In a major interview, former finance minister Kaspar Villiger explains how our country can be successful in the future. He talks about how he disappointed his parents - and why it's not a bad thing when Federal Councilors have an emotional outburst.

This interview by Mario Stäuble and Larissa Rhyn was originally published in Swiss daily in Tages-Anzeiger on 2.1.2024. Translated and edited for layout purposes by the UBS Center.

Mr. Villiger, what was your last major trip?

From Hamburg to the North Cape and back, by ship on the "Hurtigruten". Together with my wife and a granddaughter, following her graduation from high school.

When you came back to Switzerland, what did you notice most?

We took the Deutsche Bahn home from Hamburg. We were amazed that it was more or less on schedule. The SBB was on time to the minute, it was clean, everything worked. Even if we didn't always see smiling faces. But when you see on TV how everything is in ruins just a few hundred kilometers away, Switzerland seems like an island of the blessed.

Is this story true?

Not at all! Suddenly wars are possible again in Europe. Francis Fukuyama's "end of history" is proving to be an illusion. Our prosperity is based on exports. Everything that happens somewhere affects us sooner or later. Whether it's imported quagga mussels (that are overwhelming our lakes), coronavirus, currency turbulence, or Russian assets that we have to freeze. The storms around us affect us very directly - and our politics as well. Even if they do not do so immediately, everyone notices the effects.

Switzerland has long been an export nation. What has changed?

The last 30 years have been a relatively quiet time. But now the post-Cold War security order has failed. Protectionism and political turbulence hamper free trade, and this trade is a vital part of our economy. The dramatic debt load of countries and companies is making the international financial system fragile. All of this creates great uncertainties for us, too.

Have we made ourselves too comfortable in Switzerland?

I'm afraid so. At the same time, our tried-and-tested political engine has suddenly stopped working. Switzerland has become much more polarized. This is probably due to factors such as urbanization, the fragmentation of political forces, and the new media. This puts our strongly consensus-oriented system under pressure. Polarized systems can only work if the poles are prepared to compromise.

And that no longer works?

Unfortunately, the pole parties have realized that you can win elections with polarization and resistance to compromise. The center parties have shrunk, the pole parties have grown. That's why we have a backlog of reforms in areas such as the European dossier, pensions, neutrality policy, and energy policy. But I still have hope.

Why?

Switzerland has had phases of great polarization before. There have always been clashes and disagreements, but never a rift. I'm hoping for the same now, and that Federal Councilors will be less driven by the particular interests of their parties in the future.

Wasn't that already the case during your time in the Federal Council?

Of course, not everything was perfect in my time either. Federal Councilors must not simply be the henchmen of their parties. They have a different function in the collegial government. I have the impression that the parties now exert more pressure on their Federal Councilors than they did in my time. You even have to be allowed to tell your own party where it is wrong.

In the last Federal Council elections, the parties opted for stability, but at the same time we saw frictions and power games. What does that say about polarization?

I've never seen a Federal Council election that wasn't accompanied by drama and fuss. That doesn't really worry me. I think the sign of stability in turbulent times was important. This signal should not be underestimated. If Federal Councilors are not simply voted out of office in difficult times, they can afford to be unpopular at times. And to strive for what is important in the long term, even if it doesn't go down well at first.

However, stability is also paralyzing because changes in society are only reflected in government years later - if at all.

I always like to compare us with other countries. Have we fallen behind countries with supposedly more modern systems? Just look at the tumult the Germans have with their system, or the problems Macron has in France. In Switzerland, for example, the integration of migrants has been more successful than in other nations. Apparently, around 45% of our population has a migration background - and our system works. That is a tremendous achievement.

But reacting to acute crises is difficult with our system - isn't it?

That is correct. Crisis management needs to be improved. As far as I know, the government is presently working on it.

Where do you see the biggest risks?

I see four core risks. The first is the reform backlog that I mentioned. An important example is the EU. We lack a solid foundation with our most important export customer. I was quite furious when the Federal Council unilaterally broke off negotiations and simply buried the framework agreement.

Why?

When the population says no to a negotiation result, that is a sign that is also understood and accepted abroad. But if the Federal Council suddenly breaks off negotiations unilaterally on its own initiative, the negotiating partners’ trust is severely damaged. However, the Federal Council has now succeeded in restarting the process with promising solutions. That deserves respect. Something also urgently needs to happen in the area of old age benefits. We only gained four or five years with the last vote to reform social security. The danger of these interim solutions is that nothing will be done again for several years. It is not socially responsible to carelessly expand a social security system without knowing how it will be paid for. Securing it for future generations is social. This requires courage.

