As an international pioneer of environment protection, international solidarity and peace promotion, Switzerland propagates these core values in Hungary as well through the presence of Swiss enterprises and Swisscham Hungary, the bilateral chamber operating in the country, says Peter Burkhard, Swiss Ambassador to Hungary. The diplomat stresses that an extensive overhaul of the nation’s education and health care systems is very important for Hungary to maintain and sharpen its allure in the race for investments.
Switzerland prides itself with having the oldest policy of military neutrality been spearheading the global promotion of peace and solidarity for well over a century and is an internationally acclaimed actor in conflict mediation. In addition to these values, the culture of sustainability and environmental awareness are also core principles that Swiss enterprises uphold and promulgate in their operations worldwide.
“This culture and awareness is transported to Hungary by Swiss enterprises through their investments and activities. For the past 25 years, Swisscham, the bilateral Chamber of Commerce in Hungary has also fulfilled the same role. If a Swiss enterprise sets up a business operation here, they apply the same standards as in Switzerland and import the state-of-the-art sustainability and social responsibility approach of their home country,” Ambassador Peter Burkhard tells Diplomacy&Trade in an exclusive interview.
A champion of values
Neutrality has been an internationally recognized, governing principle of Swiss behavior for centuries. “Swiss foreign policy is very much driven by the principles of universality, solidarity and the promotion of peace, stability and welfare in the world. So much so that these principles are enshrined in our constitution and they materialize in concrete policy making. Switzerland has institutions and structures within the Ministry of Foreign Affairs that are dealing with peace or human rights promotion, conflict mediation and other aspects of universal solidarity,” according to the Ambassador.
Bilateral political relations with Hungary are also defined by this policy of neutrality. The fact that Switzerland is neither an EU nor a NATO member has an impact on the frequency of political interaction between the two nations as Swiss politicians and their Hungarian counterparts do not meet regularly in Brussels or at other EU or NATO
“Bilateral relations are defined by geography and history. In terms of history, there is still a catching up following the abolition of the east and west divide in Europe. Our interests, particularly in the field of economy, are aligned: we are both very open economies as both our countries earn a substantial part of their GDP through exports,” Ambassador Burkhard notes.
He stresses that compared to other countries of the same size, Switzerland has a very dense diplomatic network globally with embassies in virtually all Latin American and central Asian countries as well as the entire Caucasian region. “Hungary seems to be following the same logic in terms of building a very wide diplomatic network, which serves not only political but also export-driven economic interests,” Peter Burkhard says.
Committed to Hungary
Although the wave of large Swiss investments in Hungary took place nearly three decades ago and the inflow of new investors has slowed considerably, the commitment of Swiss enterprises to Hungary is unwavering. The Ambassador explains that Swiss companies with a presence here are almost without exception expanding their operations. A case in point was pharmaceutical giant Roche’s decision last October to open a pharmacovigilance hub on the outskirts of Budapest or Nestlé Hungary’s investment program of HUF 43 billion over the past seven years, strengthening its position as the largest Swiss investor and job provider in the country. Another tendency is for Swiss enterprises to increase the technology content of their operations here, the diplomat adds.
Hungary used to be part of the manufacturing chain for Swiss corporate investors but these days, Hungarian subsidiaries are essentially independently operating businesses with headquarters delegating more and more tasks and the range of local competencies widening. The backbone of the Swiss economy are SMEs and many of them are lesser known than the
Switzerland-based multinational companies, as they operate in niche markets. Of the 800 Swiss companies active in Hungary, most are SMEs, like Phoenix Mecano in Kecskemét, Laurastar in Kapuvár and Fraisa in Sárospatak, says Ambassador Burkhard.
Staying ahead of the competition
In the “friendly and balanced competition” among the central and eastern European countries for foreign investment, the final decision is often up to small details, personal contacts or the cluster effect, the Ambassador notes. For instance, SSCs is the financial industry are mostly set up in Poland and not Hungary.
Nevertheless, for a country to stay ahead of the game in the race for capital, the availability of skilled and highly-educated labor is essential. To further boost Hungary’s allure as an investment destination, the overhaul of the nation’s education system, with particular regard to vocational training, as well as shoring up the health care system are key priorities.
“In order to improve the employment prospects of the population and to achieve a reversal of the emigration of skilled workers seen in the previous years, the education and health care system are key factors. This opinion is also shared by many Swiss companies operating in Hungary. If the government’s objective is for Hungary to have higher quality workplaces with a larger technology content than a more qualified workforce with a higher level of education is crucial. And the more educated and qualified a country’s workforce is, the bigger the expectations with regards to the availability of a modern and well-functioning education and health care system. We see that very highly qualified workers from Germany come to work in Switzerland because of the quality of Swiss education, health care and the overall environment,” Peter Burkhard explains.
Caring for the environment
Sustainability is part of the Swiss constitution and the country passed legislation on sustainable forestry more than a 100 years ago. The result was one of the most progressive forestry laws in Europe. In the late 1960s and the 1970s, a huge effort went into water cleaning and water protection in Switzerland and in consequence all Swiss lakes have drinking water quality. Electricity production has been CO2 free historically because of the abundance hydro and nuclear power plants. Very early on Switzerland has placed a special focus on energy efficiency, long before discussions in other countries started on this topic. Switzerland has shared its invaluable expertise in the field of environment protection as part of a program called the Swiss contribution to enlargement. Through the contribution, Switzerland has helped reduce economic and social disparities in the enlarged European Union by committing CHF 1 billion to projects and programs in the ten states that joined the European Union in May 2004. Bulgaria and Romania, which joined the EU in 2007, are supported with additional CHF 257 million. In December 2014, the Swiss Parliament approved further CHF 45 million for Croatia, which became a member state in 2013. Switzerland’s enlargement contribution corresponds to approximately 8% of the EU’s contributions to promote cohesion in the 13 member states that have joined the EU since 2004.
“Under the Swiss contribution, there were 37 public sector projects in Hungary and a number of these were related to sustainability and environmental protection. Exploratory talks have started between the governments of Switzerland and Hungary on a second Swiss contribution and one area of focus would be water purification, applying the expertise
accumulated in Switzerland over the years,” according to the Ambassador.
A country of many languages
With four official languages and many others spoken widely, Switzerland is an emissary of multilingualism. According to official data, the economic value of multilingualism has been estimated to be 9% of Swiss GDP and is a source of considerable wealth for the country. In particular, its value to IT services has been calculated to be nearly 25% and its value to the chemical, transport and mechanical engineering industries to be over 15% each.
The diplomat notes that the other root of linguistic diversity is the fact that Switzerland has to a large degree been a country of immigrants. The share of foreigners living in the Alpine country has been around 20% since the 1900s. A person who speaks Spanish or Serbian would not run into linguistic problems anywhere in Switzerland, the Ambassador
points out as anecdotal evidence. As an exporting country, this is a huge asset for the Swiss economy.
“The common denominator of the cultural activities organized or supported by the Embassy is clearly multilingualism. We are actively cooperating with Germany and Austria in promoting German-language cultural events, the same is true in the case of French speaking countries, and to some extent we also participate in Italian cultural programs,” Peter Burkhard concludes.
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