Brussels announced on Sunday that talks about Swiss participation in a new research and student-exchange program would have to be put on hold, after Bern said it could not sanction an immigration deal with Croatia.

The Swiss Justice Ministry announced on Saturday that it would be unable to sign a labor market pact with Croatia, as previously planned, on July 1. That decision - which has been strongly criticized by the European Commission - followed a referendum by Swiss voters in favor of immigration curbs on EU members.

"The free movement of persons between the EU and Switzerland is a key principle that we will not put into question," said Joe Hennon, a spokesman for the European Commission. The commission said it was postponing talks on the EU's 80-billion-euro ($109 billion) Horizon 2020 research program, as well as its 14.7-billion euro Erasmus Plus educational exchange program.

"The protocol (with Croatia) has not been signed yet," said Hennon. "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.

Warning of 'serious consequences'

The Swiss referendum text - limiting the number of workers from its 28 member states - means that Bern has a full three years to renegotiate its labor market deal with the EU as a whole. However Switzerland can no longer conclude international treaties that increase the number of EU immigrants -- such as that with the bloc's newest member state Croatia.

Brussels' decision to put the research and study agreement on ice is among the first of a series of possible retaliatory moves. The EU has already postponed talks on a cross-border electricity deal with Switzerland.

Following the referendum last Sunday, European Commission President Jose Manuel Barroso warned that the restoration of quotas for EU migrants was in breach of an accord on free movement of workers that already existed. He warned the move would have "serious consequences" for relations between Switzerland and the bloc.

The Swiss government has said it will present a law on how to deal with the entire EU labor market by the end of the year. The head of the rightwing populist Swiss People's Party, Toni Brunner, on Sunday called for measures to be put in place more quickly, citing "a new wave of massive immigration" as the EU extends freedom of movement to its eastern members.

rc/av (AFP, dpa, Reuters)