Swiss start freeing up blocked EU payment to help thaw frosty ties

FILE PHOTO: Switzerland's national flag and the European Union flag are seen at the European Commission building in Brussels, Belgium April 23, 2021

ZURICH (Reuters) – Switzerland’s upper house of parliament on Thursday approved unblocking 1.3 billion Swiss francs ($1.41 billion) in payments to poorer European Union members in a bid to thaw frosty ties with its biggest trading partner.

The government wants to free up the “cohesion payment” — frozen in a 2019 row over mutual recognition of stock market rules — as a sign of goodwill after years of talks to bind Switzerland more closely to the single market collapsed in May.

Differences over a new bilateral treaty that critics said infringed too much on Swiss sovereignty scuppered the talks.

Cohesion payments are seen as the entry fee for non-EU members like Switzerland or Norway to take part in the single market.

Brussels had been pushing for a decade for a treaty that would sit atop a patchwork of bilateral accords and have the Swiss routinely adopt changes to single market rules.

With the treaty dead, it has blocked any additional Swiss access to the single market, the lifeblood for the export-led Swiss economy, and relegated Swiss-based scientists to the sidelines of its Horizon research programme.

Members of the right-wing Swiss People’s Party opposed authorising the payment, saying there was no assurance it would persuade the EU to soften its hard line on the Swiss.

“Releasing the money alone is no guarantee that Switzerland can take part in Horizon, for example,” Foreign Minister Ignazio Cassis, a Liberal, acknowledged during the debate. “That is the risk that the government is prepared to take.”

The lower house was expected to approve the measure later on Thursday.

($1 = 0.9239 Swiss francs)

(Reporting by Michael Shields, Editing by William Maclean)