National Agenda : Swiss May Shed the Cloak of Neutrality : * The country is reassessing its position with the outside world as it celebrates its 700th birthday.

“For the outsider,” wrote newspaper editor Fabien Dunand in a recent book marking the 700th anniversary of Switzerland’s independence, “neutrality is as Swiss as chocolate.”

Along with towering mountains, verdant valleys, expensive watches, brimming banks and milk chocolate, the tradition of neutrality has defined Switzerland for the outside world since at least 1815, when it was first formally established at the Congress of Vienna. For nearly five centuries, the quirky confederation of 26 semiautonomous cantons has managed to stay out of fights between its neighbors while enriching itself in the process.

The practice has not always been perfect. During World War II, Switzerland was one of Nazi Germany’s most dependable arms suppliers. Even worse, the Swiss government blocked entry to thousands of Jewish refugees fleeing the Third Reich, knowing at the time that this meant sentencing them to almost certain death in Nazi concentration camps.

Nor has Swiss neutrality always been universally respected.

The English statesmen and author Sir Thomas More, among others, condemned the Swiss practice of exporting its mercenary soldiers all over the world while observing the morally high ground of peaceful neutrality at home.

“This passionate will to remain neutral,” observed Swiss author Friedrich Durrenmatt, “makes me think of a virgin who makes her living in a bordello but wants to stay chaste.”

But until recently, neutrality had always been considered one of the inviolable principles of Swiss life.

The first big crack came last August when Switzerland for the first time in its history agreed to participate in international economic sanctions by joining the U.N. boycott of Iraq. Quickly sensing parallels between tiny, rich Kuwait and tiny, rich Switzerland, the Swiss also for the first time allowed overflights by foreign military aircraft.

The Persian Gulf War opened a broader debate that many feel will eventually lead to Switzerland’s abandonment of neutrality as the pillar of its foreign policy.

The end of the Cold War (and with it, Switzerland’s important role as an international intermediary) and changing geopolitical climate are cited as reasons for the shift. But the biggest pressure is coming from the emerging European Economic Community and the projected unified market by 1993.

Many Swiss fear that the powerful new market threatens to isolate and marginalize Switzerland, which depends on the 12 nations of the European Community to take more than half its exports. As a result, some Swiss political leaders want to join the Community, an act that would almost certainly compromise its sacred principle of neutrality.

Although Switzerland--unlike its fellow European “neutrals” Austria and Sweden--has not formally applied for membership in the European Community, the Swiss Federal Council took an important step in that direction earlier this month when it declared membership a “priority consideration.”

Meanwhile, diplomats and government constitutional experts here in the Swiss capital and abroad have begun testing the waters for the possible abandonment of neutrality as one of the tenets of Swiss life.

“Europe has entered a new phase of its postwar history in which the policies of the superpowers have changed,” explained senior Swiss diplomat Mathias Krafft in a May 17 speech in London. “An internal European Community market is emerging, East-West relations further improve and disarmament has become a possibility and a necessity.

“Even a traditionally neutral country like Switzerland must continuously review its security policy and, at some point, even its neutrality,” concluded Krafft, director of the division for international law in the federal department of foreign affairs.

Krafft’s speech at a seminar on Swiss neutrality was studiously cautious. Swiss officials vividly recall the 1986 ballot in which Swiss voters overwhelmingly rejected a proposal to join the United Nations--even though the measure was supported by most leading political figures, journalists and scholars. “It is clear that the idea of abandoning neutrality is still unacceptable for many, probably the great majority of Swiss citizens,” Krafft noted in his London speech.

But privately and unofficially, many Swiss officials are impatient to shed the restrictions they feel that neutrality places on their foreign policy.

“Neutrality is only a tool of Swiss foreign policy,” commented Thomas G. Borer, a young lawyer and Swiss diplomat based in Bern. “It is not a goal or a higher good. Unfortunately, over the years it has become mythologized as a principle of government. Now that we are in a position where we have to open up our foreign policy, neutrality has to be pushed back.”

