Author: Celso Torres

Introduction

Switzerland, known for its neutrality, abstains from military alliances and international conflicts, playing a significant role in global peace and diplomacy. It frequently hosts diplomatic conferences on international humanitarian law. Over time, shared characteristics in their political systems and joint efforts in international organizations have strengthened relations between the United States and Switzerland. Currently, the United States stands as Switzerland’s primary trading partner, accounting for 16.3% of its total exports. Therefore, the relationship between the U.S. and Switzerland is vital for the economic development, security, and maintenance of global peace for both nations.

Quick Facts

• Population: 8.6 million
• Capital: Bern
• Official Language: German, French, Italian, and Rumantsch
• System of Governance: Semi-Direct Democratic Federal Republic
• President: Alain Berset  
• GDP: US$ 807.71 billion (2022)
• Currency: Swiss Franc

History of U.S.─Switzerland Relations

Despite their history of close cooperation, certain factors have strained the relationship between the United States and Switzerland in the past. In the 1990s, tensions arose due to the World Jewish Congress lawsuit against Swiss banks regarding the handling of stolen Nazi gold during World War II. The U.S. argued that Switzerland, as a neutral country, had inadvertently aided the Nazi regime, thereby prolonging the war. Switzerland disputed this claim, leading to heightened tensions. Additionally, Swiss banking secrecy has been a contentious issue, with U.S. authorities alleging that it hampers oversight and facilitates money laundering schemes. To address these challenges, the United States and Switzerland established the U.S.-Swiss Joint Economic Commission (JEC) in 2000. This commission focuses on fostering trade relations, combating money laundering and terrorism, and protecting intellectual property rights. Subsequent agreements, such as the Enhanced Political Framework and Trade and Investment Cooperation Forum, have further enhanced the JEC’s mandate.

In 2013, Switzerland signed the Foreign Account Tax Compliance Act (FATCA) to ensure that Swiss banks operating in the U.S. comply with surveillance and accountability measures. This requires Swiss banks to report offshore accounts to the Internal Revenue Service.

Furthermore, in 2019, the U.S. Senate approved the Double Taxation Treaty with Switzerland, aimed at promoting entrepreneurship and facilitating the creation of new businesses in both countries, thereby fostering employment and new industries.

Despite past disagreements, both nations remain committed to spreading democratic values and institutions globally. Their cooperation extends to providing economic development assistance and humanitarian relief to developing nations.

Strategic Interests

• Trade: In 2021, Switzerland emerged as the seventh-largest foreign investor in the United States, injecting a total of $315 billion into the country. Trade between the two countries primarily takes the form of services, with the US exporting business services, financial services, and licenses, and importing licenses, information services, and insurance services.
• Security: As a neutral nation, Switzerland plays a diplomatic role in mediating current international conflicts. Since 1980, Switzerland has served as the protecting power between the United States and Iran, facilitating open lines of communication and providing consular and diplomatic assistance to Iranian citizens in the U.S. and Americans in Iran. Presently, Switzerland has offered to assume a similar role in the Russo-Ukrainian War, although the Russian government declined this offer. Switzerland is a valued partner of NATO and engages in numerous operations mandated by the United Nations (UN) and the Organization for Security and Co-operation in Europe (OSCE). However, due to Swiss law prohibiting participation in combat operations for peace enforcement, all operations are manned by volunteers.

Neutrality

In 1920, the League of Nations formally acknowledged Switzerland’s state of neutrality, which prohibits the country from participating in international wars, supplying mercenary troops to belligerent states, and favoring any belligerent state in the exportation of war material. However, this neutrality law does not extend to internal conflicts and does not apply to military operations authorized by the United Nations Security Council.

Currently, Switzerland’s neutrality is under scrutiny due to the Russian invasion of Ukraine. The nation is restricted from sending weapons and ammunition to Ukraine as per its neutrality law. However, given the urgency of the situation, Swiss authorities are reassessing the centuries-old declaration of neutrality. Many politicians are exploring avenues to support Ukraine without violating Swiss neutrality laws.

Introduction

Germany is the largest economy in Europe by GDP. Its diplomatic ties with the United States play a significant role in ensuring political stability in Europe and fostering economic development between the two nations. Alongside the United States, the European Union stands as a key supporter of Ukraine in its conflict with Russia. Currently, Germany holds a prominent position in NATO, leading the Very High Readiness Joint Force (VJTF). Additionally, Germany ranks as the fifth-largest trading partner of the United States, with annual bilateral trade exceeding $260 billion in goods and services. Therefore, the relationship between the U.S. and Germany is vital for the economic growth, security, cultural exchange, and mutual interests of both nations.

Quick Facts

• Population: 84.2 million
• Capital: Berlin
• Official Language: German
• System of Governance: Parliamentary Republic
• President: Frank-Walter Steinmeier
• Chancellor: Olaf Scholz
• GDP: US$4.259 trillion (2021)
• Currency: Euro

History of U.S.─Germany Relations

Until the 20th century, commerce and immigration were the primary factors shaping the relationship between the U.S. and Germany. However, during WWI, Germany’s alignment with Austria-Hungary, Bulgaria, and the Ottoman Empire, known as the Central Powers, and the U.S.’s support for the Allies, including the United Kingdom, Russia, Italy, and Japan, disrupted their relationship. Germany’s threats to the U.S., such as unrestricted submarine warfare and attempts to form a partnership with Mexico to invade the United States, turned them from rivals to enemies. Relations were later restored through peace and trade treaties signed in 1921 and 1923.

