By John Revill
BERN (Reuters) -The Swiss arms industry is calling for looser curbs on the resale of its goods as weapons exports fell in 2024 for a second year, fuelling concern the neutral country is falling behind as Europe ramps up defence spending over the war in Ukraine.
Matthias Zoller, who is responsible for the armaments sector at industry association Swissmem, said neutrality laws were holding Switzerland back from valuable contracts.
Germany, the largest buyer of Swiss arms, has excluded Swiss companies from some procurement deals, while Denmark and the Netherlands have halted orders, Zoller said before the government released export figures for 2024 on Tuesday.
Swiss war material exports dropped 5% to 665 million Swiss francs ($754.74 million) from 696.8 million francs in 2023, the State Secretariat for Economic Affairs (SECO) said.
The decline, which followed a 27% plunge in 2023 could be partly to do with European worries about the Swiss ban on the transferring of previously bought armaments to war zones, including Ukraine, SECO said.
“There’s a big surge in defence spending in Europe, and Switzerland will miss out,” Zoller said. “It’s a disaster for the industry but also the country’s defence capabilities.
“Instead of working day and night to ramp up production, many companies in Switzerland are letting people go or investing elsewhere.”
Swissmem’s members include military suppliers like Rheinmetall and Safran Vectronix.
NEUTRALITY-LINKED RESTRICTIONS
Under neutrality laws and the Swiss war materials act, weapons cannot be sent directly to countries involved in armed conflict, and re-export of previously sold weaponry is also blocked. That has prevented transfers of anti-aircraft ammunition, for example, from Germany to Ukraine.
Thierry Burkart, leader of the centre-right Free Liberal Party, described the restrictions as “completely absurd.”
“This harms us enormously, not only our industry, and our defence capability, which we need to work on, but also our contribution to European security, while remaining neutral,” Burkart told Reuters.
The Swiss government is now mulling whether to relax its restrictions “in extraordinary circumstances” as well as limiting the re-export restriction to five years after the products have been delivered.
The move to a five-year limit was supported by the Social Democrats, said Fabian Molina, a member of the lower house of parliament.
“We should do everything possible, to support Ukraine, because European security is now defended in Ukraine,” Molina said.
“Weapons that have already been sold to third countries should under strict conditions be allowed to be exported to Ukraine because they need them right now.”
Andre Mittmann from SECO, said the decline in the arms industry could worsen in future if countries continued to shun Swiss armaments.
A drop in exports and knowledge from Switzerland “will be problem for the Swiss Army and could be then a problem for Swiss security policy,” he said.
Still, it was a matter for politicians to decide how to react due to the restrictions involved for Switzerland as a neutral country, he said.
“Changing this would be a political decision, for parliament and the Swiss people to decide.”
($1 = 0.8811 Swiss francs)
(Reporting by John Revill, additional reporting by Dave Graham; Editing by Bernadette Baum)
