will often be tied to international fluctuations; said nation will be dependent on trade with other states (Katzenstein 1985). Small states might also have smaller bureaucracies, a more limited diplomatic corps and lesser intelligence capabilities.

Overall, most early literature underlines the disadvantages of small states. Keohane (1969) argues that small states are system-ineffectual, meaning that their capacity to impact outcomes in the international sphere is limited at best. For Morgenthau (1972: 129–130), small states are simply states which are not considered as middle or great powers and are likewise not able to act like great powers. Annette Baker Fox (1959) contends that small states are incapable of successfully exerting power on other states as well as of resisting the will of other states.

In the post-Cold War era, small states’ scholars have started combining more traditional variables (economy, size of population, military and territory) with “new variables”—such as the projection of a certain image—and have thereby shifted their attention from the power that a state possesses to the power that a state exercises. Multifactorial definitions contemplate both objective as well as subjective measures of size. Thorhallsson (2006), in his conceptual framework, combines elements from small states’ literature into an analytical system by listing: fixed size (population and territory); sovereignty size (the degree to which a state is recognized by others and is able to control its own borders); political size (military and administrative capacity, foreign policy consensus); economic size (GDP, market size, economic development); perceptual size (how domestic and external actors perceive a state—the soft power element); and preference size (ambitions and prioritizations of the governing elite and its ideas about the international system).

Mouritzen and Wivel (2005: 4) propose to abandon the quest for a universal definition of small states and choose instead to define small size as “relational.” In other words, a state can be weak and uninfluential in one aspect, but powerful in another. Ingebritsen (2006) claims that small states can become “norm entrepreneurs” and lead by example internationally by utilizing national knowledge and specificities to their own advantage and deriving a positive image from it.

Thorhallsson et al. (2019) propose a new theoretical concept, which they call “Shelter Theory.” Breaking with methodological nationalism, Shelter Theory rather than considering solely small states is also applicable to all small political units (Ibidem: 15). Shelter Theory, for instance, can be useful in analyzing dynamics within states. It can be suited to study the choices faced by domestic political units and even be helpful in assessing why a political unit should remain part of a bigger state or secede from it or dislocate, according to whether or not it receives sufficient shelter from the bigger unit (Thorhallsson et al. 2019: 17). The precondition should be the presence of the choice to either leave or remain attached to a state (or a bigger unit) that can offer shelter and protection. For these three authors, small states and political units are not motivated simply by security concerns (as the realist argument would have it) seeking to protect their territorial integrity, but rather need social, political, economic and social shelter to “thrive” rather than merely to “survive” (Thorhallsson et al. 2019: 17). In other words, they need protectors, external ones, who can provide them with shelter.

Some states, however, have been successful in the past despite their small size and territory. Switzerland is often presented as an example of politico-economic success. The country has been routinely listed as one of the world’s most successful economies based on criteria such as GDP per capita, economic and political freedom, efficient governance, transparency, high standards of living, quality of infrastructure and facility to do business, due to low bureaucratic hurdles (Guo and Ladner 2016; Guo and Wu 2016). Following the more recent literature, it would seem that Switzerland is a good case for a country that is “small” in some regards, and therefore needing shelter and strongly advocating for multilateralism, and not so small in other regards, particularly when it comes to some economic sectors and some aspects of norm entrepreneurship (Fleury 1988).

Switzerland as a Small Neutral State: An Easy Way Out?

Besides being a small (and not-so-small) state, Switzerland is also a neutral state. Indeed, Swiss neutrality is one of the main principles of its foreign policy; put very crudely, it dictates that the country is not to involve itself in the military affairs and conflicts of third parties. This policy is self-imposed, permanent and armed, designed to promote peace and ensure external security. Neutrality is also meant to guarantee independence for Switzerland and ensure credibility for the country, which is host to a myriad of international organizations.

