Swiss votes to keep army

ZURICH, Switzerland -- Voters in Switzerland have rejected a proposal to scrap the army by four to one in a referendum.

The rejection of the plan -- which was brought by critics of what is one of the world's biggest armies -- along with three other non-government initiatives was not unexpected.

Exit poll results issued shortly after voting closed suggested that 79 percent of voters had rejected the proposal, Swiss radio reported.

All resolutions have to be approved by both an absolute majority of voters and a majority of the Swiss cantons (states).

While neutral Switzerland has not been attacked for centuries, all men are required to take time off work to undergo annual military training.

Critics argue the army is too expensive and say the government is not acting quickly enough to rationalise the system.

Sunday's vote was called under a law that allows anyone to demand a referendum if they collect 100,000 voters' signatures.

Switzerland declared itself neutral in 1515 and the last battle against a foreign power was when Napoleon invaded in 1798.

The country remained neutral throughout both World Wars and is not a member of the United Nations or NATO.

A referendum on the issue in 1989 was rejected by 64.4 percent of those eligible to vote, but the support of almost a third of Swiss electors had a strong effect on future policy in encouraging a trimming of the army.

Switzerland, a nation of seven million people, currently has 350,000 soldiers, most of them reservists.

The army question was one of five issues the Swiss public is being asked to vote on.

Most, if not all, of the proposals are expected to be rejected because resolutions have to be approved by both an absolute majority of voters and a majority of the Swiss cantons.

Of 66 non-government resolutions put forward for referendums since 1980, only five have been approved, according to UBS Warburg, the investment banking arm of UBS bank.

However, there was some nervousness in international financial markets about one referendum issue -- the proposal to introduce a federal capital gains tax.

Under a proposal initiated by the Federal Trade Union Federation in 1999 -- during the height of the bull market rally -- the tax would be levied at a minimum 20 percent on gains made in foreign exchange, securities and other transactions.

The government is opposed to the introduction of the tax, arguing that a federal capital gains tax would compete with similar taxes already being levied at the regional level and make the Swiss tax system far too bureaucratic.

Also on the ballot sheet is a proposal for the government to fund a voluntary service for humanitarian missions at home and abroad as well as a proposal for a new energy tax.