The main challenge to Swiss neutrality, said Borer, is economic, particularly in the face of a unified European market. “One out of every three Swiss francs is earned abroad,” he said during a recent interview in Bern. “Can you really justify neutrality when you have that kind of economic interdependence?”

European market membership would also place other pressures on Switzerland that its citizens may not be able to accept. Like other European countries it would be required to open its borders to workers from other member states, including Greece and Portugal, countries with only a fraction of Switzerland’s prosperity. Switzerland would also be required to bring its banking and tax laws into conformance with other European states, probably ending its reign as the world’s most famous fiscal haven.

A special commission formed to consider these and other issues linked to Swiss neutrality will release its report later this year.

Because of its cumbersome system of direct democracy, which requires a national referendum on practically every important issue, including treaties, any switch will not come instantly. Such a radical change would probably require a new constitution to replace the 1848 document under which Switzerland is still ruled.

But the debate, along with an introspective re-examination of many other aspects of Swiss life such as banking secrecy and government surveillance of its citizens, has turned Switzerland’s 700th birthday party into a somewhat somber event, more like an exercise in self-analysis than a celebration.

“Switzerland is on the path of re-entering Europe,” said Thomas Jenny, a spokesman for the Swiss 700th anniversary committee. “The cliches of chocolate, cheese, watches and banks no longer work. It has to find a new identity. The national debate is part of that process.”

By the standards of the hoopla surrounding the American Bicentennial or the festive celebration marking the 200th anniversary of the French Revolution, the Swiss septuacentennial is a tame affair. Plans to stage a national fair to mark the anniversary were soundly rejected by voters in the several cantons where it was supposed to take place.

Sponsors of the national celebration have tried to make the best of the situation by describing the voter rejection as a good example of Switzerland’s direct democracy at work. Instead of giant nationwide galas, the planners have scheduled a series of smaller cultural events, including rock concerts and comedy shows, scattered about the Swiss landscape, catering to the interests of individual cantons and even communities.

But critics of the program, including Jean Ziegler, a Geneva University sociology professor and author, say it is a perfect example of Switzerland’s failure as a unified nation state. Switzerland has been so busy trying to protect itself against outsiders, contends Ziegler, author of a recent best-selling book attacking the Swiss banking system, that it never took the time to create lasting national institutions.

“Switzerland is not a nation--it is a defense organization,” Ziegler, the country’s most outspoken politician and critic, commented to a journalist during a recent train ride between Geneva and Bern. “As long as Europe is torn by war--400 years of the enemy at your doorstep--it all held together. But nowadays there are no enemies, no chaos on the borders, not even any Communists to rally against. Switzerland as a nation is finished.”

The changing world political setting has put into question many of Switzerland’s most treasured institutions, including the 650,000 strong Swiss citizens’ army--on a per capita basis one of the largest armies in the world. Switzerland has a relatively minuscule population of only 6.5 million, including more than 1 million foreigners. Under the law, every Swiss male is required to serve in the Swiss army reserves until he is 50.

The army demands one month of training from its citizen-soldiers each year. Its fortresses and nuclear bomb shelters--sufficient for every man, woman and child in Switzerland--are dug deep into the Alpine mountainsides. The officers tend to be the same men who sit in the bank boardrooms and government ministries. In a November, 1989, referendum, a surprising 36% of the Swiss voted to disband this secret military and national conscription. Many feel that if the vote were taken today, it would be much closer.

Other institutions under fire include the judiciary and police. In the most celebrated case, Justice Minister Elisabeth Kopp was forced to resign after admitting that she warned her husband that investigators were probing his firm’s connection to Lebanese drug money laundering. She was later acquitted of criminal wrongdoing in the case.

More recently, the Swiss were shocked to learn that authorities have for years engaged in widespread surveillance and eavesdropping on their fellow citizens, amassing more than 600,000 dossiers.

Thrown into the already bubbling caldron are the facts that Switzerland has Europe’s highest rate of heroin addiction and acquired immune deficiency syndrome. In an attempt to isolate and control both related problems, authorities several years ago began distributing free sterilized needles and allowing open sale and use of heroin and other drugs in public parks in Zurich and Bern. But the addiction rate speaks of a national ennui and mental depression unexpected in the Alpine paradise, where the per-capita income ($26,000) is the highest in the world.

