Interview with H.E. Mrs. Sabrina Dallafior Matter Ambassador of Switzerland to Finland

Ambassador Sabrina Dallafior Matter has served as the Swiss Ambassador to Finland since August 2023.

Which kind of impact the current geopolitical situation has had on Switzerland?

Thank you for this very multi-dimensional and timely question. There are many simultaneous crises going on in the world, the war in Ukraine, the tensions between China and the United States, the armed conflict in the Middle-East to name but a few. The risks linked to it are considerable. 

Switzerland is one of the most globalized countries of the world and trades intensely with other countries.  The exports of goods and services account for over 70% of the Swiss (GDP), which is high by international standards – the average is 50% in the European Union (EU) and less than 30% globally. Switzerland's economy is very sensitive to geopolitical developments because of its strong export orientation and consequent reliance on global markets.

Russia's aggressive war against Ukraine has had a significant impact on Europe and beyond. This conflict also had wide-ranging implications for Switzerland, affecting humanitarian concerns, security, and the economy. Switzerland strongly condemns Russia's military aggression towards Ukraine, considering it a clear violation of international law that is completely unacceptable. On 28 February 2022, the Swiss Federal Council decided, on the basis of the Embargo Act, to fully implement the European Union sanctions against Russia. These include measures against Belarus. To date, Switzerland has implemented 12 sanctions packages, as have the EU-countries. Switzerland reaffirms its solidarity with Ukraine and its people. At the beginning of January 2024, the protection status S was active for ca. 66’000 displaced persons from Ukraine and was dissolved for ca. 21’000 persons.

The geopolitical risks have further increased with the armed conflict in the Middle East. An escalation of this conflict could be accompanied by a sharp rise in oil prices, supply chain problems and rising inflation rates.

The EU and Switzerland have long traditions to do business. How do you see the situation today taking into consideration the trade talks and cooperation within the Horizon Europe framework?

Switzerland, not itself member of the EU but surrounded almost only by EU-countries, is indeed closely intertwined with the surrounding states in economic, scientific, demographic, social and cultural terms. Switzerland is one of the EU's main trading partners, and the EU is Switzerland's most important trading partner. In 2021, Switzerland was the EU's third most important trading partner in services, after the US and the UK. At the end of September 2022, 374’000 cross-border commuters were working in Switzerland and 1,4 Million EU/EFTA/UK citizens live in Switzerland whereas 440’000 Swiss citizens live, study or work in EU-countries. Thus, maintaining stable, regulated, and sustainable relations with the EU is crucial for Switzerland. Furthermore, it's critical to us to sustain direct bilateral relations with individual European countries, such as Finland.

Relations between Switzerland and the EU are governed by over 120 bilateral agreements. These agreements regulate e.g. free trade, the free movement of persons, internal security and asylum, land and air traffic, education, research, the environment and statistics. In order to facilitate the adaptation of the existing agreements to the respective changes in EU law and to determine how disputes over the bilateral agreements are to be resolved, Bern and Brussels have been negotiating a so-called framework agreement in recent years.

Following a break in negotiations in May 2021 and the successful conclusion of exploratory talks since then, the Federal Council adopted a new draft mandate for negotiations with the European Union in December 2023. The negotiations are to begin as soon as the mandate has been approved by Parliament and the cantons.

Among third countries, Switzerland was the biggest contributor to the EU budget in 2014–19 with EUR 2.2 billion, 80% of which was devoted to research and innovation. Switzerland is currently considered a non-associated third country in Horizon Europe and related program and initiatives (Euratom program, the Digital Europe Program, DEP), unlike, say, Turkiye, Israel or Tunisia, that are associate members.   What comes to ITER (International Fusion Energy Organization), Switzerland is currently not considered a participating state. In its first meeting after the October 2023 elections, the Swiss government decided to allocate a further CHF84 million for 2024 to fund research in place of Horizon. Switzerland’s full association to Horizon Europe as soon as possible remains the Federal Council’s declared goal. In the non-associated third country mode, researchers and innovators in Switzerland can participate to a limited extend in only around two thirds of the calls for proposals.

Switzerland and Finland are both Europe's innovation frontrunners. It is clear that the potential for collaborative research is huge. 120 collaborative projects were underway between the two countries in 2020 under the Horizon Europe umbrella. Several of Europe's top universities are located in Switzerland and strong innovation clusters have grown up around the country's two technical universities (ETH, EPFL) in particular. I believe it would be beneficial for all parties to fully associate Switzerland to Horizon again.

Mid December 2023 a transitional arrangement was agreed with the European Commission to enable researchers in Switzerland to participate in the ERC Advanced Grant (AdG) 2024 call as soon as negotiations on the package approach and on association to the Horizon package have begun. This transitional arrangement is to be applied to all Horizon Europe and Euratom calls for proposals for the 2025 program year, provided that a corresponding agreement between Switzerland and the EU has been initiated by then.

What kind of opportunities do you see in R&D innovation cooperation between Finnish and Swiss companies?

