SWITZERLAND & LIECHTENSTEIN: ASSESSING OUR

UNCLAS BERN 000898

SIPDIS

SIPDIS

SENSITIVE

STATE ALSO FOR USTR

E.O. 12958: N/A
TAGS: PREL ETRD SZ VE
SUBJECT: SWITZERLAND & LIECHTENSTEIN: ASSESSING OUR
BILATERAL RELATIONSHIPS

FROM AMBASSADOR PAMELA P. WILLEFORD

1.(U) Introduction: As I prepare to leave Embassy Bern
after two and a half years, I would like to share some
observations and insights I gained during my tenure here. I
hope these thoughts will be helpful to those dealing with
Switzerland and Liechtenstein, and Europe in general.

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Big Picture
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2.(SBU) Switzerland and Liechtenstein are niche players in
the world and we must be creative in how we challenge them
to contribute to our shared goals. Our three new agreements
with Switzerland -- covering political cooperation, trade
and investment, and counterterrorism cooperation -- are
modest achievements in and of themselves, but must be filled
with good content to be truly useful. We should not be
afraid to ask our partners for assistance, mindful that
there are constraints on how active these traditionally
neutral countries can be. In anything we do, personal
relationships will be key. We should not be fooled that the
engineer-like Swiss are impervious to relationships - this
is how we get things done. We encourage Washington to
cultivate and use these relationships, just as we have done
in Bern.

3.(SBU) A word on Davos. The World Economic Forum's Annual
Meeting is the premier event of its kind. The USG can use
this platform to spread our message. Indeed, if we are
early enough with our ideas, we can work with WEF organizers
to fashion sessions and programs important to us. A high-
level USG presence is noticed by the global community. We
encourage Washington to begin thinking now about this coming
January's meeting.

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State of the Partnerships
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4.(SBU) Switzerland and Liechtenstein can be valuable
partners for the United States, provided we are creative in
identifying areas of cooperation that take into account
their own limitations. Though neither is a member of the EU
or NATO, each play a role larger than their size would
suggest. Switzerland and Liechtenstein, as international
financial centers, are important to the struggle against
terrorist finance, money laundering, and narcotics assets.
Economically, Switzerland is the world's 16th largest
economy, 12th largest aid donor, 6th largest direct investor
in the United States, and "manager" of 40 percent of the
world's privately held savings. Switzerland is a
participant in all relevant export control and non-
proliferation regimes. In political affairs, Switzerland
plays above its size in the United Nations. It has used its
neutral status to our benefit along the Korean DMZ and as
our protecting power in Iran and Cuba. As depository of the
Geneva Conventions, Switzerland has recently played a key
role in hosting a diplomatic conference passing the Third
Additional Protocol to the Third Geneva Convention.
Switzerland's tentative steps toward peacekeeping in the
Balkans, engagement in NATO's Partnership for Peace, and
even tiny presence with ISAF in Afghanistan, reflects a
country reconsidering its role in global security - though
with trepidation.

5.(SBU) Our greatest challenge has been prying more
cooperation out of the often provincial and isolationist
sectors of the societies. Bank secrecy laws entail that
host country financial institutions are substantially self-
policing - not an entirely comforting situation.
Agricultural protectionism shattered Swiss efforts to pursue
a free trade agreement with the United States. Both the
federal structure of Switzerland and acute concerns about
sovereignty mean that information sharing on terrorism,
proliferation, and other crimes is less than optimal. The

Swiss military is barred from participation in peace
enforcement (as opposed to peacekeeping) activities. Media
has been critical of the war in Iraq and the broader war on
terrorism - particularly with respect to Guantanamo,
renditions, and travel/visa restrictions. Bad feelings
derived from the Holocaust Assets scandal still redounds
against us.

6.(SBU) Facing these challenges, Embassy Bern has worked
with sympathetic counterparts within the host governments to
fashion ways of improving coordination and avoiding
friction. Among the measures we have taken are several
agreements designed to ease cooperation on political
affairs, trade, and law enforcement. The Federal Council
approved three this week, and should address the customs
agreement this summer:

-- Framework for Intensified Cooperation, to ease
collaboration on multilateral democracy and security
building. Thus far, this has reaped Swiss membership in,
and million dollar donation to, the Foundation for the
Future, as well as Swiss financial support for disarmament
in Ukraine, election monitoring in Afghanistan, and the
NATO/EAPC trust fund in Iraq.

