Switzerland strongly supports Serbia on EU accession

Switzerland is being mentioned a lot these days amongst Serbs, and you all know the reason. Trouble with Swiss Franc loans is the main topic for many people, not only in our country, but in the whole region. We asked Mr. Jean-Daniel Ruch, the Ambassador of Switzerland in Serbia, to speak about this, and other important issues concerning Switzerland and Serbia.

So, Mr Ruch, have you been under a lot of pressure these days? I am talking about the Swiss Franc loans, of course. People asking questions, wanting to know what future holds for them?

Preporučujemo

- Well, not as much as our export industry! Especially small and medium companies. Current situation is not easy for them. They have to search for a way to save money, to remain competitive in the World market. Our economy depends a lot on our exports, as you know. Actually, 2014. was a record year for the Swiss export industry, with sales amounting to over 200 billion CHF. We exported goods worth more than in any other previous year in our history. This year, it will be difficult to remain at these levels, because the competition in the World markets is ferocious, and when suddenly the price of your product increases by 15-20 %, it obviously makes you less competitive. This is a big problem for our export industry.

Foto Marko Todorović

May I ask what all those in Serbia who took the Swiss Franc loans want to know: What does the future hold for them?

- Well, this question is really hard to answer, because it all depends on the Euro-Franc exchange rate. Personally, I really feel compassion for those who believed in the solidity of the Swiss Franc. Actually, it turned out that the Franc was perhaps too solid. I feel compassion, because this was almost an act of trust in the state of Switzerland, so now some people may feel betrayed. I am really sorry for that. Let me confess: I made a similar mistake – I lost money because I trusted the Euro. I really do not know how this situation will evolve in the next few months and years, and I do not think that anyone can predict it.

Foto Marko Todorović

Switzerland is one of the biggest investors in Serbia, with more than 50 million Euros invested every year, for the last two years. Can we hope to see this improve even more?

- Actually, the preliminary figures for 2014. show that this rise in money invested in Serbia is even accelerating. We have the figures for the first half of 2014., and the actual number is 68 million euros of Swiss companies’ investments in Serbia. We hope that this rise will continue, and we are doing everything to attract new investors from Switzerland.

Pročitajte ovaj intervju na srpskom

Will the problems that small and medium Swiss companies are having with the Euro-Franc exchange rate affect the investments in Serbia, and in which way?

- I can tell you that I received phone calls from the Swiss companies, who consider creating production units elsewhere, because all of a sudden everything became cheaper abroad. However, we have to realize that Serbia is also facing a fierce competition from other countries with the same kind of advantages.

Foto Marko Todorović

So, there is a chance for Serbia to profit from this Euro-Franc exchange rate situation?

- Well, there is a fighting chance, but it will not be easy. Serbia must keep on doing whatever it can to create better circumstances for investors. However, one thing that will improve is the amount of money coming to Serbia from Serbian diaspora. There is an estimate that at least 300 million Euros is being given from the Serbian diaspora in Switzerland to their relatives in Serbia! Obviously, we can expect a 15-20 % increase to this sum, because of the rise of the Franc.

Vučić’s Government promised reforms, and reforms we are witnessing. What do you think about what they have done up until now?

- I think that your political leaders know pretty well what needs to be done. Also, I understand the difficulties they are facing on that path. If you look at what happened in the legislative field, I think that relatively good job has been done, especially with the new Labor law, and the law on bankruptcy. But, at the same time, it is not enough to change a legislation, but you also have to take some operational measures. The next big test, happening right now, is the privatization of 188 companies that are being put on the market. I hope they will find buyers and that this process will run smoothly.

Foto Marko Todorović

Are Swiss companies interested in buying those companies?

- Some. I cannot tell you the details, as you can imagine, but yes, we have some indication that there are some interested.

What is the main single thing that Serbia must change to attract even more investors from Switzerland?

- I think the most important thing is legal security. I hate to say it, but we have a few investors here who have bad stories. And they are not afraid to tell those bad stories. And usually it is about corruption, about administrative hurdles which can suddenly appear or disappear, if you know what I mean... And this is really the worst problem. I have seen, personally, in some instances, court decisions that were simply not implemented. Then the court decision is turned around by some administrative decision, and then they have to go back to the court again... It is a very long and cumbersome process. Fortunately, not all Swiss companies are facing this problem...

