Ukraine: Dependence on Russian gas at the heart of hesitations to exclude Russia from Swift

The West has so far failed to agree on maximum sanctions against Russia, refusing to exclude it from the international banking system Swift, mainly due to the fear of many European countries for their energy supply.

Although the measure is on the table, no measures to exclude Russian banks from this international payment system, a key lever of the global financial system, were decided yesterday, Thursday, by European leaders at the Brussels summit.

Many countries, such as Germany, Austria and Hungary, have expressed reservations, fearing the consequences of such a decision on Russian gas exports.

“Swift blockade would have a huge impact (…) on German companies in their relations with Russia, but also on the settlement of energy supply payments,” German government spokesman Stephen Hempstreet said today.

In Hungary, Prime Minister Viktor Orb .n expressed satisfaction that the sanctions decided yesterday “do not extend to energy”, which is a guarantee “for the energy supply of Hungary and other EU member states”.

Nuclear weapon

Swift, an acronym for the Society for Worldwide Interbank Financial Telecommunication, is a Brussels-based company and is therefore governed by the Belgian and European networks.

Founded in 1973, it is one of the most important banking and financial communication networks, enabling interbank transactions between financial institutions around the world.

According to the website of the Russian organization Rosswift, Russia is the second country after the United States in number of users of this system, with 300 Russian banks and institutions as its members.

In practice, the system allows a country like Germany to pay for Russian gas electronically.

The exclusion of a country from this system is considered a “nuclear economic weapon”, since the consequences in the economic relations of that country with the rest of the world are enormous.

But the exclusion of a state from Swift means that other banks can not do business with the banks of the punished country either. A fact that has not escaped the attention of the most economically dependent countries of Russia, such as Germany.

“We must always be careful not to harm ourselves more than others – in this case, sanctions do not make sense,” said Jürgen Tritin, a German lawmaker who specializes in international affairs for the Greens.

But even countries with little exposure to Russian raw materials, such as France, remain reluctant to take such a measure with such a complicated application.

“Swift is among the options, but it is the last resort,” French Finance Minister Bruno Lemerre said today.

Indignation

Austria has said, through Chancellor Carl Nehammer, that the financial sanctions imposed yesterday by G7 leaders will already hit 70% of Russian banks in their transactions, making it impossible to block Swift.

This hesitant attitude is causing outrage within Europe as well: “EU governments that have blocked difficult decisions (…) have been dishonored,” said Donald Tusk, former President of the European Council and current President of the European People’s Party. The same criticisms have been made by Kiev.

On the British side, Prime Minister Boris Johnson also spoke in support of Russia’s blockade of Swift during the G7 summit, according to a Downing Street spokesman.

“We want Swift deactivated. Other countries do not want it,” British Defense Secretary Ben Wallace told the BBC.

US President Joe Biden said yesterday that excluding Russia from Swift remained an option, acknowledging that “at the moment it is not an option shared by Europeans.”

Already in 2014, shortly after the annexation of Crimea by Russia, the measure was discussed, but eventually abandoned.

Source: AMPE