Why did the United States not cut off Russia from the Swift? It is complicated.

President Biden said Thursday that the United States and Europe are united in their efforts to counter Russian aggression against Ukraine with tough sanctions. However, there was one area in which the disagreement was suggested: Swift.

The Belgian messaging service, officially known as the Association for Worldwide Interbank Financial Telecommunication, connects more than 11,000 financial institutions around the world. It is seen as a potential nuclear option in the world of sanctions because if Russia were expelled from the Swift system, the nation would be essentially cut off from a large part of the global financial system.

But doing so won’t be easy and could come with a set of costly complications for countries outside Russia, many of which depend on the state for energy, Wheat and other goods. This has made some countries fickle about pulling the trigger.

SWIFT is a global cooperative of financial institutions that began in 1973 when 239 banks from 15 countries came together to figure out the best way to handle cross-border payments. It does not actually hold or transfer funds, but allows banks and other financial companies to alert each other about transactions that are about to occur.

Banning Russia from SWIFT will limit its ability to conduct international financial transactions by forcing importers, exporters, and banks to find new ways to send payment instructions. Analysts said that due to Europe’s heavy dependence on Russian energy exports, there is a reluctance among some eurozone leaders to take this step and to risk those purchases by making it more expensive and complex to do business with Russia.

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The Financial Times reported, On Thursday, British Prime Minister Boris Johnson was pushing hard to get Russia out of the Swift regime, while German Chancellor Olaf Schulz said such a move should not be included in the EU’s sanctions package.

Mr. Biden said Thursday that US sanctions against Russian financial institutions would be the result of Russia being excluded from the SWIFT system. He said expulsion of Russia from the podium remained an “option” but most of Europe was opposed to such a move for the time being.

It’s always an option,” Biden said. “But at the moment, that is not the position the rest of Europe would like to take.”

The US and Europe have disagreed over whether a country should be taken out of SWIFT before, most recently in 2018, when the Trump administration wanted to cut off Iran’s access. finally, Swift cut ties with Iranian banks For fear of violating the sanctions imposed on that country.

However, sanctions experts said SWIFT is often overrated as a tool and that cutting off access could actually backfire by forcing Russia to find alternative ways to participate in the global economy, including forging stronger ties with China or developing a digital currency.

Such a measure could accelerate Russia’s efforts to expand the use of its financial messaging service and bring it closer to China, said Emily Kilkris, a senior fellow at the Center for a New American Security.

“There is also this long-running question of whether scrapping the Swift itself creates a lot of bad incentives for Russia,” Kilkris said.

Michael Parker, an attorney at the law firm Ferrari & Associates, suggested that blocking Russia from SWIFT likely opened the door to other solutions, including finding alternative communications systems. He said the most effective first step would be to impose the kind of banking sanctions Biden announced on Thursday.

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“To actually isolate Russia from the American banking system or the global banking system, the Russian banks have to be punished. And that’s what they did.” At the end of the day, this is a financial tool — hitting their big banks is as far as we can possibly go beyond the first line of sanctions. .”

Emily Flitter Contribute to the preparation of reports.

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