Britain, France, Germany, Italy Spain: US citizens’ bank data in exchange for US reporting some of their citizens’ bank accounts
Overseas Americans already caught in crosshairs
GENEVA, SWITZERLAND – A proposed deal that is being hailed by the six countries involved as a step forward in their fight against international tax evasion ironically borrows from a Swiss solution proposed as part of new double taxation treaties. In both cases data on foreign citizens is not turned over directly to the other government by financial institutions. Instead, the banks would hand data on foreign clients to their own governments, which would pass it on.
The US and EU-5 proposal comes as Swiss and US negotiators grapple with differing interpretations of a pending a new tax treaty. Strict Swiss data protection laws have been a sticking point. The Swiss have insisted they will not accept “fishing expeditions” but will accept bulk requests where tax fraud or evasion is shown to be likely.
Switzerland proposed for its recently negotiated double taxation treaties with Germany and the UK that Swiss banks collect withholding taxes that the Swiss government will then pay to these countries. Their citizens can elect to declare the assets and get the withholding tax back or cede it to their governments if they do not want to declare their accounts.
The news of the six nation proposal came at the same time 8 February as the publication of 355 pages of regulations for Fatca, new US legislation designed to fight tax evasion.
EC applauds government to government approach
Europolitics reports that the European Commission was happy with the news.
“The European Commission issued a statement applauding these arrangements: ‘Thanks to this intergovernmental approach – the only one conceivable for now because it is rapid – to the exchange of tax information, the extra administrative costs, compliance costs and legal impediments (related to data protection) that financial institutions in the EU would have experienced will be considerably reduced’. The financial sector itself has estimated at US$100 million the extra costs for a multinational European bank as a result of implementation of the new legislation.
“For the Commission, which opened the debate on FATCA with Washington in April 2011, any EU member state should now be able to adopt this government-to-government approach to information exchange by concluding ‘coordinated bilateral agreements’ with the United States. Washington is considering developing other partnerships with third countries.”
Automatic data handover part of the likely new deal, but reciprocal
The new agreement between the US and Britain, France, Germany, Italy and Spain would see financial data for all Americans automatically handed by these countries to the IRS, the US tax arm.
In return, the US would hand over data, too, but, in addition, the other countries’ financial institutions would benefit from being included in a group registration with the IRS. The result: complying with Fatca would be far less expensive.
The US argues the new arrangement would lower the cost of implementing Fatca—and that it will at the same time bring the other governments information about bank accounts held in the US by some of their own citizens, those with offshore accounts.
Significantly, too, “the Fatca partner [country] would not be required to terminate the account of a recalcitrant account holder”, an American who did not report account information to the IRS, according to the US Treasury.
The reporting requirements and burdens would not be the same: the US is asking for all US accounts to be reported because it is the only country besides Eritrea to tax its citizens on the basis of citizenship rather than residence. The five European countries would be given data only on their citizens who have US accounts but who are resident in the home country.
Ed. note: Eritrea was condemned in 2009 and again in December 2011 by United Nations Security Council resolution 2023, for destabilizing the Horn of Africa region. Eritrea is sanctioned in part for its diaspora tax, used for military purposes. The US voted in favour of the sanctions. The only other country, according to Wikipedia, that has a citizenship-based tax system as opposed to residence system, was the Philippines, but it changed to a residence system in 1995.
Fatca: data privacy concerns circumvented by reporting to banks’ own governments
Fatca, the Foreign Account Tax Compliance Act, is a US law that went into effect in March 2010 but which is only gradually being implemented. It requires foreign financial institutions (FFI’s) to report to the US government US accounts, according to the US Treasury Department’s press release on the six-nation proposed agreement Wednesday 8 February.
Fatca’s implementation has been rescheduled several times and it has been the subject of much heated debate in the financial industry. The US Treasury Department in its press release concedes that Fatca “has raised a number of issues, including that FFIs established in these countries may not be able to comply with the reporting, withholding and account closure requirements because of legal restrictions.”
Data protection laws have been part of this debate in the UK, for example.
Questions have also been raised about the legitimacy of the American government writing laws that apply to non-US businesses, the FFIs, outside the US.
Fatca and Americans living outside the US: not tax evaders
US expatriates have voiced a number of concerns about Fatca, starting with its failure to distinguish between Americans in the US with offshore accounts and Americans who are resident, particularly long-term, overseas.
American Citizens Abroad (ACA), a Geneva-based international non-profit organization, in 2011 and after public debate in town hall meetings, called for the outright repeal of Fatca, saying it “destroys lives and the US economy”.
Growing number of Americans in Switzerland refused regular bank accounts
A Town Hall meeting of Americans in Geneva Wednesday 8 February called for a show of hands of those who have been turned down for a bank account in the past year: an estimated 50 percent said yes, and afterwards some people admitted privately they haven’t told their banks they are American for fear their accounts will be closed.
The US is currently investigating 11 Swiss banks for aiding wealthy Americans based in the US to evade taxes. More importantly, for Americans who live in Switzerland, Swiss banks, like those elsewhere, are preparing for Fatca, and US clients may be viewed as a liability.
ACA has been gathering growing evidence that US residents abroad, even if they file taxes, are being refused bank accounts and that financial institutions are beginning to divest themselves of US securities.
The New York Times in an article published 9 February says “Fatca has also been criticized by American expatriates because it imposes new reporting requirements. Some have said it makes Americans less attractive as clients for financial institutions, raising the cost of doing business overseas. Those criticisms were not addressed in the proposed rules.”
Tax evasion effort tacked onto jobs bill
Fatca was passed by the US Congress to little fanfare in 2010, tacked onto a much larger jobs bill called the Hire Act. President Barack Obama when he signed it, made reference to four of the five parts of the Hire Act, never mentioning the foreign tax compliance section. The IRS web page devoted to Hire initially failed to mention Fatca as well (Hire Act (pdf).
The US Treasury Department press release yesterday mentions that the five Fatca partners of the US would look at “certain accounts” as part of the agreement.
The law itself is more precise, stating that FFIs will be obliged “in the case of any United States account maintained by such institution, to report on an annual basis” several pieces of information:
“(A) The name, address, and TIN of each account holder
which is a specified United States person and, in the case of any account holder which is a United States owned foreign entity, the name, address, and TIN of each substantial United States owner of such entity.
(B) The account number.
(C) The account balance or value (determined at such time and in such manner as the Secretary may provide).