-- Trade and Investment Cooperation Forum (the Forum) for
discussion and resolution of minor trade and investment
disputes and discussion of common efforts to, for example,
strengthen intellectual property rights. The Forum will
complement other non-trade related economic discussions
under the auspices of the Joint Economic Commission
established in 2002.

-- Operative Working Arrangement (OWA) to enable information
sharing and possible joint investigations in terrorism
cases.

-- Customs Mutual Assistance Agreement (CMAA),addressing
offenses against customs laws that are prejudicial to the
economic, fiscal, and commercial interests of both
countries, due for finalization this summer.

7.(U) In addition to these agreements, the Embassy worked
successfully with OBO and local Swiss officials to finalize
a lease on a new chancery, which we should occupy in 2008.

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Regional Stability, Democracy & Aid
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8.(SBU) Switzerland's traditional neutrality has, in the
past, severely restricted its involvement in world affairs
outside of the humanitarian and economic spheres. We have
worked hard to bring the Swiss around toward fostering
regional stability and democracy. In May 2005, the Federal
Council (cabinet) voted to enhance our bilateral
relationship. As a first gesture, they contributed $250
thousand to the NATO/PfP trust fund for Iraq, $350 thousand
to dismantling conventional weapons in Ukraine, $300
thousand for election observation in Afghanistan (among the
largest OSCE donations),and added short-term training
courses for Iraqi and Afghan security officials. The Swiss
also made a significant commitment to fostering democracy in
the broader Middle East and North Africa by joining the
Forum for the Future and pledging $1 million to the
Foundation for the Future.

9.(U) Progress on the diplomatic front was also impressive,
as the Swiss fulfilled their obligation as depository state
for the Geneva Conventions by hosting a diplomatic
conference to approve the Third Additional Protocol, which
in turn will allow the Red Cross/Red Crescent Movement to
recognize the Israeli Star-of-David emblem. Embassy (with
Mission Geneva) invested a great deal of effort in steeling
the spines of our Swiss counterparts, efforts crucial to
ensuring a successful diplomatic conference.

10.(SBU) For the future, we want the Swiss to maintain their
220-strong peacekeeping force deployed to Kosovo and Bosnia,
to expand their small presence in Afghanistan, and to
broaden their NATO-partnership activities outside of Europe.
We want Swiss Army reform currently underway to succeed in
transforming the Swiss military into a lighter, deployment-
oriented force available for peace support operations. We
also wish to maintain our defense procurement relationship
with the Swiss military. We also hope to see the Swiss
enlarge their broader security assistance to include police
and border security assistance. Likewise, in the aftermath
of the Kashmir earthquake and Indian Ocean Tsunami, we might
encourage the Swiss to explore a potential PfP coordinating
role for the use of military assets in humanitarian relief -
an area that might appeal to the pacifist as well as
internationalist sectors of the populace.

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Trade & Investment
--------------

11.(U) A major outcome of the May 2005 Federal Council
decision was the Swiss proposal to explore a free trade
agreement with the United States. Unfortunately, needed
agricultural tariff reforms were too large a pill for many
Swiss to swallow. USTR's fallback position was to initiate
a bilateral Trade and Investment Cooperation Forum, mandated
to address small, yet sensitive issues such as strengthening
intellectual property rights cooperation, removing Non-
Tariff Barriers to trade and investment, and beef and wine
exports.

12.(U) Another potentially useful tool for the Mission is
the U.S.-Swiss Joint Economic Commission (JEC),whose
meetings in Washington, Bern, and at the World Economic
Forum in Davos have served as fora for discussion and
resolution of bilateral misunderstandings. Through the JEC,
the Swiss-American Chamber of Commerce, and intensive
outreach efforts with Swiss and Liechtenstein media, the
Mission has alleviated business concern about U.S. post-9/11
security measures such as passenger name recognition laws,
food security, aviation cargo regulations, and the financial
provisions of the Patriot Act. Working proactively, we
averted a potential crisis on Zurich Airport's FAA
certification. FCS's intervention also turned back Swiss
Health Office attempts to disadvantage U.S. pharmaceuticals.

