«We need to copy Switzerland,» German economist and professor Hans-Werner Sinn said in an interview with finews.ch, adding that the European Union should merge its armies, form an otherwise weak central state with extensive autonomous rights for the member states and no more bailouts by the state.  

The interview with Hans-Werner Sinn was conducted ahead of the annual conference «Professional Investment» on October 27 and 28 in Zurich. finews.ch is media partner at the conference and professor Sinn will hold a keynote speech: «The Euro Trap – Development of World Economy and the Situation in Germany, Switzerland and Europe.»

Mr. Sinn, how do the citizens of the EU perceive Switzerland today?

Switzerland still enjoys an excellent reputation.

Where do you see Switzerland's strenghths and weaknesses in an international context?

Switzerland is extremely expensive. Only rich people can afford to make holidays there. The country has

«Belief in welfare state is spreading»

highly productive companies, which currently need to become even more productive to remain competitive.

What could Switzerland do better in what areas?

I'm time and again surprised to see how the belief in the welfare state is spreading even in Switzerland. Taxation isn't low anymore either.

What effects on Switzerland have the current developments in the EU?

Switzerland was saved by the rescue packages for the banks too. Capital flight to the country increased, prompting an appreciation of the franc, which in turn had negative effects on the Swiss economy.

Are you a born pessimist or on which assumptions and findings do you base your rather sceptical opinion about the EU?

I'm a born realist and I don't have a sceptical opinion about the EU. On the contrary, I see the EU as an outstanding achievement of post-war Europe. Free trade and the free movement for EU citizens

«State of inefficiency and stagnation»

contributedsignificantly to the strenghthening of the economy and increase in the quality of life. In that respect I don't understand your question. Do you perhaps happen to confuse the euro system with the EU?

How much time do you think the EU and the euro still have?

Many years. It looks as if in the euro, public protection and transfer systems cemented a permanent mis-allocation of capital in favor of the overpriced Southern European countries.

If we allow us to think in scenarios: What will break the European Community, the European Economic Community?

They won't break up, but remain in a state of inefficiency and stagnation, because capital is mis-allocated.

Which are the necessary measures to sustain a unified Europe?

We should copy Switzerland. Merge the armies, form an otherwise weak central state with lots of autonomy for the member states and refrain from bailouts with fiscal umbrellas and/or through the European Central Bank. Leukerbad, but bigger.

Should Switzerland join the EU and if so, when?

As a German I wish my country to be relieved as net contributor. As a Swiss, I would oppose on the same grounds.

What will the EU look like in five years time?

If only I knew.

The 67-year old Hans-Werner Sinn is an economist, high-school teacher and head of the ifo Institute in Munich. He also acts as advisor to the German goverment.