What are the other risks?

Our prosperity is only possible if we have strong companies that create jobs and pay taxes. But domestic policy constantly restricts their entrepreneurial freedom, while the economic environment is becoming more difficult. That is the second risk. The third is the erosion of our fiscal resilience.

What do you mean by that?

A stable financial budget. I sometimes get the feeling that we criticize everything that works in our country, whether it's the National Bank or the debt brake. And we ignore what doesn't work. It upsets me that even a few members of the middle parties now want to circumvent the debt brake because of the army, even though it is enshrined in the constitution. It was only thanks to our financial stability that we were able to overcome major crises such as the financial crisis, coronavirus, and Credit Suisse without any lasting damage.

How?

I expect politicians to have the courage not only to set priorities, but also to put the brakes on what is merely desirable. If you prioritize everything, you prioritize nothing.

Where would you make cuts?

That's no longer my job. I had this task until 20 years ago. And it was hard work, just like today.

How did you solve the problem?

The first step was a round table with the cantons, political parties, business associations, and trade unions. Arnold Koller, Ruth Dreifuss, and I represented the Federal Council. We had countless meetings, and at some point, at three in the morning, in a meeting room at the National Bank in Bern, we achieved a breakthrough. The parliament then largely approved our proposals. And we pushed through the austerity program without a referendum.

You are describing a government that is strong enough to push through a compromise. Is the Federal Council strong enough to do this today, for example with the new EU package?

A united Federal Council can move mountains. It is structurally the weakest government in Europe because it can make few decisions on its own and above all has to convince others. But if the Federal Councilors unite, solutions can be pushed through. I expect the Federal Council to do the same now. The latest developments in the EU dossier make me confident.

So in the end it's all down to the seven members of the Federal Council?

Exactly. Let me give you an example: Ruth Dreifuss was not convinced by many of the measures at the round table on austerity measures that I mentioned. But she was very loyal throughout the entire process. I still admire that today. Later, when it came to the introduction of insurance for maternity leave, she called me and said: So, now you're going to come on TV with me and defend it, even though you were always skeptical. And that's what I did.

You mentioned neutrality. Closely linked to this is Switzerland's self-image as a mediator. Is this image still correct?

When I look back over the last 20 years, I can't think of any earth-shattering mediation services that Switzerland provided. On the other hand, I think of the Oslo Accords, which the NATO country Norway brokered. Figures like Mr. Erdogan or countries like Qatar are also mediators today. Neutrality is glorified. If it still had the paramount importance that is sometimes ascribed to it, then the conflict parties would have to line up at our gates. And they are not doing so. Of course, we are a good location for important conferences. But that is not a phenomenal achievement in world politics.

Should Switzerland join NATO?

No, but we should work more closely with it. Security is the fourth and final risk I see: a country like Switzerland can no longer defend itself autonomously. Technological and financial requirements make this impossible. Cooperation with friends is imperative, and that can only be with NATO. But we should not join, because we otherwise might be forced to send troops into conflicts that have nothing to do with our national defense. Our current neutrality stems from a time when war was a legitimate political tool. Nobody took offense at treating aggressors and victims equally. Today, states that share our values interpret equal treatment as a position in favor of the aggressor - for example in the war in Ukraine. And a neutrality that the relevant powers no longer understand provides no protection.

What must Switzerland do?

Neutrality has never been handled as orthodoxly as the SVP now demands in its new plebiscite. It has always been adapted to the situation. Today, we are in a global conflict between two basic philosophies of how the state should be organized: democratic and based on human rights - or autocratic, where human rights are ignored. We must define our neutrality in such a way that we are no longer perceived as egotists and economic profiteers.

Does this mean that we also need to position ourselves more clearly towards China - even if our economic interests suffer as a result?

That depends on China's specific behavior. In the case of the Russia sanctions, we also had to go along with them because otherwise we would have risked being sanctioned ourselves at some point. But of course, in view of the global conflict between the USA and China, it is likely to become more difficult to dance at both weddings at the same time.

What does that mean politically?

That we position ourselves clearly. The problem is that the economic and political importance of autocratic systems is growing rapidly. It is an irony of fate that capitalism saved communism in China. Without economic success, the government would have collapsed long ago. Democracies have lost their role model effect. Many fragile states and emerging economies are increasingly turning to autocratic systems. This will also weaken the UN. Democratic states will firstly have to keep their own houses in order and secondly cooperate more if their system is not to be degenerated into an episode in world history. In the global debate between democracy and autocracy and law and power, Switzerland must position itself clearly on the side of democracy.