(D) Except to the extent provided by the Secretary, the gross receipts and gross withdrawals or payments from the account (determined for such period and in such manner as the Secretary may provide).”
It defines a US account: “In general.—The term ‘United States account’ means any financial account which is held by one or more
specified United States persons or United States owned foreign entities.” The exception is an individual whose aggregate accounts at one financial institution, including for example retirement accounts, are under CHF50,000 in a given year.
ZURICH, SWITZERLAND – More morning and evening flights, but fewer flights over southern Germany from Zurich: this is the tradeoff agreed to by Switzerland and Germany, which announced Saturday 28 January they have signed an agreement to reduce noise.
The new accord is expected to go into effect in the summer of 2012.
Noise reduction in the southern German air corridor has been a contentious issue for a number of years and the two governments said in announcing the agreement that they also hope new developments in airplane technology will ease the situation.
Swiss, one of the main airlines using the corridor, has said it will be replacing half of its fleet there by 2020, according to TSR.
Switzerland has said it needs more flexibility for flights in and out of Zurich, particularly in the morning.
Zurich Airport had 20,911 “movements” of planes in December 2012, up 1.7 percent from a year earli.
GENEVA, SWITZERLAND – Italy’s new prime minister, Mario Monti, has told the country’s parliament, through his minister for relations with that body, that Italy should not seek a double taxation agreement with Switzerland along the lines of those with Germany and the UK.
But the opposition then accused him of not being open to negotiations with Switzerland, which has expressed its willingness to seek an agreement, and of not going after the CHF14-15 billion such an agreement could bring into the Italian government coffers.
The European Commission has said it is opposed to such agreements, which allow Switzerland to respect its banking secrecy laws and partner governments to collect tax revenues for their citizens holding Swiss bank accounts. The UK and German agreements call for Swiss financial institutions to collect withholding taxes on transactions, money that is paid to the foreign treasuries. Account holders then have the choice of coming forward and announcing their holdings in order to recuperate the tax, or remaining silent and forfeiting the tax.
BERN, SWITZERLAND – The Swiss government 5-6 December took part in European Union best practice discussions in Berlin covering how to eliminate salary differences between men and women.
It was invited to join the discussions, hosted by Germany, and present its Logib software, a self-check software programme that the Swiss Confederation uses and which can be used easily, internally, by companies of at least 50 employees.
Germany and Luxembourg are using the software, as are companies in Switzerland that have government contracts.
Swiss companies have shown less enthusiasm, the federal government noted in mid-November, with only 20 companies signing up for a salary review programme.
Recent figures published by the Swiss Justice and Police Department show that men continue to earn nearly 20 percent more than women for equal work.

Swiss photographer Michael Grob on his work with Cambodian landmine victims: "Unlike in Afghanistan which is still in a state of war, we had to learn to adjust to the reality of such an amount of mines still being in Cambodian soil so long after the fighting has stopped. It was at times very difficult for me to deal with the impression left by the very high number of mine inflicted casualties - especially those of injured children. The work of the UN in Cambodia is, in my eyes, of utmost importance. It is for some communities the only opportunity for some kind of future. The situation touched me deeply and profoundly...my work for the United Nations mine action - as insignificant as it might be in the bigger picture - shall go on as long as needed." (©2011 Michael Grob)
GENEVA, SWITZERLAND – Efforts to get rid of landmines are making good progress in many countries and funding is being maintained despite government budget constraints, a key meeting in Cambodia that closed 2 December shows. But work remains, with 4,000 new victims of landmines each year: six people died in Pursat Province, Cambodia, which hosted the meeting, Thursday 1 December when their truck triggered a mine.
The 11th meeting of the States Parties, the 158 nations that are part of the Anti-Personnel Mine Ban Convention finished in Phnom Penh with several strong commitments.
The Netherlands stated that “despite cuts in other areas, the government remains convinced of this matter” and it will maintain its €15 million annual contribution to demining and victim assistance.
Austria is increasing its 2012 funding slightly, to €1.9 million.
Cambodia funding stepped up
Austria announced its first contributions to demining and victim assistance in Cambodia, totaling €400,000. New Zealand, too, will contribute to a demining project in northeastern Cambodia: more than US$ 1 million in 2012.
Burundi bright spot
Cheering news came from Burundi, which says it has completed demining, a full three years ahead of the deadline to which it was committed. It is the 19th country to be declared mine-free.

Myanmar told the landmine ban meeting in Cambodia at the end of November that it is carefully considering the matter (Photo, ©2011, AP Mine Ban Convention)
The meeting, with 1,000 delegates taking part, marked progress in a number of areas and made media headlines over the first-ever participation by Myanmar, as an observer.
The isolated nation has been making commitments to reform, and at the land-mine ban meeting it said that “thorough study of the treaty will be continued”.
Its actions will be watched closely; it is one of three countries, along with Qaddafi’s Libya and Israel, who have been accused of laying mines in 2011.
“Convincing evidence” Syria is using mines
There is also “convincing evidence”, the group says, that Syria has used mines this year.
Tuvalu and South Sudan took their seats as the Convention’s newest adherents. Finland announced that it is on the verge of becoming the 159th to join the Convention.
Fifteen States that have not yet joined the Convention attended as observers, “signaling their openness to engage in a discussion on the devastating impact of anti-personnel mines”, a meeting press release states. The US is one of these and it reported that it is continuing to review its landmine policy.
Other signs of progress reported by the meeting: “Turkey reported the destruction of all stockpiled anti-personnel mines: 3 million mines. Burundi and Nigeria declared completion of their mine clearance obligations. Guinea Bissau, Jordan and Uganda announced that they will complete their demining programmes in coming months.”
A major and often under-funded part of the States’ commitments is helping survivors. Meeting host Cambodia, one of the most affected countries, says it is “assessing its national action plan on disability with a view to preparing a revised plan in 2012.”
Britain, Germany fail to meet commitments to demine
Germany is one of four countries with new reports of mine contamination that are falling far behind on their commitments to demine.
The town of Koblenz, Germany is the site this weekend of a massive project to defuse a bomb with 3,000 tons of explosives left over from the second world war; 45,000 people are being evacuated from their homes to allow the army and experts to get rid of it. The bomb became apparent this year due to lower water levels in the Rhine, reports NPR.
Britain has failed to clear any mines in the Falklands for the second year in a row.
