BRUSSELS/ZURICH (Reuters) - The European Union said on Sunday it has postponed negotiations with Switzerland on its participation in multibillion-dollar research and educational schemes in the latest fallout from a shock Swiss vote in favour of immigration curbs.
The decision follows Switzerland's announcement that the result of last week's referendum on immigration means that it will not be able to sign a labour market pact with new EU member Croatia on July 1 as planned.
European Commission President Jose Manuel Barroso has warned that the narrow Swiss vote to restore quotas for migrants from the EU in breach of an accord with Brussels, would have "serious consequences" for relations between the wealthy Alpine nation and the 28-member union surrounding it.
Free movement of labour is one of the EU's fundamental principles.
In one immediate consequence, the EU's executive Commission said it was postponing talks on Swiss participation in both the EU's 80-billion-euro ($109 billion) Horizon 2020 research programme and its 14.7-billion-euro Erasmus+ educational exchange programme. Both schemes cover the period from 2014 to 2020.
A Commission spokesman said there was a close link between Swiss participation in Horizon 2020 and Erasmus+ and the planned Swiss agreement with Croatia as the EU schemes involved the free movement of researchers and students.
"The protocol (with Croatia) has not been signed yet. Given the circumstances and in the absence of a clear political signal to do so, upcoming negotiation rounds have been postponed until Switzerland signs the protocol," he said.
The EU has already put on hold talks on a cross-border electricity agreement with Switzerland.
BENEFITS VS CONSEQUENCES
The EU allows some non-EU countries to participate in its Horizon 2020 programme, which allocates grants to fund world-class science projects, and Erasmus+.
Under the previous EU research programme, which ended last year, Swiss researchers were awarded 1.8 billion euros in EU funding for research in areas such as information technology, health and nanosciences, EU science commissioner Maire Geoghegan-Quinn, said in a speech in Berne last month.
Erasmus+ will provide opportunities for more than 4 million Europeans to study, train, gain work experience or volunteer abroad.
In an interview with Reuters last week, Barroso hinted at more far-reaching consequences from the vote, saying Switzerland could not enjoy all the benefits of the EU, the world's biggest market, without reciprocal access.
While he did not spell out any specific sanctions, Barroso implied that Swiss people could lose the right to live and work in the EU, and Swiss companies might also face obstacles.
Swiss government spokesman Philipp Schwander said earlier on Sunday that Switzerland could not sign the labour market pact with Croatia in the agreed form "due to the new constitutional provision provided by the February 9 vote."
He said Switzerland was still keen to seal the deal with Croatia in a way that took the vote into account and did not discriminate against Croatian workers.
The referendum, backed by the right-wing Swiss People's Party (SVP), has sent Swiss diplomats scrambling to contain the damage in Brussels.
Justice Minister Simonetta Sommaruga will be in Austria for a previously planned trip on Monday, while Foreign Minister Didier Burkhalter will fly to Berlin to meet German chancellor Angela Merkel on Tuesday.
Swiss newspapers were full of suggestions for what to do next, including calls by the Socialist Party for a new vote.
Swiss business leaders say they are increasingly concerned about other popular votes coming up, including one on May 18 to install the world's highest minimum wage, 22 Swiss francs ($24.17) an hour. Another, set for late in the year, seeks to cap population growth through immigration at 0.2 percent a year. ($1 = 0.7307 euros)
(Reporting by Katharina Bart; Editing by Kevin Liffey and Jan Paschal)