--------------
World Economic Forum
--------------

13.(U) The WEF Annual Meeting in January is the premier
international event of its kind. Our Embassy's presence
supports senior cabinet and congressional participation (six
cabinet members and seven legislators last year; presidents
and vice presidents in recent years). Our consultations
with WEF organizers ensure that USG officials have a
platform to our present policies. This year, for the first
time, the Mission established a "Shared Logistics Platform"
that provided airport and security liaison assistance, as
well as logistical support in the run-up to and during the
WEF on a cost-sharing basis. Washington remains an
important partner for the Mission in WEF support, as we seek
to regularize this practice and improve support for high-
level USG WEF attendees.

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Counterterrorism & Law Enforcement
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14.(U) The FBI, Homeland Security, and the Drug Enforcement
Administration are all represented at post, while other law
enforcement agencies are represented by regional offices.
We are working with Washington and the Swiss Government to
grant the RSO law enforcement status as well.

15.(SBU) Cooperation with Swiss law enforcement agencies has

improved "glacially" over recent years. We are hoping some
changes will speed this process along. We have recently
agreed on new language for an updated bilateral Operative
Working Agreement (OWA) allowing joint investigations under
certain narrow circumstances. Swiss Justice Minister
Blocher will now present to Parliament. Direct cooperation
with cantonal and municipal police is severely restricted.
We are also hopeful that a new OWA will lead to greater
information sharing between the Swiss and Embassy law
enforcement representatives, including at the cantonal
level.

16.(SBU) Given the absence of direct attacks in their
territory, public complacency is a big problem. The level
of risk is impossible to establish, absent the ability to
investigate leads. High-profile terrorist suspects arrested
here - primarily support-personnel for the Madrid and Riyadh
bombings - have been provisionally freed for lack of hard
evidence. One Salafist terrorist was deported to Spain,
though only after a leak to the Spanish media revealed his
presence in the country.

17.(SBU) On terrorist finance, the Swiss continue to freeze
over $25 million in al Qaeda/Taliban assets. Switzerland
holds about $130 million in Iraqi assets, whose turnover has
been delayed by UN bureaucracy. Liechtenstein, for its
part, is cooperating on the U.N. lists and is looking for
ways to be helpful in USG efforts against North Korean
assets. We will continue to press both countries to ensure
that financial institutions exercise due diligence with
their clients and for authorities vigorously to investigate
suspicious transaction reports.

18.(SBU) Liechtenstein was a model of cooperation for the
mission's law enforcement agencies, offering legal
assistance on important investigations of money laundering
and child pornography. The principality continues to be in
full compliance with the Financial Action Task Force
requirements. It recently returned a high-profile Iraqi
asset, Saddam's former executive jet, to the new government
there. Post ensured that media was aware of all these
successes.

19.(SBU) One area where we have been effective in
encouraging better coordination is in combating trafficking
in persons (TIP). USG pressure, especially the downgrading
of Switzerland in 2004 to "tier two," has spurred the Swiss
Federal Government to communicate better with cantons on
ways to protect trafficking victims and to identify areas of
prosecution. As the Swiss move to introduce new legislation
and enlarge data collection, we will look for ways to
encourage and support them.

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Non-proliferation of Weapons of Mass Destruction
-------------- ---

20.(SBU) The Swiss are members of all relevant non-
proliferation agreements and regimes and reliably report
requests for controlled items. Traditionally, in the gray
area of dual-use items, the Swiss have been less diligent.
However, we have recently witnessed a greater openness on
the part of export control officials to share information,
due in large measure to Embassy outreach and Washington's
agreement to supply leads on investigations. Given the
growing threat from Iran and North Korea, this is very
important. Swiss officials have taken part in PSI exercises
and are on-board for using existing law robustly against
proliferators. The Mission hopes that a broadened OWA will
also foster joint investigations in the area of non-
proliferation connected with terrorism.

