Swiss upper house backs Pfister’s 12 billion army fund

The Council of States, the upper house of the Swiss Parliament, has backed Defence Minister Martin Pfister’s armaments fund and doubled its maximum borrowing capacity, SRF reported in an analysis by Andy Müller.

If the National Council approves the fund in December and no referendum is launched, Pfister would have an additional 12 billion francs available for expanding the army from January.

The decision marks a significant political success for Pfister. When he presented his funding plans in January, his proposal faced strong opposition, particularly over a temporary 0.8 percentage-point increase in value-added tax. All parties except Pfister’s Centre rejected the tax increase. Opinion polls also suggested that voters would probably reject a mandatory referendum on the tax rise.

The fund proved more important than the tax increase

Public debate focused heavily on the tax increase, while the more significant part of Pfister’s proposal received less attention: creating an armaments fund that could borrow money. The Council of States has now approved the fund.

It would be financed through a slower reduction of Covid debt and a value-added tax increase of 0.2 percentage points. The fund would remain in place even if voters rejected the tax increase, because the Council of States separated the fund from its financing. The referendum on the fund is not scheduled until 2028, after the national elections.

Parties on the political right, which until recently opposed rearmament plans unless they were fully financed through debt, have now embraced the fund. Their calculation is that rejecting the tax increase would put heavy pressure on the federal budget. Another spending-cutting programme would probably become unavoidable, which would suit the FDP and SVP.

Left-wing parties also support the fund, particularly the proposal to reduce Covid debt more slowly. However, they fear additional pressure for cuts to development aid and education if voters reject the tax increase. They unsuccessfully sought to keep the fund and the tax increase linked.

The fund idea is not new. Pfister’s predecessor, Viola Amherd, also proposed this form of financing, but it failed to win a majority. Pfister’s success therefore builds partly on his predecessor’s defeats, as years of debate prepared the political ground.

The security situation in Europe has also deteriorated since Pfister took office. In Parliament, support has grown for the view that Switzerland must strengthen its defence capabilities more quickly.

The 0.2 percentage-point tax increase remains controversial. The National Council could reduce it further or remove it entirely. That would not amount to failure for Pfister, whose priority is securing the fund. Current indications suggest that the National Council will back it in December, turning a politically risky idea into a project with majority support.