Category Archives: Small States

Having grown up in Switzerland, I always have been interested in small states. Small states are not just small versions of large states–they are culturally and politically different from large ones. Small states have a more narrow range of interests and often develop peculiar specialties which offer prestige and economic well-being in a globalized world. This is why small states defend their interests much more vigorously and often in defiance of the international community. Small states are often spaces for social and cultural experimentation. All these factors make small states and their stories so compelling.

What the Belalcázar Monument in Popayán Teaches Us About Confederate Monuments

The current debate about Confederate memorials in the United States highlights their importance in terms of current symbolic meaning, location, and original intent. The equestrian statue commemorating the conquistador Sebastián de Belalcázar (1479/80-1551) in Popayán, Colombia, can help us understand what these monuments signify today and why they have become objectionable.

In Latin America, there are many statues in honor of liberators from Spanish colonial rule, like Simón Bolívar, José de San Martín and others, just as there are monuments to George Washington and Thomas Jefferson in the United States. Colonizing powers are known to have erected monuments remembering colonizers, like the Columbus monument in San Juan, Puerto Rico, erected in 1893. However, there are also are a handful of statues commemorating conquistadors that were erected in the post-colonial period. Notable examples are the Columbus monument in Santo Domingo and the Pizarro monument in Lima, about which I wrote earlier. The Belalcázar monument in Popayán belongs to that list as well.

Belalcázar monument in Popayán, Colombia (1937). A great place to watch the sunset.

Sebastián de Belalcázar and his mercenaries arrived in Popayán in 1537, claimed the territory for the Spanish crown and founded the city of Popayán. Belalcázar already had founded the city of Quito, and he went on to found others, like Cali, and is considered a co-founder of the city of Bogotá. Creating colonial settlements was the most important method for the Spanish to establish control over newly subjugated territories. So why was the colonizer honored with a monument in 1937?

The Belalcázar monument was created by the Spanish sculptor Victorio Macho (1887-1966) in 1937 to commemorate the quadricentennial of Belalcázar’s conquest and the founding of the city of Popayán. It was first placed in the center of town in the Plazoleta de San Francisco. In 1940, it was moved to the top of the Morro de Tulcán, a hill ad the edge of the colonial core of Popayán. The poet Rafael Maya (1897-1980), a member of the conservative and anti-modernist literary movement Los Nuevos, told Macha that the statue should symbolize Popayán’s best: “a heroic race, wisdom, beauty, holiness, poetry and song.” It is evident that the the statue was intended to celebrate hispanidad –that is an Iberian and Catholic identity.

El Morro de Tulcán in Popayán where the Belalcázar monument was placed in 1940.

El Morro del Tulcán is a poorly researched pre-hispanic pyramid, perhaps dating back to 500 CE, although some archeological finds point to use as late as the early colonial period. During road construction at the foot of the pyramid in 1928, adobe structures, vessels, bones and other pre-hispanic objects were found. When the top of the pyramid was removed to create a level space to place he equestrian statue of Sebastián de Belalcázar in 1940, it was well known that this was a sacred indigenous site.

Thus the quadricentennial of the founding of Popayán only served as a nominal pretext to erect this equestrian statue. Its real purpose was to assert the rule of Colombians of Spanish descent over indigenous Colombians. Placing the equestrian statue on top of a sacred pyramid was a conscious act of desecrating a native site, of staking a claim to the land, and of establishing cultural primacy. Only the amount of graffiti on the base of the monument seems to indicate that its placement is controversial in contemporary Colombia.

And herein lies the obvious connection with the Confederate monuments. They were mostly created between 1900 and 1920, decades after the end of the Civil War. Their purpose was not primarily to celebrate the accomplishment of the Confederate leaders but rather to reassert White supremacy in the Jim Crow South. Their intent was to put the White brand on public spaces and to intimidate Blacks. The point is not that the monuments of Sebastián de Belalcázar and Robert E. Lee might offend some people today. The critical point is that they were erected with the intent to offend and to intimidate.

Switzerland: Pioneer of Right-Wing Populism

The ascent of a narcissistic autocrat with a white nationalist platform to the presidency of the United States has shocked the world. While the nationalist right played a relatively marginal role in US politics until quite recently, there are other countries with a long history of successful populist politics. Perhaps the best example is Switzerland where nationalist right-wing politics have been practiced successfully for two generations. Their rise has been incremental, gradually normalizing xenophobic and exclusionary discourses.

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Poster against “mass-naturalization” (2004)

On February 12, Swiss voters will decide whether to facilitate the naturalization of third-generation immigrants. These are legal residents of Switzerland who were born and raised in Switzerland and whose parents were also born and raised in Switzerland. Under the current arbitrary and discriminatory naturalization laws, which are entirely based on the ius sanguinis, residents whose grandparents immigrated have to meet the same requirements as recent immigrants who were born abroad. Facilitated naturalization is only granted to spouses and children of a Swiss national. Similar measures were rejected by Swiss voters in 1983, 1994, and 2004. The 2004 poster shows dark hands greedily grabbing Swiss passports. Recent polls indicate that there is a slim margin of support of the measure, but it may still fail because a majority of cantons is also required.

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Controversial poster at Zurich main station (Jan. 2017) with the text: “Uncontrolled naturalization? No.”

The political right, particularly the Swiss People’s Party (SVP), the largest party in Switzerland, has campaigned vigorously against the measure, using very controversial campaign tactics. Their main poster shows a woman wearing a burqa with the caption “Uncontrolled naturalization? No to facilitated naturalization.” Andreas Glarner, a leader of the populist right, justified the poster: “The wearer of a burqa is a symbol for lacking integration.” The intended effect is to create a visual link between a sinister, fully veiled Muslim woman and well-integrated third-generation immigrants. A look at the facts shows how baseless and manipulative this statement is. According to federal authorities, a total of 24,656 individuals would benefit from this measure. Of these, only 334 have roots outside of Europe, while 14,331 individuals, or 58%, have roots in Italy. Furthermore, research shows that naturalization enhances integration, indicating the absurdity of Glarner’s arguments.

Switzerland has a unique system of direct democracy that allows any group to launch an initiative to add an amendment to the constitution or to challenge a federal law in a referendum. A national vote has to be held if a sufficient number of voters demand it with their signatures. This system has enabled fringe groups to take their pet issues directly to voters, bypassing the parliamentary process. It also has forced parliament to work out balanced compromise legislation that can withstand a referendum.

The first initiatives against Überfremdung (overforeignization) were launched by a right-wing fringe party called Nationale Aktion gegen die Überfremdung von Volk und Heimat (National Action Against Overforeignization of People and Home). Even though there was no mainstream support for the initiative, 46 percent of the electorate supported it in the first vote of 1970. If adapted, it would have limited non-citizens to 10% of the resident population, down from the actual rate of 17.2%. (The current rate is 24.6% which in part is due to the fact that naturalization in Switzerland is exceedingly restrictive.) In the following years, similar initiatives followed, all of them narrowly defeated, until 2014.

