Swiss set to vote in gold, immigration referendums

November 30, 2014 Posted by admin

* Swiss vote on three popular initiatives

* Polls suggest plans will be rejected, but markets on edge

* First projections due at around 1130 GMT

ZURICH, Nov 30 (Reuters) – Swiss voters will decide on
Sunday whether to force the central bank to boost its gold
reserves and whether to impose radical limits on immigration in
a series of referendums that have put global markets and
business leaders on their guard.

Switzerland’s system of direct democracy gives citizens the
right to force popular votes if they can gather enough
signatures of support.

Initiatives that are approved in such votes must be written
into law within three years, regardless of how unpalatable they
are to policymakers and the business community.

Sunday’s votes reflect growing unease with what some of the
population view as a dangerous drift away from traditional Swiss

Despite Switzerland’s prosperity, some citizens see the
country as under siege – from immigrants seeking work and from
trading partners who have insisted in recent years that the
Swiss dismantle their business model based on banking secrecy.

The recent flurry of popular initiatives is having
repercussions beyond the country’s borders, threatening to
undermine its reputation for stability, spooking foreign firms,
and fuelling debate about ties with the European Union, of which
Switzerland is not a member.

“This Sunday is also about the future of Switzerland in
Europe,” national daily TagesAnzeiger wrote on Saturday. “The
vote on the (immigration) initiative is also a vote about the
bilateral agreements with the EU.”

Polls suggest that none of the three initiatives up for vote
on Sunday – the gold and immigration referendums plus a third on
taxation of wealthy foreigners – will pass.

But they are still being closely watched abroad because of
the upheaval they would cause if they did go through.

Gold and foreign exchange markets are bracing for the
outcome of the gold initiative, which, if accepted, would compel
the Swiss National Bank (SNB) to hold at least 20 percent of its
assets in the precious metal and prohibit the bank from ever
selling the reserves, already the seventh largest in the world.

The central bank has urged voters to reject the gold
initiative, saying it would have to buy 70 billion Swiss francs
($72.5 billion) worth of gold – around two-thirds of the world’s
total annual gold production – within five years to build up its
reserves from roughly 8 percent of its assets currently.

The rules, backed by the right-wing Swiss People’s Party,
could also roil financial markets by making it more expensive
for the SNB to defend its 1.20 per euro cap on the franc,
imposed at the height of the euro zone financial crisis in 2011
to protect the economy from a soaring currency.

The central bank would need to buy up gold as well as euros
when intervening to weaken its currency, potentially casting
doubt on the viability of its cap policy, which has already come
under pressure from a weakening euro.

“This is certainly not the right time to spend tens of
billions of francs to satisfy an expensive right-wing caprice,
while the European Central Bank is preparing for a full blown
quantitative easing in the coming month,” said Ipek
Ozkardeskaya, an analyst at Swissquote.

A second vote will decide whether to cut annual immigration
by three-quarters from current levels, with the aim of reducing
the strain that high levels of immigration have put on
Switzerland’s natural resources.

The vote could confound the government’s attempts to salvage
its raft of treaties with the EU, its biggest trading partner.

In February, the approval of a previous vote to limit
immigration called into question the country’s commitment to the
free movement of people principle on which Switzerland’s
economic ties with the EU are based.

A third vote to decide whether to scrap one of Switzerland’s
biggest tax perks for expatriates could deal a blow to the
country’s reputation as a tax haven.

Early projections are due at around 1130 GMT after polls
close, with final results expected by about 1600 GMT.
(1 US dollar = 0.9655 Swiss franc)

(Reporting by Alice Baghdjian; Editing by Noah Barkin and Hugh

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