Swiss Arms Chief Seeks Closer European Ties for Defense Race

(Bloomberg) — Switzerland’s most senior arms procurement official is seeking closer collaboration with European neighbors, as global demand for weapons surges and the nation’s own defense industry falters. 

Russia’s full-scale invasion of Ukraine and concern over US President Donald Trump’s commitment to NATO’s mutual defense clause is forcing Europe to rearm, pushing weapons firms to their capacity limits. That’s making it more challenging for small countries like Switzerland to place orders, said Urs Loher, director of Armasuisse, the government agency responsible for Swiss army procurement.

To give it more negotiating heft, Armasuisse is in talks with Germany to jointly procure helmets, while the agency is also considering expanding cooperation in electronic warfare with foreign partners.

“We’ll have to increasingly get involved in such collaboration projects to ensure that the small quantities we need arrive within an appropriate time period at somewhat reasonable prices,” Loher said in an interview in Bern. Artillery ammunition prices, for example, have quadrupled in the past three years, with waiting times of five to six years, he said.

Switzerland’s dilemma is partly a legacy of a post-Cold War peace dividend that allowed the neutral nation — surrounded almost entirely by NATO members — to spend less than 1% of gross domestic product on defense. At the same time, its neutrality means it has imposed strict export rules for arms, blocking shipments of Swiss-made weapons to Ukraine.

“We are paying the price of over 30 years of peace dividend,” Loher said. “Switzerland suffered large collateral damage from the blocked re-export requests of weapons to Ukraine. Our European partners lost trust and it will take time to rebuild that.”

For years, the Swiss army and government agencies have been dealing with outdated weapon systems, particularly in air defense, and delayed purchasing programs, including for Israeli drones. At current levels, Swiss air defense systems can cover just 8% of the country, or four out of the country’s 10 biggest urban areas, Loher said.

On Thursday, parliament’s lower house approved 1.7 billion Swiss francs ($2.1 billion) of procurement projects, but rejected a proposal for an additional 1 billion francs for anti-aircraft ammunition. New Defense Minister Martin Pfister said there was “currently no financial scope” to raise the army budget.

NATO member states, in the meantime, adopted the alliance’s most ambitious military ramp-up since the Cold War on Thursday, closing in on an agreement to ratchet up spending at a summit later this month. It includes a five-fold increase in ground-based air-defense systems capabilities, Bloomberg has reported.

The challenge of securing reliable arms supplies comes as Switzerland’s owns defense industry is being squeezed by the nation’s neutral stance. In particular, blocking arms deliveries to Ukraine has meant that other European governments are increasingly cutting Swiss products out of their arms-supply chains as they rush to bolster their defenses.

That’s weakening Switzerland’s bargaining position in times of crisis, according to Loher, 58, who served as chief executive officer at the Swiss subsidiaries of Rheinmetall AG and Thales SA before taking over the helm of Armasuisse in 2023.

“If we no longer have our own arms industry we will be totally dependent on foreign countries,” he said. “That would make it more difficult to have an army as independent and autonomous as possible.”

Such fears have prompted the Swiss government to ask parliament to reinstate its power to approve arms re-exports. A commission in parliament’s upper house suggested exempting 25 countries including most NATO members from having to obtain permission for re-exports.

Without that flexibility, the Swiss arms industry is rapidly facing an existential threat.

“Whether we want a defense industry here in Switzerland is ultimately a political discussion — politics set the framework,” Loher said. “I would simply like to point out that the longer the discussion goes on, the more it becomes redundant.”

(Updates with defense minister’s comment in eighth paragraph)

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