21.(SBU) The Swiss co-hosted with the USG two major
conferences on WMD - one a workshop for 80 representatives
of Eurasian countries on the bio-terrorism threat and
another with 60 participants on supporting a US Department
of Energy effort to eliminate plutonium-producing plants in

Russia. Pledges on the latter project have been
forthcoming. Follow-on conferences on both themes are
expected in the coming 12 months. In addition, under
Partnership for Peace, the Swiss sponsor annual
international conferences on critical infrastructure
protection - an effort for which we hope to recruit USG
experts.

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Consular
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22.(U) This year, our Consular Section has taken on
additional burdens in assisting neighboring consular
districts in Italy and France, where governments have failed
to adopt machine-readable passports by the USG's deadline.
These efforts are in addition to the usual portfolio, which
also includes close coordination with the Swiss Protecting
Power in Tehran. Notwithstanding these challenges, Consular
has achieved remarkable success in reducing visa applicant
waiting times and improving customer service. Washington
was helpful in providing us with a needed fourth consular
officer.

23.(U) The Embassy also increased public outreach to clarify
visa and passport regulations and procedures and provide a
human face to the application process. Our Homeland
Security, Foreign Commercial Service, Consular, and Public
Affairs sections initiated and implemented a program of
travel trade promotions and outreach to the press and the
Swiss travel industry that has contributed to a significant
improvement in the Swiss public perception of travel to the
U.S. Other factors contributing to the improved perception
are the implementation of a Swiss pilot program for
biometric passports and a growing public appreciation for
security measures. Positive public perception combined with
favorable economic factors made the U.S. the leading long-
haul destination for Swiss travelers. The annual number of
Swiss travelers to the U.S. increased from 235 thousand in
2003 to 270 thousand in 2005, with an annual 300 thousand
expected by 2007.

24.(U) Swiss students studying in the U.S. contribute
approximately USD 60 million to the U.S. economy on an
annual basis. To promote graduate studies in the U.S., the
Commercial, Public Affairs and Consular sections joined
forces to support the annual MBA Fair in Zurich. In 2005, a
total of 4,656 students enrolled in U.S. higher education
programs, a 13 percent boost from the previous year.

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Public Diplomacy
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25.(U) On all the above substantive goals, official Swiss
reluctance to engage more deeply with the United States
stems largely from public suspicion of USG actions.
Generally, the Swiss public is not energized about the
terrorist threat; those who are tend to believe that
association with America might only increase Switzerland's
exposure. Some Swiss do "get it," however. Mission's task
is to work with these partners to spread the message that
terrorism threatens us all and that spreading freedom and
prosperity to the region is a long-term means to tackle the
threat. The large majority who opposed the war in Iraq must
be reminded that we share a common interest in a successful
new Iraq. Those media outlets that have exaggerated USG
faults have had their over-reaching exposed. We will seek
ways to help those sympathetic to our goals get the word
out.

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Post Security
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26.(SBU) As noted in the law enforcement section, it has
been an uphill struggle to convince many Swiss authorities

of the gravity of the current threat. For many years, the
Canton of Bern refused our requests to operate a
surveillance detection (SD) team. We have succeeded in
reversing their decision and we should have an SD program in
place shortly. As noted, we are working to have our
diplomatic security agents recognized as law enforcement
under our bilateral agreements. The coming years will offer
a particular challenge as we relocate the Embassy to a new
chancery.

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Management: Relocation to a New Chancery
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27.(U) Among the most satisfying accomplishments of the past
years has been the identification and securing of a new
chancery. In 2005, we signed a lease for a more secure and
centrally located Chancery building and executed a contract
to sell the existing building. We are completing the permit
process. Renovation on the new site should begin mid-2006,
and we should be prepared to relocate in early FY 2008.
Until that time, tremendous efforts will still be necessary
to overcome challenges, both expected and unexpected.
Washington's continued support will be key.

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Final note
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28.(U) I would like to thank everyone in Washington and Bern
for their wonderful support during my time here. I have had
the privilege of working with tremendously talented people
who are dedicated to serving their country. Representing my
country as U.S. Ambassador to Switzerland and Liechtenstein
has been one of the highlights of my life.
WILLEFORD