Driver 5: geopolitics, sanctions and neutrality

The vote of 27 September 2026

The fifth driver concerns Switzerland’s position in a world that has become more dangerous and more divided. Chapter I.IV described how Switzerland adopted the European Union’s sanctions against Russia from 4 March 2022 onwards and how the frozen assets have become a lasting test of its legal order. The Swiss People’s Party responded with a popular initiative “Preserving Swiss neutrality”. It would have anchored a “permanent and armed” neutrality in Article 54a of the Constitution, prohibited membership of military or defensive alliances except in the case of a direct military attack and restricted economic sanctions to measures required by the United Nations.¹ On 27 September 2026 the voters rejected the initiative by 70.2 per cent, with every canton also against it. Foreign Minister Ignazio Cassis commented that Switzerland had been neutral, was neutral and would remain neutral. In his reading the vote concerned only the specific constitutional text.²

For the financial centre, the result has a direct legal consequence. The Federal Council retains the power under the Embargo Act to adopt sanctions of the European Union and other partners. Swiss banks will therefore continue to apply the same sanctions regimes as their European competitors, which protects their access to correspondent banking and to the dollar system. The clear margin also reduces the risk that sanctions policy becomes a permanent subject of constitutional conflict before 2035. At the same time, the campaign showed that a significant minority wants a more restrictive interpretation of neutrality. The debate will return whenever sanctions affect Swiss interests directly, as the continuing question of the confiscation of frozen Russian assets demonstrates.

The United States and China

The relationship with the United States has become the second geopolitical uncertainty. In August 2025 the American administration imposed a tariff of 39 per cent on Swiss goods, one of the highest rates applied to any trading partner. On 17 November 2025 the Swiss government announced a non-binding memorandum of understanding that reduced the rate to 15 per cent. Swiss companies including Roche, Novartis and ABB pledged investments of USD 200 billion in the United States by the end of 2028. A legally binding agreement was to follow.³ The episode showed how quickly an ally can exert economic pressure. For the financial centre, American leverage operates above all through the dollar, the correspondent banking system and the extraterritorial reach of American sanctions and tax law, which Chapters G.III and I.IV have analysed. A future conflict over sanctions enforcement, over the treatment of UBS or over Swiss trade surpluses could reach the banks directly.

China forms the third pole. On 20 August 2026 Switzerland and China concluded negotiations on the optimisation of their free trade agreement of 2014. Under the revised agreement, 99.8 per cent of current Swiss exports would enter China duty-free, compared with about half before. The agreement also covers investment, services, digital trade and sustainability provisions. Both sides intend to sign it before the end of 2026.⁴ Chapter H.I described the GDR link that has allowed Chinese companies to list in Zurich since 2022. The Asian dimension of the Zurich financial centre therefore rests on a delicate balance. Switzerland is among the few Western countries with a comprehensive trade agreement with China, while its banks must comply with Western sanctions and export controls. BCG’s finding that Hong Kong has overtaken Switzerland in cross-border wealth, largely on the strength of mainland Chinese clients, shows where Chinese private wealth prefers to be booked.

Neutrality as an asset and a liability

Geopolitics thus acts on the financial centre in two directions. In times of conflict, neutrality, the rule of law and a strong currency attract capital. The Swiss Bankers Association attributed part of the record inflows of 2025 to international clients who value Swiss stability in a volatile geopolitical environment.⁵ The same features expose Switzerland to pressure whenever the great powers demand alignment. The critical uncertainty for 2035 is the shape of the world order. A world of competing blocs with strict sanctions regimes would force Zurich to choose its alignment more clearly and would limit its role as an intermediary. A world of negotiated coexistence would enlarge the space for a neutral financial centre. The Federal Chancellery’s Perspektiven Schweiz 2040 reflects the same uncertainty in its axis from a multipolar to a unipolar order.⁶

Notes

1. IamExpat, “Switzerland to vote on Neutrality and Food initiatives in September 2026”, https://www.iamexpat.ch/expat-info/swiss-news/switzerland-votes-on-neutrality-september-2026. ↩
2. SRF News, “Abstimmung Neutralitätsinitiative”, 27 September 2026, https://www.srf.ch/news/abstimmung-neutralitaetsinitiative-1. The figure of 70.2 per cent is taken from the SRF results page on the evening of the vote. It matches Swissvotes, “Volksinitiative «Wahrung der schweizerischen Neutralität (Neutralitätsinitiative)»”, vote no. 688.00, https://swissvotes.ch/vote/688.00, which records 29.85 per cent yes (70.15 per cent no), 0 cantons in favour and 23 against and a turnout of 47.06 per cent. The formal validation of the result by the Federal Council had not been published in the Federal Gazette when this chapter was completed. ↩
3. IamExpat, “US tariffs on Switzerland reduced from 39% to 15%”, November 2025, https://www.iamexpat.ch/expat-info/swiss-news/us-tariffs-switzerland-reduced-39-15. ↩
4. Federal Council, press release “Die Schweiz und China schliessen die Verhandlungen über die Optimierung des Freihandelsabkommens ab”, 20 August 2026, https://www.admin.ch/de/newnsb/aGSlWc_NOHlHRbL77edlo. ↩
5. Plattform J, “Erstmals 10 Billionen erreicht” (cited above). ↩
6. Federal Council, press release on Perspektiven Schweiz 2040, 19 June 2026 (cited above). ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of September 2025.