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Swiss fascist election poster (1933): “We clean up”

The term Überfremdung was used even though it was discredited because of its use in Nazi Germany. The term was coined in 1900 in a Swiss publication that was part of an older Swiss polemic against immigration in the years leading up to WW I. Populist discourses against immigration in Switzerland thus go back over a century. The Swiss fascist movement created an anti-immigration visual language that has informed election posters until today. In the 1970s, the fringe right linked “overforeignization” with relevant issues of the day, such as overpopulation, environmental degradation, the selling out of the homeland, and excessive real estate speculation leading to usurious rents. A pseudo-environmentalist approach to limiting immigration was also attempted in the 2014 Ecopop initiative.

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Swiss poster against “overforeignization,” c. 1970.

Since the 1960s, seven different right-wing populist parties have won seats in the national parliament. While these parties remained on the fringe until the early 1990s, they used the tools of direct democracy very effectively to enact an anti-foreigner agenda. While the early initiatives were not successful, they framed the discussion and allowed the fringe right to set the tone for the immigration debate. Just the threat of a new initiative or of a referendum forced the mainstream to make serious concessions to the fringe right, thus establishing a tyranny of the minority that also is an emerging trademark of Trump’s America.

Over the past three decades, the populist right prevented facilitated naturalization of children and grandchildren of immigrants, forced a tightening of asylum laws, and in 1992 engineered the ballot box defeat of Swiss participation in the European Economic Area (EEA), which many saw as a stepping stone towards EU membership. And in February 2014, the political right for the first time managed to pass a measure that would limit immigration. As this new limitation is in violation of existing treaties with the EU, the Swiss government has stalled on its implementation so far.

In the early 1990s, the Swiss People’s Party (SVP) established itself as the main right-wing party and managed to transform popular support of anti-immigration issues into success in parliamentary elections; it has been the most successful Swiss party since 1999 and currently has the support of about 30% of Swiss voters. The party became a model for other European right-wing populist parties and recently has been consulted by similar parties in Europe, like Germany’s AfD. Their controversial 2007 election poster, showing a black sheep being kicked out, became such a branding success that they recycled it for a number anti-foreigner campaigns. Furthermore, right-wing parties in Europe used the motif for their own purposes.

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Infamous 2007 Swiss People’s Party (SVP) election poster (left) and imitations from Belgium, Germany, and Spain.

One of the more spectacular successes of the hard right was the passage of a constitutional amendment outlawing minarets in Switzerland in 2009–of which there were exactly four in the entire country. Their campaign posters showed a Swiss flag pierced by minarets that had the appearance of missiles. Anti-Islamic prejudices were further pushed by the same sinister-looking Muslim woman in a burqa seen in the current campaign. And again, this illustration was imitated by right-wing parties across Europe, like France’s Front National and the British National Party, who used it in their own polemics against Islam.

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Minarets piercing the Swiss flag like missiles, Muslim woman in burqa (2009). Imitations from France and Britain.

While the mass appeal of right-wing populism still is a relatively new phenomenon in Europe and the United States, the roots of contemporary right-wing populism in Switzerland go back to the 1960s. It has been a powerful driver of anti-immigration, anti-EU and anti-Islamic policies in Switzerland that defied the political elites even though the populist right has never received more than 30% of votes in parliamentary elections. It has developed a polemical and manipulative rhetoric and misleading graphics over the past half century that has become the model for right-wing political parties across Europe.

Addendum February 12, 2017: Hearing on NPR this morning that Swiss voters approved the facilitated naturalization of third-generation immigrants felt a bit surreal. This certainly is a step in the right direction, but the Swiss government set the bar very low with its proposal. While the vote (60.4% of voters and 17 out of 23 cantons in favor) is a setback for the populist right, we have to remember that naturalization for third-generation immigrants still is not automatic and that second-generation immigrants–who were born and raised in Switzerland–still have to go through the exceedingly tough and arbitrary naturalization process. The government’s proposal
set the bar very low, much lower than So the populist right still drives the immigration and naturalization agenda.

What the Brexit Vote Teaches Us about Direct Democracy (and the Future of Democracy)

Yesterday’s Brexit vote was widely seen as a referendum on referenda. The populist right across Europe now routinely is demanding to take issues directly to the people in order to bypass the parliamentary process which has not produced desired outcome–a process The Economist recently dubbed Referendumania. The United Kingdom Independence Party (UKIP) has demanded for years that important issues like EU membership should be voted on by the electorate. Prime Minister David Cameron gave in to the demands in order to win the last election, feeling confident that he would win the vote and thus quiet the right-wing opposition. The gamble backfired: Cameron lost both the vote and his job.

The price Britain will pay for playing with the populist fire is potentially steep. Scotland voted overwhelmingly in favor of staying in the EU and now wants a second vote on independence. In Northern Ireland, the vote opened up old confessional lines of cleavage: Protestant Unionists voted for the Brexit, Catholics against. And the City of London may lose its position as premier financial market in Europe. Most importantly, the British economy will face an uncertain future. The EU is unlikely to sign off on free trade arrangements of the sort Norway and Switzerland enjoy because such a deal would encourage other member nations to leave as well. Furthermore, it took Switzerland a couple of decades to arrive at its current, admittedly cushy relationship with the EU.

Governments in other European countries no doubt will try to avoid this populist trap. This will enrage the masses even more, and demands for more democracy will become ever louder. In the wake of the British vote, the German right-wing party Alternative for Germany (AfD) has demanded more direct democracy for Germany. Marine Le Pen, the leader of the Front National, promised a referendum on the Frexit if she is elected president of France next year. And the Dutch right-wing leader Geert Wilders announced a push for the Nexit.

One real concern is that this type of referendum is susceptible to lies and deception. The Brexit campaign was run entirely as a post-truth campaign. Its most visible element was the Vote Exit campaign bus run by Boris Johnson, the former mayor of London and possible successor as prime minister. The inscription on the side of the bus made a bold claim: “We send the EU £350m a week.”

False claim on Boris Johnson’s Vote Exit campaign bus: “We send the EU £350m a week.” (Reuters)

As it turns out, the figure is wrong. It disregards the massive rebate Britain has received since 1985, and it does not include the EU payments that flow back to British institutions. But facts just did not matter in this campaign that was ruled by anger and fear and dominated by issues like immigration and sovereignty. Michael Gove, co-chair of the Leave campaign and current minister of justice, was asked to name a single independent economic authority who thought Brexit was a good idea. His response: “I think people in this country have had enough of experts.”

The counter-example to this narrative is Switzerland. Swiss voters go to the ballot box four times a year to decide three or four issues each time. Direct democracy in Switzerland has grown organically into the fabric of Swiss politics since the late 19th century. Both the government and the media generally do a good job to inform the public on the facts and on the pros and cons of the issues to be voted on. As a result, Switzerland has developed a polity that is structured from the bottom up and that allows voters to participate in decision-making processes on all levels of government. This system has produced an educated and knowledgeable electorate that is much less likely to be fooled by deceptive populist rhetoric.

