Russia sanctions: Did raw materials traders influence the Federal Council?

SubscriptionCriticism of the Federal Council

Exception to Russia sanctions: What role do raw material traders play?

When the Federal Council decided not to support an EU measure against Russia, it received criticism from the left. Now internal documents show: Federal Councilor Cassis also had objections.

Published: January 9, 2025, 11:01 am

Federal Councilor Guy Parmelin explained the adoption of EU sanctions against Russia at a media conference in spring 2022.

Photo: Peter Klaunzer (Keystone)

Subscribe now and benefit from the read-aloud function.

BotTalk

Shortly:

The Federal Council has decided not to adopt an EU sanction against Russia.
Internal documents show that the raw materials traders were involved.
The economic department argues that the EU’s purpose is not clear enough.
Federal Councilor Cassis criticized this argument.

Switzerland fundamentally supports the EU’s sanctions against Russia. The Federal Council decided this after the Russian attack on Ukraine. With a few exceptions, Switzerland has since adopted new sanctions. However, last October the Federal Council decided not to take a measure. This is intended to prevent sanctions from being circumvented.

The EU has obliged corporations in its territory to make “best efforts” to ensure that their subsidiaries in third countries do not evade sanctions. At the request of Economics Minister Guy Parmelin, the Federal Council refused to allow Swiss companies to do so.

US Ambassador Scott Miller was “disappointed”, the SP described the decision as “scandalous”. Switzerland is putting the interests of raw materials traders affected by the war in Russia above its international responsibility, the party wrote.

Parmelin’s State Secretariat for Economic Affairs (Seco) rejected the accusation. Seco said the decision was not politically motivated, and certainly not economic. One actually doubts the feasibility of the rule. “I don’t know how you can recognize a “lex raw material” in this provision.”said Simon Plüss, the person responsible for sanctions at Seco, at the time. The provision applies to all sectors.

Commodity traders turned to State Secretariat for Economic Affairs

However, internal documents that this editorial team received based on the public information law show that it was actually the raw materials traders who came to Seco before the decision. The Suissenégoce association wrote in an email dated July 4, 2024 that an article in the new sanctions package would lead to “legal uncertainties for the Swiss raw materials trading industry”.

“We would therefore like to hear from Seco to what extent and to what extent Switzerland plans to adopt this 14th EU package.” And: “We would welcome it if we could exchange ideas with you and your team in advance of such a project.” A delegation of sanctions specialists would be happy to go to Bern. It is not clear from the email correspondence whether there was a meeting. However, telephone conversations were arranged.

A law firm also opposed the adoption of the sanction – the documents do not reveal on whose behalf it was. The firm argues that it is unclear what it means that a firm must use “best efforts.” Ultimately, the EU expects that subsidiaries outside the EU will also have to implement the sanctions. The contradiction of the previous practice of the Seco and the territorial principle, as was discussed several times with the Seco.

Significant doubts about enforceability

The law firm asks: “How can a Swiss shareholder of a foreign (non-EU) company be able to prove that the company is complying with EU or Swiss sanctions?” There are no legal means to do this. Fulfilling the provision with regard to subsidiaries in Russia and China is downright impossible. In these countries, the implementation of foreign sanctions is expressly prohibited.

Federal Councilor Guy Parmelin’s Department of Economic Affairs (WBF) ultimately suggests not adopting the sanction using a similar argument. There are considerable doubts about the enforceability of the provision, writes the WBF in internal administrative documents.

It also warns of resistance from the industry: the introduction of such an indefinite provision is likely to lead to “submissions from associations, along with corresponding parliamentary proposals”. A certain amount of pressure on Switzerland is possible in terms of foreign policy if it does not accept the sanction. However, accusations can probably be refuted by pointing out the difficulties in implementation.

Cassis: “Argument is not enough”

The deal was controversial in the Federal Council. It wasn’t just the SP representatives who had objections: Ignazio Cassis’ Foreign Affairs Department (EDA) wrote on August 28th in an email to the Economics Department (translated from Italian): “As far as the obligations regarding the subsidiaries established in third countries are concerned, We reiterate that the argument proposed by Seco was not sufficient to justify not adopting this measure.”

However, the EDA does not propose to adopt the sanction, but rather to strengthen the argument. Non-adoption must be well justified, it writes in its comments on the text from the WBF. This is not the case with the argument of lack of clarity, especially since nothing prevents Switzerland from clarifying its own rules. On the other hand, the territorial principle speaks against adopting the sanction – the principle according to which Swiss law applies to events in Switzerland.

The Federal Council ultimately put forward both arguments when it decided on October 16 not to adopt the sanction.

newsletter

Good morning Basel

Receive the most important and exciting news from the region, Switzerland, the world and sport.

More newsletters

Charlotte Walser Belongs to the Federal House team of the Tamedia editorial team since 2021. The doctor of philosophy has been working as a journalist since 1995.More info@charlottewalser

Found an error?Report now.