In 1941, Japan’s attack on Pearl Harbor prompted the U.S. to declare war on Japan, thus becoming an enemy of the Axis powers, which included Germany, Italy, and Japan. Despite lacking a formal relationship, many German refugees found sanctuary in America, including notable figures such as Thomas Mann, Albert Einstein, Marlene Dietrich, and Kurt Weill.

Following Germany’s defeat in WWII, the Potsdam Conference divided the country into Western and Eastern regions, dominated by the U.S., U.K., France, and the Soviet Union, respectively. The formation of NATO by the Western bloc and the Warsaw Pact by the Eastern bloc marked the onset of the Cold War. Post-WWII Germany symbolized democracy in the West and communism in the East, with West Germany emerging as a strong military and economic power. The reunification of Germany in 1990 solidified its relationship with the U.S.

In response to the 9/11 terrorist attacks, Germany, as a NATO member, sent troops to Afghanistan to support the U.S., although it opposed the Iraq War in 2003 due to concerns over destabilizing the Middle East.

Friction arose in the U.S.-Germany relationship in 2013 following mass surveillance disclosures, where the FBI and NSA illegally collected personal data of German citizens. This led to Germany canceling the 1968 UKUSA Agreement, an intelligence-sharing pact with the U.S. and U.K.

The relationship between the two nations has been influenced by the stances of their respective presidents and chancellors. During the Trump and Merkel administrations, differences over trade, immigration, and relations with Russia strained ties. However, with the election of Joe Biden and Olaf Scholz, both countries’ relationship has strengthened, marked by shared political ideas and increased cooperation, particularly evident during the Ukraine War, which bolstered their economic and political ties.

Understanding the Current Relationship

In 2022, Germany took significant steps to support Ukraine in the Russo-Ukrainian War by donating 5,000 helmets and a complete field hospital. Initially, Germany refrained from providing military assistance to Ukraine, which strained its relationship with the United States. However, during a meeting between Chancellor Olaf Scholz and President Joe Biden in February 2021, Scholz reiterated Germany’s alignment with the United States in supporting Ukraine while expressing a cautious approach to avoid escalating tensions with Russia.

Germany’s reluctance to engage militarily stemmed partly from the belief that economic integration could help deter further conflict, along with considerations of its reliance on the Nord Stream 1 pipeline for affordable natural gas.

The Nord Stream 1 pipeline, a key source of natural gas from Russia, had been a major factor in Germany’s neutrality stance. However, in late August 2022, gas flow through the pipeline halted due to Western sanctions and equipment leaks. With Germany no longer dependent on Russian gas, the country shifted its position and began providing military support to Ukraine. This support includes armored fighting vehicles, air defense, artillery, and other resources to bolster Ukrainian sovereignty.

In response to Germany’s shift, the United States became a significant supporter by agreeing to supply Germany’s demand for natural gas through a 20-year contract, supplying 2.25 million tonnes per year. This partnership reflects a strategic move to strengthen ties between the two nations while supporting Ukraine in its defense against Russian aggression.

Strategic Interests

• Trade: In 2023, Germany exported €14.1B and imported €8.46B from the United States. Main German exports to the US include automobiles, machinery, and pharmaceuticals. Main US exports to Germany include aircrafts, pharmaceuticals, oil and gas, and medical equipment.
• Security: Since January 2023, Germany has assumed leadership of NATO’s Very High Readiness Joint Force (VJTF). This force serves as a crucial component and the primary responder for NATO’s territorial defense, with the capability to deploy and take action in any location within 48–72 hours. Germany has shouldered a significant portion of the responsibility for defending European territory against the threat posed by Russia, maintaining approximately 8,000 troops on standby for rapid deployment.
• International cooperation mechanisms: Both nations are members of several international organizations dedicated to fostering alliances for global security, economic cooperation, and peace. They are part of prominent groups such as the G-7, G-20, the North Atlantic Treaty Organization (NATO), the Organization for Security and Co-operation in Europe (OSCE), the Organization for Economic Co-operation and Development (OECD), the World Trade Organization (WTO), and the International Monetary Fund (IMF). These memberships reflect their commitment to international cooperation and their roles as key players in addressing global challenges.
• Sustainable development: The U.S.-Germany Climate and Energy Partnership, established in 2021, aims to foster long-term development in four key areas: hydrogen, offshore wind, zero-emission transport, and third-country cooperation. Through this partnership, the goal is to promote environmental sustainability and advocate for shared values, with the aspiration of inspiring other nations to adopt similar initiatives.

Future DevelopmentsThe Just Energy Transition Partnership, comprising G7 members, is dedicated to assisting developing nations in expanding and transitioning to renewable energy sources. Recent commitments indicate that the United States will invest $8.5 billion and Germany €700 million in South Africa. This investment aims to prevent up to 1.5 gigatonnes of greenhouse gas emissions over the next two decades. Furthermore, both countries are committed to the Paris Agreement and are actively developing strategies to limit the global average temperature increase to 1.5°C.