The Swiss Times - Swiss News in English

Swiss Military’s Offset Obligations Reach CHF 5 Billion

  • By The Swiss Times
  • 26 January 2024

Switzerland’s foreign military equipment suppliers face substantial offset obligations, totalling CHF 5.14 billion, with significant progress in 2023.

Swiss Military’s Offset Obligations Reach CHF 5 Billion
©Keystone/SDA – Anthony Anex

The Swiss military, in its latest dealings with foreign suppliers of military equipment, has accrued offset obligations amounting to a staggering CHF 5.14 billion. As of the end of 2023, orders valued at approximately CHF 1.94 billion have been allocated to the Swiss industry, reflecting a substantial fulfillment of these commitments. The Confederation released these details in a recent report.

In a notable shift from previous practices, starting in 2024, the Confederation plans to publish offset register figures every quarter instead of the current semi-annual frequency. Offset transactions are everyday in international military procurement, requiring foreign suppliers to engage in compensatory trade with the Swiss industry as part of their contractual agreements.

Per the current data from the Federal Armaments Office (Armasuisse), the offset register comprises 18 distinct programs per procurement project. These involve collaborations with foreign suppliers and detail the remaining offset obligations. The register is a comprehensive resource, listing Swiss companies involved, types of offset transactions, and regional distribution based on language preferences.

Significant progress has been made in fulfilling these offset obligations. For instance, the procurement of 36 F-35A fighter jets has seen around CHF 693 million, or 27% of Lockheed Martin’s commitment, being actualized. Additionally, for the advanced ground-based air defense system (Patriot), Swiss contracts worth about CHF 202 million have been issued, amounting to approximately 19% of the US manufacturer Raytheon’s offset obligation. Both these obligations are slated for completion by the end of 2034.

Armasuisse has, for the first time, published a register of banking agreements in a move towards greater transparency. These agreements are an option for foreign providers facing likely offset obligations. This initiative aligns with a recommendation from the Council of States Control Committee (CC-S) advocating for increased transparency in such dealings.

This comprehensive approach to offset obligations reflects the Swiss government’s commitment to balancing its international military procurement with substantial benefits to its domestic industry. The current figures indicate a robust engagement with foreign suppliers, ensuring that Switzerland’s military procurement policies also bolster its industrial sector.

©Keystone/SDA

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