The Weapon Of The West That Can Destroy Russian Power Without Firing A Shot

Ukraine has demanded sanctions against Russia following its suicide attack, as well as its separation from the central world payment system.

Removing Russia from the Society for Worldwide Interbank Financial Telecommunications (SWIFT) network could reduce Russia’s ability to trade with most countries in the world and could severely hit its economy.

But on Thursday, the United States and the European Union chose not to separate Russia from SWIFT, leaving the door open to reconsider the possibility.

What is SWIFT?

SWIFT is a network used by banks to send secure messages regarding money transfers and other transactions.

More than 11,000 financial institutions in about 200 countries use SWIFT, which makes it the backbone of the international financial transfer system.

How does SWIFT work?

SWIFT is allowed to record international banking numbers and bank identification codes.

It connects more than 11,000 financial institutions worldwide and broadcasts over 5 billion financial messages annually.

It connects clients to banks when they make transactions.

If the two entities are not partners, then Swift becomes a mediator and communicates between the two entities.

It claims to be a reliable and secure system that conducts transactions between banking partners.

Who owns SWIFT?

SWIFT is a cooperative established under Belgian law. “It is owned by its shareholders (financial institutions) who control it and represent about 3,500 firms around the world,” the website said in a statement.

What is the relationship between SWIFT and Russia?

According to the Russian National Swift Association, Russia has the second largest number of consumers after the United States, with about 300 Russian financial institutions affiliated with the system.

More than half of Russia’s financial institutions are members of SWIFT.

Alicia Garcia Herrero, chief economist for Asia Pacific at Netexus in Hong Kong, said that imposing sanctions on Russia over SWIFT would be a serious blow to the country.

“It’s a big deal because no debt or commercial financing can be made without it,” he said.

Garcia Herrero says it is bigger than blocking EU gas imports from Russia.

Russia’s response

Nicole Zvoravlio, vice-speaker of the Federation Council, acknowledged in January that expelling the country from the network was a possibility.

SWIFT is a settlement system, it is a service. So if Russia loses contact with SWIFT, we will not receive foreign currency. But buyers, European countries, will not be able to get our goods first, oil, gas, metals and other important components of their imports.

Zoravlio also pointed out that although SWIFT is easy, it is not the only way to transfer money, and a decision such as suspending a country would require a consensus among the members.

Zoravalio added that SWIFT is a European company, an association that includes many countries.

Is Russia’s suspension of SWIFT really a threat?

Gunter Wolf, director of the Brussels-based Bruegel think tank, told AFP that the pros and cons of the strategy were debatable.

In practice, the removal of SWIFT would mean that Russian banks could not use it to make payments or receive transactions with foreign financial institutions.

Western nations have threatened to expel Russia from SWIFT following the annexation of Crimea in 2014.

But leaving large economies like Versace, which is also a major exporter of oil and gas, could have significant consequences for other countries.

The Prime Minister of the Netherlands, Mark Rutte, acknowledged on Thursday that sanctions were “sensitive” for some EU countries because they would have a “huge impact on themselves”.

“In practice, that would be a real headache,” Wolf said. This will have a particularly significant effect on European countries, which have significant trade with Russia, which supplies 41% of the continent’s natural gas.

Herrero said leaving Russia would be “costly” for bondholders, EU banks and energy importers.

Such sanctions could prompt Moscow to accelerate the development of an alternative transition system, with China, or other countries, potentially reducing US dominance over the financial system.