Capital: Berne

Population 7,508,700

Area 41,285 km2

Languages
History
Government 
Economy
Switzerland and the EU 

Languages

The national languages of Switzerland are German (Central and Eastern Switzerland), French (Western Switzerland), Italian (Southern Switzerland) and Romansch (Southeastern Switzerland). German is spoken by 69 percent of the Swiss population, 20 percent speak French, 10 percent Italian and 1 percent Romansch.

History

Present-day Switzerland has its origins in the “everlasting Confederation” entered into by the three earliest cantons, Uri, Schwyz and Unterwalden, in 1291. After the victory of Morgarten in 1315 over the Habsburgs, further cities and regions acceded to the Confederation: Lucerne in 1332, Zurich in 1351, Glarus and Zug in 1352, Berne in 1353. These “eight ancient cantons” became the nucleus of the Swiss Confederation, which by 1513 had expanded to 13 cantons. In 1499 the Confederation broke away from the German Empire, but this was not recognised legally until the Peace of Westphalia in 1648. Gradually, further territories joined the Confederation. Following a major civil war came the transition from a confederation of states to a federal state. In 1848 the Swiss electorate adopted a new constitution and Bern was chosen as the federal capital.

Today Switzerland consists of 26 cantons. Women were not granted the right to vote and elect representatives until 1971. In 1992 the Swiss electorate rejected accession to the European Economic Area (EEA). Since 2002 Switzerland has been a member of the UN.

Government

The Constitution declares that Switzerland is to be governed as a republic and guarantees the exercise of political rights in the form of a federal representative democracy. The Swiss Constitution confers sovereignty, i.e. supreme political power, on the population, which elects parliament. Parliament, in its turn, elects the members of the government (Federal Council), which appoints the members of the Federal Supreme Court. The four main politi-cal parties (all represented in the government) are the following: the Swiss People’s Party, the Radicals, the Social Democrats and the Christian Democrats. The legislative (Federal Assembly) is composed of two equal chambers, viz. the Council of States (with 46 mem-bers representing the cantons) and the National Council (200 members allocated accord-ing to the strength of the party).

Each canton has its own constitution, parliament, government and courts. Within the can-tons, approximately 2,900 communes also enjoy a certain degree of autonomy.

The highest judicial power is invested in the Federal Supreme Court with its seat in Lausanne. The Federal Criminal Court has its seat in Bellinzona. A Federal Administrative Court is under construction in St Gallen.

Economy

The proportion of exports in Switzerland’s Gross Domestic Product (GDP) is high in international comparison. Since Switzerland’s domestic market is small, its economy deals less in mass production than in the development and production of high-value individual items.

A first rate education system is one of the foundations of Switzerland’s economic competitiveness. Switzerland also has an excellent infrastructure. Political stability, investment in communications and information technology, a reliable decentralised energy supply and its central position in Europe provide attractive conditions for businesses. The state only intervenes when this is deemed to be in the general interest.

Strengths in the Provision of Services

The Swiss economy is mainly geared towards the provision of services. While in the 1960s half of all employees were still working in the industrial sector, at the beginning of the 21st century this proportion had sunk to around 25%. At the same time, the proportion of workers in the service sector grew from 39% to over 70%, while less than 4% gained their income from agriculture.

The agricultural sector is undergoing changes thanks to an increasing demand for healthy food, more environmentally-friendly production methods and world economic developments. Because of the limited area of arable land and the lack of raw materials, Switzerland has to import many of the agricultural products it needs as well as raw materials for its industry.

Small and Medium-sized Enterprises

The backbone of the Swiss economy is formed by highly specialised and flexible small and medium-sized enterprises (SMEs). SMEs account for 99% of registered companies in Switzerland. Switzerland’s long industrial and service traditions and its potential for innovation in the growth areas of the future have led to it to specialise in the production of high quality branded items. Many businesses follow a "niche strategy," successfully concentrating on a small range of top-quality, innovative products.

Exports to the EU

The most important exports, which go mainly to the European Union (EU), are:
• Chemicals
• Machinery
• Precision Instruments
• Clocks and Watches
• Jewellery

The main services include:
• Insurance
• Banking
• Commodities trading
• Tourism

In order to keep the Swiss export economy competitive, businesses invest heavily in research and development.

At the same time, Switzerland’s careful approach to energy and natural resources is very important. It is founded on the recognition that durable economic progress is only possible in the long run if the environment is respected. Switzerland has many years of experience in the area of environmental protection and has amassed a lot of know-how in environmentally-friendly technology and in the establishment of environmental norms.

Switzerland and the EU

Switzerland is the EU’s closest neighbour, not only geographically, but also culturally and economically. It is its second trading partner (services included), after the US and before China. Over 900 000 EU citizens live and work in Switzerland, and many more cross the borders or transit the country on a regular basis.

Since the rejection of the Agreement on the European Economic Area by public referendum in 1992, Switzerland has been aiming to obtain similar access to the internal market through the negotiation of bilateral sector agreements, while at the same time retaining comparative advantages like bank secrecy and limited judicial cooperation in that respect, weaker export controls (dual use), predatory tax regimes, and less stringent competition laws. Seven bilateral agreements (on free movement of persons, public procurement, land and air transport, agriculture, research, and mutual recognition of conformity assessment) were concluded in 1999 and entered into force on 1 June 2002. Together with the EC-Switzerland Agreement of 1972, which established free trade in goods and competition rules, they form the basis for bilateral relations.

Switzerland applied for membership of the EU in 1992, but as a result of two negative referenda (on the EEA in 1992, and on the start of accession negotiations in 2001) the issue is on ice for the foreseeable future. Nevertheless, in 2004 the Swiss Parliament decided to maintain the application for membership, while the European Union maintains its position that the EU stays open for Switzerland to join.