US President Joe Biden is seriously considering whether to support Russia’s expulsion from SWIFT, the high-security network that connects thousands of financial institutions around the world, but has not yet made a final decision.
The information was confirmed to CNN by several people familiar with the US president’s discussion and stance.
The decision to take such a step has always depended on approval from the European Union, which has been in a contentious debate for weeks over the action, choosing not to go forward this week.
But US officials and their EU counterparts continued to weigh options, including removing individual banks and entities, rather than the entire Russian economy, from the network, officials say.
The move would be considered the nuclear option when it comes to responses to Russia’s invasion of Ukraine.
Biden and his advisers highlighted how complicated it would be to block Russia from SWIFT, noting that the US cannot act unilaterally.
“This is not the position the rest of Europe wants to take,” Biden told reporters on Thursday.
But since Biden’s press conference announced new sanctions against Russia for its unprovoked attack, the government appears to be moving closer to that position, as other European allies have now lent their support.
The administration discussed the matter with the Federal Reserve, the US central bank, which would have a hand in any decision, according to an official. And US officials are talking to the EU about a possible move.
A government official said additional sanctions would likely come if Kiev, the beleaguered Ukrainian capital, falls. But it was unclear whether this would include the SWIFT system or whether Russia’s removal from SWIFT could happen sooner.
A White House official told the CNN that “as the president and government officials have made clear, we are focused on coordinating with allies and partners to impose more costs on Russian President Vladimir Putin for his war of choice,” but declined to comment further.
On Saturday, Italy signaled it would support taking steps to kick Russia out of SWIFT after Prime Minister Mario Draghi told Ukrainian President Volodymyr Zelensky that “Italy fully supports the European Union’s line on sanctions against Russia, including those related to SWIFT”.
Draghi’s comments are particularly notable given the Italian economy’s exposure to the energy system, but the main opposition to the action comes from Germany, officials say.
The Society for Worldwide Interbank Financial Telecommunication was founded in 1973 to replace telex and is now used by over 11,000 financial institutions to send secure messages and money orders. With no globally accepted alternative, it is an essential pipeline to global finance.
Russia’s removal from Swift would make it much more difficult for financial institutions to send money in or out of the country, causing a sudden shock to Russian companies and their foreign customers – especially buyers of US dollar-denominated oil and gas exports.
“The cut would end all international transactions, trigger currency volatility and cause massive capital outflows,” Maria Shagina, a visiting researcher at the Finnish Institute of International Affairs, wrote in an article last year for the Carnegie Moscow Center.
Russia’s exclusion from SWIFT would cause its economy to shrink by 5%, estimated former finance minister Alexei Kudrin in 2014, the last time the sanction was considered in response to Russia’s annexation of Crimea.
Swift is headquartered in Belgium and managed by a board made up of 25 people, including Eddie Astanin, chairman of the board of directors of the Central Counterparty Clearing Center of Russia.
The system, which describes itself as a “neutral utility”, is incorporated under Belgian law and must comply with EU regulations.
UK Defense Secretary Ben Wallace said on Friday that removing Russia requires consensus.
“These are international organizations, and if not every country wants them kicked out of the Swift system, it gets difficult,” he told the BBC.
Source: CNN Brasil
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