Political systems create political cultures as much as political cultures shape political systems. Countries like Britain and Germany have a strong tradition of parliamentary democracy. Voters elect leaders who represent them in parliament that in turns forms a government which it controls. This mechanism does not really allow for an alternate decision-making process, for instance in the form of a referendum, as the political culture does not have the tools to deal with it. A system that works exceedingly well in Switzerland therefore could turn toxic for Britain, with the potential of doing the same in other European countries.

There are two reasons why the current populist anger is directed at the European Union and why referenda could accelerate the unraveling of the EU. The European Union has been an elite project. It has done a poor job explaining to Europeans how it has brought peace and prosperity to a continent that had been ravaged by two world wars, how it helped Spain, Portugal and Greece transition away from fascist dictatorships, and how it supported countries formerly in the Soviet bloc both politically and economically. But it also created institutions that are not transparent and that delegate too many decisions to bureaucrats in Brussels. And it has thoroughly mismanaged the Greek debt crisis. Thus it has become an easy target for malcontents.

The second reason is that Globalization has contributed to the de-industrialization of Western Europe (as well as North America). This has created massive wage stagnation and chronic unemployment among the working classes, and it has spawned unprecedented levels of global migration. European populists successfully managed to blame the European Union for both. In reality, 1.5 billion workers, mostly in China and India, have joined the global labor market over the past quarter century which has created extraordinary pressures. On top of that, the digital revolution has begun to make human labor redundant–a trend that may lead to massive unemployment in developed societies in the future. The EU is responsible for none of this: British voters will soon discover that leaving the EU will not lessen the competitive pressures on British industry, nor will it ease migration pressures.

Western democracies have become vulnerable to populist deception. Boris Johnson will be rewarded for his deceptive politics by inheriting the job of Prime Minister. He also wrote the playbook for Donald Trump on how to win a fact-free campaign that is not restrained by the limitations of truth. Maurine Le Pen is favored to win the French presidency next year. And Angela Merkel, the lone beacon of reason in European politics, may well stumble over the populist furor raised by the refugee crisis. Direct democracy which has given Switzerland unparalleled political stability and economic success may also become the political idea that will give the populist right the tools to undo the European Union.

 

Xhaka vs. Xhaka: Swiss Debates about Immigration and National Identity

The world was watching today as Switzerland and Albania met in a qualifying-round soccer match at the European Championship in France. Switzerland won 1-0. The game got world-wide attention because two brothers were playing on opposite teams: Granit Xhaka for Switzerland and Taulant Xhaka for Albania.

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The Xhaka brothers Taulant (left) and Granit embracing before the game. (Screenshot Blick.com)

Whenever US national teams in any sport play in a big tournament, the expectation typically is that the US will win it all–soccer (known was football in the rest of the world) being an exception. Small countries rarely expect their sports teams to win a big tournament. Often, just qualifying for it suffices to get fans excited. When Switzerland beat Spain during the 2010 World Cup, fans were ecstatic. Spain went on to win the World Cup, Switzerland was eliminated because of a loss against Chile and a draw against Honduras, and everybody was happy. So symbolic victories matter and have an afterlife in the psyche of small countries with implications for national identity formation.

For Albania, the game was important because this is the first time ever that the Albanian national team qualified for a big tournament–World Cup or European Championship. To the Albanians, being there was more important than winning. This is why some streets of Zurich were dominated by Albanian immigrants who were in a celebratory mood in spite of the loss of their team. One Albanian fan told the Zurich daily Tages-Anzeiger that Albania was represented at the Euro with 38 players, more than any other country: “We feel like victors because the Swiss national team consists predominantly of Albanians.”

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Albanians celebrating: post-game parade in Zurich’s Langstrasse. Some Swiss showing colors as well. (Tages-Anzeiger)

And this is exactly the reason why some Swiss do not feel like celebrating. The Swiss national team over the past few years has become a focal point of the tempestuous debate about immigration, integration, naturalization and national identity which has been virulent in Switzerland since the early 1970s. When the Swiss Under-17 team unexpectedly won the World Cup in 2009, the Swiss public was surprised to learn that two-thirds of the players on that team had a migration background.  Many of these players have now moved up to the senior team.

Of the eleven players in the starting lineup of today’s game, only three do not have a migration background–interestingly the goal keeper and two defenders, while all mid-fielders and strikers do have a migration background. Five players have roots in Albania or in Kosovo (which is ethnically Albanian), and one additional player has roots in Bosnia. So the Albanian fans got it right: they do have reason to celebrate. At the same time, an informal survey of the Swiss tabloid Blick indicates that 58% of its readers do not identify with their national team.

The example of the Xhaka brothers illustrates what has become the norm in Swiss and indeed in European soccer. Both Xhaka brothers were born in Switzerland to Kosovo-Albanian parents who escaped collapsing Yugoslavia in 1989. Both grew up in Basel and learned to play soccer in local clubs. Both profited from the efforts of the Swiss Soccer Federation that since the early 1990s has made it their mission to help integrate the children of immigrants into Swiss society through soccer.

Taulant, born in 1991, still plays for the FC Basel and has collected four Swiss championship trophies with his club. Granit, born in 1992, transferred to Borussia Mönchengladbach, an elite German Bundesliga team, in 2012. Last month, it was announced that he will transfer to Arsenal next season. Both brothers played for Swiss national youth squads, but only Granit was invited to the senior team, while Taulant was invited to play in the Albanian national team in 2013. So Taulant plays for a Swiss club, but for the Albanian national team, while Granit chose a career in the Bundesliga and the Premier League but still plays for the Swiss national team.

Populists vilify both a nascent multicultural society in Switzerland in general and immigrants in particular because of their supposed lack in strength, character, conviction and commitment to their new country. Commentators from the populist right have denounced prominent Swiss players with a migration background because they allegedly lack loyalty towards their adoptive country as they play for a foreign national team, foreign club team, or both. While native Swiss players enjoy great support for seeking fame and fortune abroad, this is not the case for players with a migration background who play for a foreign club, like Granit, or worse, for a foreign national team, like Taulant. The Xhaka brothers very much represent the globalized cosmopolitan world of elite soccer in Europe where top teams buy top players regardless of nationality. But a more parochial Swiss public examines ‘their’ players with migration background for their ‘Swissness’ and finds them mostly wanting, as a desire to play abroad is seen as lacking ambition to integrate.

