The decision by Swiss voters to cap immigration has imperiled relations with other European states, as it has burnished efforts by right-wing populists intent on spreading an anti-foreigner political agenda.

On Sunday, the Swiss narrowly backed a proposal to curb the country’s open-borders treaty with the 28-nation European Union, of which it is not a member. Voters were stoked by fears of overpopulation and Europe’s rising numbers of Muslims.

The vote’s impact is echoing well beyond the country’s Alpine peaks, bringing retaliatory threats from leaders across the continent and worries that the move could shake the European economy.

The vote in Switzerland – home to Nestle, the world’s biggest food company, and international drugmakers Roche Holding and Novartis – could make it difficult to hire foreigners, some business leaders warned.

The government has three years to implement the new rules, which will primarily affect workers from the EU, many of them highly qualified.

About 20 per cent of Swiss residents are foreigners and 45 per cent of employees in the country’s chemical, pharmaceutical and biotech industry are not Swiss.

Officials in Brussels, the EU’s administrative capital, warned that the vote could threaten Switzerland’s access to the 500 million consumers of the bloc, which stretches from Greece to Ireland and from Latvia to Portugal, and is anchored by economic powers Germany and France.

While not a member of the EU, neutral Switzerland signed a sweeping treaty with its neighbours in 1999. The fear and loathing over immigration that drove the referendum can also be seen in countries across the region.

“Switzerland is playing the role of a pioneer for the whole of Europe now,” Toni Brunner – chairman of the Swiss People’s Party, which backed the referendum and has launched an initiative to ban mosque minarets – told the Neue Zuercher newspaper. “EU open borders, in the form they exist in today, will have to be discussed.”

Hard economic times persist in much of Europe, the legacy of a multi-year debt crisis. And that leaves immigrants vulnerable to public wrath from Britain to Greece. Hungary’s far-right Jobbik party – anti-immigrant, anti-Roma and anti-Semitic – has moved from the political fringes into the halls of parliament and is campaigning heavily before April elections.

Paramilitaries with the Golden Dawn in Athens have launched street battles against immigrants, staging a number of well-documented attacks. The flow of Syrian refugees into Europe has also helped boost the popularity of anti-immigrant nationalists in Bulgaria.

Advocates of a more united Europe are bracing for European Parliament elections this May, when anti-immigrant nationalists from France, Holland, Britain, Finland and elsewhere are expected to capture as many as one-third of the seats.

With many far-right European parties adopting protectionist stances, observers note that substantial victories for nationalists could jeopardise European parliamentary approval of a sweeping free-trade accord that is now being negotiated with the United States.

“Immigration is the big theme of 2014 in Europe,” said Mats Persson, director of Open Europe, a think tank that focuses on EU changes. “One of the big risks is that the European Parliament becomes quite polarised after the May elections, filled with federalists who want a closer union in Europe and nationalists who want exactly the opposite.”

Bound by treaties that consider open borders a core tenet, EU member states cannot legally block the flow of citizens from one country to another. But with the citizens of Bulgaria and Romania – two of the region’s poorest nations – recently gaining full mobility rights in the EU, a host of European leaders are seeking ways to discourage – or block – inter-European immigration.

British Prime Minister David Cameron is pressing for changes that give individual nations more power to override region-wide laws. Prodded to action by the growing popularity of the anti-immigration United Kingdom Independence Party, Cameron has called for a referendum by 2017 that would decide if Britain should exit the EU.

Earlier this year, the British government rushed through legislation to restrict benefits for EU citizens who move to Britain from elsewhere. Under the new laws, such migrants must wait three months after arriving before they can apply for unemployment benefits. The government also tightened the test for migrants seeking benefits. For instance, migrants are now questioned about their English-language skills.

In Berlin, Chancellor Dr Angela Merkel’s government last week appointed a committee to find ways of curbing “benefits tourism”, or the practice of poor Eastern Europeans migrating to Germany, allegedly for the sole purpose of tapping its generous social benefits.

After the Swiss vote, the Euro-sceptic party Alternative for Germany (AFD) called for a similar referendum in Germany.

German Finance Minister Wolfgang Schaeuble said he regretted the Swiss vote, and at the same time acknowledged the tide of immigration fear washing over Europe.

“People are increasingly uneasy about unlimited freedom of movement in this world of globalisation,” Schaeuble told ARD public television.

He and other European officials said the Swiss vote would have consequences. The bloc could demand a renegotiation of treaties that allow the free trade of everything from Swiss watches to its trademark cheeses.

Economic retribution, however, appeared to be a risk the Swiss were willing to take.

The Swiss People’s Party sold the referendum as a needed step to preserve Swiss identity. Party leaders argued that 80,000 EU citizens were setting up shop in the Alps each year, an influx of Italians, Portuguese and other Europeans they said was changing the country’s social fabric.

