Despite pressure from politicians, the U.S. and its allies won’t push to expel Russia from the SWIFT global financial-messaging network, Bloomberg News reported.
At a summit in Brussels this month, European Union leaders agreed to extend existing sanctions on Russia through the end of 2015. But seven months after U.K. leaders proposed at a similar summit to cut off Russian banks from the network, which handles international interbank communication for more than 10,500 financial institutions, that option is still being kept off the table.
The biggest reason: U.S. and German banks are the ones who use the SWIFT network the most to communicate with Russian banks, and would be hardest hit by the shutdown. A cutoff would also make a Russian cyberattack on foreign banks more likely, some experts have suggested. “Russia is a cyber superpower fully capable of destroying the entire global financial system,” Brookings Institution senior fellow Clifford Gaddy told Bloomberg. He added that, “So far, we have been protected against that outcome” because Russia won’t attack the financial system on which it so heavily depends.
U.S. senators John McCain and Marco Rubio have pushed for a SWIFT cutoff to pressure Russia over the conflict in Ukraine. They and U.K. Prime Minister David Cameron point to the decision in 2012 to cut off two dozen Iranian banks from SWIFT as part of sanctions to prevent Iran from pursuing nuclear weapons. Transactions with banks in South Africa were also blocked in the 1980s as part of anti-apartheid sanctions.
But in October, SWIFT issued a statement saying it “has no authority to make sanctions decisions,” and that it would require a decision by the EU for any such cutoff.
While the 2012 cutoff for the Iranian banks was disruptive, its biggest impact was on financial transactions involving oil. Russia’s $2.1 trillion economy and $866 billion in annual trade are each more than five times the size of Iran’s, and would have much wider economic effects on the world financial system, Bloomberg reported.