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During both World War I and World War II, Switzerland managed to keep a stance of armed neutrality, and was not involved militarily. It was, however, precisely because of its neutral status, of considerable interest to all parties involved, as the scene for diplomacy, espionage, commerce, and as safe haven for refugees. The 1917 Dada movement of Zürich was essentially a cultural reaction to the war, initiated by exiles. Lenin was also exiled in Zürich, from where he travelled directly to Petrograd to lead the Russian Revolution.
One potential result of World War I was an expansion of Switzerland itself. In a referendum held in the Austrian state of Vorarlberg on 11 May 1919 over 80% of those voting supported a proposal that the state should join the Swiss Confederation. However, this was prevented by the opposition of the Austrian Government, the Allies, Swiss liberals, the Swiss-Italians and the Swiss-French.
In 1920, Switzerland joined the League of Nations.
Nazi Germany drew up plans to invade Switzerland, most notably 'Operation Tannenbaum', but the invasions were never carried out. The Swiss Army under Henri Guisan for the event of an invasion had the plan of yielding parts of the Swiss plateau to the Germans, retreating to fortresses (the réduit) in the Alps, from there offering continued armed resistance, while the population in the occupied territory would have been instructed to resist passively and through acts of sabotage.
Nazi Germany never did attack Switzerland although they repeadetly violated Swiss airspace. Switzerland also suffered from allied bombings during the war.
Controversy over financial relationships with Nazi Germany
The commercial involvement of some Swiss banks with the Nazi regime, particularly the gold trade of the Swiss National Bank was the object of public attention between 1995 and 2000. The Bergier Commission estimated that roughly half of the 890 million USD transactions in gold by the German Reichsbank were effectuated with the involvement of Swiss banks. Switzerland was accused of violation of neutrality and prolongation of the war because of these transactions, with US Senator Alfonse M. D'Amato and attorney Edward Fagan providing particularly vigorous criticism. Stuart Eizenstat officially investigated the charges on behalf of the US administration. Dealings in gold with Nazi Germany were seen as particularly immoral because much of the gold in question had been looted from Jews killed in the Holocaust. Switzerland had already paid reparations to the Allies in 1952, but accusations in the 1990s were to the effect that these had been insufficient. In 1997, information released by whistleblower Christoph Meili revealed that the UBS AG destroyed records of assets belonging to Holocaust victims, which the Swiss banks were ordered to return to their lawful owners. After a Swiss-Jewish organization filed a complaint against the bank, the Swiss authorities reacted with an arrest warrant against the whistleblower. Meili managed to escape to the United States where he was granted political asylum. In 1999, the Swiss banks settled for the payment of 1.25 billon USD in additional reparations to a special Holocaust Fund.
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