“The UK has consistently failed to meet their clearance obligations under the treaty, and now have to clear more than 110 mined areas across over 7km2 in less than seven years,” the group notes.
Ed. note: the Swiss federal government’s entire public web site is down at noon Wednesday, so we are unable to provide links
BERN, SWITZERLAND – Switzerland’s Federal Council (cabinet) Wednesday morning approved a package of reforms for the International Monetary Fund (IMF) covering the world body’s governance and quotas. The package was approved by the IMF in December 2010 but is being implemented piecemeal as countries vote. The reforms were designed to give a stronger voice to developing economies and to redress imbalances that reflect an older world economic picture.
Switzerland’s contribution quota initially rose to 1.59 percent from 1.45 percent, but post-reform it will be CHF1.21, and Switzerland drops from the 19th largest contributor to 19th, after Korea and Australia. Its contribution from the Swiss National Bank will, however, increase significantly, from CHF3.6 billion to CHF7.3b, with the reforms doubling the ordinary contributions of countries.
The increase in contributions is the first major one since 1998, says Bern in a statement issued Wednesday, and is designed to more correctly align contributions with economies and financial flows.
Switzerland’s share of IMF votes also falls, from 1.40 percent to 1.57 in March after an initial set of reforms was implemented, and now down to 1.17. The US remains by far the largest contributor, with the largest vote, followed by Japan, Grmany, France and the UK.
ZURICH, SWITZERLAND – Credit Suisse Thursday pushed its GDP growth forecast down sharply, from 2 percent to 0.5 percent, for 2012. The bank points to the euro crisis, which “continues to weigh on markets, with economic momentum in Europe fading unexpectedly quickly.” Switzerland will be hurt by the fall in exports due to “decidedly gloomier” prospects for countries to which the Swiss export, and the accompanying fall in capital investment on new machinery and equipment.
Consumers and the construction industry, which continues to boom thanks to low interest rates, will prop up economic growth, the bank’s analysts say.
But “a significant cooling of European growth is no longer avoidable”, according to Credit Suisse, and “while the US economy has accelerated again slightly following the dip seen in mid-2011, the opposite is occurring in Europe. Most significantly, economic momentum in Germany – Switzerland’s key trading partner – has slowed. At the same time, the partial spillover of the debt crisis to Italy has brought increased volatility on the financial markets, growing tensions on the credit and interbank markets, and falling confidence among households and businesses.”
Sentiment is more of an issue than home-grown problems, the bank notes, pointing out that Swiss public finances and companies do not have excess debt.
“On the contrary, interest rates in Switzerland will remain low until at least the end of 2012. In addition, inflation is not an issue in Switzerland at present; pressure on consumer prices is holding up, so purchasing power is safeguarded (inflation in 2012: 0.4%). Finally, immigration is likely to remain strong, meaning an important driver of the growth in consumption will remain in place. By contrast, the constant talk of crisis, together with a deterioration in the labor market situation (unemployment rate in 2012: 3.3%), is increasingly impacting sentiment, and poses certain constraints for the growth in consumption.”
Nuclear waste disposal in France and Swiss plant shutdowns prompt new concerns
Train with waste traveling from France to Germany today could spark new protests

GERMANY AND SWITZERLAND TO SCRAP NUCLEAR ENERGY, ©2011 Chappatte, distributed by Globe Cartoon. More cartoons on Chappatte’s web site. Geneva-based Patrick Chappatte works for the International Herald Tribune, for Geneva newspaper Le Temps, and for NZZ am Sonntag. All cartoons reproduced with permission.
BERN, SWITZERLAND – Decommissioning Switzerland’s nuclear power plants will cost 10 percent more as a result of inflation, an increase of about CHF2 billion, than the last estimates in 2006 showed, the Federal Energy Office said Thursday 24 November.
The companies that own the power stations and the waste storage facility are responsible for covering the cost of decommissioning as well as waste storage. They make annual contributions to two funds, with the contributions set for five year periods.
For 2012-2016, their costs will be increased by CHF127.67 million a year for waste management and CHF60.7m for decommissioning.
The increase is part of energy costs that must be approved by the government before companies can pass them on to consumers.
The cost study carried out by swissnuclear, mandated by the federal commission responsible for decommissioning and cost management, will now be evaluated by the Swiss Federal Nuclear Inspectorate, which will bring in independent outside experts.
Switzerland’s decommissioning will take until 2034
The Swiss government called a halt to nuclear power plant construction in May 2011, two months after the president announced a temporary moratorium. The measure amounts to the end of the country’s nuclear power programme.
The May decision covers four power stations with reactors and two research facilities with reactors, as well as waste disposal centres. The government is allowing the plants to operate until their licenses run out, which means the plants will all shut down by 2034.
GENEVA, SWITZERLAND – Few details have surfaced from the discussions between the US and Switzerland about a new “global solution for all banks“ that would end serial tax evasion investigations by US authorities, with both sides pledged to silence while negotiations are underway.
The head of the Swiss Bankers Association gave a rare glimpse into the talks when he said in Geneva Tuesday 22 November that his group’s role is to find a solution for “the rest of the financial sector” but not for the 11 banks under investigation by the US Justice Department.
The small group of banks, which includes Credit Suisse, is suspected by the US of helping American clients evade taxes by hiding money offshore.
Claude-Alain Margelisch, chief executive of the Swiss Bankers Association, qualified discussions with US officials as “productive”.
His group approached its members, he says, “to find solutions. I can say we’ve made progress.”
His remarks came in the context of a presentation to the Swiss Foreign Press Association on key banking events of the past year. The agreements with the UK and Germany were major accomplishments, he said, but these are not yet ratified and “we have to convince all parties” that the treaties are a compromise and the best way forward.
The group’s priority with the agreements is to see them ratified, he says. “Our view is that there can be no renegotiation”, as suggested by some German parliament members who are opposed to the treaty.
Swiss banks want to “draw a line under the past but protect the future,” he told the reporters. “Our strategy is clear: we want the clients’ [business] to remain in Switzerland and we want this business done correctly.”
ZURICH, SWITZERLAND – A German state is reportedly considering buying a disk with data about Germans holding bank accounts in Switzerland in order to evade taxes at home, according to a German financial paper. North Rhine-Westphalia has been offered a CD with details of 1,000 clients at the Zurich branch of private bank Coutts, a subsidiary of Royal Bank of Scotland, the newspaper reported late Wednesday.
The bank has not yet issued a statement.