Riklin (2010a, b) distinguishes several key functions that neutrality has played for Switzerland in historical perspective. The developments from 1945 onward and especially after the end of the Cold War, notably the wave of democratization in Europe and the role of international law and multilateral institutions, have diminished the significance of neutrality (Kley and Portmann 2014: 1101). For instance, Switzerland has taken part in UN economic sanctions even when these sanctions arose out of military conflicts, as in the case of the first Gulf War. Throughout the years, the application of neutrality and the continuation of a neutral position for Switzerland have remained a discretionary duty, largely left to politics, while many actors have come to question the effectiveness of the tool and its use in the post-Cold War world. As put by Laurent Goetschel (2002: 573): “Neutrality is a tool of Swiss foreign policy and not an end in itself. It serves to implement foreign policy interests and goals. At the same time, neutrality belongs without a doubt among the core elements of Switzerland’s political identity.” Nonetheless, neutrality is itself a relational notion. The international customary law status of permanent neutrality depends on the continued recognition by the international community.

Amid increasing US-PRC strategic competition and rivalry, emphasizing neutrality might offer an easy way out for a country like Switzerland. Past experiences are mixed. Switzerland has for a very long time enjoyed high diplomatic clout, e.g., through its “good offices,” serving as intermediary between the United States and Iran for years or staging high-level summit meetings between great powers on Swiss territory. Yet, Switzerland’s position of neutrality had frequently been put under strain, e.g., by the US after the Second World War. Even though not directly participating in the multilateral institutions being set up at the time (NATO, UN, European integration process), or only participating provided that such memberships would not erode the Swiss principle of neutrality (Fischer and Möckli 2016), Switzerland nevertheless gradually became part of the so-called Pax-Americana, when the United States became the dominant economic and military world leader. During this period, Switzerland became integrated into the security system of the West, with a series of diplomatic, economic and technological steps. As amply shown in modern historiography, Switzerland had in the earlier decades of the Cold War in many ways straightforwardly sided with the US (e.g., early on in the Hotz-Linder-Agreement of 1951) despite its commitment to neutrality. Wyss (2012) shows how Swiss armed neutrality meant acquiring adequate weapons, which was one of the causes for its alignment with the Western bloc (mainly the UK, but also the US and France), and paradoxically brought about a situation in which Switzerland arguably broke international law and discredited its credibility as a neutral state in the eyes of the Soviets as well as the US and their respective allies. A similar picture emerges when looking at arms sales, e.g., in the context of dual-use clock parts or the Pilatus porter airplane (Gaffino 2009). At one point during the Vietnam War, no less than 90% of all Swiss cogs and gears were destined for the US arms industry (Gaffino 2009: 27). In overall economic terms, 95% of Swiss foreign trade between 1946 and 1989 was with countries from the non-Communist West, mostly with countries that were member states of NATO (Schaufelbuehl and König 2009: 9).

The PRC has had a less complicated relationship with Swiss neutrality. Frequently, it has lauded it. Only recently have scholars started to research in depth to what extent the PRC likewise benefited from the early Swiss recognition in January 1950—Switzerland being among the first Western European countries to establish diplomatic relations with the PRC successfully (the UK tried but failed).⁵ Although there was less pressure from the PRC, ongoing research suggests that there was a price to pay that came with being a neutral. All the above makes it clear that neutrality might not be such an easy way out, but a demanding policy that is likely to attract pressure or even coercion by great powers and one that is increasingly difficult to explain to the global civil society. In the terms used above, neutrality would mean to abstain from balancing or bandwagoning in terms of security, but not so economically, where balancing and bandwagoning both seem adequate as long as these are applied equally to all sides. It is an open question (and depends much on the individual perspective) to what extent neutrality has or has not been successful during the Cold War, but today’s conditions, with heavy global economic integration and increasing great power rivalry, would not seem to make the task any easier, but rather more difficult.

Discussion of Key Recent Documents

In this section, we discuss several recent key documents released by the Swiss government. These will help us to answer our research question, trying to gauge whether or not the documents support the IR theories regarding the national strategy vis à vis China and the US, as well as those regarding the theories on small states. Our hope is therefore to contribute to the knowledge of IR theories by looking at one specific case, namely that of Switzerland, while also illuminating the specific Swiss constellation amid great power rivalry.

