Mon, Dec 01, 2014 - Page 15 News List

Swiss cast vote on gold, immigration

SUCCESS UNLIKELY:Opinion polls have indicated that the three initiatives on the ballot, including one on taxing wealthy expatriates, are not likely to succeed

Reuters, ZURICH, Switzerland

Swiss voters yesterday were to decide on whether to force the central bank to boost its gold reserves and whether to impose radical limits on immigration in a series of referendums that have put global markets and business leaders on their guard.

The votes reflected growing unease with what some Swiss view as a dangerous drift away from traditional national values.

Despite Switzerland’s prosperity, some citizens see the nation as under siege — from immigrants seeking work and from trading partners who have insisted in recent years that the Swiss dismantle their business model based on banking secrecy.

The recent flurry of popular initiatives is having repercussions beyond the nation’s borders, threatening to undermine its reputation for stability, spooking foreign firms, and fueling debate about ties with the EU, of which Switzerland is not a member.

“This Sunday is also about the future of Switzerland in Europe,” national daily Tages-Anzeiger wrote on Saturday. “The vote on the [immigration] initiative is also a vote about the bilateral agreements with the EU.”

Polls suggested that none of the three initiatives up for vote yesterday — the gold and immigration referendums, plus a third on the taxation of wealthy foreigners — would pass.

However, they are still being closely watched abroad because of the upheaval they would cause if they did go through.

Gold and foreign exchange markets are bracing for the outcome of the gold initiative, which, if it is accepted, would compel the Swiss National Bank to hold at least 20 percent of its assets in the precious metal and prohibit the bank from ever selling its reserves, already the seventh-largest in the world.

The central bank has urged voters to reject the gold initiative, saying it would have to buy 70 billion Swiss francs (US$72.5 billion) worth of gold — about two-thirds of the world’s total annual gold production — within five years to build up its reserves from the about 8 percent of its assets currently.

The rules, backed by the right-wing Swiss People’s Party, could also roil financial markets by making it more expensive for the national bank to defend its SF1.20 per 1 euro exchange-rate cap, imposed at the height of the eurozone financial crisis in 2011 to protect the economy from a soaring currency.

The central bank would need to buy up gold as well as euros when intervening to weaken its currency, potentially casting doubt on the viability of its cap policy, which has already come under pressure from a weakening euro.

“This is certainly not the right time to spend tens of billions of francs to satisfy an expensive right-wing caprice, while the ECB [European Central Bank] is preparing for a full-blown quantitative easing in the coming month,” Swissquote analyst Ipek Ozkardeskaya said.

A second vote is to decide whether to cut annual immigration by three-quarters from current levels, with the aim of reducing the perceived strain that high levels of immigration have put on Switzerland’s natural resources.

The vote could confound the government’s attempts to salvage its raft of treaties with the EU, its biggest trading partner.

A third vote — to decide whether to scrap one of Switzerland’s biggest tax perks for expatriates — could deal a blow to the nation’s reputation as a tax haven.

Early projections are due at about 11:30am GMT after polls close, with final results expected by about 4pm GMT.

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