BERNE, Switzerland -- There is a scene in the 1949 movie "The Third Man" in which the cynical character played by Orson Welles says: "In Italy for 30 years under the Borgias they had warfare, terror, murder, bloodshed -- they produced Michelangelo, Leonardo da Vinci and the Renaissance. In Switzerland they had brotherly love, five hundred years of democracy and peace, and what did that produce? The cuckoo clock."


Actually, this was something of a misrepresentation of Swiss history. In the wars of the Renaissance era, many European rulers preferred to hire Swiss mercenaries to do their fighting for them. The Swiss were glad to oblige. And although the cuckoo clock is indeed one of the more famous Swiss inventions, the country is perhaps better known these days for its secretive banking industry.


Two words come to mind when one thinks of Switzerland's experience in the 20th century: prosperity and neutrality. For the Swiss, the concepts are closely related. While they see themselves as firmly in the liberal democratic Western European tradition, that does not mean that they regard it as necessary to join Western European institutions, including the European Union. To do so would compromise the neutrality which is at the heart of Switzerland's identity.


But there is another reason for the Swiss reluctance to enter the EU. This is the suspicion that the EU is embarked on a grand project to create a federal political union that would strip member-countries of a large amount of their national sovereignty. Like some other European states, such as Britain, Denmark and Norway, Switzerland has great difficulty understanding what benefits are to be gained from such an exercise.


The irony is that the Swiss have created a decentralized federal system which in some respects resembles the political structures that will likely emerge in the EU over the next 10 years. Much power is devolved to the cantons, and major issues are decided in referendums, but there is still a single currency and a central government in Berne. A key feature of the Swiss system is that no part of the federation feels that its interests are damaged by the center.


As a result of Austria's vote last June to join the EU, the Swiss will soon find themselves in a situation in which all their neighbors, except for dot-sized Liechtenstein, are EU members. If the EU continues its drive to a create a military identity for itself as well as close political and economic ties, this will leave Switzerland looking rather exposed as a neutral island in a sea of militarily united states.


Of course, no one harbors aggressive intentions toward Switzerland, and during the Cold War both West and East found it useful that at least one country of unimpeachable neutrality continued to exist. The question is whether neutrality remains the best course for the Swiss now that Europe is not divided into two camps.


For the moment, the answer must be yes. Neutrality is a Swiss tradition that long pre-dates the Cold War. Other countries that were neutral after World War II, such as Austria, Finland and Ireland, are already having to rethink their options, but the Swiss are such a special case that it is probably in everyone's interests to let them stay as they are. Europe should always have one country that stands apart from the tensions and dramas that make up international politics, and Switzerland is lucky enough to be that country.