The Swiss Constitution (April 1999)

All of Swiss foreign policy has to conform to the Constitution. Two articles in the Constitution are particularly relevant. Art. 2 describes the aims that the Swiss Confederation sets itself and asserts that it shall “protect the liberty and rights of the people and safeguard the independence and security of the country,” “promote the common welfare” and commit “to a just and peaceful international order.” In short: security, economy and values (justice). The last bit, on “a just and peaceful international order,” had been added in the new 1999 Constitution. During the same full revision of the Swiss Constitution, an entire article explicitly on foreign relations was inserted in the section concerning the powers of the Confederation. Art. 54 defines these relations as the responsibility of the Confederation stipulating:

The Confederation shall ensure that the independence of Switzerland and its welfare is safeguarded; it shall in particular assist in the alleviation of need and poverty in the world and promote respect for human rights and democracy, the peaceful co-existence of peoples as well as the conservation of natural resources.

Art. 57 on the “security of the country and the protection of the population” and Art. 101 on foreign economic policy highlighting “the interests of the Swiss economy abroad” give further texture to the goals of an independent Switzerland and its welfare. Neutrality is not mentioned explicitly in this context (only in Arts. 173 and 185), since it is officially understood as a means to reach other goals rather than a goal in itself. The Constitution therefore simply assumes neutrality, while its contents are determined elsewhere (Kley and Portmann 2014: 1101).

The Cascade of Swiss Foreign Policy Documents

The Vision of “Switzerland in the World 2028” (July 2019)

The current Swiss foreign policy framework draws some of its strategic inspiration from a report that the Foreign Ministry had commissioned to a working group.⁶ The report emphasizes “a more focused, networked, agile Swiss foreign policy.” The network aspect is underlined through the newly coined notion of a “whole-of-Switzerland approach,” that has since found its way into all official strategy documents. It refers to an approach that includes a “national dialogue on foreign policy” and “citizen-centred foreign policy” beyond the Parliament and the cantons, particularly the inclusion of “relevant competencies and networks outside of the Federal Administration” (Switzerland in the World 2028 2019: 22). NGOs, think tanks and scientific institutions are especially mentioned, and contact with them “could be stepped up,” the report says. Finally, the “Swiss business world” and “its competencies, contact networks and local knowledge” are also included. The approach fits the concern to envision a foreign policy that is closely intertwined with domestic policy.

When envisioning the world in 2028, the report depicts a “fragmented world shaped by power politics,” where liberal values are no longer alone associated with prosperity, but “outside the Western world” a “counter-model” of “capitalism without political pluralism” has arisen as a challenger (2019: 3). Interestingly, the report seems to frame “liberal values” along a West/non-West dichotomy. There are only five actors that the report singles out as particularly important major powers: the US, the PRC, Russia, the European Union and “the West,” the latter of which is further described as a “transatlantic community of values” (Switzerland in the World 2028 2019: 4).

With regard to the US, the report asserts its continued leading global role, but identifies a change of self-perception from “being the keeper of the global order” to the “America first” policy of the Trump administration. This trend, the report says, “is likely to continue after [Trump’s] presidency” (2019: 3). The PRC is said to have “regained the status of a world power,” while its model is described as a “one-party state” with “state capitalism combin[ing] with nationalist rhetoric that is once again increasingly based on Marxist-Leninist principles” (Ibidem 2019: 3). There is a very clear passage on the realization that “China’s long-expected gradual adoption of the western developmental model has not taken place,” as the PRC is credited with being “the only major power with a clearly discernible foreign policy vision,” that is the Belt and Road Initiative (BRI).

There are two sections in this report that directly speak to the Swiss position amid great power rivalry. One is called “An eye on the major powers.” It highlights “good offices” as a “high-potential area” of Swiss foreign policy, the importance of “coherence between departments in their handling of priority countries” and the need for specific “country strategies,” particularly with regard to the US, the PRC and the RF (Switzerland in the World 2028 2019: 18). The report notes the continued US importance for “Switzerland’s prosperity and security” and the “solid historical foundation,” “largely shared values and close cultural and human ties” (Switzerland in the World 2028 2019: 18). It asks to step up “cooperation with influential US think tanks” (2019: 19). But the fact that Switzerland had entertained closer diplomatic exchanges with the PRC than with the US is also mentioned (Ibidem 2019: 18), as is the need to state the Swiss “multilateral interests” to the US (at the time, under the Trump administration) and to cooperate “in areas in which it makes sense to do so” (Ibidem 2019: 19). With regard to the PRC, the report considers the “very close relations” a success and recommends drafting a China strategy that “intelligently combines the opportunities and challenges associated with the cooperation” (Ibidem 2019: 19). In the scenario of an even more politically polarized world, the working group foresee that the relationship with the PRC “could become more complicated” (Ibidem 2019: 19). The report asks for an “effective overall strategy” that can accommodate the “close economic relations and strategic dialogue” in place. Finally, the report calls for a “structured cooperation with like-minded states” in Europe, but also outside of Europe, explicitly, it seems, targeting small advanced economies with a similar population size, such as Denmark, Finland, Ireland, Israel, New Zealand and Singapore.

