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Europe to review Swiss relations

European partners threatened yesterday to review their relations with Switzerland after voters in the Alpine nation narrowly backed a proposal to curtail immigration from the EU, in a referendum that has also unsettled Swiss business.

French Foreign Minister Laurent Fabius described the vote, initiated by the right-wing Swiss People's Party (SVP) and opposed by the government in Berne, as a "worrying" move that showed Switzerland was withdrawing into itself.

"We're going to review our relations with Switzerland," Fabius told RTL radio.

Chancellor Angela Merkel's spokesman said that while Berlin respected the result, it would create "considerable problems" for Switzerland's relationship with the EU.

The European Commission said it went against the principle of free movement between the Alpine nation and the EU that has existed for more than a decade.

It said: "The EU will examine the implications of this initiative on EU-Swiss relations as a whole,".

Switzerland is not a member of the 28-nation EU, but a pact with Brussels has ensured the free movement of citizens to and from the bloc since 2002.

The vote to reintroduce immigration quotas, backed by a razor-thin margin of 19,526 voters on Sunday, threatens that pact, and with it a key pillar of the Swiss economy, which relies on the EU for nearly one-fifth of its workforce.

Switzerland is home to food and beverage giant Nestle, drugmakers Novartis and Roche, as well as a host of major commodities dealers such as Glencore Xtrata and Louis Dreyfus Commodities.

"What's the point of investing in Switzerland, when it's not certain whether you can get qualified staff to carry out your plans," Valentin Vogt, Swiss Employers Association president, told a newspaper.

He said the vote created toxic uncertainty for Swiss businesses, which already faced pressure amid a foreign crackdown on banking secrecy and an outcry over the favorable tax rates some Swiss cantons offers to multinationals.

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