Switzerland is an important place for trading in petroleum, wheat and aluminium. That is known. With the Ukraine war, an accurate estimation of the size of the industry becomes more important.
Workers examine and prepare a Soviet-made rotary dredge with the productivity rate of 5,250 tons of processed coal a day during operations at the Beryozovsky opencast colliery, owned by the Siberian Coal Energy Company (SUEK), near the Siberian town of Sharypovo in Krasnoyarsk region , Russia, May 23, 2017. Picture taken May 23, 2017. REUTERS/Ilya Naymushin
The number is persistent: Countless media reports state that 80 percent of Russian raw material exports went through Switzerland. Reference is made to a report by the Swiss embassy in Moscow from last year. The number is huge, especially since Russia is one of the world’s largest suppliers of natural gas and oil, but also of wheat, nickel and aluminum. But the amount of the value also makes you suspicious. This would also have to include some of the exports to China and other Asian countries as well as the USA for the number to be plausible. The Swiss commodity trading center is important, but is it really that big?
Outdated Estimates
The request to the Swiss Embassy in Moscow for the origin of the number ends up at the State Secretariat for International Finance (SIF) via the foreign department. The answer is short: “We cannot confirm the number of 80 percent. The information in the cited economic report is based on outdated estimates.” The number was probably taken from an outdated brochure from the Swiss raw materials association STSA.
Such estimates are notoriously difficult because the industry is extremely international. For example, a commodities trader identified as Swiss may have its headquarters in Singapore and most trading activities in Geneva. In addition, some raw materials pass through several countries. What then is the share of an individual country in the export?
Advertising and politics are operated with such numbers. Critical voices towards commodities traders like to point out the great importance of the sector and how much Switzerland is caught up in the problems of the resource curse. The traders themselves prefer different numbers depending on the situation: If they are criticized, they like to hide their light under a bushel. In advertising brochures, on the other hand, to impress customers, the industry prefers to show how global and how large the cluster in Switzerland is.
The transit trade thing
But what about Switzerland’s share of Russian raw material exports? If the total Russian exports of oil, natural gas, agricultural goods, metals and chemical products such as fertilizer are compared to the so-called transit trade of Russian goods via Switzerland, the figure is 25 to 30 percent rather than 80 percent – as the average value for 2012 until 2018.
However, it is possible that raw materials from other countries originally came from Russia. Switzerland also does a lot of merchanting with Germany, the Netherlands and Great Britain. Originally Russian raw materials could also flow through these countries. Assuming that half of the transit trade from these countries is classified as Russian, then Switzerland’s share of Russia’s commodity exports increases to 50 percent – still significantly less than the 80 percent.
The term merchanting includes all commercial transactions by companies based in Switzerland where the goods are bought and sold without the goods ever crossing a Swiss border. This primarily refers to commodity trading. Even if Switzerland’s percentage of Russian raw material exports is less than is often assumed, the number is still huge, especially when viewed in absolute terms.
According to the Swiss National Bank, the value of commodities bought from Russia and resold around the world was between 60 and 110 billion francs in the years leading up to the pandemic. Another figure shows how large the Swiss commodity trading center is overall: Russia’s share of the total transit trade is “only” 10 to 13 percent – with the same restrictions as above.
The number calculated by transit trade is probably a bit too low. If you ask around at a bank involved in trade finance, the value falls 40 percent for all commodity exports. Some journalists and retailers argue that it feels like there should be more. Another figure that has been floating around for a long time and has taken on a life of its own is also an argument: 75 percent of Russian oil exports apparently went through Switzerland.
FILE PHOTO: The shadow of a worker is seen next to a logo of Russia’s Rosneft oil company at the central processing facility of the Rosneft-owned Priobskoye oil field outside the West Siberian city of Nefteyugansk, Russia, August 4, 2016. REUTERS/Sergei Karpukhin/File Photo
Big bandwidth
Oil trading is also important because it is likely to account for the largest share of the entire commodities business in Switzerland in terms of value. The absolute value fluctuates greatly with the oil price. The export of crude oil and petroleum products is also Russia’s largest foreign exchange earner and an important source of financing the Russian budget.
The non-governmental organization Public Eye estimates that the Swiss share of Russian oil exports is currently between 50 and 60 percent. Public Eye came up with these numbers in three different ways. The Geneva trading house Mercuria speaks of a Swiss share of 70 percent. Here, too, the range is wide, albeit not as pronounced as in the case of raw material exports as a whole. The development of the proportion would also be interesting.
What conclusion can you draw from this? Switzerland is an important commodity trading center for crude oil, wheat or aluminum from Russia with important companies. It may be difficult to statistically get a hold of the industry, but it would not be a luxury to know more about the dealers, especially from the official side; especially since the Federal Council recommended in 2018 to collect more facts about the scope of the raw materials industry and its contribution to the national economy.