The second section directly speaking to the Swiss position amid great power rivalry is entitled “Independence: freedom of action and new opportunities of neutrality.” It notes that in the absence of alliances Switzerland can be pressured more easily given the pertaining “geopolitical competition for power” (Ibidem 2019: 16). Swiss neutrality is declared “a trump card in the country’s independent foreign policy,” which, while “being called into question in the 1990s,” is not “obsolete” (Ibidem 2019: 16). The report highlights the “greater room for manoeuvre,” the credibility that comes with pursuing “no hidden power-politics agenda” and the importance of “the country’s host state policy and good offices” (Ibidem 2019: 16).

Foreign Policy Strategy 2020–2023 (January 2020)

The current key documents of the Swiss foreign policy framework have all been released after the vision of 2019. The government presents them as located at three different levels, two strategic at the level of the Federal Council (the highest executive authority in the country, composed of seven members from across the party spectrum) and one operational at the level of the Foreign Ministry (headed by one of these seven federal councilors). In its most updated form, the framework is spelt out in the recent Americas Strategy (2022: 11). At the top of this cascade sits the “Foreign Policy Strategy (2020–2023)” (FPS), published in January 2020. The FPS identifies globalization as “the most significant international trend of recent decades,” highlighting its winners and losers and confirming that Switzerland has gained from it, currently being one of the 20th largest economies in the world. Analyzing the different drivers of change in today’s world, the FPS distinguishes five different realms: social, political, economic, technological and environmental. Each of these realms is explained in a small paragraph, but no specific countries are mentioned other than in the one concerning the drivers of change in the political realm:

The strategic rivalry between the United States and China, which manifests itself in trade, technology and security issues, also clearly highlights diverging values, with China advocating a state and development model that does not link prosperity to political pluralism. Meanwhile, although the democratic and market economy model remains successful, it is coming under pressure. In addition, many democracies face a crisis of confidence. (Ibidem 2020: 7)

The strategic rivalry between the US and the PRC is depicted as stretching across all spheres, from trade to security to values; the economic cooperation among the rivals is not mentioned. While China’s different political model is highlighted and contrasted with the “democratic and market economy model,” the fact that this would put Switzerland and the US in the same camp is not stated, but perhaps assumed.

The FPS discusses thematic focus areas and objectives for implementation in all countries of the world and also in multilateral institutions. Additionally, it discusses a set of “priorities at the geographical level” in two chapters (Ibidem 2020: 21). One chapter is devoted to Europe and the European Union, which it refers to as its “core issue” in foreign policy and the “most important partner” (2020: 21). Outside of the EU, Switzerland has eight priority countries: Brazil, China, India, Japan, Russia, South Africa, Turkey and the United States. With all of these countries, Switzerland has established formal dialogues and pursues individualized country strategies. Each of these countries receives a separate discussion in the strategy. With regard to the PRC, the FPS notes “challenges, particularly in terms of the different political systems, on human rights issues and in the area of security policy” and assumes the “different value systems” to become more “marked” in the future, “particularly at the multilateral level” (2020: 28). All of this requires more “coordination on the Swiss side—both between departments and between the federal government and cantons” (2020: 28). The BRI is said to present opportunities “for Swiss interests and the economy,” but points to the importance of “compliance with universal values and rules” (2020: 28). About the US, the FPS does not go much beyond what has been stated by the working group in the report on “Switzerland in the World 2028.” Again the US’ “key role for European security” is mentioned (and a pipelined agreement on military training cooperation), its economic importance for Switzerland and historical and cultural close ties (2020: 29). What is perhaps more interesting is that the comparative side-remark in the report about Switzerland seeing more interest given to it by the PRC than the US is dropped. Instead, the FPS highlights that the “continuous cultivation and expansion of close and diverse bilateral relations has proven successful” and “regular talks are held in relation to politics, economic affairs, science and research, education, taxation, finance, customs issues and security, as well as interparliamentary dialogue” (2020: 29). Finally, Switzerland commits itself again to work with the US “to advocate peace and security where it is in both sides’ interest” (2020: 29). The notion of a “whole-of-Switzerland approach” is not referred to throughout the entire FPS, but pops up in the very last sentence of the conclusion (2020: 39).

