Switzerland condemns Russia's invasion of Ukraine in the strongest possible terms, but only half-heartedly supports the EU's sanctions.

The Federal Council, as the government in Bern is called, continues to focus on ensuring that Switzerland cannot serve as a platform for circumventing the sanctions imposed by the EU.

John Knight

Correspondent for politics and economy in Switzerland.

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The Federal Council confirmed this on Thursday afternoon after a special session.

In the field of financial sanctions against certain individuals, this means that the measures that have been in place since 2014 will be tightened, as stated at a press conference.

At the same time, however, the Federal Council decided not to freeze the accounts of Russian officials who were subject to sanctions in the EU.

In principle, the Swiss are taking the same path as after the annexation of Crimea by Russia in 2014. Then as now, the Federal Council justified its cautious foreign policy course with Switzerland's political neutrality.

In Bern, reference is also made to the country's traditional role as a mediator in international conflicts, for which too much partisanship would be detrimental.

Almost CHF 28 billion in direct investments in Russia

From a purely legal point of view, the numerous sanctions announced by other states against Russia have no effect in Switzerland.

They would only be binding if the UN Security Council issued them.

But there will be no such decision because of the Russians' right of veto in this body.

However, Switzerland can voluntarily accept the sanctions of its western trading partners or impose its own coercive measures such as goods and service embargoes, financial sanctions and entry bans.

The Federal Council's comparatively passive stance on sanctions issues is likely to have something to do with economic interests.

At the end of 2020, Swiss direct investments in Russia were almost CHF 28 billion.

At the same time, almost CHF 16 billion of Russian money was invested in Switzerland.

For Russian companies, Switzerland is an important hub in the commodity business and a popular place of residence for oligarchs.

According to the "Russian Economic Report" published by the Swiss embassy in Moscow last summer, around 80 percent of Russian commodity trading is carried out via the financial services centers of Geneva, Zug, Lugano and Zurich.

For this reason, the most important Russian energy and raw materials companies as well as well-known credit institutes have branches in Switzerland.

In fact, Gazprom, Rosneft, Lukoil and Rusal, among others, as well as Sberbank, the largest Russian bank, have branches in the Confederation.

"The stability, legal certainty and neutrality of Switzerland as a location are decision-making criteria for Russian investors, with the last point in particular becoming even more important in the course of the geopolitical tensions," the report says.

Rich Russians also like to settle in Switzerland

The embassy also emphasizes that Switzerland has been by far the most important foreign place for wealthy Russians to invest their wealth for years.

Net private transfers hit a five-year high in 2020 at $2.5 billion.

Rich Russians also like to settle in Switzerland - like Gennady Timchenko.

The 69-year-old oligarch and close confidante of Vladimir Putin lives in a luxurious villa in Cologny on Lake Geneva.

The Swiss magazine "Bilanz" estimated his fortune at the end of 2020 at 12 to 13 billion francs.

Timchenko owns larger shares in the gas company Novatek and the petrochemical group Sibur.

The British government put Timchenko on its sanctions list on Tuesday and announced that it would freeze his assets in the United Kingdom.

The billionaire owes Putin his steep professional and financial rise in the Russian oil business.

His daughter Ksenia is married to Gelb Frank, the son of Putin's former transport minister.

Similar to the oligarchs in London, Timchenko is trying to

So far, the Putin friend has had nothing to fear in his adopted country.

It was different for his compatriot Viktor Wekselberg a few years ago.

The entrepreneur, who made a name for himself through holdings in well-known Swiss industrial companies such as Oerlikon and Sulzer, ended up on the American sanctions list in 2018.

Although the Swiss government did not follow suit in this case either, Wekselberg got into trouble.

Because his Swiss banks slammed the door in his face for fear that they would indirectly violate the regulations issued by America.

Financial institutions also quickly sided with Washington when it came to the international sanctions against Iran so as not to risk losing access to the important American financial market.

On Thursday night, American President Joe Biden imposed sanctions on Nord Stream 2 AG in Zug, Switzerland.

Deals with the operator of the controversial gas pipeline must be terminated within a week.

The Swiss banks involved will certainly comply with this requirement.