Ukraine war: Switzerland must also finally implement the sanctions in earnest

Zurich, Lausanne, 21. February 2025

Three years after Russia’s invasion, the fate of Ukraine is looking more uncertain than ever. Against the backdrop of the talks between the Russians and Americans, the EU is keeping up the pressure on Moscow by continuing to apply sanctions. Switzerland has adopted all the packages with one major exception to the provisions. However, it refuses to implement them consistently and to close any loopholes, preferring instead to protect its interests as a commodity trade hub, which had been vital to the trade of Russian commodities and assets for decades. In fact, Switzerland’s authorities and the Federal Council prefer to bow to the lobbying of the commodity traders’ association rather than impose on this high-risk sector the legal guardrails that are long overdue.

The boldest response Switzerland has provided so far to the invasion of Ukraine on 24th February 2022 was to fully adopt the first package of EU sanctions against Russia. In the meantime, 15 packages have been adopted and implemented by the State Secretariat for Economic Affairs (Seco) which is responsible for this, but with one major exception. With a view to protecting its role as a commodity trade hub, whose economic importance has further increased during the war years, it’s also continuing to implement the sanction measures inconsistently. While the import and trade of Russian coal, 75 percent of which went through Swiss companies before the invasion, has also been banned in this country since April 2022, it has never been seriously investigated whether the activities of these companies, most of which are located in the Swiss canton of Zug, continue to operate..

Switzerland also joined the import ban on Russian oil, Moscow’s largest source of income, imposed by Brussels a short time later. However, this coincided with numerous major Geneva-based traders in Putin’s black gold starting to use their (some of them newly founded) branches in Dubai. What is not clear even now is whether these subsidiaries – as required by Seco – operate independently, i.e. they don’t receive any instructions or funds from Switzerland. By last Autumn at the latest, the Federal Council ought to have closed this loophole. This was because the 14th package of EU sanctions also specifically included an obligation for companies to ensure that their foreign subsidiaries don’t undermine sanctions. However, the Federal Council decided against this and simply ignored this provision.

The official reason for this controversial exemption was to “avoid legal uncertainty”, i.e. exactly the same argument as presented by Suissenégoce, the commodities industry association, when lobbying for this laissez-faire approach at Seco. After three years of bloodshed in Ukraine,   political opportunism in terms of location policy seems to have gained the upper hand again in Bern  This was recently demonstrated by Swiss Finance Minster’s  public thanks  to the commodity traders for their substantial tax contribution to the federal budgets during the war years 2022-23. Unlike the EU, the Swiss Parliament and Federal Council, as early as Autumn 2022, did not want to know anything about an excess profits tax on the record earnings generated by the crisis profiteers..

It’s high time for Switzerland to accept its political responsibility, realising that its role as a commodity trade hub provides it with the most effective leverage.  This is why all the sanctions adopted must be fully enforced. Otherwise, suspicion will once again hang over Switzerland of shamelessly profiting from the plight of others.

More information here or from:

Oliver Classen, Spokesperson, +41 (0)44 277 79 06, oliver.classen@publiceye.ch