With her grey hair and composed attitude, the elderly Swiss woman walking by a bus stop on a busy Wednesday evening resembles a good grandmother on her way to make cookies for her grandchildren. It comes as a sudden and unexpected surprise when she takes a step out of the crowd waiting for the bus and yells at a beggar, clearly an immigrant, huddled up against a wall: “We voted yes last Sunday. Now, go home!” This is a scene from Nyon, Switzerland, a bustling and prosperous city of nineteen thousand located on the shores of the lake of Geneva, three days after the Swiss people voted for a referendum that aims to set quotas on the immigration of foreigners to the country.

A slight majority (50.3 percent) of the voters endorsed a proposal put forward by the far-right Swiss People’s Party (SVP) to introduce a ceiling on immigration. This outcome caught the public by some surprise and runs against Switzerland’s bilateral agreement with the European Union (EU) that ensures free movement of people between the two sides. Switzerland, located right in the heart of Europe, is not a member of the EU but is closely integrated with the Union through more than one hundred bilateral agreements.

The reaction of the elderly woman is not typical of the area of Nyon and the western parts of Switzerland. Nyon and neighboring Geneva, as well as the French-speaking areas that constitute more than a quarter of the country, rejected the proposal by majorities as high as 60-70 percent of the voters. Meanwhile, voters in the rest of the country-with the exception of Switzerland’s three important business centers, Basel, Zurich and Zug, supported the proposal, reaching considerably high rates in especially rural areas.

Those parts of Switzerland that voted against the proposal are populated by prosperous people who have greatly benefitted from close integration with the EU and are quite at ease with foreigners and immigrants. However, this is not the case with the kind of people that the elderly woman represents. They live on a limited income and do not enjoy the benefits that come with close relations with the EU and the external world. They resent the foreigners that they feel are invading their ways of living and space. Often, the only foreigners they interact with are those who fail to integrate, are unemployed and resort to petty crimes to survive.

It is not surprising that most of the Swiss that approved the proposal by and large come from the much less prosperous central, rural and mountainous parts of the country. These are parts of the country that receive large subsidies from the federal budget and from the financial contributions coming from the six richest cantons, while in contrast the parts of the country that voted against the proposal happen to be net contributors to this budget. This creates a terribly paradoxical situation whereby the parts of Switzerland that create jobs, economic growth and wealth thanks to its openness to the external world is being penalized by those parts of the country that depend on them for their economic survival.

The result of the February 9 referendum puts Switzerland at odds with the EU by undermining its four sacrosanct freedoms: free movement of people, goods, services and capital. Hence, it is not surprising that threats to freeze ongoing negotiations that aim to further deepen relations between the two sides were quick to come from the European Commission, the executive body of the EU based in Brussels, and several European member states.

In many ways however, this reaction has more to do with public opinion in the EU than a vote in a small country with a population of eight million. Brussels fears the prospect of far-right political parties emerging even stronger from the upcoming European Parliamentary elections scheduled for next May. Those political parties vie for the votes of people with similar profiles to the ones who voted in support of the Swiss referendum. Furthermore, Brussels is also concerned about the outcomes of the referendums soon to be held on Scottish independence and United Kingdom’s exit from the EU. There is serious concern that the outcomes of these votes could be the beginning of the unraveling of the European project.

European elites recognize that the drivers behind the Swiss vote, the EU parliament election and the UK referendums are fundamentally the same. Far-right parties express the frustrations of people hurt by the financial and the euro crises of 2008-2011 and who now experience the inability of their governments to let the economy recover and create jobs. The case is particularly strong in the UK, where a pro-EU government and the City face a powerful popular anti-EU feeling notably captured by the anti-EU United Kingdom Independence Party (UKIP). UKIP is particularly vocal in the northern and western areas of the country. Not surprisingly these are the very areas that have benefited the least from UK’s membership to the EU.

The European Union’s greatest challenge now is to find an answer to the frustrations of the people who feel forgotten after having paid a high price in the economic turmoil of the last six years. Though less remarkable than in the United States, income inequalities remain relatively wide in Europe, according to Eurostat figures.

These frustrations are particularly destabilizing because they cultivate the fears of the people against foreigners and immigrant workers, accused of accepting lower wages and poorer working conditions than the locals, thus undermining labor markets. Hence the panacea offered by populist political parties like UK’s UKIP and Switzerland’s SVP—closing borders and keeping immigrants out—is easily understood and relatable.

Yet paradoxically, these are policies that would hamper business and trade and end up putting the timid European recovery at risk. This is particularly the case of Switzerland and the UK, two very open economies that have thrived thanks to their ability to benefit from globalization. But it may also hurt the highly export-oriented economies of Germany, Denmark, the Netherlands, and Sweden, among others, which rely more and more on foreign skilled workers to compensate for their failing demographics.

The EU is walking on a tightrope. Its chief task is to promote the integration of the continent, thus fighting all opposite temptations like those expressed by Swiss voters. But in the meantime, it has to find a discourse that is less threatening to regain the hearts of European citizens. In case it fails in this endeavor, it will see more and more frustrated people attracted to the populist political parties.

In short, it must reconcile the likes of the elderly woman of Nyon with the ideal of an open Europe. The prosperity of all is at stake. It will be tough work, but the alternative is one neither the Swiss nor the Europeans would find beneficial.

Yves Genier is business reporter and finance editor at the Swiss weekly newsmagazine L’Hebdo. Kemal Kirisci is the TÜSİAD senior fellow at the Center on the United States and Europe at Brookings.

Image: Flickr/Sascha Erni, .rb. CC BY 2.0.