Historically, Switzerland has maintained a stance of neutrality and limited engagement in its foreign policy. Increasingly, however, this position has been brought into question by the demands of a much more integrated world. Switzerland is completely surrounded by nations belonging to the European Union (EU), which by 2002 had become so integrated that 12 of its members now use a single currency, the euro.
In 1992, Switzerland became a member of the International Monetary Fund (IMF) and World Bank. It also joined the World Trade Organization (WTO) and the Organization for Security and Cooperation in Europe (OSCE). In response to the ever-increasing level of integration among their European neighbors, Swiss voters approved a referendum in 2000 creating a series of bilateral trade and residency agreements with the European Union. It is thought that much of the Federal government and the business elite would like to see Switzerland join the EU, but opinion polls consistently show that up to three-quarters of the Swiss population are fervently opposed to any such move. President Couchepin believes his country will eventually have to join the EU, but that integration should take place gradually and that the ultimate decision must accord with Switzerland's tradition of direct democracy.
Another significant move toward integration came in March 2002, when the Swiss electorate voted for membership in the United Nations. This was the second referendum held on the issue. The first, fifteen years before, had been voted down by a wide margin (75% of Swiss rejected membership), but this referendum was approved by a small majority (55% to 45%) in an election notable for its small turnout: only 58% of Swiss citizens voted on this contentious issue. Switzerland officially became a member of the UN in September 2002.
Switzerland's foreign policy of neutrality was tested during the wars in the Balkans of the 1990s, when Yugoslav armed forces and paramilitary squads began a campaign against the Albanians and NATO entered the conflict, launching air strikes in Kosovo and Serbia. While Switzerland had supported economic sanctions imposed on Yugoslavia, it did not support NATO action and refused to permit NATO forces to use its airspace.
President Couchepin announced a similar policy toward the U.S.-led war on Iraq in the spring of 2003, saying that the attack represented a failure of international diplomacy and voicing the fear that it would undermine international efforts toward collective security and, in particular, the authority of the UN Security Council.