If the information is accurate it comes less than three months after the new Swiss-German double taxation agreement became effective. The treaty, which some German politicians have called too liberal, appeared to calm relations between the two countries after a series of incidents in 2009-2010 that involved stolen bank data that another German state bought and accusations that UBS had helped clients defraud German governments.

Swiss forests (here, Bern) are an economic and environmental priority, but poor wood-burning stoves could counteract forestry efforts
BERN, SWITZERLAND – More than 15 percent of fine particles, those minuscule bits of dust that are harmful to health, come from wood-burning stoves, the Swiss federal government now says, twice the amount shown by earlier research.
Reducing the quantity is a public health priority, with the popularity of home fireplaces growing, but an changes to regulations need to be aligned with an economic and environmental priority, to better develop and exploit Swiss forests.
The amount of wood burned for fuel is on the rise in Switzerland, according to Swiss energy officials, and it is likely to continue to go up if fossil fuel prices rise.
Switzerland is closely watching the example of Germany, which recently tightened its laws for wood as an energy source. It lowered the acceptable limits for home fireplaces, including existing ones.
Pilot projects have been started in some Swiss cantons in an effort to find better tools for measuring home fire emissions.
Burn dry wood in a correctly installed and properly functioning fireplace, for your health
A group meeting in Bern this week concluded that there is a huge difference, in terms of health and air pollution, between good home fireplaces and those that don’t meet today’s standards. Quality is directly linked to proper installation, the group says, as well as correct use and burning the right materials.
The question is of growing importance because the number of automatic wood-burning stoves has tripled and the number of manual home wood-burning stoves (poeles) has doubled in the past 15 years according to the Swiss Energy Office.
Swiss authorities, researchers, firms and cantonal officials, many of them with Cercl’Air, met 8-9 November to discuss the effectiveness of air filters on home fireplaces and to review Swiss regulations governing small wood-burning units.
Switzerland’s law requiring certification for home fireplaces went into effect in 2007, but the implementation has been phased in, through 2012.
Cercl’Air is a group that brings together corporate and governmental Swiss air quality managers.
Today’s filters function mainly with electrostatic separation, but this works only if the fireplace is correctly installed and functioning properly. Studies are showing that a large number of wood-burning systems of medium- and large-size are not correctly installed, and these will be targeted to reduce fine particles in the short term.
More problematic are smaller units, under 70 kW, whose emissions are currently measured visually in most cantons to ensure, for example, that only dry wood and not household waste is being burned. But this approach is inadequate with older fireplaces that are not up to current standards.
Meanwhile, the Energy Office provides tips for anyone using wood for fuel, including avoiding creating too much soot through:
- proper ventilation in the fireplace
- using only dry wood
- lighting the fire properly
- avoiding using too much wood.
Federal Energy Office brochure on using wood-burning fires correctly (Fr, PDF)
Chinese tourists overtake Italians, catching up with French, British

Chinese tourists on Mt Saentis 29 October, next to Switzerland's first mountain peak weather station, commissioned in 1882: on a clear day six countries are visible from this point
BERN, SWITZERLAND – The Swiss franc continues to have a strong impact on European and US visitors to Switzerland, with the number of overnight stays by foreigners in September down 6.8 percent compared to the same month a year earlier.
Foreigners accounted for a little more than half of the industry’s 3.3 million overnight stays in September.
The overall figure for the year to date is down 2 percent, but in September overnight stays fell 3.4 percent.
The decline in European stays continued, with Bern attributing this largely to the over-valued Swiss franc against sterling and the euro. Visits by foreigners were down 6 percent, but European visitors’ stays fell by 11 percent.
German tourist numbers were down 13 percent, British 13 percent, Dutch 12 and Italian 11 percent. US visitors are down 9.4 percent, although the number of overnight stays by Canadians rose
Chinese tourists to Switzerland: rapid increase as Alps tug Asians
Asian numbers and in particular overnight stays by Chinese tourists continue to rise, with a 12 percent overall increase that includes a 43 percent increase by Chinese visitors, some 20,000 overnight stays. For the year to date, Chinese tourists show a 58.6 percent increase.
Germany remains by far Switzerland’s largest tourist client country, with some 470,000 overnights to date in September. The US was second with 172,000, Britain third with 152,000, France fourth with 100,000 – and then the surprise of China, with 67,000 overtaking Italy, with 65,000.
Wanted: British skiers, snowboarders, holiday fans and winter hikers
The British figures are likely to cause particular concern, with the crucial ski season coming up. Swiss statistics show 1.43 million overnights from January to the end of September, and the fourth quarter tends to be low, but the industry is holding its breath looking at winter ski season reservations.
British statistics register “visits” by its citizens abroad rather than overnight stays, and in 2010 the number of visits was down to 896,000 from a 2008 figure of 1.16 million. The first quarter of the year, with the ski season, saw 294,000 British visitors in 2011, compared to 350,000 a year earlier.
British tourists travelled again in the second quarter of 2011, but with the weakening pound, travel increased to North America, remained stable in the European Union and dropped to countries outside the EU, which includes Switzerland. Travel outside the EU during April to the end of June was at a level last seen in 2009 and before that, iln 2005.
BERN, SWITZERLAND – Greece is the latest country to consider a bilateral tax agreement with Switzerland, a move that will not please everyone in the European Community. Bern announced Thursday afternoon that “State Secretary Michael Ambühl and Ilias Plaskovitis, the general secretary in the Greek Ministry of Finance, conducted talks on a possible tax agreement between Switzerland and Greece. Both parties discussed the possibility of a tax agreement like the ones Switzerland signed a few weeks ago with Germany and the United Kingdom.”
Bern notes that “the aim is to regularize the assets held by Greek taxpayers in Swiss bank accounts in the past as well as to introduce a tax at source on future investment income. Switzerland would forward the tax revenue to the Greek authorities on an anonymous basis. In addition, mutual market access for financial services should be improved.”
The two governments will now need to decide if they are opening negotiations. But Greece, with its just-announced EU bailout, could be under pressure from the EU, which is not entirely happy with Switzerland’s agreements with individual EU countries, according to PwC’s bimonthly “EU Tax Newsletter” in September. “It is widely believed in Brussels that the European Commission’s President Barroso and the EU’s Tax Commissioner Semeta have missed out on an opportunity to make the case for European integration / the “Community” method and publicly oppose the bilateral agreements by Germany and the UK, as they objectively undermine the EU’s position vis-à-vis Switzerland regarding tax fraud and tax avoidance and harmful tax competition (EU-wide Code of Conduct on Business Taxation), and talks with the US regarding Fatca [foreign ], wrote Bob van der Made, PwC Netherlands.
