Switzerland has not fought a foreign war since 1815, and that fact is routinely misread as a moral position. It is closer to a business model. The great powers guaranteed Swiss perpetual neutrality at the Congress of Vienna because a buffer across the Alpine passes suited everyone; the 1907 Hague Convention later turned custom into law, obliging a neutral to keep belligerents out of its territory and to treat them with strict equality. Nothing in either document requires Switzerland to be pacifist, and it never has been. The arrangement survives because it pays, and the question now pressing on Bern is whether it still does.
The armed half of armed neutrality is expensive by design. Swiss men face universal conscription into a militia army that can mobilise well over 100,000 personnel, reservists keep their rifles at home, and motorway sections double as emergency runways. When the government wanted CHF 6 billion for new air defence, it had to win a 2020 referendum, which passed by roughly 8,700 votes out of more than three million cast; the money bought 36 American F-35A jets, a choice that itself annoyed European neighbours who had bid. Until the end of 2020 the air force famously provided armed readiness only during office hours, a detail British defence planners still enjoy, but the serious point stands: a neutral cannot borrow anyone else's deterrent, so it must fund its own while sheltering, unacknowledged, behind NATO's geography.
The diplomatic half generates the return. Geneva hosts the UN's European headquarters, the International Committee of the Red Cross, the World Trade Organization and a dense cluster of arms-control talks, all of which exist there because both sides of any dispute can attend. Switzerland acts as a protecting power, formally representing the United States in Tehran since 1980, and it only joined the UN in 2002, by referendum, after decades of judging even membership too aligned. Banking was long the other dividend: the 1934 secrecy law made Swiss accounts a haven for capital fleeing every regime and every tax authority, until the 2009 UBS settlement with Washington and the move to automatic exchange of account information from 2017 dismantled secrecy for foreign clients. What remains is scale, with Swiss institutions still managing around a quarter of the world's cross-border private wealth, plus a commodity-trading hub in Geneva and Zug that handles a third or more of global oil and grain deals.
The Ukraine test
Russia's 2022 invasion forced a choice the doctrine was built to avoid. Within days Bern adopted the EU's sanctions packages wholesale, freezing central bank reserves and oligarch assets, and Moscow promptly added Switzerland to its list of unfriendly states, ending its protecting-power role between Russia and Georgia. The numbers exposed the gap between gesture and substance: about CHF 7.5 billion frozen, against a Swiss Bankers Association estimate of CHF 150 billion or more in Russian money held in the country. Campaigners, including several UK parliamentarians, argue the shortfall reflects thin enforcement, since Switzerland polices sanctions through a small unit in its economics ministry rather than anything resembling Britain's Office of Financial Sanctions Implementation.
At the same time the War Material Act, which bans arms transfers to states at war, obliged Bern to refuse when Germany asked to send Swiss-made Gepard anti-aircraft ammunition to Ukraine, with Denmark and Spain rebuffed over other equipment. The legal logic was impeccable and the commercial damage immediate: Germany's defence procurement agencies began writing Swiss suppliers out of future contracts, and parliament in Bern has been arguing ever since over indirect re-export carve-outs.
What the bill looks like now
Cyber conflict strains the doctrine further, because the Hague rules assume armies crossing borders, not intrusions transiting neutral servers; when the ICRC itself was hacked in 2022, exposing data on more than 515,000 vulnerable people, no neutrality provision offered an answer. Credibility has taken older wounds too: the 2020 revelation that Crypto AG, a Swiss cipher-machine firm, had been secretly owned by the CIA and Germany's BND for decades showed the state tolerating espionage conducted under its neutral flag. Defence spending is scheduled to rise towards one per cent of GDP by the early 2030s, cooperation with NATO through Partnership for Peace keeps deepening, and each step narrows the distance between neutral Switzerland and merely non-aligned Switzerland. The policy has always been renegotiated whenever the price changed. The current renegotiation is simply happening in public.
