Russia is set to face retaliation for its offensive in Ukraine, as several Western countries say they are ready to exclude Russian banks from the Swift financial messaging system. An exceptional measure, which Iran faced in 2018.
Six months after withdrawing from the Iranian nuclear agreement signed in 2015, Donald Trump had decided to hit Iran in the wallet, targeting in particular the oil and financial sectors. The banking and financial messaging network Swift had implemented the sanctions requested by the United States, which wanted to disconnect Iran from the platform.
Swift at the time called the decision by the United States “regrettable”, but capitulated, arguing that it had been taken “in the interest of the stability and integrity of the global financial system as a whole”. “I announce that we will proudly circumvent your illegal and unjust sanctions because they go against international law,” Iranian President Hassan Rouhani said in the process.
In 2012, Swift administrators had already removed 30 Iranian financial institutions from the platform following the revival of Iran’s nuclear program.
What would be the consequences for Russia?
The United States has called the possible expulsion of Russia from the Swift system a “nuclear weapon”. The reason ? More than 300 Russian banks use the Swift system for their transactions, ranking the country second only to the United States in terms of the number of users.
An expulsion would inevitably lead to a slowdown in their financial system, and would therefore have a strong impact on the country’s economy. As the Carnegie Moscow Center points out, “Russia is heavily dependent on Swift for its exports of billions of hydrocarbons denominated in US dollars”.
Western countries at odds
The exclusion of Russia from the Swift system was not immediately unanimous among Western countries, since many of them have economic interests with the country led by Vladimir Putin.
This Friday, Germany, one of the countries most reluctant to this expulsion, had indicated via its spokesperson that a “suspension of Swift would have massive repercussions (…) for German companies in their relations with Russia, but also to settle energy delivery payments”.
For his part, Polish Prime Minister Mateusz Morawiecki had pointed to “Germany’s concrete selfishness”. In France, Bruno Le Maire said he was in favor of this sidelining of Russia.
Finally, the Western countries succeeded in reaching an agreement, and announced in a press release that they had decided to exclude many Russian banks from the interbank platform. These measures have been taken by the United States, France, Germany, Great Britain, Canada, Italy and the European Commission.
In 2014, Russia had already been threatened with expulsion from the financial messaging network, following the annexation of Crimea carried out by the Russian Federation.