BERN, SWITZERLAND – Swiss exports and imports continued to expand in the first nine months of 2011, but with the rate of growth slowing down steadily and “losing strength” and reflecting the state of the world economy, the Swiss Statistical Office said Thursday morning in a press release.
Exports grew by 2.4 percent from January to September, CHF147 billion, with growth in the first two quarters but a decline in the third.
The growth was achieved despite falling prices, down 10.7 percent in real terms, although without including pharmaceuticals, prices fell by 7 percent.
Imports rose in the first nine months but by a weak 1 percent.
Switzerland showed a positive trade balance from January to September of CHF16.7b, a one-year 14.7 percent increase. A CHF17b surplus with Asia offset the CHF16.3b deficit with the European Union.
A bright spot: orders from Italy, France and Germany rose by 4 percent in September.
ZURICH, SWITZERLAND – Credit Suisse said Monday it is paying euros 150 million to settle a tax fraud dispute with the Duesseldorf, Germany tax office, heading off a court case. Switzerland’s other large bank, UBS, is reported to have lost $2.3 billion, higher than initially thought, in the fraudulent trading case that erupted last week when the bank called London police, who arrested one of the bank’s traders.
Oswald Gruebel, the head of UBS, told Der Sonntag over the weekend that he will not resign over the theft incident.
The Duesseldorf case brings to an end a saga that began with Credit Suisse offices in 13 German cities being raided after German officials from one state in 2010 bought stolen data from a Frenchman who had worked in the information technology offices of HSBC in Geneva.
Bank Julius Baer earlier in 2011 agreed to settle a similar case with Duesseldorf, for euros 50 million.
BERN, SWITZERLAND – July 2011 was not the disaster for Swiss tourism that some people expected, given the high Swiss franc, but European visitors’ overnight stays were down by 3.5 percent compared to July 2010, with foreigners’ overnight stays down 4 percent.
Two of Switzerland’s traditionally largest groups of European visitors, Germans and the British, were down 11.6 and 10.5 percent respectively.
The Swiss Statistical Office attributes the drop to the combination of a very high franc and unusually cold, wet weather for mid-summer.
Chinese (without Hong Kong) tourists, while still a small part of the overall number, had a positive impact with a 61 percent increase, to 76,787 overnight stays. Germans had 527,612, the largest group.
For the first six months of the year, Chinese visitors’ overnight stays rose 42.5 percent, faster than Indian visitors’, which increased by more than 25 percent, and the Chinese are now not far behind Indians as a key tourist group.
BERN, SWITZERLAND – A Swiss-German tax deal has been reached, and the details, which have provoked much speculation in recent weeks, were made public Wednesday morning by the two governments. The much-touted likely “fine” of CHF2 billion that Swiss banks would need to pay Germany turns out to be a refundable guarantee:
“In order to ensure a minimum income from the retrospective taxation of existing banking relationships as well as to state their resolve to implement the agreement, the Swiss banks have undertaken to pay a guarantee in the amount of CHF 2 billion. The funds advanced by the banks will then be offset by the incoming tax payments and refunded to the banks.”
Bern and Bonn initialed the agreement on “outstanding tax issues” Wednesday 10 August. Key features of the agreement include:
- Persons resident in Germany can retrospectively tax their existing banking relationships in Switzerland either by making a one-off tax payment or by disclosing their accounts
- Future investment income and capital gains of German bank clients in Switzerland will be subject to a final withholding tax
- Proceeds of the withholding tax will be transferred to the German authorities by Switzerland
- A safety mechanism is being set up to allow Germany to request some information in order to avoid new, undeclared accounts from being opened
- A solution to the problem of the possible prosecution of bank employees is included.
Specifically, on the withholding tax, Bern says in its statement, “Final withholding tax for the future: future investment income and capital gains should be directly covered by a final withholding tax. The single tax rate has been set at 26.375%. This is in line with the current flat-rate withholding tax in Germany. The final withholding tax is a tax at source. After it has been paid, the tax obligation towards the country of domicile will generally have been fulfilled.”
German authorities will be able to submit requests for information in order to prevent new, undeclared funds from being deposited in Switzerland “in the context of a safety mechanism that must state the name of the client, but not necessarily the name of the bank. The number of requests that can be submitted is limited and there must be plausible grounds. The number will be within the range of 750 to 999 requests for a two-year period; an adjustment will then be made based on the results. So-called fishing expeditions are not permissible.”
Germans can pay lump sum back taxes anonymously or own up to accounts
The agreement notes that “To retrospectively tax existing banking relationships in Switzerland, persons resident in Germany should be given one chance to make an anonymous lump-sum tax payment. The size of this tax burden will vary from between 19% to 34% of the assets in question, and will be determined based on the duration of the client relationship as well as the initial and final amount of the capital.” Alternatively, “those affected should also have the possibility of disclosing their banking relationship in Switzerland to the German authorities.”
Germany to streamline Swiss banks’ access to German market
Switzerland has been keen to gain better access to German financial services markets and the agreement notes that “mutual market access for financial services will be improved.” In particular, “the exemption procedure for Swiss banks in Germany will be simplified, and the obligation to initiate client relationships via a local institution will be eliminated. Likewise, the problem of purchasing data relevant for tax collection purposes has been resolved.
Bern says it expect the agreement to be signed by both governments in coming weeks and notes that it “could enter into force at the start of 2013″.
Michael Ambühl, State Secretary, Swiss Federal Department of Finance, and Hans Bernhard Beus, State Secretary, German Federal Ministry of Finance, were the lead negotiators, who initialled today’s agreement.
US approach contrasts with German tax collection deal
ZURICH, SWITZERLAND – There is not an official war open against Swiss banks, by the US Department of Justice, but continuing skirmishes, highlighted this week by Le Temps and the Financial Times, make it clear that peace is not around the corner, either. Officials from the two countries appear to be heading for another showdown, writes Zurich-based Haig Simonen at the British newspaper, just as Switzerland and Germany are on the verge of announcing that they have found a way forward with a similar problem of German citizens hiding money from their taxman in Swiss bank accounts.