Foto Marko Todorović

But the damage is being done...

- Yes, and not only the damage to those Swiss companies, but for the reputation and image of Serbia. And this has a wider impact.

There has been a substantial amount of pressure on Serbia to impose sanctions against Russia. What are your thoughts about this?

- I think that Europe needs small states which can serve as a bridge between the two main blocks in Europe. Switzerland, for example, always followed its principles. We said that the annexation of Crimea is a violation of the international law and a violation of the OSCE principles and commitments. But our decision not to impose sanctions on Russia and not to join the EU policies has allowed us to play an important role, as chair of the OSCE, in creating a framework for de-escalation of this crisis.

Foto Marko Todorović

How do you view the negotiations between Serbia and the EU so far?

- We are really eager to support the accession process to the EU. This is the primary aim of our cooperation strategy, through which we are channeling around 75 million CHF between 2014 and 2017. What I would really wish to see is this process taking some speed. Because, who knows what will happen in the next five or six years in Europe in general, not just in the EU? I really wish these chapters could be opened sooner, and that visible progress is made.

What does the joint chairmanship of the OSCE mean for bilateral relations of Serbia and Switzerland? What does it mean for Serbia now that it is the chair of the OSCE?

- For our bilateral relationship, it means deepening and strengthening not only of the relationship between our two states, but also personal relationships between our leaders, ministers and senior officials. It has really been an enjoyable cooperation, and it continues to be that way. For Serbia, this is an opportunity to show that it is back as a responsible partner in international relations, a partner who is ready to take responsibility and to play a useful role, a mature role, in managing an international organization. This is very important, in my opinion, for credibility and image of Serbia.

Foto Marko Todorović

Switzerland is donating 75 million Euros to Serbia in the next four years. Where is this money going to be spent?

- Actually, it is more than that. In addition to the 75 million, there is 7,5 million earmarked for the recovery from the floods. After the EU, we are the largest donor to Serbia. The overall objective of this assistance is to prepare Serbia to join the EU. The first area we are helping in is the economic development of Serbia, which is the most important. This year, we want to put a particular emphasis on the employability of young people. Switzerland has an educational system that is very favorable to the employment of young people. We probably have one of the lowest rates, worldwide, of youth unemployment. We want to help Serbia get there, also. Another area is in the field of energy – promoting energy efficiency. We have a long history of cooperation in this area with Serbia, as well as with the former Yugoslavia.

The Swiss-Serbian Chamber of Commerce (SSCC) was founded 9 months ago. What has been achieved during that time?

- They are starting this year with very ambitious program of activities. I think they are seriously taking their role of providing services and helping Swiss companies here to answer some questions. Also, a big event in Geneva is planned by the SSCC for the beginning of April, which will be used for connecting Swiss companies to Serbia.

Foto Marko Todorović

Hard times are still ahead of Serbia, as we are trying to cut the budget deficit. You had a similar situation in Switzerland not so long ago. How did you manage it?

- We had budget deficit for almost 15 years, from 1991. to 2005. We took some measures, and from 2005. until now we have a budget surplus. We introduced a mechanism, called “the Debt brake”. It means that, according to this article in our Constitution, adopted in a referendum in 2001, the Government must present a budget that must be balanced. It means that you cannot spend more than you earn, unless there are some emergency situations, like natural disasters. If that happens, then this additional spending which would create a budget deficit must be approved by both chambers of our Parliament. And the Bill that proposes that “we must spend more than we earned this year, because something happened” must include a mechanism through which this deficit will be compensated. Furthermore, the Federal council has decided, since we had surplus since 2005., to use a significant part of this surplus for the reduction of the national debt. In 2005. we had debt of 53 % of the GDP, and today it is 38 % of the GDP. Quite a reduction.

Ambasador Švajcarske Žan Danijel RuhFoto Marko Todorović

A personal question: How does life in Serbia differ, for you, from life in Switzerland? What do you miss, and what is it here that you do not have back home?