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Split loyalties: mother Xhaka wearing a t-shirt combining the flags of Albania and Switzerland. (Daily Mail Online)

At the 2014 World Cup, the Swiss team was the most cosmopolitan and was widely praised as a model for integration. But recently, questions of integration and identification with Switzerland have flared up within the national team as well. A frustrated Stephan Lichtsteiner, a star player at Juventus Turin and one of the few players without migration background, started the debate when two players with a long history with the national team were cut from the roster for the qualifier against Estonia in March 2015. He angrily told the rightist Basel daily Basler Zeitung: “To me it is not about the`true Swiss’ and the ‘other Swiss,’ rather it is about the question whether people still can identify with the the national team.”

Observers believe that this was a public acknowledgment that a powerful Albanian bloc has emerged in the Swiss national team and that the team is not nearly as integrated as perceived by the public. Lichtsteiner’s statement certainly did not not improve the public image of the Swiss national team at best and played into the populist rhetoric at worst. In that context, Albania was the worst-possible opponent for Switzerland. It is a good thing that the Albanian-Swiss managed to win over the Albanian team–otherwise the public backlash in Switzerland questioning the loyalty of their players would have been palpable. But then these players are professionals who want to play soccer, win games, and be successful in their careers–and who are annoyed about being drawn into integration and identification debates. So the true winners of today’s game: the Xhaka brothers.

Tartu University and the Anti-Russian Memory Project

Monuments are never about the past. They are about how we think about history and culture at the time the monument is erected. Monuments are part of national memory projects whose primary purpose is to shape the present and the future. As attitudes change, monuments themselves can become focal points of political debate. We often instrumentalize monuments to help construct a version of history that is compatible with national identity, as I argued in my piece about the Pizarro monument in Lima, Peru. A recent visit to the campus of Tartu University confirmed this vividly.

I participated in a conference that took place in Tallinn and Tartu, the two largest cities in Estonia. Putin’s aggression against Ukraine was a daily topic of conversation, and the fear that Putin may turn his attention to the Baltic states was expressed frequently. During the Tartu portion of the conference, international participants were invited on a walking tour of Tartu University, led by a Tartu professor who had studied in Tartu during the Soviet period and a younger lecturer at Tallinn University who also was a Tartu alumn. We spent a lot of time at the monument of Swedish King Gustav II Adolf (a.k.a Gustavus Adolphus). It is that monument and the history behind it that gives a snapshot of the history of Estonia over the past 400 years.

The University of Tartu was founded by King Gustav II Adolf of Sweden in 1632, the same year the King died in the Battle of Lützen. Estonia was a Swedish territory then, and Tartu became only the second Swedish university–after Uppsala. Russia gained control over Estonia during the Great Northern War in 1710–and promptly closed the university. The university was reopened in 1802 as the Universität Dorpat by the German-Baltic elites as a German-speaking university; its new charter was confirmed by Tsar Alexander I of Russia in 1802. As a result of the Russification campaign in the 1880s, Russian displaced German as language of instruction. Most of the German faculty left, and the university lost its international reputation.

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Main building of the University of Tartu, constructed in a neo-classical style in 1804-09.

In 1919, after Estonian independence, the University of Tartu became an Estonian-speaking institution and the national university of a newly independent Estonia. In 1928, the above-mentioned monument to Gustav II Adolf, the founding patron, was erected to mark the pre-Russian origin of the university, to signal Estonia’s Northern European identity and to symbolically reestablish the university’s link to European intellectual traditions. But Estonia was annexed by the Soviet Union in 1940 and occupied by Nazi Germany in 1941-44. At the end of the war, the Soviets introduced Russian as a second language of instruction. And in 1950, they dismantled the monument to Gustav II Adolf.

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Monument to King Gustav II Adolf of Sweden in Tartu (1928).

In the Soviet revisionist reading of history, the university was founded by Russians in 1802–even though the Russians had closed the University a century before that. The monument to the Swedish king who had founded the university contradicted this narrative and his memory had to be erased. Sometime in the 1960s, according to our guides, students built a snowman that resembled the statue. This triggered an intervention by the KGB, the Soviet secret service, because the snowman served as a reminder of the missing monument, which in turn had revived the memory of a time before Russian rule. In the mind of the paranoid Soviet system, this was the very definition of a subversive act. In 1992, one year after Estonia regained independence, the monument was restored as a symbolic reminder that Estonia had rejoined the community of European nations.

Our tour guides then led us into the main auditorium, the Aula. While there is no formal monument here, the Aula clearly has become the locus of an important national memory. In 1964, the Aula at Tartu University was the site of the memorable speech by Urho Kekkonen, the long-time president of Finland, during an unofficial visit of Soviet Estonia. Like Estonia, Finland had been part of Tsarist Russia and was able to free itself at the end of the First World War. But unlike Estonia, Finland was able to maintain its independence during and after the Second World War. As Finnish and Estonian are both part of the Finno-Ugric language group, the two cultures grew closer in the waning years of Tsarist Russia. After 1945, Finland became a model and the window to the West for Soviet Estonia as Finnish TV could be received in the northern half of Estonia. Kekkonen’s speech was entirely in Estonian, and he focused on the kinship of the two nations which gave Estonians hope for a brighter Post-Soviet future.

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Aula (Main Auditorium) at Tartu University.

Even though the Tartu professor started his studies at Tartu a decade after the speech, he described it so vividly and glowingly as if he had been there, including the fact that Kekkonen spoke better Estonian than the rector of the university. This is the nature of vicarious memories: they are transmitted with a great personal and emotional commitment from generation to generation as they hold a symbolic truth that needs to be enshrined in the national memory. Yet, the only tangible impact of Kekkonen’s speech was the establishment of a ferry link between Tallinn and Helsinki in 1965. While the Kekkonen visit was a reminder to this small country that the outside world had not completely forgotten it, some make the argument that it was akin to the recognition of the Soviet occupation.

There is little that reminds the casual visitor to Tartu of the the Soviet period. The entire country is seeking to reconnect with its European past, and the preservation of its pre-Russian cultural legacy has become a national project. The preservation of monuments is a key part of this strategy. The Tartu campus is full of such memory sites. In addition to the Aula and the monument to Gustav II Adolf, they also include monuments to German-Baltic professors at Tartu, such as the statue of Karl Ernst von Baer (1886), and the historically important fraternity house of the Estonian Student Union which was founded in 1870 and whose colors are now the colors of the Estonian flag. Since independence, new memorial sites have been created, such as the monument to the Swedish politician and legal scholar Johan Skytte (2007) who served as the founding chancellor of Tartu University in 1632.

Yet, in the minds of Estonians, the Soviet legacy is omnipresent. The anti-Russian rhetoric permeated the entire tour of the Tartu campus and indeed all conversations with local professors and students. In part, this speaks to the fear of a potential aggression by Putin’s Russia. But in part, this also an indicator of a project to create a national memory and narrative that tries to marginalize the Russian and even more so the Soviet role in Estonian history. Perhaps the sole exception to that is the Tallinn plaque in the memory of the Russian president Boris Yeltsin (2013)–he recognized Estonian independence in 1991.