Switzerland is one of the world’s top countries for R&D, with potential for partnerships in areas like biotech, nanotech, cleantech, AI, quantum computing and renewable energy. Finland is one of the EU's pioneers and has long been a leader in the development of digitalization. In the EU DESI 2022 index Finland ranked first for example in the integration of digital technologies by companies. The report cites Finland's particular strengths extensive basic digital skills and a strong tradition of preparedness in the area of data and cyber security. The country has a strong international position in certain areas such as artificial intelligence, 5G/6G and quantum computing. I see promising opportunities for R&D cooperation in all these fields.

There is great potential within e-health and MedTech, since both countries have complementary skills in these fields. Finland has one of the strongest health tech economies in the world. Public-private collaboration has led to strong innovations and digitalisation in healthcare, with almost all patient data stored electronically. The Finnish approach has attracted a lot of interest in Switzerland, which is more conservative in what comes to digital health data.

Purchasing power, cost of energy, lack of work force – how Swiss companies have tackled these challenges?

The Swiss economy has remained quite stable. Switzerland 2023 had an annual inflation rate of 2.1% and an unemployment rate of 2.0 %. In these respects, the country has tackled the challenges well.

Concerns about energy sufficiency have also affected Switzerland and various backup systems have been built after the start of the war in Ukraine, especially in preparation for cold winters. What comes to energy prices, the Swiss industrial sector holds a somewhat easier position compared to its European counterparts, largely due to its lower energy intensity. At the same time, the rise in gas and electricity prices has put a heavy strain on the budgets of smaller companies in particular, but also of many private households. In any case, as a small and open economy, Switzerland's reliance on imports does create indirect vulnerabilities in its energy supply.

Like Finland and many other countries, Switzerland is facing a major shortage of skilled workers and this challenge is cited as top obstacle to Swiss economy. Skills shortages peaked in Switzerland in 2022, and there was no sign of the problem easing in 2023. Despite the slowdown in the growth rate caused by the current economic downturn, the skills shortage has increased by 24% and reached a record high. At present, it is particularly difficult to fill vacancies for health specialists, IT specialists and technical engineers.

Cooperation between Finnish and Swiss companies – which kinds of opportunities you see and in which fields?

The bilateral economic, political and cultural relations between the two countries are characterized by mutual respect and trust, both important elements for success in business. Switzerland and Finland both are part of the internal market of the EU with freedom of movement for persons, goods and services. Both countries excel in research and innovation, being in top 10 of the IMD World Digital Competitiveness ranking (Switzerland ranked 5th, Finland 8th). These circumstances provide a good basis for cooperation between Finnish and Swiss companies and there is plenty of potential in the markets for companies from both countries.

The Swiss market is a sophisticated and mature market, ideal for advanced tech products and it is often seen as an ideal test market for them. If the product breaks through in Switzerland, it often has great potential in the big markets of its neighboring countries as well.

The world's leading founders and investors meet annually in Helsinki at the start-up event Slush, where Switzerland also has a strong presence. Swiss start-ups that take part can benefit from matchmaking with investors, larger Swiss companies can enter into partnerships with innovative start-ups, and Finnish start-ups and growth companies can be attractive investment targets for Swiss venture capitalists.

I see potential in inbound tourism from Switzerland for the Finnish tourism industry. The direct flight connections to Finland from Switzerland, including Lapland, are better than ever.  

Finland has very ambitious climate targets. The country wants to be carbon-neutral by 2035 and carbon-negative shortly thereafter. The coal phase-out is scheduled to take place in 2029. This means that new solutions for renewable energies are needed. This rapid energy transition can also offer interesting opportunities and cooperation possibilities for Swiss providers of green solutions.

There are also great opportunities for Swiss companies in the field of rail infrastructure. 

Actors like the Switzerland Global Enterprise and Chamber of Commerce Finland-Switzerland, and the Embassies of both countries be it in Finland or in Switzerland are always happy to act as door-openers and help to bring companies from both countries together.  

How Swiss companies have followed requirements of corporate responsibility – very important theme today?

According to a study commissioned by the Swiss federal government and conducted by the consulting firm Ecofact AG and the Department of Sociology at the University of Zurich published in November 2023, Swiss companies are doing quite well in this field. The measures taken by large companies were particularly praised. Numerous companies have significantly expanded their programs for the establishment of so-called due diligence measures in recent years. In doing so, they have also orientated themselves towards the corresponding OECD and UN codes of conduct. The aim of these measures is to structure business activities responsibly worldwide in order to minimize the negative impact on society and the environment.

What would you like to tell Finnish people about Switzerland?

Well, I probably don't need to give a special introduction to Switzerland, as the tourist hotspots in particular are probably well known to everyone. Sure, we are a small country and have high mountains. And we still have many mountain farmers. But Switzerland is more than just Heidi, cheese and chocolate. We have excellent schools and universities and correspondingly very well-trained specialists. A quarter of the population does not have a Swiss passport, and more than half of these foreigners were born in Switzerland or have lived here for more than ten years. This is why, in addition to the four official national languages, English, Portuguese and Spanish are the most widely spoken languages in Switzerland. This brings not only great cultural diversity but also many innovative ideas to the Swiss economy. We have a well-developed public transport network and the same four parties have been represented in government for 80 years. So, whether you come to Switzerland as a tourist or for business, you are always welcome and I guarantee that you will find what you are looking for and feel at home.

Text: Embassy of Switzerland to Finland
Questions: Anne Hatanpää, FinnCham