EU Fear of Running Out of Gas Halts Russian Exclusion from Swift Banking System

The West has so far failed to agree on extreme sanctions against Russia, refusing to exclude it from the Swift banking system, mainly due to fears in several European countries over its energy supply.

European leaders, meeting at the Brussels summit on Thursday, did not decide on any measure to block Russian banks from this international payment interface, an essential mechanism of world finance, in retaliation for the invasion of Ukraine.

Several countries, including Germany, Austria and Hungary, expressed reservations, fearing the impact of such a decision on Russian gas supplies.

“A suspension of Swift would have massive repercussions for German companies in their relations with Russia, but also for making energy delivery payments.”, the spokesman for the German government, Steffen Hebestreit, justified on Friday.

In Hungary, Prime Minister Victor Orban welcomed the sanctions decided on Thursday “do not extend to energy”, guaranteeing “the supply of gas to Hungary and the other EU Member States”.

Swift, an acronym for Society for Worldwide Interbank Financial Telecommunication, is a Brussels-based company, subject to Belgian and European law.

Founded in 1973, it is one of the most important banking and financial messaging networks, which allows interbank settlement between financial institutions around the world.

According to the website of the Russian national association Rosswift, Russia is the second country after the United States in number of users of this system, with some 300 member banks and institutions.

Specifically, this system allows, for example, a country like Germany to pay electronically for its purchases of Russian gas.

economic nuke

Blocking a country from this system is considered a “economic nuke”, since the impact is important for the economic relations of that country with the rest of the world. But to disconnect a State from Swift is also to prevent its own banks from making transactions with the banks of the punished country.

A fact that did not escape the most economically dependent nations of Russia, such as Germany. “Always be careful not to harm yourself more than others. In this case, sanctions are meaningless”, declared the German deputy Jürgen Trittin, specialist of the international for the ecological party.

Even in the European states less dependent on Russian raw materials, such as France, skepticism remains, since the application of this measure is complex.

“Swift is one of the options” but “is the last optionFrench Economy Minister Bruno Le Maire commented on Thursday.

Austria, through Foreign Minister Karl Nehammer, declared that the economic sanctions decided on Thursday by the G7 leaders would already affect 70% of Russian banks in their transactions, making Swift’s blockade useless.

But the point of view is not shared by all. “EU governments that have blocked tough decisions have disgraced themselves”, declared the former president of the European Council, Donald Tusk, currently head of the Right Party PPE in the European Parliament.

A criticism expressed also by Ukraine.

British Prime Minister Boris Johnson advocated such a move at the G7 meeting, according to a spokesman.

“We want (Swift) to be disabled. Other countries don’t want itBritish Defense Minister Ben Wallace lamented on BBC radio.

US President Joe Biden assured Thursday that cutting off Russia from the Swift network remains “One option”, and acknowledged that “is not currently a position shared by Europeans”.

In 2014, shortly after Russia’s annexation of Crimea, the option had been discussed but ultimately abandoned.