FIFA Corruption and Small State Soft Power

Vladimir Putin made a good point in his condemnation of the indictment of 14 FIFA officials by the US Department of Justice this week: is this any of their business? Yes, FIFA is a corrupt organization. Yes, many members of FIFA’s all-powerful Executive Committee have been implicated in a number of corruption scandals. Yes, Putin has skin in the game because Russia was awarded the 2018 World Cup as part of a rigged dual bidding process in 2010 that also gave Quatar its controversial 2022 World Cup–a process that allegedly took corruption to a much higher level and that now is under investigation. Furthermore, given his aggressive and deceptive policies against sovereign nations formerly in the Soviet orbit, Putin is not a likely candidate to occupy the moral high ground in issues other than riding topless through the Siberian tundra.

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FIFA President Sepp Blatter in 2010 disclosing Russia and Qatar as hosts of the 2018 and 2022 Word Cups (BBC News)

Yet, Putin makes a point worth exploring. Here is what Putin said about the arrested FIFA officials: “They are accused of corruption – who is? International officials. I suppose that someone broke some rules, I don’t know. But definitely, it’s got nothing to do with the USA. Those officials are not US citizens. If something happened it was not in the US and it’s nothing to do with them. It’s another clear attempt by the USA to spread its jurisdiction to other states. And I have no doubt – it’s a clear attempt not to allow Mr Blatter to be re-elected as president of Fifa, which is a great violation of the operating principles of international organisations.”

Let’s look at Putin’s argument in a reversed order. So how do international organizations work? They are incorporated in the country where they are based. FIFA is incorporated in Zurich, Switzerland, as a tax-exempt “Verein”–a club or association–with few financial reporting requirements. Except that there balance sheet has a few more digits than that of the local stamp collector club. De facto, FIFA operates like a large global, post-national corporation even though its members are continental and national federations. It has become a money-making machine even though on paper it is just a non-profit club. So the legal structure within which FIFA operates is woefully inadequate for the kind of business it does.

The next question is: if FIFA really is so corrupt, and not even Putin denies this, why would the host country, Switzerland, not investigate FIFA and bring charges?  For starters, corruption per se is not a crime under Swiss law. If corruption leads to unfair competitive practices, this can be prosecuted under the Unfair Competition Act. (Ironically, the Swiss parliament currently is considering the implementation of an anti-corruption statute which actually may make a difference in the future.) This is one reason why over two dozen major international sports organizations, including the International Olympic Committee, are based in Switzerland. (Other reasons are reliable and secretive financial services, an excellent transportation infrastructure, a pleasant environment, and good shopping for their wives.) They have created a culture of collusion with Swiss authorities who are going easy on these organizations in return for them doing business in Switzerland. Switzerland sees the presence of these organizations as a source of soft power–a small state specialty the Swiss are proud of. There are cases of Swiss authorities backing off when the organization under scrutiny threatened to leave the country. In short, the Swiss authorities never would have investigated FIFA on their own, particularly as the FIFA president, Sepp Blatter, is a Swiss national.

There is a striking over-representation of small states in the Executive Committee, FIFA’s governing body. This is part of the FIFA system. The Cayman Islands, for instance, did nothing to investigate Jeffrey Webb, one of the vice presidents who now is suspended. It is not in the interest of small states to investigate its citizens who sit on important international boards and thus give their countries outsized influence. Of the seven FIFA officials arrested in Zurich this week, six represent small states. And then there is Teflon Sepp, the FIFA president, who so far miraculously has escaped prosecution. It is instructive, in this context, that the US has taken Chuck Blazer, its own corrupt FIFA official, out of circulation. He now is an informant for the US government.

This brings us back to the original question: what business of the U.S. is it? The indictments were brought under the Racketeer Influenced and Corrupt Organisations Act (RICO) of 1970. This implies that FIFA is treated as a Mafia-like criminal organization. As long as just one aspect of the crime, like wire fraud, originates in the U.S., the entire web of crimes can be prosecuted under U.S. law. This hook allows U.S. authorities to go after crimes that were largely committed abroad. The hook here is the Confederation of North, Central America and Caribbean Association Football (CONCACAF), a regional FIFA suborganization, that is based in Miami. Not surprisingly, most of those indicted are indeed associated with CONCACAF.

This type of aggressive extraterritorial jurisdiction is mostly seen with great suspicion and contempt in other countries as it tends to show U.S. authorities as overzealous, overbearing and overreaching–even though soccer fans would be glad to make an exception here. Over the years, such extraterritorial prosecutions often are directed against small states and its citizens. A good example is the U.S. pursuit of Nazi Gold in Switzerland in the 1990s–at a time when Swiss neutrality no longer was of use to the U.S. So the question remains if the U.S. prosecution really will be able to uproot FIFA corruption. The fact that Blatter himself was not indicted makes me think that it won’t. And the other question is how long it will take for small countries to feel trampled by this very assertive U.S. prosecution. So far, authorities in Switzerland have cooperated–hence the Zurich arrests. But it is unclear how long they will. Ironically, then, the solution may have to come from within FIFA, as Blatter himself demanded today. What Blatter can’t see is that this only has a chance of working without him as president.

Estonia’s Russian Legacy and Putin’s Greater Russia

When British defense secretary Michael Fallon publicly stated last week that the Baltic states of Estonia, Latvia and Lithuania were at high risk to be drawn into armed conflict by Vladimir Putin, much like Ukraine had been over the past year, and that NATO had to prepare for Russian aggression, the media in the West took note. But to people in the Baltic region, this was old news, as I experienced first-hand during a visit last Fall when I had a number of discussions on the topic with colleagues at the universities of Tartu and Tallinn. They confirmed that the Russian covert campaign Fallon warned against in fact had already begun.

Estonia is a classic case of a small country that has been tossed around by history. Estonia was dominated by foreign powers for most of the last millennium: Danes, Germans, Swedes, and Russians, both of the Tsarist (1710-1918) and Soviet flavors (1940-41; 1944-91). In spite of that, Estonia has been able to maintain a cultural and linguistic identity over the centuries which forms the core of its national identity today. To Estonians, the Russian legacy weighs particularly heavily as Tsarist Russia began to russianize Estonia in the late 19th century, the construction of the highly visible Russian-Orthodox Alexander Nevsky Cathedral occupying the symbolic spot across from the Toompea Castle being the pinnacle of that effort.

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Russian-Orthodox Alexander Nevsky Cathedral (1894-1900) on the symbolic Toompea Hill in Tallinn, Estonia.

Estonia was traumatized in particular by the Soviet occupation of 1940 and its subsequent integration into the Soviet Union. While foreign control over the centuries, even by Tsarist Russia, had been comparatively benign, Soviet rule was ruthless and oppressive. The Estonian response after independence in 1991 was a strong anti-Russian backlash and assertive policies to pursue integration into the Western economic and military systems by seeking membership in Nato and the European Union and by joining the Eurozone. The only Russian celebrated in Estonia today seems to be Boris Yeltsin whose supportive role in Estonia’s quest for independence in 1991 was recognized by a plaque in his memory in 2013–which has a distinct anti-Putin edge. The plaque was affixed to the bottom of the massive wall that fortifies Toompea Hill–which since the Middle Ages had been the locus of foreign power.