Switzerland and Germany are expected to announce Wednesday 10 August that they have signed an agreement for the Swiss to withhold tax on Germans’ bank accounts in Switzerland while Swiss banks will pay a lump sum up front for tax revenues lost in the past by Germany. The new agreement would leave Swiss banking secrecy intact by Switzerland turning over the taxes collected without identifying account owners.
The New York Times describes the new agreement, as well as an upcoming one with Britain as putting a squeeze on tax evaders, in an article published late Tuesday.
The US is taking a more aggressive tack to uncover past tax cheats and a 2009 treaty with Switzerland covering a set number of accounts held by Americans at bank UBS looks increasingly like a one-off settlement. The DOJ 4 August announced yet another indictment, this time against Gian Gisler, a former UBS banker who left the company in 2008 and who now lives in Zurich. His indictment follows four against former Credit Suisse senior managers in late July that topped up four other ex-Credit Suisse indictments in February 2011.
According to the DOJ “While working at UBS and at two other Swiss asset management firms, Gisler had more than 38 U.S. taxpayer clients and allegedly opened and/or managed more than 60 hidden accounts on their behalf. Gisler left UBS in 2008 when it became public that UBS was the target of an IRS investigation, and moved to a Swiss asset management firm so that he could continue to assist his US taxpayer clients in hiding their accounts at other Swiss banks. When that firm ceased its private banking business, Gisler left for yet another Swiss asset management firm so that he could continue to engage in the same conduct.”
The Financial Times says six other banks, in Switzerland and Liechtenstein are now being investigated by the DOJ. “The US investigations have taken months to gather pace. But receipt of the names, along with thousands of voluntary self-declarations by US taxpayers, has widened the scope of the US inquiries. Although only 25 US taxpayers with undeclared Swiss accounts have been indicted so far – and the first case dates back to April 2009 – the pace is beginning to build.”
Swiss left out of G20 meeting
ZURICH, SWITZERLAND – Switzerland and Germany’s foreign ministers Sunday confirmed media reports that an agreement will shortly be announced on a tax deal. The Swiss Foreign Affairs Department said in a statement that Swiss President and Foreign Minister Micheline Calmy-Rey and German Foreign Minister Guido Westerwelle “both praised the progress that has been achieved in the area of taxation, as well as the generally intensive relations between Switzerland and Germany.”
The two met Saturday 7 August in Locarno, on the sidelines of the Locarno international film festival.
Calmy-Rey “stated that she was pleased that the negotiations concerning an agreement on withholding tax will shortly be brought to a conclusion, and she went on to underscore the fact that ‘Switzerland’s banking sector has no interest in untaxed assets.’ She noted that withholding tax is a fair way of taxing German assets without an automatic exchange of information, and it also guarantees the confidential management of client data,” according to the statement.
Switzerland has not yet confirmed details of the deal, but financial media have been reporting a 26 percent withholding tax as likely, in future.
Swiss newspaper SonntagsZeitung reported at the start of the weekend that a deal is expected to be announced Wednesday 10 August, with Swiss banks agreeing to pay an upfront lump sum for Swiss accounts held by Germans who did not pay taxes in the past 10 years. The amount agreed to, possibly CHF2 billion, is reported, by what the newspaper calls a source close to the deal, to be a fraction of what Germany initially demanded.
G20 meeting in Cannes won’t include Switzerland
Switzerland’s disagreements with its neighbours over accounts held by their citizens in Swiss banks was dealt a new blow over the weekend, however, when the Seco, Switzerland’s economy ministry, confirmed to news agency ATS that French President Nicolas Sarkozy has invited Singapore, but not Switzerland, to participate in the next G20 meeting. Switzerland has been busy for several months building its influence to counteract the possibility it would not be invited to the G20 talks.
Switzerland, despite its role as the world’s top fortune management centre, is not a member of the Group of 20, the world’s largest economies, created in 1999 “to bring together systemically important industrialized and developing economies to discuss key issues in the global economy.” The high Swiss franc is currently viewed by a growing number of investors as one of a small group of “shadow currencies”, reports the Economist and other international media.
It was not invited to the last meeting of the group, in Seoul, but Sarkozy has told Switzerland it will be “integrated” into the G20 meeting, even if it is not directly participating. Switzerland fears a repeat of one of the Seoul meeting outcomes. TSR/ats reports that “the objective of this offensive is to prevent a repeat of what happened in 2009, when Switzerland, without any advance consulation, was put on a gray list of tax havens by the OECD, at the instigation of the G20.”
The next meeting will be held in Cannes in November 2011, under France’s presidency.
India studies stolen HSBC-Geneva account holders data
Meanwhile, India Express 7 August published a story saying that France has handed over to Indian authorities the names of 700 holders of HSBC bank accounts in Switzerland. France received stolen data from a former employee of the UK bank’s Geneva branch, in 2008 and the theft increased tensions between France and Switzerland over the issue of tax evasion and the use of stolen data.
The Indian Foreign Ministry says it already had most of the data from other sources, but will be checking the accounts.

An ailing 85-year-old surrounded by her family in a camp for people displaced by floods in Balochistan, Pakistan. The elderly are especially vulnerable to water-borne diseases associated with flooding (photo, ©2011 UNHCR / D Khan, September 2010)
GENEVA, SWITZERLAND – The numbers alone are daunting: 43.7 million displaced persons worldwide, of which 15.4m are refugees, 27.5m are internally displaced refugees and nearly 850,000 are asylum seekers, with one-fifth of asylum seekers in South Africa alone.
The world’s 49 least developed countries hosted some 2 million refugees last year.
Just under 100,000 refugees were admitted for resettlement in 2010, by 22 countries. The United States accounted for 71,000 of these.
The figures are part of the “UNHCR Global Trends 2010″ (2.7 MB pdf) published 20 June to mark World Refugees Day.
The numbers don’t yet include refugees from 2011 conflicts in Cote d’Ivoire, Syria and Libya, among others.
The imbalance in how the world supports refugees, or people who are forcibly displaced, is equally stark and marks this year’s report, says the UN High Commissioner for Refugees agency, based in Geneva: “Pakistan, Iran, and Syria have the largest refugee populations at 1.9 million, 1.1 million, and 1 million respectively. Pakistan also has the biggest economic impact with 710 refugees for each dollar of its per capita GDP (PPP) followed by Democratic Republic of the Congo and Kenya with 475 and 247 refugees respectively. By comparison Germany, the industrialized country with the largest refugee population (594,000 people), has 17 refugees for each dollar of per capita GDP.”