- I come from a village with the population of 300 people. A small village in the mountains. And this means that, if I want to go to a mountain, or go pick mushrooms, or go hiking, or if I want to go skiing, it takes me about 10 minutes to be on the slopes, just by walking, from my home. So this nature is very present, everywhere in Switzerland. Here, if I want to visit real nature, it takes me a bit of time. The mountains are very far away from Belgrade. Now, the other major difference is the nightlife here. It is much more lively than anywhere in Switzerland. We have nothing like the splavs and clubs here. And it is very much enjoyable.

What is the situation with the asylum seekers now? What about the influx of the Kosovo Albanians, do you expect these people to go to Switzerland?

- In general, we had an improvement of this situation, after we took some very strict measures. Serbia is designated as a safe country. People from this region seeking asylum in Switzerland are treated by accelerated procedure. Usually the norm is that they are sent to their country in 48 hours, without any financial compensation. So Switzerland is not really an attractive country to seek asylum in. Now, the last wave from Kosovo has not yet reached Switzerland. We are closely monitoring the situation. Next countries in line after Hungary are possibly Austria and Germany. So we are preparing for that, should it happen.

Foto Marko Todorović

Many people say Serbia has a bright future in tourism. What would you like to see offered to tourists in Serbia?

- More train connections. I have lots of friends who like to come to Belgrade. We have some cheap flights from Switzerland. There are these city-hoppers who are a bit tired from London, Paris, Berlin, and who would like to come to Belgrade and enjoy the nightlife. And also a fact that everything is cheaper here plays a part. But after two or three days these people would like to see something else besides Belgrade. And then, if you don’t have a car, it is a bit complicated. So I would like to see the public transportation being enhanced here, so tourists could go places. One more thing: people in Switzerland love to hike, especially after they retire. And I think there is a market for that in Serbia. Here is what has to be done: Mark the trails, produce the precise maps. We are totally lost without the maps. First thing to do in Switzerland, when you go hiking, is buy a map. A precise map licensed by the Federal Office of Topography, which has a scale of 1:25.000, so you can almost count the trees. And they are regularly updated. So, maps, marking the trails, and opening some mountain lodges where hikers can rest.

Everyone is talking about the Swissleaks, so I was keeping this question for the end of our conversation...

- There are two things I really need to say here. The first one is that this list of names is based on data from the years preceding 2007. So, it is old stuff. Then, it was all stolen. It was stolen and offered by the former employee of the HSBC, in return for money, to several governments. Since 2009. we have changed our policy, and since then we introduced measures of strict compliance with international standards, in the area of taxation. One of the most complicated issues here, of course, is the money of the so called “PEP people”, the politically exposed persons. Now, Swiss banks are perfectly aware of the sensitivity of this situation, and we are fully committed to combating tax evasion and financial crime internationally. But also, we expect that these commitments will also be undertaken by each and every country in the world, and in particular from those countries that are home to financial centers of the world.

Foto Marko Todorović

What about Serbia?

- We have a double taxation agreement with Serbia. I have seen that the acting director of the Tax administration announced that Serbia will seek information on the accounts of citizens of Serbia. According to this agreement there is a provision which allows this exchange of information. So, there is a procedure for that. Our willingness to cooperate with Serbia is proven. After the changes of 2000., we were approached by the Director of the Serbian Tax administration, who was also the President of the commission on extra-profits and asked to freeze the accounts of seven people close to the former regime. We immediately froze accounts of six of those people. The seventh one had no account. Now, in this context, we were ready to return the money to the Government of Serbia, provided that it would be proven that this money was acquired illegally. Basically, what needed to happen is this: There should be a criminal procedure, a trial, a judgment, and on the basis of that judgment we would send the money back. This is a standard procedure. Now, in one case, we have received an official notification from the district attorney Rade Terzić, who informed us that the procedure against one of the six people, Dragomir Tomić, has been abandoned. And then, nothing happened on the other five orders. And after years of inaction, we had no choice but to liberate the money from these accounts, because there was no reason to keep it frozen anymore, since there was no active procedure carried out by the Serbian judicial authorities. Why am I telling this story? At the time when there was a real effort by the Serbian Government to recuperate the extra profits made in previous years, Switzerland has really shown desire to cooperate as much as it could. Unfortunately, the judicial authorities here in Serbia never managed to carry out these cases.

(Igor Ćuzović)