Swiss Seek European Arms Procurement Ties to Bolster Defense

(Bloomberg) -- The Swiss government is seeking closer collaboration with other European nations in defense procurement, following warnings by senior officials over the country’s struggling arms industry.

As part of a new defense strategy announced on Friday, Switzerland aims to buy at least 30% of its arms from Europe. Swiss forces should also use the same weapon systems as their neighbors, or at least compatible ones, the government said in a statement. 

“It’s a give and take,” the government said. “Swiss companies need to gain access to international cooperation and the supply chains of foreign system suppliers.”

Russia’s full-scale invasion of Ukraine and concern over US President Donald Trump’s commitment to NATO’s mutual defense clause is forcing Europe to rearm, making it more challenging for small countries like Switzerland to place orders. At the same time, the Swiss defense industry has been frozen out of procurement efforts as the country’s rules — rooted in its neutrality stance — mean it has blocked requests to send arms and ammunition to Ukraine.

As neither a member of NATO nor the European Union, the Federal Council reiterated that neutral Switzerland is finding it difficult to order arms, as suppliers ship to bigger countries first.

The strategy update will likely put further pressure on parliament to ease stringent rules, which forbid the re-export of war material with more than 50% of domestically produced components. Swiss defense exports have slumped by 30% from a record in 2022, as arms producers have started to shift production abroad to circumvent the restrictions. 

“Because it refuses to re-export Swiss war material to Ukraine, it is no longer regarded as a reliable partner by European countries,” the government said. “An increasing number of countries are therefore excluding Switzerland from procurement projects and supply chains.”

Earlier this month, NATO member states adopted the alliance’s most ambitious military ramp-up since the Cold War.

Last week, the Swiss Upper House approved proposals that would reinstate the government’s power to permit passing on such arms to conflict zones. The bill still needs approval in parliament’s Lower House.

Though small in its contribution to economic output, the Swiss policy of “‘armed neutrality” has magnified importance of the country’s defense sector: Swiss law enshrines the need to maintain an industrial capacity “adapted to the requirements of its national defense.”

Senior officials have expressed fears that a dwindling domestic defense industry lowers Switzerland’s negotiating heft with foreign suppliers. 

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