Click on charts to view larger
Drawn-out wars taking their toll
Roughly one-quarter of the 15.4m refugees are registered with the UN Relief and Works Agency for Palestine Refugees. The UNHCR says that of those under its care, 7.2m or about one-third, have been stuck in a refugee situation for more than five years, mainly due to drawn-out wars.

Within view of the Itombwe Massif, a convoy of UNHCR trucks carries Burundian refugees home after years of exile in the Democratic Republic of the Congo (photo, ©2011 UNHCR / M Hofer, December 2010)
The figure is the highest since 2001 and at the same time the lowest number since 1990 have been able to return home, fewer than 200,000.
The UN High Commissioner for Refugees, António Guterres, comments bluntly that “Fears about supposed floods of refugees in industrialized countries are being vastly overblown or mistakenly conflated with issues of migration. Meanwhile it’s poorer countries that are left having to pick up the burden.”
Some people have been refugees for up to 30 years, with Afghanistan a notable case in point. Afghans were one-third of the world’s refugees in 2001, as they were a decade later, at the start of 2011.
60th anniversary for UNHCR shows dramatic changes

A woman returns to the ruins of her home after violence strikes southern Kyrgyzstan (photo, ©2011 UNHCR / S Schulman, June 2010)
The UNHCR will celebrate the 60th anniversary of its founding in July 2011 and the report notes that the picture today is “of a dratically changed protection environment”. The organization’s early “caseload was 2.1 million Europeans, uprooted by World War Two. Today, UNHCR’s work extends to more than 120 countries and encompasses people forced to flee across borders as well as those in flight within their own countries.”
Two relatively recent developments have been the huge growth in numbers of internally displaced persons and the growing number of stateless persons, or “people lacking the basic safety-net of a nationality”, says the Geneva group, which plans to highlight this group during 2011.
“The number of countries reporting stateless populations has increased steadily since 2004, but differences in definitions and methodologies still prevent reliable measurement of the problem. In 2010, the reported number of stateless people (3.5 million) was nearly half of that in 2009, but mainly due to methodological changes in some countries that supply data. Unofficial estimates put the global number closer to 12 million.”
Actress Angelina Jolie to help tell individual stories for 60th anniversary
The UNHCR’s Goodwill Ambassador Angelina Jolie is helping draw attention to refugees’ stories in a series of videos, including one released 18 June of her visit to Syrian refugees in Turkey. The videos are part of the organization’s efforts to draw attention to refugees by recounting individuals’ stories.
GENEVA, SWITZERLAND – “It’s the bean sprouts”, the source of the E. coli outbreak in Germany, Reinhard Burger, Germany’s head of infectious diseases programme, said Friday morning 10 June. The actual sprouts that are behind what the WHO labels the “the unusual enteroaggregative verocytotoxin-producing Escherichia coli (EAggEC VTEC) O104:H4 bacterium” have not yet been pinpointed.
Germany’s Federal Institute for Risk Assessment and Food Safety and the Robert Koch-Institute will publish a joint press release Friday.
The number of new infections has been falling in recent days, but E.coli itself has killed 6 people in Germany and the HUS complication has killed 26, with an additional death in Sweden, according to WHO worldwide figures for the outbreak. In total, 2,909 people have been infected.
The European Union said Tuesday it would set aside €210 million for farmers touched by the outbreak, but a European farmers organization, Colos, says the losses are reaching €400m a week. Spanish farmers, the largest fruit and vegetable producers in Europe, calculate they have lost €200m in business since the start of the outbreak at the end of April, and German farmers say they have lost €60m, according to news agency AFP/TSR (Fr).
GENEVA, SWITZERLAND – The agriculture minister for Lower Saxony in Germany announced Monday 6 June that earlier suspicions may not be correct, that an organic farm in the region is the source of a dangerous outbreak of E. coli.
Initial tests led researchers to suspect the farm’s produce, but authorities Monday said that 23 of the 40 samples taken have come up negative for the E. coli strain that has so far killed 22 people and put more than 2,000 in hospital suffering from the infection or HUS, a complication. The other samples must still be analyzed, reports Der Spiegel. Two women who work at the farm have come down with diarrhea and one has been diagnosed with a form of E. coli, but Spiegel doesn’t specify if it is the strain that has caused the outbreak.
The farmer uses no fertilizers and has no animals, but Reuters quotes a London microbiology professor as saying this eliminate the possibility of the bacteria thriving.
GENEVA, SWITZERLAND – World Health Organization (WHO) figures Sunday 5 June showed that 21 people have died from E. coli or HUS, which is provoked by E. coli, while in Germany public health authorities in Lower Saxony say they have a “really hot lead” to the cause: bean and other sprouts from a farm 70km south of Hamburg are looking like the culprit.
Gert Lindemann, agriculture minister for the state of Lower Saxony said at a press conference that the deadly strain of the bacteria has now been traced to a farm in the Uelzen area; German media say it is near Bienenbuettel. The farm has been closed while the investigation continues. Reuters notes that “Lindemann said that not only beansprouts, but also alfalfa sprouts, mung bean sprouts, radish sprouts and arugula sprouts from the farm might be connected to the outbreak. Raw sprouts are popular among Germans and often mixed in salads or added to sandwiches.”
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The WHO in Geneva, which keeps the official world tally on infectious diseases, with all affected countries reporting to it, published its latest figures at 18:00 Sunday:
Germany, HUS: 627, with 15 deaths
Germany, E. coli: 1,536, with 6 death (note: does not include the HUS cases)
| Country | HUS | EHEC |
|---|---|---|
| Austria | 0 | 2 |
| Czech Republic | 0 | 1 |
| Denmark | 7 | 11 |
| France | 0 | 10 |
| Netherlands | 4 | 4 |
| Norway | 0 | 1 |
| Poland | 1 | 0 |
| Spain | 1 | 0 |
| Sweden | 15 | 31 |
| Switzerland | 0 | 3 |
| United Kingdom | 3 | 8 |
In addition, the WHO reports that the United States has published information about two suspected E. coli cases linked to the German outbreak. In the figures above, “all except 1 of the above HUS and EHEC patients had travelled to or from Germany during the incubation period for infection, typically 3–4 days after exposure (range 2–10 days),” according to the WHO.
Countries that are affected are also reporting their cases to Germany, and European countries are reporting to the secure Early Warning and Response System (EWRS) as well.
