The U.S. may draw a line in cutting off Russia’s ties with Swift
Seven years after Russia annexed Crimea and supported the separatist uprising in eastern Ukraine, the United States and its European allies put President Vladimir Putin on alert.There are more military Aggression against ukraine This will lead to more severe economic and political sanctions imposed by Western allies in 2014.
“If, in fact, he invades Ukraine, there will be serious consequences… and economic consequences that he has never seen or has never seen before,” President Joe Biden said Wednesday.
What thoughts might he have?On the one hand, Washington is urging Germany’s new coalition government to be ready to stop opening North Stream 2 PipelineThe project will increase Russia’s natural gas exports to Western Europe, but in the United States’ view, it will make Ukraine more vulnerable to pressure from the Kremlin.
In addition, some people in Washington’s foreign policy circle suggested that the Biden administration can use the power of the US dollar.In particular, it is widely speculated that Russia may be cut off from the Global Interbank Financial Telecommunications Association, or fast, An important system for international remittances.This is sometimes called “Nuclear option” ——Although no weapons are involved.
So far, the Biden administration has been cautious to avoid saying that it is considering measures to exclude Russia from Swift. In addition, although both Washington and Moscow have made public statements, they both know that the impact of excessive use of US economic sanctions has diminished to some extent in recent decades.
Most economic sanctions used by the President of the United States are International Emergency Economic Powers Act, The inheritance law of the Enemy Trade Act of 1917. There are more emergencies than most people can remember. A congressional agency discovered in July 2020 that 59 national emergencies had been declared since 1977, 33 of which are still ongoing.
IEEPA gives the President extraordinary powers to block the flow of U.S. dollars, freeze the use of payment systems, impose tariffs, and restrict exports. These have been used against “rogue state” officials, terrorists, drug lords, cyber hackers, money laundering banks, and regimes deemed hostile to American interests.
A small industry in Washington serves to be listed as “Specially Designated Nationals”, This label makes you unpopular in many banks and airports around the world.The list is made up of Office of Foreign Assets Control The U.S. Department of the Treasury. Ofac staff have access to financial, intelligence and law enforcement records.
As the list of sanctioned persons and countries increased, Washington realized that it had established an anti-alliance, from powerful figures in Venezuela and Iran to the ruling Kim family in North Korea. Those who are targeted by the United States have a common connection in the areas of gold, cryptocurrency, and money laundering.
In addition, hostile powers such as China or Russia may turn a blind eye to sanctions violations. The attractiveness of the US dollar as a reserve currency and medium of exchange is also facing increasing risks. If the world reduces its reliance on the dollar system, the United States will find it more difficult to finance its overseas government and corporate deficits.
So when some U.S. policymakers proposed Cut off Russia’s access to Swift, Ofac’s people coughed and looked at the ceiling.
Until last month, Michael Parker was a prosecutor of the U.S. Department of Justice Money Laundering and Asset Recovery Section, Where he worked closely with Ofac’s former colleagues. He is now responsible for the money laundering and sanctions department of Ferrari Associates, a Washington law firm. In his view, “Severing Russia from Swift without taking any other actions against Russia will only be deeply troublesome. Remember, Swift is just a communication system.”
Swift, based in Belgium, is the main secure messaging system that links global correspondent bank relationships. But another former senior official of Ofac said: “Swift is just a mechanism. There are other ways to make direct payments between banks. They can reuse telex as they did in the past.”
The former official added: “If you politicize European institutions like Swift, you will encourage countries such as Russia and China to establish their own systems. Therefore, Swift’s decision to implement policy deadlines has major shortcomings. .”
Russia’s attack on Ukraine will trigger some financial sanctions by the United States. But they may not include termination of access to the Swift system.