GO
Loading...

Gaddafi's Scorn Is Good News for Swiss Economy

An unfortunate turn in Swiss-Libyan diplomatic relations in 2008 may now have a silver lining for the Alpine economy.

Swiss Francs
Image Source | Getty Images
Swiss Francs

Switzerland faces a very limited impact from unrest in the North African countrybecause of a steep fall in trade.

According to data from the Swiss crude oil association and the Swiss state Secretariat for Economic Affairs (SECO), the Libyan share of oil imported as a share of total crude imports to Switzerland has fallen from 75 percent in 2008 to 11 percent in 2010.

"While it is too early to grasp the global impact of the social unrest in Libya, Switzerland is shielded from much of it as trade relations have decreased considerably," a SECO spokeswoman told CNBC.

Diplomatic and trade relations soured between the two countries since a string of events that included the fight over the release of two Swiss businessmen in 2008, among them the country head of ABB Libya.

According to SECO, the drastic decline of oil imports from Libya to Switzerland led to an overall slump in trade. Imports from Libya plummeted by 78 percent in 2009, while exports to Libya fell by 44 percent. Trade with Libya only accounted for 0.25 percent of overall Swiss trade in 2009.

In 2010, imports from Libya to Switzerland stood at 485 million Swiss Francs ($516 million), a fall of 32 percent compared to the previous year.

But this number still dwarfs the level of Swiss exports to Libya of only 110 million Swiss francs in 2010. The bulk of exports from Switzerland to Libya consist of chemicals and machinery.

In March 2010, Libyan leader Moammar Gaddafi imposed a general embargo against Switzerland and ceased the issuance of visa to Swiss business people. According to SECO, these measures have never been lifted.

Experts believe that the Gaddafi family has withdrawn all of its estimated $5 billion in assets in Swiss banks after the diplomatic standoff.

At one point in 2010, Gaddafi called for a “holy war” against Switzerland and made a passionate plea in front of the United Nations to divide Switzerland among France, Italy and Germany.

The Libyan leader had been disgruntled with Switzerland ever since Swiss officials had arrested his son Hannibal and his son’s pregnant wife in Geneva in the summer of 2008 for allegedly have beaten hotel staff.

Soon after the release of his son, Libya held two Swiss businessmen hostage for having violated visa regulation.

They were released after one year of negotiations and an infamous apology by the Swiss president at that time.

Engineering giant ABB, which has 10 employees in Libya, told CNBC on Wednesday it has started to evacuate these employees temporarily. None of these employees are Swiss citizens.

But ABB’s operations in Lybia are small. In 2010, ABB generated revenue in the “double digit million dollars” in Libya. ABB’s total revenues was $30 billion in 2010.

Meanwhile, Swiss newswire service AWP reports that protests against Gaddafi’s rule continued in several Swiss cities on Tuesday. Protestors are predominantly Libyan citizens living or exiled in Switzerland.

In the capital of Bern, some 50 people have protested in front of the Italian embassy against Mr.Berlusconi’s military aid to Libya. In Geneva demonstrators demolished Libya’s office at the UN.

Contact Europe: Economy

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More