ZURICH, SWITZERLAND – The driver of a bus returning a group of 12- to 25-year-olds from a day at Europapark in Rust, Germany is in critical condition after the bus inexplicably crashed on its return trip. Fifteen of the young people suffered minor injuries after the bus veered off the A5 autoroute near Heitersheim, rolling 20 metres into the forest before stopping. Details, TSR, Fr
Ed. note: GenevaLunch, like most businesses in Switzerland, is taking a four-day weekend. Our news today is brief headline stories.
©2011 Chappatte, distributed by Globe Cartoon. More cartoons on Chappatte’s web site. Geneva-based Patrick Chappatte works for the International Herald Tribune, for Geneva newspaper Le Temps, and for NZZ am Sonntag. All cartoons reproduced with permission.
©2011 Chappatte, distributed by Globe Cartoon. More cartoons on Chappatte’s web site. Geneva-based Patrick Chappatte works for the International Herald Tribune, for Geneva newspaper Le Temps, and for NZZ am Sonntag. All cartoons reproduced with permission.

Most fresh produce sold in Switzerland in May comes from Switzerland, says Bern (photo: Fully, Valais, lettuce)
Update 13:45 BERN, SWITZERLAND – Ed. note: a 12th person died Monday in Germany from what appears to be E.coli, and pressure on German hospitals is increasing due to the high number of people hospitalized and in intensive care. AFP (TSR, Fr) reports that some hospitals are appealing for blood donors because of the sudden need for blood plasma.
German public health authorities and researchers at the Robert Koch Institute are still trying to determine the source and precise nature of the deadly E.coli outbreak in their country. The death of an 11th person was announced Monday and a specialist in western Germany, interviewed on television Sunday night, noted that while Germany normally sees about 1,000 cases a year, it has had 1,200 cases in the past 10 days.
The strain appears to be particularly virulent, with patients not responding to normal treatments.
Some 300 persons have been treated for the infection.
Swiss and other non-German cases so far all linked to Germany
The Swiss government Friday 27 May offered an update on E. coli bacteria cases in the country, saying that of the 20 registered since the start of 2011, a figure in line with other years, just one has been identified as possibly belonging to the strain that has caused 10 deaths in Germany.
Germany, Austria extend ban to other fresh produce
Germany and Austria over the weekend announced that they are recommending to consumers to avoid buying lettuce and eggplant (aubergine) as well as cucumbers and in Austria tomatoes, saying the source of the bacteria has not yet been fully identified. Cucumbers from Spain were initially listed as the culprit, and these are still under suspicion, but there is no confirmation that this is the only source.
Spanish authorities reacted angrily Monday, saying that Germany and Austria are over-reacting in condemning Spanish agricultural products, reports El Pais (Sp).
European health authorities say there is no evidence the infections have spread beyond Germany, but they urge caution and good hygiene in handling food.
“Currently there is still no evidence that any potential contaminated food product would have been distributed outside of Germany,” the European Centre for Disease Prevention and Control said in a statement issued Friday. “Thorough investigations ongoing in the country aim at identifying the source of infection, and are crucial to further determining the scope and magnitude of this risk.
“Rapid identification of potential cases linked to this outbreak, within Germany or among persons who have travelled to Germany since mid-April/beginning of May, is essential to prevent the development of severe disease. Secondary clusters of cases from person-to-person exposure may occur and thus personal hygiene messages are important.”
Swiss produce mainly from Switzerland this time of year, but good hygiene urged
The Swiss Office of Public Health has confirmed that most fresh produce on sale in Switzerland at the moment comes from Switzerland, but it offers the public several recommendations for avoiding food contamination (see below).
GENEVA, SWITZERLAND – The German coalition has agreed to end Germany’s nuclear power programme by 2022, it announced after late-night talks Sunday 29 May. The agreement came after officials received the report of the German government ethics commission on the country’s use of nuclear energy. The commission’s report will be issued Monday.
Germany has 17 nuclear power plants, one of which has been out of commission for years, and seven of which were closed in March 2011, following Japan’s post-tsunami nuclear crisis. All but three of the others should be closed by 2021, the commission recommended, and those three can be closed in 2022.
Switzerland a week earlier announced that it will end its nuclear energy programme, but it will take longer, until 2034, to spin it out.

Max shades her 3 new young ones, who bring the number of her offspring to 26 in 9 years (photo ©2011 Heidi Buergermeister)
Zurich, Switzerland (GenevaLunch) - Good news for Max the Swiss stork fans: a third baby bird has been spotted in the nest, making Max’s 2011 family the same size as her usual ones. Only two young ones had been spotted before this week until official photographer and neighbour Heidi Buergermeister saw a third head.
Happy Mother’s Day this week to Max!
The three little ones bring to 26 the number of offspring she has had, in 9 years.
One of Switzerland’s best-loved families could well be Max the stork and her annual crop of babies. Max, who will soon be 12 years old, has been banded and tracked longer than any other bird in the world. She migrates every fall to southern Spain or northern Morocco, then returns to the Swiss-German border area, Tuefingen, on the north side of Lake Constance, to mate and have her young.
She was born in 1999 in Avenches, canton Vaud, and the Museum of Natural History in Fribourg follows her movements closely and keeps her growing fan club informed.
Escalating violence by Syrian government against its citizens drawing sharp rebukes
(video) Geneva, Switzerland (GenevaLunch) – The United States Wednesday 27 April in Geneva initiated a special session of the Human Rights Council (UNHRC) on Syria. France announced that it has called in the Syrian ambassador for an explanation of his government’s attacks on its own citizens, along with four other European governments: Britain, Germany, Italy and Spain.
Late Wednesday news agencies received a statement that 30 members of the ruling Baath party in the city of Banias, scene of protests, have resigned over deaths this week and the violence used on protesters.
Syria was accused by US ambassador Eileen Chamberlain Donahoe, representative to the UNHRC in Geneva, of “the killing of hundreds of civilians in connection with peaceful political protests last week.” Donahoe stated, in initiating the special session, that “we strongly condemn the killing, arrest and torture of hundreds of Syrians by the Syrian authorities. It is entirely appropriate that the Human Rights Council condemn willful government violence against peaceful political protestors. At the Special Session we expect Human Rights Council members to call on the government of Syria to meet its responsibility to protect its population and stop these attacks.”

