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Plaque in memory of Boris Yeltsin in Tallinn, placed on the historic city wall in 2013.

But the most obvious legacy of almost 50 years of Soviet rule is a large ethnic Russian population. The Soviet Union used massive forced migration to pursue its goals. According to the Estonian government, the Soviets killed or deported about 60,000 Estonians, or more than five percent of Estonia’s population, between 1940 and 1949. At the same time, a large number of Russians relocated to Estonia, both voluntarily and forcibly. While in 1934, 88.1% of residents of Estonia were ethnic Estonians, their share had dwindled to 61.5% in 1989.

Estonian independence turned the privileged Russian population into losers. Restrictive citizenship laws which are based on the ius sanguinis, disenfranchised many Russians living in Estonia: ethnic Russians, even those born in Estonia, were not automatically given Estonian citizenship but rather had to undergo a naturalization process that required knowledge of the Estonian Language. This turned out to be an insurmountable burden for many Russians. As a result, there were many stateless people in Estonia whom Estonia euphemistically calls “people with undetermined citizenship.” Ironically, it is the European Union which, through its European Commission Against Racism and Intolerance, pressured Estonia to improve the plight of the Russian population in Estonia. According to the Estonian government, the situation has vastly improved: while in 1992, 32% of residents of Estonia were stateless, in 2014 only 6.5% were, with another 9.2% holding foreign passports, mostly from other former Soviet republics.

While the issue of “people with undetermined citizenship” appears close to resolution, the integration of ethnic Russians remains a critical issue. An estimated 24% of the resident population are ethnic Russians, and they mostly represent the underprivileged classes in Estonian society. The concentration of Russians is particularly high in urban areas: in Tallinn, the capital, perhaps half the population is Russian, and in the Narva region along the Russian border almost the entire population is Russian–which creates an opportunity for Putin to unfold a similar scenario as in Eastern Ukraine.

This constellation will give Putin ample talking points to repeat what he is currently doing in Ukraine (and what he had done in Georgia before), particularly as Estonia has not dealt with the Russian minority in an exemplary fashion. The pattern is as simple as it is predictable: creating border incidents, developing a rhetoric of assisting beleaguered ethnic Russians in a former Soviet republic, infiltrating the border area with Russian special units in disguise to stir unrest, creating a phony and fabricated resistance and separatist movement, gradually occupying territories and integrating them into his Greater Russia.

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Tallinn presents itself as a Northern European city: there are few traces of the Russian past.

One of the legacies left to us by Soviet Communism is the fiction of international brotherhood which supersedes nationalistic divisions characteristic of capitalist societies. The implosion of Yugoslavia with all the resulting ethnic conflicts speaks to that. The Soviet policy of settling ethnic Russians in far-flung parts of the Soviet empire is another such legacy. It creates ethnic conflict in so many of the former Soviet republics, and even in areas that lie within the Russian Federation. The Baltic states today very much are afflicted by these Soviet settlement policies–and they create an opportunity for Putin to justify his Greater Russia rhetoric.

Conditions in Estonia are ripe for Putin’s strategy to unfold. In fact, stage one has already begun. Russia has been creating small border incidents with all Baltic states as well as with Finland, most commonly air space violations. The most egregious so far has been the capture and abduction of Eston Kohver, an officer of the Estonian Internal Security Service, from Estonian territory on September 5, 2014. Kohver still is in Russian custody at this writing.

Which gets us back to Mr. Fallon’s point. It appears likely that Putin will employ the same strategy in the Baltic states that worked so well in Georgia and Ukraine. In Georgia and Ukraine, Western powers could claim that their interests were not directly at stake. The difference is that the Baltic states are members of Nato, as is Poland, for that matter. We now know that managing Putin’s aggressions after the fact is futile. Yes, Nato promised not to station its troops on the former Soviet sphere of influence. But Russia also guaranteed Ukraine’s territorial integrity in 1994 in exchange for Ukraine giving up the nuclear weapons it had inherited from Soviet times. It is now time for Nato to increase its commitment to the sovereignty and territorial integrity of the Baltic states, before Putin has a chance to unfold his time-tested strategy on them.

Postscript added on March 2, 2015: The looming conflict with Russia also overshadowed yesterday’s parliamentary elections in Estonia. In the media, the outcome was represented as a victory for the governing Reform Party. But their coalition with the Social Democrats actually lost the majority in parliament as support for both parties declined slightly. One of the factors is that two new parties will be represented in parliament. Most importantly, the pro-Russia Center Party gained some votes and now enjoys support from 24.8% of the electorate (24% of residents of Estonia are ethnic Russians) and will continue be the second-largest party. It is likely that the Center Party will remain the main opposition party. The concern is that Putin will be able to use both the large number of ethnic Russians and the political support they have within Estonia as a wedge issue.

Potassium Iodide for the Masses

In early November 2014, my mother who lives in Switzerland received a small package in the mail from  the Swiss Army Pharmacy (Armeeapoteke) which contains 12 potassium iodide pills. It was mailed to all 4.9 million Swiss residents who live within 50 km (about 30 miles) of a nuclear power plant, to be used in case of a nuclear accident, paid for by the operators of the Swiss nuclear reactors. As Switzerland has a resident population of about 8.2 million, 60% of all Swiss residents received such a package. The astounding fact, of course, is that 60% of Swiss residents live within 30 miles of a nuclear power plant, including residents of the Zurich, Basel and Bern metro areas.

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60% of Swiss residents live within 50 km of a nuclear power plant (red dots)

Switzerland has five operating nuclear power plants–one of the highest per capita rates in the world. They were put into service between 1969 and 1984. Current plans call for the retirement of all stations between 2019 and 2034–which would give each plant a fifty-year life span. There are no plans to replace the current plants, but it is unclear if enough alternative energy can be generated to make this plan work.

The distribution of potassium iodine happens every ten years in Switzerland–with the innovation this year that the radius was expanded from 20 to 50 km. It is an interesting scheme which only is thinkable in a highly organized small country as the logistical challenges and the political pitfalls of such an endeavor are substantial in the best of circumstances. It also is indicative of a reactive, defensive stance typical of small countries: small countries rarely have the means to determine their own destinies. They tend to be caught in a web of dependencies consisting of larger nations or international organizations. Therefore, their actions tend to respond to the external circumstances they cannot control nor change.

Form a public policy viewpoint, this initiative is a dicey proposition. On one hand, it represents an admission by the Swiss federal government that nuclear power is potentially unsafe which may erode public support for nuclear power in a small country that heavily depends on it. On the other hand, it represents an effort of a responsible government that seeks to protect its civilian population against possible dangers. The protection of the civil population has a long tradition that goes back to the early years of the Cold War over which neutral Switzerland had little influence.

