Swiss roll up the welcome mat

BRUSSELS, Belgium — The European Union is confronted with unrest in Ukraine, tension with Russia and instability along its southern flank. Surely at least one of the neighbors could be trusted not to go rogue.

But since Sunday, even staid, sensible Switzerland has become a thorn in the EU's side.

Swiss citizens voted in a referendum on Sunday to support an ultra-conservative party's proposal to slap quotas on migrants coming from EU countries, prompting immediate concern among the over 1 million EU citizens living and working in the Alpine country.

"I've been coming to work here for seven years, now I'm afraid of a change in the law," Ines Nouvelle, a French secretary, told Spain's El Pais newspaper in Geneva. "We feel less and less welcome here."

The vote could have dramatic implications for the Swiss economy.

Annulling an agreement on the free movement of labor could invalidate a web of agreements governing relations between the 28-nation EU and the wealthy non-members among them.

That's likely to mean that Swiss quotas on EU workers will be countered by restrictions on imports of Swiss watches, cheese or financial services — no small concern for a country that sells 60 percent of its exports to the union that surrounds it.

"This is bad news, for Europe but also for the Swiss," France's Foreign Minister Laurent Fabius said Monday. "Switzerland will be penalized for isolating itself … we will have to revise our relations."

Swiss businesses are already warning of dire consequences from the impending isolation from their biggest market. They’re also deeply concerned about damage from a ban that would stop them from hiring the foreign bankers, pharmacists, waiters and hotel workers on which so much of the Swiss economy depends.

The EU's worries run even deeper.

Switzerland's angst over the migrants who make up over a fifth of its workforce is mirrored in some of the EU's own member countries.

Increasingly popular right-wing parties in Britain, France, the Netherlands and elsewhere cheered Sunday's vote as a reaffirmation of economic nationalism. They demanded their own governments also act to roll back EU free labor movement rules — or leave the EU altogether.

"Fantastic," tweeted Dutch far-right leader Geert Wilders after the referendum result came in from Switzerland. "What the Swiss can do, we can do: restricting immigration and getting out of the EU."

The right of European companies to hire workers from wherever they want within the EU — and of workers to move where jobs are — is a fundamental part of what the union is about.

It was long hailed as a key goal by parties on the left and the pro-business right as a way to overcome labor market rigidities that put Europe at a disadvantage compared to the United States and other competitors.

However, many perceived the EU’s expansion to include former communist countries to the east in the mid-2000s as a step to far.

The specter of cheap eastern labor — symbolized by the Polish plumber — undercutting local wages has been blamed for a rise in euro-skepticism in France and the Netherlands.

A media campaign warning of an expected influx of Romanians and Bulgarians this year led Britain's Conservative government to press the EU to roll back free-movement rules. Similar restrictions are also being sought by the ruling party in the German state of Bavaria, a close ally of Chancellor Angela Merkel.

Such animosity toward cross-border migration is rising despite a raft of data showing labor movement is good for the EU economy.

"The vast majority of people who move from one EU country to another do so in order to work. They don’t do it in order to claim benefits," Laszlo Andor, the EU's employment commissioner, told a British audience Monday. "These workers are in fact of considerable benefit to the economies and to the welfare systems of the receiving countries."

He pointed to studies showing how an inflow of migrants from new EU member countries has boosted the economies of Western Europe by more than 1 percent, while immigrants' taxes ensure they contribute much more to welfare and pension budgets than they take out.

However, such arguments have been losing ground thanks to scare stories blaming immigrants for welfare scrounging and crime.

In Switzerland, a nation of 8 million, long-standing communities of Germans, Italians and Portuguese make up the bulk of the around 1 million EU migrants. Anther 200,000 — mostly French and Germans — commute across the border daily to work in Geneva, Zurich and Basel. Around 430,000 Swiss live abroad in EU countries.

Nevertheless, the anti-immigration campaign successfully played on fears of an Eastern European invasion that would overwhelm the country's prosperous Alpine tranquility. It secured a 50.3 percent vote in favor of imposing quotas.

In a country proud of its independence and distinct culture, most voters ignored warnings from almost all mainstream political parties, trade unions and employers' associations about the economy's need for foreign workers.

One example is the vital tourism sector, which will struggle to find Swiss-only staff for its hotels and restaurants in a country with one of the world's lowest unemployment rates — 4.7 percent, compared to 7 percent in the United States, or 11 percent across the EU.

Foreigners make up a quarter of employees in Swiss banks and 45 percent in the major pharmaceutical industry. The overwhelming majority of players in the national soccer team that qualified for this year's World Cup finals are of immigrant background.

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According to Swiss law, the government has three years to change the migration rules in line with the referendum vote.

Officials in Switzerland and at EU headquarters in Brussels have expressed hopes a compromise can be found by then, but planned agreements on student exchanges, technology cooperation and institutional ties have already been plunged into doubt.

Switzerland is an important market for the EU — a bigger trading partner than Russia or Japan — but the wider implications of Sunday's vote go well beyond the economic, revealing growing public dissatisfaction with one of the basic principles of European integration.

"This is not an isolated case," said Yves Pascouau, head of the migration and diversity program at the European Policy Center, a think tank. "This is worrying in the sense that even mainstream parties in some of the member states are turning to the idea that freedom of movement may not be a good thing."