Davos is on a war footing.
As snipers fan out over the rooftops of the Alpine resort and the Swiss army rolls miles of barbed wire through the town, officers have more than the security of Mario Draghi and Lloyd Blankfein in mind. They are also preparing for a worst-case scenario: European chaos sparked by a collapse of the euro.
At their annual exercise in September, the Swiss army drilled for a conflict between two fictitious neighboring states in crisis. The challenge was figuring out how to turn Switzerland into a fortress that could keep out the flood of refugees a conflict would send its way.
“Rising nationalism in Europe is a trend that needs to be monitored,” Major-General Jean-Marc Halter, 54, Switzerland’s second-highest ranking officer who took charge of the war game and is overseeing security at Davos, said in an interview at his headquarters in the Swiss capital, Bern. “It’s the army’s job to protect the country against all possible security threats.”
While Switzerland hasn’t seen conflict since the Sonderbund civil war of 1847, Davos has provided a chance to demonstrate military readiness ever since former Palestinian leader Yasser Arafat attended the forum in 1985. About 3,300 troops will protect government heads this year, including Britain’s David Cameron and Italy’s Mario Monti, and secure the airspace in a 46 kilometer (28 miles) radius around the Alpine village.
The five-day event, which starts today, is the single biggest operation executed by the Swiss army this year.
More Bloomberg coverage of the 2013 Davos World Economic Forum.
“In Davos we gain insight into the effectiveness of our training, procedures and chain of command,” said Halter, adding that instability on Europe’s periphery is “a scenario that needs to be thought through.”
Switzerland is right not to be complacent, said James Galbraith, a professor of government and business relations at the University of Texas, who warns of a potential “explosion of violence” on the continent.
“Europe is still heading toward a social and human crisis,” he said in a Jan. 11 interview. “In Greece, there’s already a breakdown of public order. You have the rise of an essentially fascist organization that’s harassing immigrants.”
If Spain, which is plagued by regional divisions, leaves the euro, the country could break apart, said Galbraith, who last year published a book titled ‘Inequality and Instability: A Study of the World Economy Just Before the Great Crisis.’
“These things have the potential to escalate very rapidly, which is what we saw in Yugoslavia,” where a series of wars killed more than 120,000 people after the state disintegrated in 1991, Galbraith said. “When I speak of Yugoslavia, it’s to remind people that advanced societies have the potential for advanced levels of violence.”
On Jan. 14, a gunman fired at Greek Prime Minister Antonis Samaras’s office at his party’s Athens headquarters following a spate of fire-bombings around the capital. Rioters last February set fire to a number of buildings housing a Starbucks Corp. (SBUX:US) café, a bank and a movie theater in the Greek capital. The Italian government said last May it would step up the use of armed forces to safeguard more than 14,000 “sensitive” sites across the country in the face of increasing violence.
More than 10 miles of barbed wire help deter most attacks on Davos and thwart the attentions of anti-globalization activists, who in 2000 broke a window at a McDonald’s, vandalized several cars and burned a U.S. flag. Still, “there is a certain potential for violence that can’t be ignored,” said Halter.
“Revolutionary Perspective,” a violent political group, claimed responsibility on an Italian activist website for an explosion that shattered windows in Davos’s four-star Posthotel Morosani in 2011. Last year, the Swiss air force intercepted 14 light civilian aircraft pilots unaware of the no-fly zone around the ski resort.
The risk that civil unrest in Europe would trigger a wave of refugees into Switzerland is nevertheless slim, said Anand Menon, an associate fellow at Chatham House in London and professor of west European politics at the University of Birmingham. Wide-scale migration requires “something cataclysmic,” said Menon, who sees Islamic terrorism as a bigger threat, especially since France’s intervention in Mali.
“Greece, to a significant extent, is no longer self- governing and that will cause problems there,” said Menon. “But I don’t think it represents a security threat to other countries, certainly not as far afield as Switzerland.”
In September’s 16-day exercise, codenamed Stabilo Due, a European crisis triggered a clash between two fictitious states, Elbonia and Danubia. The conflict sent a wave of refugees towards Helvetia, the name of the allegorical female warrior found on Switzerland’s postage stamps and coins, prompting deployments of planes and tanks by the Swiss military.
The Swiss army declined to comment on the number of refugees they envisaged.
“These exercises in the field are indispensable,” Brigadier Rene Wellinger, commander of the 29th tank battalion, said in an interview posted on the Swiss army’s website. “Shooting ranges and simulators don’t present these types of leadership problem.”
The role of the army at Davos is questioned by some lawmakers as providing security for the forum runs up an 8 million-franc ($8.6 million) bill for Swiss taxpayers.
“The army should be used when Switzerland is threatened by a foreign power,” said Geri Mueller, a lawmaker for the Swiss Greens. “It has no business being there.”
While 170 Swiss soldiers on night maneuvers accidentally invaded neighboring Liechtenstein almost six years ago, Switzerland itself was last occupied in 1798 by French troops under the command of Napoleon.
Adolf Hitler, who called the Alpine country “a pimple on the face of Europe,” drew up a plan called Operation Christmas Tree to subjugate the country, though concerns that a campaign against Switzerland would occupy as many as half a million troops may have been the reason it was never carried out.
Switzerland’s neutrality laws, which stem from the Treaty of Paris that followed Napoleon’s defeat at Waterloo in 1815, ban the military from fighting abroad other than in peacekeeping missions. Swiss have served as mercenaries in European armies since the Middle Ages, and they still provide the papal guard in Vatican City.
Both Davos and the European conflict scenario may help Swiss Defense Minister Ueli Maurer make the case for boosting the nation’s defense spending of almost 4 billion francs.
“We have had an almost freefall in the budget for 20 years,” said Maurer. “I just hope that the budgetary pressures will lead to more efficiency, cutting fat but not the muscles.” The Swiss spent 6.3% of total government outlays on defense in 2010. That’s higher than any country in the EU that year.
Still, while the potential for the euro to collapse shouldn’t be taken lightly, Switzerland doesn’t have much to fear, according to Galbraith of Texas University.
“The prospect of a few Greek refugees turning up in Switzerland shouldn’t be particularly alarming,” he said. “Some of the unsavory characters descending on Davos strike me as capable of far more damage.”
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