Swiss MPs shun gold sales plan
'With this foundation we are letting ourselves be blackmailed for SFfr300-million every year'
'Sales of gold … can be made once the law on currency and payment instruments is passed'
SWITZERLAND's plan to create a huge humanitarian fund stumbled on Friday when a rare alliance of Left and Right united to smash a constitutional amendment that would help finance the foundation with gold sales.
Despite the embarrassing setback in parliament, the Berne government and the Swiss National Bank say they can still sell 1 300 tons of excess gold reserves once specific legislation authorising such sales is in place early next year.
But the doomed amendment would have allowed the central bank to transfer gold reserves to third parties like the fund, which Berne proposed in 1997 as a way to lift the neutral country from accusations that it cynically profited from the Second World War.
Gold prices jumped about four dollars an ounce on the news, only to settle back to around $260 as the market realised Swiss gold sales were still on track despite the vote.
The leftist Socialist Party (SP) and right-wing Swiss People's Party (SVP) and their allies joined forces to block the government-backed amendment in a lower house vote of 86 to 83 with nine abstentions. The upper house approved the article.
The SP objected to the new amendment's mandate that the Swiss National Bank make fighting inflation the primary goal of monetary policy.
Party officials said this reflected outdated monetarism that fuelled unemployment.
"Employment and price stability must be equal goals," SP member of parliament Rudolf Strahm said in the lower house debate.
The SVP, on the other hand, disliked the intention of the upper house version to allow the central bank to hand over 500 tons of gold to the proposed Solidarity Foundation to aid victims of poverty, human rights abuses and catastrophes.
The populist party wants to put all the proceeds of gold sales into Switzerland's state pension fund.
Berne has made it clear that the foundation will not aid individual Holocaust victims, but many Swiss populists still see it as caving in to foreign extortion, especially from Jewish groups, over Switzerland's wartime role as a financial centre with close ties to Nazi Germany.
"With this foundation we are letting ourselves be blackmailed for SFfr300-million every year. The SVP is against this amendment," said Christoph Blocher, the flamboyant leader of the party's Zurich chapter.
The idea of gold sales themselves was never an issue in the debate, and the Swiss government says the Solidarity Foundation can proceed even on the basis of a new constitution that voters adopted in April.
The Swiss National Bank reiterated its view that the vote did not derail plans to sell 1 300 tons of gold reserves once enabling legislation was in place, probably early next year.
"Sales of gold, as (SNB vice-chairman Jean-Pierre) Roth has said already and has repeatedly underlined, can be made once the law on currency and payment instruments has passed parliament," a spokesman said.
He observed that Switzerland's constitution already severed the Swiss franc's outdated peg to gold.
Berne plans to revalue the 2 590 tons of gold now on the SNB's books at only about one-third the market price, and gradually sell off the half not needed for monetary policy.
The government has said that it would pace any gold sales so they did not disrupt the market, which has been driven lower for months by recent and envisioned official gold sales.
Switzerland was the last major industrial country to link its currency to gold. It has by far the largest per capita gold reserves in the world. - Reuters
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