The FPS is the document with which all further strategies located at the second level of the Swiss foreign policy cascade must be in agreement with. These strategies are divided into geographical and thematic strategies. Among the latter figure documents like the Digital Foreign Policy Strategy (2021–2024), the Strategy for Communication Abroad (2021–2024), the International Cooperation Strategy (2021–2024) and the Arms Control and Disarmament Strategy (2022–2025). There are currently four geographical strategies, one on the MENA region, one on Sub-Saharan Africa, one on the PRC (the only country-specific strategy) and, the latest addition, one on the Americas.

China Strategy 2021–2024 (March 2021)

The Ministry for Foreign Affairs had the lead in coordinating the process of drafting a China Strategy, which then was endorsed and published by the Federal Council. The document signals the heightened socio-political tensions within several echelons of Swiss society and politics, regarding what is perceived as China’s more assertive behavior. It makes prominently clear that Switzerland wishes to pursue an independent policy toward China, as it seeks to “defend its long-term interests and values” (China Strategy 2021–2024 2021: 20). The notion that is used to describe the engagement with the PRC is interesting, as Switzerland is said to seek a “constructively critical dialogue and broadly diversified relations with China” (2021: 5). The strategy presents Switzerland as a “medium-sized power,” which given its size has “a direct interest in a broadly accepted international order and effective multilateral organisations (2021: 5).

There is one section explicitly addressing the global positioning of Switzerland. Registering “the rise of China and shifts in global power structures,” the Federal Council perceives nonetheless no fundamental challenge to “Switzerland’s foreign policy positioning” (2021: 20). Switzerland, it states, will remain “neutral, does not belong to any bloc, and is committed to dialogue with all states” (2021: 20). “Geopolitical polarization” and “bloc-building around China and the US” are not in the Swiss interests, the strategy states (2021: 20). Switzerland wants to be seen as a “bridge-builder” that offers “its good offices,” particularly with Geneva “as a neutral yet international venue for dialogue” (2021: 20). “In return,” the strategy continues, “Switzerland expects its independence to be respected around the world, and that it will not face either/or ultimatums” (2021: 20). If in doubt, Switzerland “will stand up for freedom” (2020: 20). This indicates an interesting ultima ratio, in line with the document’s statement on “Swiss core values” encapsulated by “a liberal economic order bound to the rule of law and the basic rights of the individual and underpinned by democracy” (2021: 20).

Despite all talk of independency, the strategy is clear regarding the fact that Switzerland cannot refrain from all partnerships. “European states and the EU” are mentioned specifically in this context as Switzerland’s “most important partners,” which share similar positions and “values [that] are often fully congruent” (2021: 20). The document underlines the importance of “structured relations with the EU” given “the current geopolitical situation” (2021: 20). There is no explicit mention of the US as a partner, but the strategy vaguely gestures toward “a large number of states outside of Europe that pursue similar interests” (2021: 20). The difficulties of dealing with the PRC are mentioned, as “cooperation with non-democratic states” is said to be “demanding” and dialogue “difficult where there are differences of opinion,” but the Federal Council believes that “turning away from China would not have a positive effect on domestic policy developments there,” while it would “harm Swiss interests and fuel uncertainty about Switzerland’s foreign policy positioning in general” (2021: 20). This last statement appears to presents a line of reasoning that is close to a strawman argument, since turning away from China has hardly been an option at the time of these discussions, and linking it to a failure to produce a positive effect in the PRC does by no means imply that current policies do create such an effect.