Large Swiss companies argued against the move to set quotas, citing the nation’s very low unemployment rate of 3.5 per cent. Switzerland, they said, desperately needed open access to talent from nearby countries.

Polls taken weeks ago suggested the referendum would fail. But it passed with 50.3 per cent support, triggering what are likely to be thorny talks with the EU to set caps on immigrants.

“The majority of Swiss have followed a party that repeatedly attracted attention with xenophobic initiatives,” said an editorial in the Swiss daily Tages-Anzeiger. “Switzerland will have to put its relationship with the EU on a completely new basis. All existing and planned agreements will need to be renegotiated.”

The Washington Post, The Guardian

The Swiss decision: who pays, who profits?

The choice by Swiss voters to impose curbs on immigration is sending shockwaves through the EU. The bloc’s leaders warn it violates the “sacred principle” of freedom of movement and politicians worry about its impact on other anti-immigration pushes. Here’s a look at the issue:

WHAT’S GOING ON? With more than one million EU citizens living in Switzerland, there could be far-reaching political and economic consequences to the vote in favour of imposing quotas on foreign workers. Although Switzerland is not a member of the European Union, it has close ties to the bloc and agreements with it on everything from government procurement to research. The vote puts that in jeopardy. The Alpine country was granted free and privileged access to the world’s biggest market only because it agreed to free movement between borders, points out Luxembourg’s Foreign Minister Jean Asselborn.

WHAT WILL THE LAW LOOK LIKE? The Swiss government opposed the limits, but it must now submit a proposal to Parliament on how to implement the voters’ wish. The justice minister says that will happen soon. Limits and quotas will apply to foreigners, including crossborder commuters and asylum seekers. Firms must give Swiss nationals priority when hiring. But the referendum did not specify how generous the quotas should be, who should set and allocate them, or what the criteria for doing so should be. Changes approved by voters also limit foreigners’ ability to bring in family members or to access Swiss social services, and reduce asylum seekers.

WHAT WILL THE EU DO? The EU says that until Swiss law is rewritten or there is a change in government policy or actions, nothing has changed. “It is up to Switzerland’s government to decide if they want to suspend the agreements with us or not,” European Parliament President Martin Schulz said. “So long as Switzerland will not react, the agreements exist.” Some European leaders are warning of serious consequences. The agreements include “a so-called guillotine clause”. That means that if one of the elements is challenged – in this case, the free circulation of workers – “then everything falls apart”, French Foreign Minister Laurent Fabius told RTL radio. If EU leaders decide that Swiss authorities have breached the accords, the “guillotine” may then fall on seven separate bilateral agreements.

WHO WOULD THIS AFFECT? In addition to EU citizens living in Switzerland, another 230,000 cross the border daily for work. Some 430,000 Swiss reside in EU member states. All these people could suddenly find themselves in legal limbo. The first tripwire may come over whether citizens of Croatia, the newest member of the European Union, can freely enter Switzerland the way nationals from other EU member states do. EU officials were expecting the Swiss to grant Croatians that right effective July 1. If the Swiss now balked, there would be “quasi-automatic” consequences for Switzerland’s chances to participate in upcoming EU research and educational exchange programmes, a top EU official said. The official spoke on condition of anonymity because he was not permitted to speak publicly.

WHAT ARE THE ECONOMIC CONSEQUENCES? The EU is the most important economic and political relationship for Switzerland, so any changes could be momentous. “Switzerland lives economically off its exchange with its European neighbourhood,” German Foreign Minister Frank-Walter Steinmeier said. “I think Switzerland has harmed itself with that result.” Its banks, UBS and Credit Suisse, and companies like Zurich Insurance, are staples of the European financial scene. Europeans are enthusiastic consumers of its chocolates and watches. If the EU decides to make it more difficult for Switzerland’s businesses to operate, the cost to the country could be huge. In 2012, according to the European Commission, the EU’s executive arm, the bloc’s exports of goods and services to Switzerland were about 216 billion (HK$2.29 trillion), and imports were around 165 billion.

WHAT ARE THE POLITICAL EFFECTS? With the European economy stubbornly refusing to grow, anti-immigrant parties have grown across the continent. Those parties may make an unprecedentedly strong showing in elections for the European Parliament this spring. “We are seeing throughout Europe the rise of what can only be called the far-right agenda,” Irish foreign minister Eamon Gilmore said. The vote was hailed by France’s leading far-right group, the National Front. Those most upset about the Swiss vote in Italy were the antiimmigrant Northern League. Their power base is in Lombardy, where tens of thousands of Italians commute to work in Switzerland every day.

AP in Brussels