Reports on the New York Institutional Gold Conference

By ALEXANDER G. HIGGINS
Associated Press Writer

GENEVA (AP) -- Swiss voters Sunday killed a
government plan to use billions of dollars
worth of quot;excessquot; gold to help people in
extreme need at home and abroad. The chief
opponent said the plan was tainted by foreign
blackmail.

The government proposal to set up a
quot;solidarity foundationquot; lost by 52-48
percent, or 1,057,327 votes against to
984,590 in favor, according to final official
returns. About 44.1 percent of eligible
voters participated.

quot;The unspeakable Solidarity Foundation cannot
be created,quot; said nationalist politician
Christoph Blocher. quot;The Swiss people cannot
be blackmailed.quot;

The plan was conceived in 1997 while
Switzerland was being buffeted by allegations
that it had misused its neutrality to profit
from links to Nazi Germany during World War
II.

President Kaspar Villiger said he quot;especially
regrettedquot; the vote, and added, quot;The
allegation of blackmail isn't right.quot;

The plan was to invest an expected 20 billion
Swiss francs ($13.4 billion) from the sale of
gold reserves and spend the interest through
the foundation, with one-third going to the
Swiss social security program, a third to
regional governments, and a third to people
in need at home or abroad.

Blocher noted that the foundation originally
was proposed by the government to aid
Holocaust victims or anyone else suffering
from genocide or disaster.

That was before pressure on Switzerland from
abroad abated following the 1998 Swiss banks
agreement to pay $1.25 billion in an out-of-
court settlement with Holocaust victims and
their heirs.

As the law to create the foundation worked
its way through parliament, the purpose
changed. All references to the Holocaust were
removed. Compensation payments -- to Nazi
victims or anyone else with a grievance
against Switzerland -- are excluded.

The government plan included dividing part of
the money evenly between self-help projects
for use at home and abroad to quot;continue the
humanitarian tradition on which our country
can rightly look back with pride.quot;

But some critics said it would add little to
what Switzerland is already doing in foreign
aid.

quot;This foundation is a product of the
blackmailing of our country by Jewish circles
in the United States,quot; Blocher, a billionaire
industrialist and member of parliament, said
in a recent interview with the daily Basler
Zeitung.

Blocher led his Swiss People's Party in
collecting the necessary amount of signatures
under Swiss direct democracy to challenge the
law.

But the process was already under way, and in
May 2000 the central bank started selling off
part of the national gold reserves.

The Swiss National Bank calculated that the
precious metal's increase in value over the
decades meant that it had twice as much gold
as it needed to back the country's strong
currency, the Swiss franc.

Some 1,300 tons is being sold off at the rate
of about a ton a day, and the money has been
piling up. The government hasn't disclosed
the total proceeds from the nearly 600 tons
sold so far, but at current gold prices it
would be worth about 9.3 billion francs ($6.3
billion).

People have proposed using the money to pay
off the national debt or to set up a national
investment fund. Blocher's party proposed
putting the money in Swiss social security.
But that proposal also lost in Sunday's vote.