Switzerland must therefore move closer to NATO. But how close?

Concrete cooperation will probably be limited to our neighboring states. Will a tank army be crossing Austria tomorrow? Probably not. But could it be that missiles fly towards Switzerland to destroy key infrastructure that is also important for Europe? Not out of the question. It doesn't take much: a wheel breaks, and the Gotthard rail tunnel is closed for months. A concrete ceiling falls down, and then the road tunnel is also closed for weeks. This means that we must be able to intercept missiles, for example. This can only be done together with friendly countries. You have to train for that.

Will NATO even accept such a "friendly status"?

That will have to be negotiated. If Switzerland continues to participate in peace missions in a spirit of solidarity, for example in Kosovo, if it makes decisions in a spirit of solidarity when supplying weapons, defends its own airspace, and does what is reasonable to protect its own territory, then agreement should be possible. That is why the new F-35 fighter jet is so important: it will enable us to protect the Alpine region for Europe. Austria is not in a position to do this.

You live in Zug, on the 18th floor of a high-rise building. Zug has become an expat city - and foreigners with high incomes are a new enemy. How do you experience the immigration debate?

(smiles) In our high-rise building, people speak Spanish and Russian and English and French - and sometimes Swiss German. Zug has a good mix of tradition and cosmopolitanism. When I walk past a school building, I see the youngsters there, they come from everywhere. That works. No, my fear is a different one.

Which one?

We know that tens of millions of young people in Asian and African countries are just waiting to emigrate. And that the migration flows we are experiencing today are just the beginning. This has the potential to destabilize Europe's successful social models.

What conclusions do you draw from this?

Science shows that the solidarity of locals with immigrants decreases when a strong diaspora grows up in a country. And the larger this diaspora becomes, the greater the danger of parallel societies. But - and this is so dangerous - solidarity within the local population also suffers. And that is exactly what we are seeing on our doorstep: right-wing populists are gaining ground in many European countries.

Now you are making the same distinction as the SVP: between "good" and "bad" immigration.

Without immigration, Switzerland would not be where it is, no question. The point is: when does it become too much? We need to make a better distinction between genuine refugees and those who come to us for economic reasons. This applies to the whole of Europe; we have to solve this problem together. We must separate the legal immigration of workers from the EU and third countries from this.

Our original question was aimed at the well-educated. There is also a rumbling among the population because expats can often afford city apartments, for example.

People in Zug have gotten used to this. I think that also has to do with the time horizon. When the Italian guest workers came to Switzerland, we initially had a problem, but they have long since become integrated compatriots. Integration is always possible with people who come from a similar cultural background and who have internalized our democratic values. Otherwise, Switzerland would have ceased to function a long time ago.

You say that even if immigration from Europe is high, Switzerland can cope with it.

Yes, although I understand people who are irritated when others only speak in foreign languages on the streetcar. That can raise questions.

What's it like for you when you order a coffee, and it comes back in English?

It's amazing: somehow everyone ends up speaking in German.

Have you ever felt foreign in Switzerland?

No. But look: I've traveled a lot and sat on the boards of directors of companies where only English was spoken. I got used to it. But I expect those who come here to be sufficiently culturally adapted and interested in our system. That applies to everyone - including expats.

In business, however, many corporate CEOs have decoupled themselves from the Swiss discourse.

I also think more entrepreneurs should get involved, openly fly the flag or even enter politics themselves. However, we have the problem that the demands in politics have risen, as have those in business. That's why it's much more difficult to be involved in both areas today. But I have also been saying for a long time that we should make more of an effort to "helvetize" foreign managers, i.e., to promote their understanding of Switzerland. There was once a famous American manager who, after many years in Switzerland, was asked how many members the Federal Council had. He said: ten.

Who was that?

If I remember correctly, Brady Dougan.

The ex-CEO of Credit Suisse.

Yes.

Mr. Villiger, you're a patriot...

...yes, I suppose I am...

...are there moments when you have a gripe with Switzerland?

Annoyed, yes, but that's not a gripe. Hooray patriotism was never my thing. But look at me: I was born in a small village - and one day I woke up as a Federal Councilor. I would never have joined a government under a chancellor who sends you back into the wilderness when he needs a pawn. But joining a government in which everyone argues and discusses with each other on an equal footing? I could imagine that. In other countries, the elite believe that the people are too stupid to have a say in politics. I am a little proud that this is not the case here.

Would you like to be young again to see where Switzerland will be in 30 years' time?

Yes. I'm actually enjoying my old age. But to know how things will turn out in the next twenty years and whether my predictions were right: I would find that exciting. (Laughs out loud) I'm 82 now, so you never know when it will be all over.