“For a long time,” French novelist and essayist Jean-Luc Hennig wrote in “Open Letter to the Swiss: So Good, So Fat, So Sad,” his recent polemical book, “I thought of Switzerland as a land of peace, spared from the world conflicts of the century, an opulent and serene paradise, perhaps overly policed and overly protectionist, but in the end a model democracy for Europe, an Eldorado of prosperity and Utopia realized--like a dream.”

But after living in Switzerland for several years, Hennig reached much different conclusions about the Swiss paradise: “A country of suffering and endemic depression, a litany of psychiatrists and suicides . . . a country of deep guilt and fear of everything (most of all, Europe), a country of isolationism based on the cantonal values of another age. The country of eternity, which means blandness, flabbiness and neutrality.”

In this atmosphere of self-examination and national mea culpa-- the 700th anniversary has prompted the release of more than a dozen such books, many extremely critical, on the challenges of contemporary Switzerland--it is no wonder that even the most lasting traditions, such as the Swiss concept of “perpetual armed neutrality,” have come under scrutiny.

The Swiss idea of neutrality dates to 1515, when the confederation of mountain-dwelling tribes were defeated by Burgundy at the battle of Marignano. After that, the Swiss “abstained” from as many battles as they could, including during the wars of religion after the Reformation.

But neutrality was not formally enshrined in Swiss society until the Congress of Vienna in 1815, mainly because the famed Austrian diplomat and arbiter of post-Napoleonic Europe, Prince Metternich, viewed a neutral Switzerland as a needed buffer zone between France and the Austro-Hungarian empire. Shielded by this neutrality, Switzerland avoided three 19th-Century European wars and two 20th-Century world wars.

According to Borer, a young, ambitious member of the conservative Radical Democratic Party, which has the largest membership in the National Council, the changing Swiss attitudes about neutrality often break down along generational lines.

Older Swiss people, said Borer, were able to sit calmly and watch as the United States and its allies did the fighting in the Gulf. It was part of the long tradition of Swiss neutrality. But for Borer, a captain in the Swiss army, it also produced a sense of shame.

“We didn’t feel very well when we saw the Americans and the British fighting in the Gulf while we were sitting here,” Borer said.

Moreover, he said, the young Swiss increasingly see themselves as part of Europe and no longer want to be the European exception.

“My father was always very proud of his Swiss passport,” he said during an interview in his office in the stately, marble Swiss Foreign Office. “But the younger generation feels very European, and we feel discriminated against because we do not have the same rights to travel and work that the other Europeans enjoy. We have to stand in line at Heathrow (London’s international airport). We can’t work in Germany or France.

“To us, the Swiss citizenship has lost value.”

The World’s Biggest Armies: Relatively Speaking Based on per capita size of military

% OF MILITARY POPULATION COUNTRY POPULATION ACTIVE RESERVES TOTAL IN MILITARY FINLAND 5,010 31 700 731 14.59 ISRAEL 4,579 141 504 645 14.09 SOUTH KOREA 43,768 750 4,500 5,250 12.00 TAIWAN 20,753 370 1,657 2,027 9.77 IRAQ 19,086 1,000 850 1,850 9.69 SWITZERLAND 6,499 4 625 629 9.67 SWEDEN 8,344 65 709 774 9.28 NORWAY 4,200 34 285 319 7.60 NORTH KOREA 22,792 1,111 500 1,611 7.07 SPAIN 39,859 275 2,400 2,675 6.71

How Others Rank:

SOVIET UNION 288,561 3,988 5,602 9,590 3.32 UNITED STATES 250,000 2,178 1,614 3,792 1.52 SOUTH AFRICA 36,516 77 380 457 1.25 BRITAIN 56,645 306 340 646 1.14 CHINA 1,115,552 3,030 1,200 4,230 0.38 INDIA 843,347 1,262 300 1,562 0.19

* in thousands

SOURCE: THE MILITARY BALANCE, 1990-1991, INTERNATIONAL INSTITUTE FOR STRATEGIC STUDIES