Small and medium-sized Swiss technology companies active in research and development are facing financial uncertainty following the failure of negotiations between Switzerland and the European Union. Some are considering transferring their resources and know-how elsewhere.This content was published on June 10, 2021 - 14:00
Uncertainty over access to Horizon Europe has put Swiss research and development companies, which also depend heavily on funding from Brussels, in crisis. The EUR100 billion (CHF109 billion) research program is in jeopardy after the abandonment of talks over a new framework agreement to govern relations between non-EU member Switzerland last month. Switzerland currently receives the second-highest share of funds of any country associated with the scheme, two-thirds of which go to universities.
Monique Calisti is managing director of Martel Innovate, a technology consulting company based in Zurich. She says the situation is especially problematic for the many small and medium-sized Swiss companies and technology start-ups that contribute to Switzerland's reputation for innovation and quality.
Although negotiations on the framework agreement did not specifically concern research cooperation between Switzerland and the EU, Brussels could respond politically to Bern's "no deal" by denying it access to its innovation funds or by deciding to integrate Switzerland as a "third country”. This would require the Alpine country to contribute more funds itself. We spoke to Calisti about the possible fallout for her sector.
Who is Monique Calisti?
Monique Calisti is an entrepreneur and expert in digital innovation. She is the CEO of the tech consulting company Martel Innovate, based in Zurich and Lugano. She is currently the Director of the EU Next Generation Internet Outreach Office and Coordinator of the European Next Generation Internet of Things project.End of insertion
SWI swissinfo.ch: Did you expect that the framework agreement would fail?
Monique Calisti: The failure of the agreement was very predictable, but we didn't expect it to break down so abruptly. I don't think it's a very constructive and forward-looking attitude on the part of Switzerland to have ended the negotiations in this way. On the one hand, the Confederation is putting on a tough face, but on the other hand it has already allocated substantial funds to the EU as part of its right to participate in the European research programme.
Clearly, there are political aspects at stake here, but they damage Switzerland's self-image. We do not give the impression of being a nation open to dialogue and European integration. This betrays a lack of strategic vision, especially when it comes to collaborations that are vital for innovation and research.
"We are thinking of opening a European subsidiary and taking part of our business and team to an EU country."End of insertion
SWI: Do you think the EU will now respond politically and cut Switzerland off from European research funding programmes such as Horizon Europe?
M.C: It is possible that the EU will react harshly, but I don't think it is in its interest to cut bridges. Research and development programmes are a top priority in Brussels. They are necessary to make progress on dossiers such as vaccines, the response to pandemics and economic recovery. The EU needs Switzerland and its important institutions as a key driver of research and innovation. So I do not expect a clean break. After Brexit, if Switzerland were to remain out of the game, the whole European scenario would suffer.
I think a way will be found to get Swiss researchers and companies like ours to participate in Horizon Europe and the other programmes, but we will have to see how. Typically, in the past, Switzerland has been admitted either as an associate partner or as a partner from a third country. In the first case, funding comes directly from the EU, in the second case from the Swiss government.
At the moment, we still don't know whether we will be allowed to participate as an associate or third country. There is a difference. Because being an associated partner means you can coordinate projects and have more strength. On the other hand, if you are not an associated partner, you are not allowed to participate in all calls for proposals and you cannot manage projects.
We therefore need clarification from the federal government as soon as possible. We need to know whether Swiss partners will be supported and how, not least because the funding conditions of the Confederation are typically different from those of the EU, and unfortunately not always favourable.
SWI: What is the difference between funding from Bern versus Brussels for small and medium sized companies?
M.C: If the projects we present are funded from Brussels, we can declare our actual costs at 100% as far as personnel costs are concerned. This is not the case with funding from the Confederation, which has salary ceilings so that it is difficult to recover the real costs in full if the staff costs us more. This, is very limiting, especially for small companies.
Large companies have other subsidiaries in the EU and universities enjoy other forms of public funding in Switzerland, whereas there is no targeted aid for small and medium-sized technology companies doing research and innovation that covers 100% of their costs. If cooperation with the EU were to fail, this would do very significant damage to small and medium-sized companies and start-ups. And the situation would not improve much if we were admitted as a third country.
SWI: How did your partners and customers react?
M.C: They immediately asked us for clarification. We’re tring to remain optimistic and reassure our colleagues as well, but of course there are many outstanding questions. The situation is similar to the Brexit announcement, when the most pressing concern was to understand how we could continue to work together. The current dynamic is similar, with the aggravating factor of the 'cultural discrimination' against Swiss companies that closing negotiations with the EU could cause.
Some partners may no longer want to work with Swiss companies for fear that those examining the project proposal, who decide who wins the European funds, will be prejudiced against Swiss participants in their evaluation. In the past, a partner we were working with decided to terminate our collaboration because we were no longer an associated country.
SWI: What are you planning to do to avoid a similar situation?
M.C: We are thinking of opening a European subsidiary and taking part of our business and team to an EU country. This would mean transferring qualified staff but also the know-how and many important partnerships that we have always had from Switzerland until now. We would not be the only ones to do this.
SWI: Do you view a lack of European integration as a loss for Switzerland in every sense?
M.C: Of course it is. Even if we were to find a 'Swiss solution', we would be in the second division on many key initiatives and would not facilitate the mobility of Swiss workers abroad. Today we can no longer think of remaining isolated. We must work together as much as possible because our society and our economy are increasingly dependent on a network that goes beyond geopolitical borders.
(Edited by Virginie Mangin)