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Statement by the President of the Swiss Council of States Hon. Filippo Lombardi

 

Excellencies,
Ladies and gentlemen,

 

I’m grateful to Ambassador Alexander Golovin for remembering the centuries of friendly relations between Russia and Switzerland, in particular the historical and cultural relation between Russia and my Canon Ticino.

In more recent years, my predecessors, past Presidents of the Council of States, have built up this good tradition to participate and speak at the opening of the Russian Economic and Financial Forum in Switzerland.

I’m therefore very honored to be here today with you and I thank the Organizing Committee for this kind invitation!

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This Forum is an excellent platform for dialogue and for opinion exchange.  This is the best opportunity for Swiss policymakers and businessmen to obtain new and specific information on the Russian current economic situation, directly from Russian decision-makers and personally discuss with them relevant cooperation issues.

I’m therefore particularly happy to be here this year, a year of double presidency: my one as a President of the Swiss senate, and – more relevant – Russia’s one as President of the G20!

 

In fact, two weeks ago, Switzerland participated for the first time at the G20, the forum of the world’s leading economies. Our finance minister Eveline Widmer-Schlumpf met in Moscow with President Vladimir Putin and all other finance ministers of the Group. The director of the Swiss National Bank, Thomas Jordan, was sat among the governors of the largest central banks.

In the course of this year, like any other member of the organisation, Switzerland will attend the debates of the G20, the preparatory meetings and the working groups dealing with issues of financial and monetary policy. Being allowed to reflect on and give an impetus to international economic cooperation is an important opportunity for our small country of 8 million people.

And for that we have Russia to thank. On behalf of the Swiss Parliament, I’d like to extend my warmest thanks to the 2013 Presidency of the G20!

In inviting Switzerland, the Russian Federation has deemed that the world’s fifth most important financial centre is able to contribute to the international economic and monetary system. It is an important occasion for Switzerland to share its views and experience with all G20 members, thereby supporting their efforts to find solutions for the present international financial crisis.

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Ladies and gentlemen,

Five years have passed since the subprime real estate bubble burst in the United States plunging the world into a depression. The financial sector, the real economic and finally the states themselves were successively hit by a true chain reaction. Today, the shockwave is still ongoing and its consequent austerity policies are affecting the social and political stability of our societies.

This crisis was not foreseen and governments seemed unable to respond to the extreme mobility of financial assets in a globalised international market. In order to avoid a global depression, the members of the G20 – which represent almost ninety per cent of the world’s GDP – even jeopardised their economy in order to recover and stabilise the financial system. Hundreds of billions of euros have been injected into the financial sector, often without direct benefit for their real economy and the welfare of their citizens. Finally, the states themselves came under pressure and have now to work hard to put their finances in order.

Switzerland has resisted the crisis of its “too-big-to-fail” banks rather well, and its economy has escaped recession. There is little doubt, that the state “debt brake” introduced in 2003 has helped a lot. This mechanism has resulted in a reduction of over one third of the Confederation’s debt and interest on debt. The Cantons and even the municipalities which have adopted the same mechanism have also experienced a continued drop in their debt.

The “debt brake” prevents a state from spending more than its overall income over the course of an economic cycle. And it has an undeniable moderating effect when it comes to drafting the federal budget. Although I have to admit it is sometimes a very frustrating system for creative MPs, who would like to invest some additional public money for their innovative ideas and projects….

Anyhow, just to give you a specific example, let’s take the budget for 2013, which Parliament adopted last December. The expenditure ceiling for the economic cycle was set at 65 billion francs, but the budget – at the end of the Parliament’s debate – remained 66 million francs below the allowed maximum.

This spread – although modest this year – will be allocated to the adjustment account intended to cover extraordinary expenses. This account has served, for example, to finance budget stabilisation measures, in 2009 and 2010, as well as tax reforms. Switzerland has not therefore been forced to forego economic growth in order to control its spending.

Of course, Switzerland’s success story is not based only on debt brake, and some other elements helped us as well. Nevertheless, this instrument could be of interest to G20 members seeking to bring down their budget deficits which hinder economic growth, and some countries are already studying and implementing it.

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Stimulating growth through structural reforms, that is the strategy of Russia’s G20 presidency to overcome the financial crisis. A lot of countries speak about reform, but rare are those  who have, for example, implemented the banking regulation standards deriving from the Basel III Agreement. And yet there is an urgent need for banks to hold sufficient capital to guarantee their operations. It is the only way to put an end to the climate of instability in the markets and to re-establish investment security. Let us therefore continue with an intelligent and balanced regulation of the banking system and the financial centres.

The crisis also gave rise to competition between states, which are fighting each other to recover tax revenue from multinational enterprises. While it is legitimate to prevent preferential treatments just in order to attract foreign companies in a country, international tax competition remains also an important incentive for economic development and improvement of state efficiency.

