Leading Article: Swiss hearts before wallets

THE Swiss have a reputation for being hard- headed and canny. Over the centuries they have proved themselves skilful at protecting their national economic interests, even if it meant profiting from neutrality in times of war and acting as a land-locked 'offshore' haven for money of often repugnant origins. But yesterday their hearts ruled their heads.

As in the Danish referendum on the Maastricht treaty, the government and an overwhelming majority of leaders in virtually every economic and opinion-forming sector believed it to be in the national interest that Switzerland should join the European Economic Area (EEA), being formed on 1 January by uniting the 12 member states of the European Community with the seven countries, including Switzerland, of the European Free Trade Association (EFTA) within a single economic space. The people begged to differ. Each had two votes, for a national and cantonal count, respectively. A majority in both was required. Enough German-speakers said 'Nein' to deliver a comfortable majority for rejection at cantonal level, and a tiny negative majority nation-wide.

There is no doubt what made them do so. The nay-campaigners portrayed the EEA as an ante-chamber of the European Community. Citing the EEA's obligation to adopt the EC single market's famous four freedoms, of the movement of capital, people, goods and services, they conjured up visions of the country being further overrun by job-stealing foreigners, who already form 18 per cent of the population: at 3.5 per cent, unemployment is unprecedently high to Swiss eyes, but temptingly low to foreign ones. They also played on Swiss fears of sacred alpine land being snapped up by foreigners. Less primitively, they stressed that membership of the EEA involved surrendering sovereignty to EC laws without any right to shape them. The 'yes' camp sought to show the emptiness of these fears and emphasise the gains, including freedom for the Swiss themselves to work in other EEA countries. It did not help their cause that the EC has been in such manifest disarray during the debate.

The economic effects of the vote in the short to medium term will be slight, although non-membership of the EEA will make the country less attractive to foreign investors. There are 130 bilateral agreements between Switzerland and the EC, providing for free trade in goods and some services, but not for the free movement of people: the big bogey of the campaign, but of potential benefit to Swiss anxious to work elsewhere.

However, the EEA itself did not stand or fall by yesterday's vote. Even if Liechtenstein follows the Swiss example next Sunday, the treaty can be adjusted to account for the drop-outs. Equally, it is for the federal government in Berne to decide whether their application for EC membership, formally lodged in May after much hesitation, should remain on the table or be withdrawn.

The worst effect will be on Switzerland's internal cohesion. The result is bound to widen the gulf between the French-speakers, who voted in favour by an overwhelming majority, and the German-speakers, who, with Italian-speaking support, delivered the negative majority. It was a bad day for the francophones. For Europe as a whole, the verdict struck yet another negative note at a time when good news is in short supply.