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The Mühleberg nuclear power plant is located in a densely populated area just outside of Bern. (Source: Wikipedia)

While Switzerland of course controls its own nuclear power program, the potassium iodine program follows the same small-state action pattern: it accepts the existence of nuclear power generation, on which Switzerland depends, as the status quo. In a sense it also downplays the true possible consequences of a nuclear accident experiences in the disasters at Chernobyl (1986) and Fukushima (2011). It blocks out the unthinkable questions of what happens if entire landscapes where millions live become uninhabitable, and it does not consider if and to what extent potassium iodide is effective against the fallout of a nuclear accident. Therefore it also could be argued that the Swiss government is creating a false sense of security while camouflaging the real impact of a nuclear disaster.

Environmentalists point to all these pitfalls. Greenpeace, in fact, sent an official-looking flier to all affected households in which ambiguous language raises doubt about this government program it pretends to support and about the nuclear program in general. Residents are urged to seek more information at the http://www.info-jod.ch/ web site whose URL looks very official as well. Only the web site itself makes it clear that this is a Greenpeace effort that has nothing to do with the Swiss government, and further links are clearly marked as Greenpeace pages.

Such a broad distribution of potatssium iodide would be unthinkable in the United States. The web site of the Centers for Disease Control and Prevenction (CDC) contains some information, but citizens have to actively seek it. Furthermore, the web site explains in some detail how the medication should be administered in the case of a nuclear emergency but does not instruct the public in how to gain access to it. By comparison, the Swiss openness about this program and about the inherent risks of nuclear power are remarkable. What is not clear yet is how this Swiss government program will move the public perception of nuclear power and whether this will reduce its acceptance in Switzerland.

 

Swiss Direct Democracy: a Model for Europe?

Small states by definition are too small to be good at everything. So they tend to bundle their resources to excel at one or two things. Like chocolate, or watches. But small states are also laboratories for ideas–like the plan to make Sweden an oil-free society by 2020. The Swiss contribution to the global melting pot of ideas is direct democracy. In Switzerland, a sufficient number of signatures can force a popular referendum on any federal law or can require a vote on a constitutional amendment on any issue imaginable.

To be sure, direct democracy is a beautiful thing–even when people make stupid decisions. Switzerland, the haven of direct democracy, showcases both the brilliance and the absurdity of direct democracy as a system of governance. While the Swiss elect a parliament, as do citizens in other democracies, the Swiss also can use referendums to undo the work of the very same parliament they just elected. So direct democracy essentially creates a parallel system that can control and even bypass the parliamentary process.

The advantage of this system is that politicians are forced to come up with laws that most likely would withstand the test of a popular referendum. So compromise is essential for the system to work. The drawback is that ordinary people like you and I could come up with something really stupid at the kitchen table and get enough signatures to force a popular vote on it—like the successful initiative to ban minarets in Switzerland. This creates opportunities for populist groups to bypass the parliamentary system altogether. This can be a good thing as long as an educated electorate can be trusted to act in the interest of the republic. This assumption will be seriously tested in the votes coming up in Switzerland this coming Sunday, November 30.

Swiss direct democracy is the envy of democratically-minded people all over the world. But the tool of the constitutional initiative has been mostly used by populist groups on the left and on the right who do not have broad parliamentary support. While leftist initiatives, like the constitutional amendment to abolish the Swiss Army, have failed consistently, the initiatives and referendums launched by the right frequently have been successful, like the vote against Swiss membership in the European Economic Area in 1992 or the vote to curb “Mass Immigration” earlier in 2014.

It has become fashionable among the populist right in Europe to promote direct democracy, most prominently the United Kingdom Independence Party (UKIP) in Britain and the Alternative für Deutschland (Alternative for Germany; AfD) in Germany. There are reasons to doubt that these movements are more democratically inclined than mainstream parties—in fact, there is evidence to the contrary. Rather, they promote direct democracy because of its populist potential: they see it as a tool to implement their anti-immigration and anti-EU agendas. One of the outspoken supporters of Swiss-style direct democracy is the euroskeptic Daniel Hannan, a journalist and Conservative British Member of the European Parliament. When Swiss voters banned minarets in 2009, Hannan wrote a column with the title “Switzerland bans minarets: long live referendums, even when they go the wrong way.”

So Europe will be watching as Swiss voters will cast their ballots on November 30. There are two contentious issues to be voted on, both with consequences that will reach far beyond Switzerland’s borders. One of them is the popular initiative with the official title Rettet unser Schweizer Gold (Save Our Swiss Gold). Its declared intent is to secure the Swiss National Bank’s gold reserves with the specific stipulations that the National Bank needs to hold at least twenty percent of its assets in gold, that it does not have the right to sell gold reserves, and that the gold must be physically stored in Switzerland. Its populist appeal is evident in the language: the phrases “our Swiss gold” makes it sound like the Swiss have a birth right to the gold that has been chiseled out of Swiss Alpine granite–rather than mined by sweat labor in Botswana.

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“Protecting the wealth of the people”: deceptive imagery to support the Gold Initiative.

Experts agree that the initiative does not make sense economically as the gold standard to support currencies has long been abandoned around the globe. But the impact would be felt globally as gold prices would rise substantially because the Swiss National Bank would be required to buy large quantities of gold. Furthermore, the Swiss Franc would rise in value to unprecedented heights which would do serious damage to the Swiss export industry. Already before the vote, the Euro briefly dropped to below the magic barrier of 1.2 Swiss Francs.

The second ballot issue is the so-called Ecopop initiative. It is a hard-core anti-immigration measure sugar-coated in language that feigns concern for the environment. It creates a horror scenario in which twelve Million people would live in Switzerland by 2050—the current resident population is eight million–which would cause the Swiss landscape to be paved over by concrete and destroy biodiversity. It seeks to limit net migration into Switzerland at .2 percent of the resident population or at currently about 16,000 individuals per year in order to keep the resident population stable and  to limit the environmental degradation associated with overpopulation. The increase in 2013 was about 100,000 so the impact on migration indeed would be serious.

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Ecopop horror scenario: deceptive images showing Lucerne littered by highrises by 2050.

The consequences would be dire: it would stop immigration almost completely (which is the true intent of the initiative), deprive the Swiss economy of a much-needed labor force, irreversibly harm Swiss universities and research institutes, and force the cancellation of the extensive system of bilateral treaties with the EU which are critical for Switzerland–which is another undeclared objective of the initiative. As a result, Switzerland would lose direct access to EU markets and all the benefits the country enjoys from its current status of de-facto integration without the burdens of full membership. It also would embolden Euroskeptics in EU member states to demand similar measures in their countries.

