June 8, 2010 - Phil Hodgen

Swiss Parliament surprises all by voting “no” on the UBS Agreement

The lower house of Parliament in Switzerland did the unthinkable and voted “No” on ratification of the UBS agreement.

(Ratification of the UBS agreement means that 4,450 Americans get their names turned over to the IRS by the Swiss government, and those 4,450 people will then live in the pain factory for quite a while).

Political background

There’s some interesting background action going on here.

The Swiss People’s Party has 60 out of 200 members of the National Council, which is the lower house of Parliament in Switzerland.

The Swiss People’s Party is in opposition to ratification of the UBS agreement.  While there may be some philosophical reason for the opposition, there also appears to be a personal vendetta involved.  Christoph Blocher is the head of the Swiss People’s Party.  In 2007 Mr. Blocher was ejected from his seat on the Swiss Federal Council by MPs from other parties.

This has apparently galvanized Mr. Blocher’s lack of love (!) for the people involved in his removal from the Swiss Federal Council.  Quite coincidentally, these people support ratification of the UBS agreement.  Hence, Mr. Blocher’s personal political aims coincide with putting a torpedo through the UBS agreement.  If his enemies favor ratification, he must be against it.

The Swiss People’s Party members appear to care little for the opinions of those outside of Switzerland’s borders.  Exhibit A:  the Swiss People’s Party pushed for the recent successful referendum in Switzerland which banned minarets.  If the United States gets its political panties in a knot, the People’s Party will not particularly care.  Repercussions be damned.  Etc.

On the other side of the table we have the Social Democrats.  They have 42 of the 200 members of the National Council, are on the cough left side of the equation and have little love for fat cats, etc.  Isn’t it astonishing that “fat cats” include highly-paid Swiss bankers? For a variety of ideological reasons the Social Democrats want increased regulation of the banks, as well as restrictions on compensation to bankers.

Upcoming election

Let’s say hypothetically that the current sitting government is perceived as weak.  Let’s also say hypothetically that the People’s Party and the Social Democrats see political advantage to some turmoil at the moment.  Let’s also say hypothetically that the next Parliamentary elections are in 2011.

Do you see what I see?

Another Parliamentary vote is coming

Another vote will come before June 16, 2010.

Three possible outcomes

There are three ways this can play out:

  • In the upcoming re-vote, the opposition parties (the People’s Party and/or the Social Democrats) will change their tune and vote for ratification.  That will occur if they can be bribed with political concessions, or if they lose their nerve.
  • In the upcoming re-vote, the opposition parties stand firm and again reject ratification of the UBS agreement.
  • In the upcoming re-vote, all of the brave (!) politicians decide that making an explicit vote on ratification is dangerous to their careers, so they decide to put the question of ratification to a national referendum.


Thanks to a telephone chat with with H. this morning, I got some of the background on what happened and why.  (Thanks for the call, H.)  H. knows many of the players in this game — and if he doesn’t know them personally, he knows them by association — because he did his Swiss military service with many of the people who are now sitting in Parliament.  His insights help me understand the dynamics.  The above is my interpretation, so don’t blame H.  🙂

And thanks to TL in Zurich for the email.

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