The China Strategy includes a large number of critical statements about the current state of the Chinese party-state. It calls for better coordination between government departments and thereby hopes to achieve a more coherent foreign policy. The China Strategy takes up the notion of a “whole-of-Switzerland approach” from the FPS and gives it more prominence, introducing it through graphics and counting it as a separate “operational principle” of its policy on China besides bilateral relations and multilateral cooperation. Overall, it might be fair to say that the clear commitment to values, to European partners and the liberal economic order suggest that when it comes to dealing with a China that would shun international rules and norms, the strategy does seem to suggest the possibility that Switzerland could shift its more “prudent” positioning as an “economic pragmatist” toward the balancing end of the continuum.

Americas Strategy 2022–2025 (February 2022)

As indicated in the title, the Americas Strategy is not exclusively addressing the US, but the text leaves no doubt about the paramount importance of the US for Switzerland. There are some critical comments pertaining to domestic challenges of the US, particularly regarding political polarization and the socio-economic chasm, as well as wide-spread racism and discrimination (Americas Strategy 2022–2025 2022: 6). In global terms, the US is said to continue to be the “economic, military, political and technological dominant power in the international system” (2022: 8). The volume of relations in terms of business (Switzerland being the 6th biggest foreign investor in the US), people (81,000 Swiss live in the US) and cooperation across sectors (most co-authored Swiss research publications are with colleagues in the US) between Switzerland and the US is extraordinarily high, the report states (2022: 9). Chapter 2 of the strategy discusses the geopolitical situation and has a section on the US as a global power. In one passage, the document mentions the PRC as a rival of the US, whose status as a global power is no longer uncontested (2022: 13). Again, China’s “centralistic-authoritarian system” is depicted as a “counter-model” to the “liberal-democratic West,” while the storm on the Capital of January 6, 2021, is mentioned as an event that has diminished the prestige of “the American model” (2022: 13). Russia and Iran find a mention as geopolitical contenders besides the PRC, but with the new administration under President Biden a new dynamic has come about, as the strategy highlights by pointing to renewed alliances in the transatlantic and Asian-Pacific regions as well as multilateral fora; the document explicitly refers to “the shared values of democracy, rule of law and human rights” (2022: 13). The consequence of this new disposition toward dialogue is said to be likely more pressure by the US on like-minded and allied nations, “particularly in key dossiers such as China, sanctions or the question of burden sharing” (2022: 13).

In terms of security, the strategy confirms the importance of the US and its support for the European security architecture as relevant to Swiss foreign and security policy, but highlights again the independence of Switzerland as well as fact that “it is not a military ally of the US” (2022: 22). “Good services” are emphasized (2022: 22). In terms of cyber security, Switzerland sides with the US in most regards, but “pursues more pluralistic approaches than the US in its choice of technology suppliers” (2022: 23). The strategy notes a risk of becoming a target of American politics and its interests, where the US enjoys considerable leverage over Switzerland in “the (unilateral) enforcement” of its own interests and legal norms (2022: 23). Particularly in view of China, the document continues, pressure will increase not just in the realm of technological norm setting “to choose ‘the right side’” (2022: 23).

Interestingly, the strategy implements some of the recommendations of the working group on the vision “Switzerland in the world 2028,” e.g., the intensification of partnerships with US think tanks, for which a footnote gives a list of already existing cooperating partners such as the “Wilson Center, Brookings Institution, The Stimson Center, CSIS, Carnegie Endowment for International Peace, The Heritage Foundation, Council on Foreign Relations, CNAS, Atlantic Council, and WOLA.” Given the skepticism that otherwise is prominent with the Swiss positioning vis-à-vis major powers, this long list of cooperation with think tanks is remarkable.

The Operational Level

The third level of the Swiss foreign policy cascade is located at the departmental level and not strategic, but operational. It includes documents labeled as guidelines on issues as diverse as the OSCE, the private sector or human rights. The “Guidelines on Human Rights 2021−2024” are interesting for their lack of mention of state actors. The PRC is mentioned only twice, once in terms of the China Strategy as part of the Swiss foreign policy framework and once in a footnote for the (currently suspended) human rights dialogue that Switzerland entertains since 1991.

