They’re a neutral nation surrounded by countries which are at the moment friendly. Neutrality incentivizes them to stay armed and to do their patrols but Switzerland has no reason to expect a war from France, Germany or Italy anytime soon.
It’s not that curious: Switzerland through their history and neutrality policy have a reputation for being secure and unlikely to bow to foreign influence.
That's actually an important point though. The kind of isolationist neutrality that Switzerland has is only possible if you can make it seem like conquering you is impossible to justify. Switzerland will protect its neutrality by force if necessary. They also have a military industrial complex, so is that one a racket?
Neutral as in "does not participate in armed conflicts between other states".
No clue where the interpretation comes from that this "neutrality" is extended to basically everything around the topic of war or military. Switzerland is a weapon export country and has been for a long long time.
Neutrality for this only means they dont export to countries at war or if there is reason to believable that the recipient would sell it to countries at war or if it would fall in the hands of terrorists etc. etc.
The real swiss neutrality is way broader and includes mandatory independence. So while Switzerland can join sanctions they decide and do not agree in advance to join sanctions the EU defined. It also includes military mission to promote peace. Swisscoy is the association of the Swiss Armed Forces in Kosovo. This is not against the swiss neutrality because there is no armed conflict there. The Swiss Armed Forces there are still armed for self-defense only.
Switzerland's neutrality is a fact of geopolitics. The geography of Switzerland means a big part of the country is essentially a natural fortress with bunkers cut directly into the mountain and firing down. There is a reason the Nazis never invaded and that wasn't neutrality (neutrality didn't do Belgium any good in WW2). Unlike other countries, Switzerland can afford neutrality and it is ultimately the most profitable option.
These days, I don't think Switzerland really fears an invasion, but it's true that the financial incentives have taken over. At the level of the population, the neutrality culture runs deep, and as Switzerland is one of the richest countries in the world, there's really no reason for the average Swiss to be upset about it.
If Switzerland is 'neutral' then it should neither deliver weapons to one side of a war nor take part in sanctions against a party to a conflict which are not enacted by the UN (since Switzerland is a member).
Actually, there is a ton of effort that goes into being neutral in a military sense. I don’t just mean the usual “Switzerland trains all their citizens and has bridges rigged to blow”. If another belligerent tries to use your territory, to maintain the benefits of neutrality you have to drive them off, lest you be seen as tacitly supporting that belligerent.
Switzerland did shoot down both Allied and German aircraft in World War II that trespassed their airspace.
Neutral doesn’t mean non-violent. They weren’t one of the belligerents engaged in WWII but they did defend their neutrality and were a target of actions by the Nazis that didn’t amount to much by the end of the War.
Switzerland's doctrine of neutrality is not newfound, rather it's a strategy they've built into their geography over centuries. They're nestled between mountains, so it would be pretty difficult for any other nation to attack them, but up until 1945, Europe was home to very frequent wars of conquest, which were devastating to property and people. Switzerland's strategy was to lean into their natural defenses by building hundreds of thousands of bunkers [0] in the mountains and signalling "Hey, we aren't looking to attack you, but if you invade, watch out for our extremely well fortified defenses. By the way, would you care to keep your valuables in our vaults? Lots of pillagers out there in the rest of Europe."
(but seriously, skim through the video. Switzerland's defenses are wild and beautiful.)
Your initial assertion that Swiss is neutral to make money is not accurate. Historically it was to prevent casualties in wars between France and... whoever else. This has enabled it to be the bank of anyone trying to escape prying eyes - but that is a byproduct of their neutrality; not the purpose of it.
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