What do you wish for the generations of your children, your grandchildren?

In my life, I've seen how things work in countries where poverty dominates, corruption is rampant and organized crime is rampant. We bought tobacco with the company, in South America and in Africa, and exported it everywhere. I experienced apartheid in South Africa when I was very young. I once visited a potential importer, a successful Indian, and I wanted to invite him to lunch, naive as I was. He just said: I'm not allowed to go to the restaurant with you. My brother wanted to give a black South African a pocketknife as a gift, but he refused because it would be perceived that he had stolen it. That's why I hope that young people appreciate living in a country where prosperity and security prevail. That is a privilege! That's why you shouldn't get upset if the weather is bad for a few days.

What have you learned about human nature in your life?

That we are susceptible to distortions of our own perception. I read psychologist Daniel Kahneman's book "Thinking fast, thinking slow" with great benefit - since then I sometimes joke that I no longer believe everything I hear. We all have Stone Age brains that react spontaneously and sometimes come to conclusions that are completely wrong.

Is that also the case in politics?

Yes, otherwise conspiracy theories and prejudices wouldn't have such a strong influence. And people in political leadership positions often risk losing their footing and overestimating themselves. Erdogan (the Turkish president, ed.) made good policies at the beginning, Orban (the Hungarian president) was a hero of freedom - and then they changed. Our system is also great in this respect.

What do you mean by that?

In Switzerland, you quickly land back on the ground. For example, you become Federal President. At the beginning, it stinks a bit because there's more work. But as time goes on, you start to enjoy it: a reception here, an honorary company there, a little "Grüezi" and a little "säb"...

And then?

Then a phone rings on New Year's Eve - and bang, it's all over. I can still remember: a cross-country skier greeted me respectfully on the cross-country ski trail in the Engadin on New Year's Eve: "Good evening, Mr. President of the Swiss Confederation! The next morning, I happened to meet him again on the trail. He said: good morning, Mr. Federal Councilor! (laughs) That's the good thing about our system. Sometimes it's tough and annoying, but in the end it's healthier and more solid.

What have you done right in your life?

Some things, but certainly not everything! (ponders) I've always taken risks. The UBS suicide mission, for example, was one such risk...

... You became Chairman of the Board of Directors after the state rescue of the bank in 2008 patriot...

Yes, or become a member of the Federal Council without knowing whether I could do it. I had to give up the company for that.

You mean the family-owned cigar factory that you ran with your brother.

I wanted to make that irreversible in order to be truly independent. No parachute. The employees - including my mother, by the way - didn't enjoy it, almost saw it as a betrayal of the family business. And I didn't know whether it would all be over after two years and I would be left without a job and a company. I wrestled with that for a long time. Today I say: I didn't do it, I didn't do it.

Are there things you regret?

I never really think about it. It's just that if I were in that moment again, I would have done it wrong again. A total mistake never occurs to me. Of course, I have lost referendums. But many things have been successful. Always thanks to good teams. My father died at 69, my grandfather at 40. I'm 82, and I still have a lot of quality of life. I look back very, very gratefully.

What is the best time in a person's life?

Every time has its charm. There is also life after retirement. (smiles) I had the worst crisis when I was 30 because I thought that my youth was over now, I wasn't going to be a star conductor or world hurdles champion. I was always interested in everything, and every yes to one thing was also a no to five other things.

You had to come to terms with the fact that the corridor was getting narrower?

Yes, but there was something else: I would have liked to study physics or mathematics, but my father told me: go to St. Gallen and study business administration, you can use that. It wasn't clear to me that I would join the company, but it was clear to him. Engineer was the compromise. But: it's not really that important what you learn. It's crucial that you learn to learn.

From whom did you learn something from in politics?

In the Federal Council, for example, from Delamuraz.

You mean the FDP Federal Councilor Jean-Pascal Delamuraz.

He did a lot with his mind. When things were at an impasse in the Federal Council, he defused the situation with a good comment. I'm more of a technocrat, a political craftsman, I want to solve problems, not exude brilliance. But I learned from Delamuraz that a lot happens at the emotional level. That it doesn't hurt if you have an outburst or drop a line. I like that.

What are you afraid of?

The only thing I'm afraid of is becoming helpless. Losing my judgment. But fear is a big word. You'll see when you're older, you actually live pretty much the same way. Your thoughts don't constantly revolve around such questions.

Do you fear death?

There's a saying: I don't fear death, but I do fear dying. But the realization that the poor world will have to do without me one day doesn't hurt me so much now. I'm afraid it will.