EU studies blocking Russia from Swift in the next few hours: France’s lonely position

With information from EFE

The French Minister of the Economy, Bruno Le Maire, announced this Friday that the European Union will study “in the next few hours” the possible blockade of Russia from the Swift international payment and banking data system.

The use of Swift “is the financial nuclear weapon”, since it allows Russian financial institutions to be blocked from accessing transactions with the rest of the world, Le Maire said after a meeting of EU economy and finance ministers on the consequences economic consequences of the Russian invasion of Ukraine.

Belgium-based Swift is a platform that connects some 11,000 financial institutions around the world and functions as a messaging system for reporting financial transactions, making it a fundamental pillar of the international financial system.

Swift’s blockade was not included in the first sanctions package agreed last night by an emergency summit of EU leaders.

Le Maire acknowledged that the activation of Swift’s blockade had generated “reservations” among some EU member states, which he did not want to identify, but not in France, which “has no reluctance”, since “Russia has already exceeded all limits long ago”.

France, as the country that holds the rotating presidency of the EU, must “take into account these reticence”, but stressed that “there must be a European consensus” to approve this measure.

He explained that the European Central Bank and the European Commission “are going to present us with a more precise evaluation of the consequences of preventing access to Russia’s Swift”, and warned: “We will see what happens in the next few hours.”

Swift for Russia: Germany an obstacle

Germany, which relies on Russian gas to power Europe’s largest economy, is the most notable hurdle, CNN reported.

Foreign Minister Olaf Scholz, who earlier this week was praised for stopping the certification of a new Russian gas pipeline, has come under fire at home.

“Swift is our sharpest sword,” Christian Democratic Union lawmaker Norbert Röttgen said on Twitter on Thursday. “Swift Exclusion of Russia Must Not Fail Now Because of Germany!” The German government said such a move would require careful preparation.

“A suspension of Swift would have a massive impact on payments in Germany and for German companies doing business with Russia, but also to settle energy supply payments; all of that would have to be well prepared,” Steffen Hebestreit told reporters.

What is SWIFT?

The Society for Worldwide Interbank Financial Telecommunications was founded in 1973 to replace the telex and is now used by more than 11,000 financial institutions to send secure messages and payment orders. Without a globally accepted alternative, it is an essential plumbing for global finance.

Removing Russia from SWIFT would make it much more difficult for financial institutions to send money in or out of the country, creating a sudden shock for Russian companies and their foreign customers, especially buyers of oil and gas exports denominated in US dollars.