How the ban on supplying weapons to Ukraine could weaken Switzerland’s powerful defence industry.

Switzerland is not just known for its fine watches and chocolate, but also for its powerful defence industry.

European countries are now avoiding Swiss products though, as Switzerland not only refuses to supply weapons to Ukraine but also prohibits other countries from sending arms with Swiss components.

A recent Berlin's decision to exclude Swiss arms companies from military purchases has caused near panic in the Confederation.

Read more about the problems arising from Switzerland's neutrality in the article by Giannis Mavris of SwissInfo – Punishment for neutrality: How refusing to back Ukraine could cost Switzerland the EU market.

Last week, Germany decided to exclude Swiss companies from certain Bundeswehr procurement processes.

According to the Swiss newspaper Le Temps, Switzerland’s Federal Office for Armaments, Armasuisse, recently received the official notice.

This has led to near panic in Switzerland's defence industry.

Germany's motives are understandable: Switzerland is no longer seen as a reliable partner. The final nail in the coffin was Bern's ban on allowing Germany to send Swiss-made weapons to Ukraine.

Specifically, Bern prohibited Berlin from transferring 12,400 rounds of ammunition for Gepard anti-aircraft systems, highly effective against drones, to Ukraine.

Germany procured this ammunition from Switzerland three decades ago, but Switzerland, citing its own legislation regulating military cooperation with foreign countries, refused to allow their re-export to Kyiv. The law strictly prohibits the re-export of Swiss military materials to countries at war.

While clearly condemning Russia's aggression against Ukraine, Bern emphasised that the relevant federal law’s provisions are mandatory for the Swiss defence industry.

This decision has caused significant dissatisfaction in Berlin. It is important to note that Germany is not alone in this stance.

The Netherlands has previously taken the same path.

According to media reports, Spain and Denmark are also considering avoiding Swiss defence products in the future.

From a political standpoint, Germany is Switzerland’s most important ally within the EU.

While the current situation is not yet critical for Switzerland’s defence industry, it is a clear "wake-up call" that could lead to Switzerland losing its defence autonomy.

Swiss neutrality laws prohibit the supply of weapons to warring countries, which is widely understood.

However, there is a different view outside Switzerland: why should Swiss-made weapons, sold abroad decades ago, not be transferred to Ukraine, which is exercising its right to self-defence under international law and UN regulations?

Many within Switzerland share this confusion. As a result, the Swiss parliament has agreed to the necessity of some amendments to the laws.

How beneficial will these changes be for Ukraine? That remains unclear.

These amendments will need to be agreed upon at a referendum, which is not possible before the end of 2025.

This means that Swiss military materials might not reach Ukraine until 2026.

However, Germany’s current move, along with other EU countries, significantly increases the likelihood of such a change.