BERN, Switzerland -- Voters dealt a sharp setback to Switzerland's political and business leaders yesterday by rejecting a national referendum to join a 19-nation European Economic Area, a move that would have required this Alpine country to abandon some of its traditional isolation and neutrality on global issues.
Most leading bankers, industrialists and mainstream politicians strongly supported the referendum, which called for Swiss participation in a giant, 370 million-population trade bloc composed of the 12 members of the European Community and the seven countries of the European Free Trade Association, of which Switzerland is a member.
But many of the traditionally conservative Swiss feared that their participation in the new Economic Area would open the door to immigration and disturb the country's cherished grass-roots political system that gives important powers to even the smallest communities and requires popular votes on most significant government actions.
In what was described as the most important vote here since the Swiss confederation was formed in 1848, German-speaking Swiss in the country's eastern and central areas turned out massively against the referendum, sealing its defeat.
Although the popular vote was fairly close, mainly because of huge support for European integration in French-speaking areas, backers of the referendum failed to win a majority of Switzerland's 23 cantons, or states, needed for the referendum to carry. Final results yesterday showed 50.3 percent of the voters opposing the referendum and 49.7 percent in favor. But 16 of the cantons voted against the measure, while only seven voted for it.
Political leaders in Bern, the capital, reacted gloomily to the outcome, predicting that Switzerland risks being cut off from its main trading partners in Western Europe.
"This is a black Sunday for the Swiss economy," said Federal Councilor Jean-Paul Delamuraz at a crowded news conference. "It is a black Sunday for the future of employment in our country and for the partisans of a new openness in our country." After years of nearly full employment, Switzerland recently has experienced its first significant jobless rate, topping 4 percent.
The voting highlighted growing divisions between the country's German speakers, who form two-thirds of the population, and the minority French speakers, who account for about 20 percent of the population, disclosing political fault lines likely to deepen in coming months.
Federal President Rene Felber described the French-German split as "a new and troubling cleavage, more worrisome than it has ever been before."
The negative vote is also viewed as another setback for the European Community, which viewed the referendum as the first step for full Swiss membership in the EC.
A prosperous country of 6.8 million people in the heart of Europe, Switzerland profited for more than two centuries from a neutral, isolationist policy that kept it out of two world wars and enriched it at the same time. Switzerland's per capita income is 25 percent higher than that in the United States.