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Ladies and gentlemen,

As we said, the Swiss-Russian bilateral relations have always been important and good. They have enjoyed a fresh boost in recent years across a range of areas – political, economic, scientific and cultural – with regular meetings taking place at the highest level. President Micheline Calmy-Rey was received in Moscow by Vladimir Putin in 2007, and no-one in Switzerland has forgotten the State Visit by President Dimitri Medvedev in 2009 (two thousand and nine).

Switzerland is also committed to its role in representing Russia’s interests in Tbilisi and Georgian interests in Moscow. It contributed to the lifting of the Georgian veto to Russia’s membership of the WTO which is a source of great satisfaction. Russia is also the only permanent member of the UN Security Council with which Switzerland conducts regular ministerial visits, as it does with the Russian ministers of foreign and economic affairs. In addition, representatives from our two countries meet through a mixed commission on trade.

It has to be said that with its 140 million inhabitants and average growth of four per cent, Russia is a magnet for Swiss investors. Its natural resources are inestimable and its industrial might is simply enormous. Russia also benefits from a highly skilled workforce and significant potential in terms of technological innovation.

Some 600 companies in Russia have Swiss shareholders, and they employ around 75’000  people. Nestlé, ABB, Holcim and Kronotec top the table, with financial services in second place. Economic ties with Russia are so strong that Switzerland’s international online news service, swissinfo.org, recently began publishing in Russian.

Driven by mutual interest in investments, Switzerland and Russia are working on a gradual mutual opening. Our double taxation agreement  is now compliant with OECD standards. And last December, the education minister Alain Berset – who incidentally was President of the Council of States in 2009 when President Medvedev visited Switzerland – signed an agreement on scientific research cooperation with his counterpart minister Dimitri Livanov.

The projects will be chosen by a joint commission according to criteria of scientific excellence, mutual interest and equivalent financial participation. They will cover engineering, nanosystems and materials sciences, natural resources, energy and energy efficiency, transport, economics, social and human sciences. In short, a vast range of projects which will enable young Russian researchers to come and work in Swiss universities.

Switzerland and Russia pursue common goals and their relations are based on mutual trust. The free trade agreement currently being negotiated under EFTA (Switzerland, Liechtenstein, Norway and Iceland) will play an important role in the development of trade between our two countries. It would be highly desirable if the customs union set up by Russia, Belarus and Kazakhstan were to lift restrictions on the import of watches, therapeutic products, metal products and foodstuffs. Access to services and investment of partner countries to the agreement would thus be greatly eased.

Swiss entrepreneurs are extremely interested in Russia’s process of modernisation. They are willing to offer their know-how, particularly in leading technologies. Health, finance, energy supply and efficiency as well as tourism are all possible areas for cooperation.

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Dear forum delegates, Two days ago one of the European leaders, the French President François Hollande discussed in Moscow with President Vladimir Putin the possibilities of Russian investments in Europe, aimed at encouraging the European economy and create jobs. As European country, Switzerland is also worried about the future of European economy and shares the EU leader’s intention to attract foreign and Russian investments in Europe.

Being in the centre of Europe, without being a member state of the EU, Switzerland now represents an excellent platform for Russian companies to invest and do business in Europe!

To facilitate their expansion in Europe, Switzerland is ready to put at disposal of Russian investors its security, its economic stability, its financial competence, its high technological standards and its good infrastructures.

 

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Speaking about economic cooperation and big entrepreneurial projects we shouldn’t forget another important aspect our people have in common: passion for sport, especially for ice hockey!  Among other task, I am acting since 2009 as President of the historical Hockey Club Ambri-Piotta, celebrating this year its 75th anniversary.

A small hockey club in Swiss Alps was born thanks to the enthusiasm of mountains village’s habitants. In the ’90, Russian hockey stars like Alexander Yakushev, Valery Kamensky, Oleg Petrov played in Ambrì and contributed to the best HCAP achievements, finalized with the double victory of the European Cup in 1999 and 2000, both in Magnitogorsk.

Last year we started to revive this historic tradition. On November 4, at the occasion of the Swiss National Ice Hockey Day, the Russian “All Stars Team” with hockey legends like Yakushev, Kasatonov, Kamensky and many others came in Switzerland, in Ticino to participate in friendship game with veterans of Ambri. It was a great show!

Interestingly, together with the Russian veteran professional players, also some Russian businessmen played as amateurs, whilst a number of Russian and Swiss politicians and businessmen came to watch the friendship game.

Maybe the hockey game is not the proper formal context to discuss serious economic issues, but I think this is a very effective way to help us to speak the same language at the end of the day. The language of understanding and friendly competition. The language of cooperation and friendship between peoples, nations and economies. Let’s continue speaking together this same language.

Thank you for your attention.