GENEVA: Russia’s invasion of Ukraine has put Switzerland’s much-vaunted neutrality to the test – and along with it, the country’s traditional role as international intermediary and reputation as a safe haven for the assets of Russia’s richest and most powerful.

       The Swiss executive branch stopped short of announcing unilateral sanctions against Russian interests after Moscow’s blistering military action in Ukraine.

       Instead, the Federal Council opted to fall in line with the European Union and pledge that Russian individuals and companies hit with EU sanctions won’t be able to evade them in Switzerland, which is not one of the EU’s 27 member states.

       The government said that financial “intermediaries” in Switzerland were now banned from starting new business relationships with 363 Russian people and four Russian companies. Any existing business must be reported to the Swiss economic affairs secretariat. Further steps are under consideration.

       While hardly a crackdown compared to other Western sanctions aimed at punishing Moscow for its invasion of Ukraine, the impact could be felt.

       The rich Alpine nation has been the biggest recipient of transactions by Russian private individuals – ahead of Britain, Spain, Luxembourg and the United States, according to a report compiled by the Swiss Embassy in Moscow.

       “Switzerland has for years been by far the most important destination worldwide for rich Russians to manage their wealth,” the report said, adding that net transfers of Russian taxpayers to Switzerland totalled US$2.5bil (RM10.5bil) in 2020. The Swiss news agency SDA-ATS reported net transfers of US$1.8bil (RM7.56bil) in the first half of 2021.

       Federal Councillor Guy Parmelin, the head of the federal economic affairs department, noted that Switzerland was bound to follow UN sanctions but could decide whether to follow EU sanctions based on criteria such as foreign policy and legal aspects – including legislation that has enshrined “neutrality” into Swiss law.

       Swiss authorities are in essence extending measures set up in 2014 after Russia’s takeover of Crimea, in which they also sought to ensure that EU sanctions were not dodged in Switzerland, to hundreds more people and businesses – but going further.

       “Switzerland is thus taking a tougher line with regard to Russia,” Parmelin told reporters in Bern, the capital.

       German government spokesman Steffen Hebestreit said Friday that “every country decides in a sovereign way about its actions... If you were to ask me whether I’d be happy if Switzerland supported the (EU) sanctions, then I’d clearly say ‘yes’.”

       However, Switzerland is also anxious to safeguard its role as diplomatic go-between for some countries – one of which is Russia.

       The Swiss government represents the interests of the former Soviet republic of Georgia in Moscow and Russia’s interests in Tbilisi, the Georgian capital, under an arrangement set up after those two countries broke off bilateral ties during their conflict in 2008.

       “It’s important to the Federal Council that implementing these measures doesn’t cut off talks between Switzerland and the countries affected,” said Parmelin. “Switzerland wants to be able to offer its services to the countries in conflict if these countries wish.”

       “If Switzerland were to automatically adopt the sanctions imposed by the EU or other countries, it could no longer credibly play the traditional role for which it is valued worldwide,” he added. — AP