Both ballot initiatives show the difficulties of addressing complex issues in a globalized and networked world by means of direct democracy. It is easy to convince ordinary voters to tell the National Bank to keep their gold in their piggy bank and to keep the Swiss landscapes from getting sullied by concrete. All that is needed are simplistic slogans using emotion-laden language that caters to  base fears in the population. But it is much harder to make a reasoned argument that demonstrates the extreme dangers these ballet issues will pose if passed. While the ramifications for Switzerland and Europe would be extremely serious, it is unclear if Swiss voters have the capacity to understand them. Of course, this could be decried as an elitist viewpoint–an argument often used by populists to defend their brand of direct democracy.

Direct democracy is a good indicator for popular sentiment and allows for a more nuanced expression of popular will than parliamentary elections and therefore is a very important political institution. But it also is prone to falling prey to populist seduction and deception. Many in Europe believe that some form of direct democracy could help address the perceived democratic deficit within the European Union. But recent Swiss votes raise doubt whether direct democracy really offers a viable alternative. The vote this coming Sunday will go a long way to answer that question. In a sense, the two ballot issues also will be referendum on the viability of Swiss direct democracy.

So Why is Walgreens Moving to Switzerland? (And What Can We Do about It?)

The other day, a petition from Campaign for America’s Future ended up in my in-box. Its subject line read: “Why is Walgreens Moving to Switzerland?” Of course, Walgreens is not moving to Switzerland. My Walgreens still will by around the corner from my house. And most corporate jobs will remain in Chicago.  The first line of the e-mail reads: “Walgreens is an American success story.  Or, at least, they used to be.” Wrong again: it still is, and will remain so even after Walgreens moves its corporate headquarters to Switzerland. It just will not pay taxes in the US anymore. But that, too, is very American. Ever since Ronald Reagan declared the government the enemy of the people, paying taxes no longer is a civic virtue. Avoiding taxation altogether is considered smart because the money would only serve to bloat the government.

The planned move by Walgreens was precipitated by its merger with Alliance Boots, a British drugstore chain. Alliance Boots moved its corporate headquarters to Zug, Switzerland, in 2008 which caused the very same discussion about corporate citizenship in Britain. Alliance Boots never had more than a mailbox in Zug. According to The Guardian, the move comes at a cost of £100 million to the British taxpayer every year. In 2013, the company headquarters were moved to Bern as Alliance Boots already had operations there. While Zug is the quintessential corporate tax haven, the move to Bern, which was missed by Bloomberg News, does little to change the story. A move to Switzerland by the Walgreen Corporation would have similar benefits. A few weeks ago, analysts from UBS, a global bank based in Switzerland, claimed that stocks in the Walgreen Corporation would rise 75 per cent if corporate headquarters were to be moved to Switzerland.

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Modest multi-party office building at Baarerstrasse 94 in Zug. Alliance Boots was based here until 2013.

Clearly, Walgreens does not want you to read this. In 1904, Charles Walgreen traveled from his small-town home in Dixon, Illinois, to Chicago and opened a pharmacy and soda fountain. It is the quintessential American success story, but today’s corporation has little to do with its humble beginnings. Walgreens want you to believe that they are an American company that pays their taxes, that they are being a good corporate American citizen, and that they live up to their iconic status as a quintessential American corporation. In a wicked way, of course, they are: like so many other American corporations, they are moving their corporate headquarters offshore.

Large corporations are de-nationalized entities which nimbly navigate the global financial and fiscal system while maintaining the fiction of national citizenship for public consumption. Two years ago, Gregory D. Wasson, the chief executive of Walgreen Corporation, sought tax breaks from the state of Illinois the company is still based. At that point, he stated: “We are proud of our Illinois heritage. Just as our stores and pharmacies are health and daily living anchors for the communities we serve, we as a company are now recommitted to serving as an economic anchor for northeastern Illinois.” At the time Wasson made this statement, the merger with Alliance Boots was essentially a done deal.

Walgreens is not the first and probably not the last US corporation to move their headquarters overseas for tax reasons. But Walgreens is different in that it is part of daily life in the US. My Walgreens is not just a pharmacy, I go there as well when I am out of dish detergent or beer. When Transocean, the owner of the Deepwater Horizon platform which caused the huge oil spill in the Gulf of Mexico in 2010, moved its corporate mailbox from Houston to Zug in 2008, nobody took notice. But Walgreens lives off he daily contact with American consumers, and in that it is seen as a quintessentially American brand that cannot be relocated so easily. And herein lies the chance to create public pressure not just to prevent Walgreens from moving to Switzlerland but to expose the fraudulent global scheme of corporate taxation.

So what does Campaign for America’s Future want you to do about this? They want you to send them ten bucks so they can “expose this scam, pressure Walgreens to do the right thing, and shut down the tax loophole that allows this to happen.” You can also sign their “Tell Walgreens: Don’t Desert America” petition. While I cannot argue against closing tax loopholes, this approach is merely cosmetic.

In 1998, the OECD published a report entitled Harmful Tax Competition: An Emerging Global Issue which arrives at the stunningly simple analysis: “Where activities are not in some way proportional to the investment undertaken or income generated, this may indicate a harmful tax practice.” Ultimately, the OECD had to abandon its efforts to develop non-abusive global taxation standards due to resistance from the wealthiest countries. The OECD report makes it clear that it is unethical for Swiss cantons (and other entities) to allow foreign corporations to incorporate and that it is harmful for tax jurisdictions where the actual economic activity of these corporations takes place. This practice particularly hurts developing countries, as Nicholas Shaxson argues in Treasure Islands (2012), that as a consequence become more dependent on foreign aid. Yet, fighting individual predatory jurisdictions, like many Swiss cantons, would only be marginally productive as corporations easily can move their mailbox to a different, equally beneficial jurisdiction.

One of the OECD recommendations was that a global standard should be established by which corporations should be taxed where their economic activity is taking place. We need to vigorously push for this standard, and we need to seek a fundamental change in how corporations are taxed globally. Corporations need to be taxed where they are producing goods and services and where they are using the infrastructure, not where they are having their corporate headquarters, i.e. their mailboxes. Such mailbox headquarters create a windfall for the host tax jurisdictions which in turn allows them to drop the corporate tax rates even more to attract even more corporate mailboxes. The Swiss canton of Zug is a textbook example for that.

The only real solution, ultimately, is to end tax competition between jurisdictions. In competitive tax environments, corporations win and taxpayers lose. Corporations and their lawyers always can move more nimbly than politicians and the polities they represent. Corporations can move their mailboxes as they please, pick where they pay taxes, and play tax jurisdictions against each other. Tax jurisdictions cannot move their citizens or their infrastructures. Unless we change the very system of how corporations are taxed, the Walgreens of this world will always have their way and citizens will lose out.

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One of many mailboxes at Baarerstrasse 94 in Zug: Künzi Treuhand AG. About 50 corporations and business groups receive their mail here–meaning that this is where they are legally incorporated. One of their advertised specialties: helping foreign corporations set up and manage corporate headquarters here. This is big business, and there are many such companies in Zug.