SWIFT, the messaging system that connects over 11,000 financial institutions as they transfer money around the globe, has ended its relationship with Iranian banks, succumbing to pressure from the Trump White House.
The New York Times, citing SWIFT, reported SWIFT is disconnecting Iranian banks from the messaging system due to the sanctions against 50 of Iran’s financial firms placed on the country by the U.S. Swift wouldn’t say if the ban applies to all of the financial firms on the U.S. government’s Iran sanctions list. Steven Mnuchin, treasury secretary, said last week that Swift has to disconnect any bank in Iran that is on the list, noted the New York Times.
The move on the part of SWIFT will aid the Trump Administration in isolating the government of Iran and could worsen the U.S. fight with the European Union, reported the New York Times, noting that it could also strengthen efforts by the European Union to create a payment system that isn’t influenced by the White House. The EU has said it is working on one, but the paper pointed out that it faces an uphill battle. None of the European countries have offered to be the host country for the payment company because they are worried about retaliation from the U.S., noted the New York Times. In a statement to the paper, SWIFT said the move to kick the Iranian banks off its messaging system was “regrettable” but that it was necessary to maintain the integrity of the financial system around the globe.
“The impact this time will not be as big as before because they are already isolated, but it will make it harder for them,” said Katherine Bauer, a fellow at the Washington Institute for Near East Policy in an interview with the New York Times. In 2012, when President Obama imposed sanctions on Iran, SWIFT also cut off access to the banks in the country. “If SWIFT disconnects all the designated banks, this is truly a tougher policy,” Richard Goldberg, a senior adviser at the Foundation for Defense of Democracies, a group that supports sanctions against Iran, told the New York Times. “If SWIFT doesn’t, this is a weaker policy with better spin.”