The conflict between Russia and Ukraine has escalated to the highest in recent days, after the Slavic invasion last Thursday, February 24. After that, the United States has again proposed the withdrawal of Russia from the international financial system (SWIFT) in his eagerness to persuade the Russian president, Vladimir Putinnot to continue the aggression on Ukrainian soil.
In dialogue with La República, the jurist and internationalist, Miguel Ángel Rodríguez Mackay, “The United States has chosen as a strategy to make Russia a financial and economic pariah, having considered not intervening militarily in Ukraine.”
What is the Swift system and why is it important?
The Society for World Interbank Financial Telecommunication (SWIFT) was born in 1973 in Brussels with the intention of ending dependence on the telex system. It is made up of more than 11,000 financial institutions and companies; and is present in 200 countries and autonomous territories.
Among its functions is to deliver messages between entities and nations, in fact, the average number of messages delivered in 2021 was 42 million per day and includes orders and payment confirmations, transactions and currency exchanges.
If a country lost access to the SWIFT procedure, it would simply “limit the movements of money that pass through the financial system,” Hugo Perea, chief economist at BBVA Research, told this newspaper.
The only country expelled from the SWIFT system was Iran in 2012 and 2018. Russia suffered an attempt in 2014, but it did not prosper.
How does it affect Russia?
The proposal initially did not have the support of the entire European Union, but as Russia advances in Ukraine some positions are changing.
Initially, fears for the energy security of Germany and Italy did not support the Washington initiative. And it is that in the old continent SWIFT is used to send payments for Russian oil and natural gas, especially the second, “on which they have a high level of dependence,” said Mackay, referring to the 40% of gas that Russia sells to the bloc of 27.
“Payments for oil and gas exports could be complicated for Russia, but it also has collateral effects for Europe, since it would have restrictions on the use of these commodities,” Perea warned.
1% of Russian transactions on SWIFT take place in Dollars. This could give clues as to why the US Treasury exempted fuel from sanctions last Thursday, February 24.
However, that last February 26 the European Union was gradually advancing in support of the definitive expulsion of Russia from the financial messaging system. Italy moderated and gave public support if it were unanimously supported by the 27 nations that make up the bloc.
United Kingdom, which although it is no longer part of the EU since 2021, it is one of the countries that also pressures others to join the measure as Hungary, PolandLithuania and Germany.
“The economy is a circuit of links typical of globalization and in the international economy of the 21st century, interdependence is a rule; therefore, if Russia is affected, those with a high level of interdependence will also be affected,” Rodríguez Mackay said.
Meanwhile, from wall streetsome major banks have asked lawmakers and the Biden administration not to remove Russia from the SWIFT system, as it would have far-reaching consequences that could damage the global economy.
“I am not convinced that (the effects of the withdrawal) will be immediate, the Russian approach is military and surely they will be concentrated there and I am convinced that Russia has foreseen that a military entry would mean an economic sanction by the United States. That was already foreseen within the Russian plan, but of course, this is not for him to endure for a long time either and the economic collapse would be done with the sole objective of weakening Vladimir Putin on the internal front of his country”, he warned. Rodriguez Mackay.
Another concern in the West is that a Russian expulsion from the system SWIFT can strengthen rival messaging systems like those of China and Russia itself.
Russia has financial messaging integrated into its national bank in 2014, after the first expulsion attempt in the Crimea case.
According to Bloomberg, it has around 400 users, a very small number compared to the more than 11,000 firms that use it. SWIFT. Another ally could be Chinaa country where Russian banks could go and continue operating.
“The idea is to move Russia away, the banks do not lose, since they are going to look for other spaces and I know they will go to the countries where they can continue to mobilize on the system on which they live,” he said. Miguel Rodriguez Mackay.
Source: Larepublica
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