Conclusions

The discussion of key documents in Swiss foreign policy has focused on the Federal Department of Foreign Affairs. To gain a more complete picture and understand interdepartmental points of contestation, the recent “Foreign Economic Policy Strategy” (November 2021) and the annual security reports by the Swiss Federal Intelligence Service (Switzerland Security 2021) might be helpful. The latter report of 2021 states in no uncertain terms the expectation that the US will demand support from its European allies “in curbing China in the economic and technological spheres” (2021: 20). The security report is depicting the PRC’s increasing ambitions, its policy of civil and military fusion, its authoritarian model and its global operations in terms of influence, espionage and intelligence. A bit different in emphasis from the Federal Department of Foreign Affairs (FDFA), the Federal Intelligence Service assumes “the growing competition between the three superpowers USA, China and Russia” (2021: 73). Certainly with the war in Ukraine, this insight from a security point of view has gained new relevance.

The present chapter has shown that Switzerland’s foreign policy strategy and orientation between the US and China seems firmly placed in the hedging zone, especially dwindling back and forth between the “economic pragmatism” and the “binding engagement” sub-zones. This posture is connected to what Switzerland wants to be acknowledged for, namely its capacity as a “bridge builder” between countries; through pragmatism and professionalism Switzerland offers its good services without getting entangled in other countries’ affairs and quarrels. Also, as the hub of many international organizations, Switzerland wants to be perceived as a responsible player that emphasizes the importance of the multilateral, rules-based order, which partly explains Switzerland’s reluctance to so far adopt the European Union’s sanctions against China, for human rights violations in Xinjiang.

Perhaps attaching to a bigger unit would mean a clearer commitment to the European Union (without predicating whether that would mean accession, which is currently not centrally on the table in political domestic discourse, or simply a closer alliance in some selected areas). In this sense, much will depend on what the European Union will do and how it will position itself in the future. If the current trend of showing solidarity with like-minded states and refusing to accept interference in internal affairs continues, then Switzerland is also likely to show a harder positioning toward the PRC although Switzerland’s own Free Trade Agreement with China since 2014, worth much more than any other similar agreement in place with other non-European countries, puts Switzerland at risk for commercial coercion by China, European countries are all in similar positions: they consider the US as their most important non-European ally (hence the continued reliance on the category of “the West”) and they depend on its military defense (and shelter!), but they also want to continue to trade with China in the future, fitting the economic pragmatism option. Juggling both interests, without jeopardizing relations with either the PRC nor the US, will constitute a big challenge for the coming years.

One option that is much discussed today is to try diversifying supply chains in order to reduce dependency from China, maintaining an independent foreign policy that prioritizes self-reliance and multilateralism. The Corona pandemic has shown the downside of depending too heavily on one country for the procurement of key items, such as medicines. Switzerland could actively seek a dialogue with the EU and shape a common policy instead of passively waiting what the EU will do. With Switzerland unable to implement a new institutional agreement with the EU (the EU-CH Framework Agreement), relations between the two are currently at a standstill. In the wake of EU sanctions on Russia for its invasion of Ukraine, however, Switzerland seems to have altered its previous stance regarding political neutrality, by following suit. It is difficult to judge whether and how this move might impact the Swiss relationship with both the PRC and the US.

In this chapter, we have studied the perceived strategic environment that Switzerland is facing, when considering the US-China strategic competition. The discussion of key foreign policy documents has indicated how the perception of a strategic competition between the US and China makes it increasingly difficult for Switzerland not to take sides and to maintain a position of neutrality. As mentioned, so far, Switzerland has chosen the “economic pragmatism” option, abiding to a strict political and military neutrality, while actively trading with the PRC and pursuing profits in the Chinese market, and at the same time it also pursues the “binding engagement” option by advocating for China to remain part of international organizations and engaging it in fora from the AIIB to the BRI. This illustrates that Switzerland’s national posture is firmly placed in the hedging zone and thus ascribable to the theoretical mode of response “neutrality,” as explained in Chapter 1 of this volume.

The pressure to maintain amicable relationship for business and institutional awareness that China’s more assertive role needs a new coordination and positioning led to decisions that provide contradictory signals about Switzerland’s foreign policy behavior. It is difficult to predict how this mode of conduct will affect Switzerland’s respective security and economic developments in the mid-to-long term but if the current tensions between the PRC and the US continues or increases, it is likely that Switzerland will be put under further and intense pressure by both the US as well as the EU, and called upon to assume a more unequivocal stance regarding its bilateral relations with both Beijing and Washington, in the interest of shared democratic values and protecting the liberal international rules-based order.