Swiss Parliament calls for a Commodity Trading Act and wants the Enforcement of Sanctions against Russia inspected

Zurich, Lausanne, 21. September 2023

Today, the National Council adopted a proposal, which called for a report on the enforcement and monitoring of sanctions against Russia in the Swiss commodity sector. According to the proposal of its Foreign Affairs Committee (APK-N), the current voluntary approach puts Switzerland’s reputation at risk. The Federal Council must now identify and rectify specific deficiencies in the embargoes against Russian oil and coal. Additionally, a motion from the Swiss Socialist Party (SP) was accepted yesterday, demanding legal rules for commodity trading. This could create the basis for a supervisory authority for this high-risk sector, as advocated by Public Eye for nearly a decade.

On 21 September, the National Council adopted (with a vote of 135 to 50) a proposal submitted by Hans-Peter Portmann (FDP) and Nicolas Walder (Green party) on behalf of the Foreign Affairs Committee. It calls for a report on "the extent to which sanctions against Russia in the raw commodity sector are currently being complied with and where deficiencies still exist." With this move, a broad parliamentary majority is finally responding to the increasing criticism in Switzerland and abroad regarding the Federal Council's lax handling of the scandal-ridden commodity industry in the context of Russia's attack on Ukraine.

The most urgent need for political action is in the trade of Russian oil, which has been subjected to a price cap since late 2022. This mechanism, aimed at limiting the Russian government's revenues from oil exports, can only be effective if the relevant authorities – in Switzerland, the State Secretariate for Economy (SECO) – also carry out controls. Oil traders in Geneva, who were selling an estimated 50-60% of all Russian oil as recently as early 2022, had little to fear from this, as Public Eye investigations revealed in March. Meanwhile, numerous new companies, whose sources of funding and beneficiaries are unknown, have transformed this opaque sector into a virtual black box. Furthermore, a loophole in the embargo law seems to allow Swiss companies to bypass sanctions through supposedly independent foreign subsidiaries.

Since April 2022, the trade of coal from Russia has also been sanctioned. Public Eye has shown that up to that point, three-quarters of Russian exports of the largest climate killer were processed in Zug and eastern Switzerland. There is a need to clarify whether and how these coal traders continue to operate, as their business model has become ostensibly obsolete due to the coal embargo.

However, sanctions evasion is only the latest risk emanating from the Swiss commodity trading hub. It took the geopolitical upheaval following Russia's attack on Ukraine for the National Council to finally acknowledge the urgent need for regulation. It also did so on 20 September with the demand for specific legislation on commodity trading. The motion submitted by the Socialist Party at the start of the full-scale invasion of Ukraine was approved by a majority of 101 to 89 in the lower chamber and must now be passed by the upper chamber, the Council of States.

Since 2014, Public Eye has been calling for a Swiss legal framework specifically tailored to the commodity sector and a supervisory authority to monitor its implementation. The National Council has now made a first step to finally set in motion the long overdue regulation of the commodity sector.

For further information, please contact:

Oliver Classen, Media Director, +41 44 277 79 06, oliver.classen@publiceye.ch
Robert Bachmann, Commodity Expert, +41 44 277 79 22, robert.bachmann@publiceye.ch