Swiss voters rejected a referendum
to introduce strict immigration quotas, a step that would have
risked choking off economic growth and souring foreign
relations.

Voters turned down the initiative known as Ecopop by 74
percent to 26 percent, according to projections by Swiss
television SRF. The measure “Halt Overpopulation — Preserve
the Natural Environment” would have limited annual immigration
to just 0.2 percent of the country’s permanent resident
population. Polls had forecast the initiative’s rejection.
Voters also turned down a measure requiring the Swiss central
bank to hold a fixed portion of its assets in gold and one that
would’ve abolished the tax privileges accorded to wealthy
foreigners.

“Immigration is high and that has provoked defensive
reflexes,” said Michael Hermann, a senior lecturer at the
University of Zurich. “It’s true that the country was more
homogeneous and self-reflective decades ago — but these are
changes that would’ve taken place anyway due to globalization.”

Nearly a quarter of Switzerland’s 8.1 million people aren’t
citizens. The many newcomers, whose numbers ballooned in the
decade after Switzerland adopted the European Union’s free
movement of persons, have led to complaints about a lack of
affordable housing and overcrowded public transport.

Economic Support

All of Switzerland’s major political parties were against
the Ecopop measure, which is significantly more stringent than
“Stop Mass Immigration” referendum approved by voters in
February. Immigration has proved a key support of economic
growth, and the political parties argued Ecopop would prevent
companies from hiring the skilled foreign workers they need and
deal yet another blow to Switzerland’s already testy relations
with the EU.

Immigration is a contentious topic in other countries as
well. U.S. President Barack Obama this month gave a reprieve to
undocumented immigrants, while British Prime Minister David Cameron has been at odds with his EU counterparts over
immigration and has promised to hold a referendum on the U.K.’s
EU membership by 2017 if he wins the next national election.

Under Ecopop, a net 16,000 newcomers would’ve been
permitted to enter Switzerland each year. Asylum-seekers, Swiss
citizens’ foreign spouses or adopted children, and specialists
in the pharmaceutical or in the banking sector could have been
affected by the new restrictions.

‘Some Pragmatism’

While February’s “Mass Immigration” initiative, which
isn’t affected by today’s Ecopop defeat, requires the enactment
of quotas, it gives a three-year deadline and leaves it up to
the government to set their level, taking the needs of
businesses into account.

Today’s overwhelming rejection of Ecocop is a sign to the
government that “we want some flexibility, some pragmatism, we
don’t want to burn our bridges,’” said Patrick Emmenegger,
professor of comparative political economy and public policy at
the University of St. Gallen.

Currently, there is no numerical upper limit for citizens
of EU countries or on the husbands and wives of Swiss citizens.
The government sets a quota on highly skilled workers from non-EU countries such as Canada, Japan or Australia each year.

“We’re really disappointed, but not really surprised,”
said Andreas Thommen, head of the Ecopop committee, which argued
the initiative would’ve preserved the environment and quality of
life. “The shock of Feb. 9 also mobilized lots of our
opponents.”

Skilled Immigrants

Skilled immigrants have played a prominent role in Swiss
business for hundreds of years. Geneva’s tradition of
watchmaking traces its origins to the arrival of Huguenots in
the 16th century, while in 1839 two Polish immigrants joined
forces to form the forerunner of Patek Philippe. Similarly,
German immigrant Heinrich Nestle founded Nestle SA (NESN), the maker of
Nespresso coffee, and Beirut-born Nicolas Hayek was the force
behind Swatch Group AG. (UHR)

More recently, Philipp Hildebrand, once president of
central bank and now a vice president at asset manager BlackRock
Inc., pointed out that the national soccer team is comprised
chiefly of players whose parents came from abroad, including
Bayern Munich midfielder Xherdan Shaqiri. “This plurality of
backgrounds and footballing cultures has unequivocally
strengthened Switzerland’s contribution to world football,” he
wrote in June.

Xenophobic and Dangerous

Even Christoph Blocher, vice president of the Swiss
People’s Party that spearheaded the February immigration vote,
said Ecopop went too far. “Ecopop is dangerous and would hurt
our country,” the former justice minister told the newspaper
Tages-Anzeiger on Oct. 31.

Had it passed, the initiative would have caused a
“significant loss” to potential growth, Credit Suisse
economist Sara Carnazzi Weber said.

According to David Marmet, economist at Zuercher
Kantonalbank, the initiative would have been “bad news for
companies, especially the construction sector.”

Landlocked Switzerland has declined to join the EU, and its
relations with the 28-country bloc are governed by a series
accords covering a range of topics such as border control,
electricity markets, scientific research and the free movement
of persons. They contain a “guillotine” clause that will
nullify all, if one is struck down. The EU said earlier this
year it won’t re-negotiate the immigration provision.

Voter participation was 48 percent, slightly above the
long-term average, SRF reported.

To contact the reporter on this story:
Catherine Bosley in Zurich at
cbosley1@bloomberg.net

To contact the editors responsible for this story:
Fergal O’Brien at
fobrien@bloomberg.net
Zoe Schneeweiss, Kevin Costelloe