Pressure mounts in Europe for “maximalist” sanctions against Russia

Several European countries have crossed the Rubicon by considering excluding Russia from the Swift banking system in response to the invasion of Ukraine, adding to the pressure on the continent, where members such as Germany and Hungary fear for their energy supply.

On Thursday, European leaders meeting in Brussels did not decide on any measure to block Russian banks from this international payment interface, an essential mechanism of world finance.

Countries such as Germany, Austria and Hungary expressed reservations about applying this sanction, considered maximalist, fearing the impact it would have on Russian gas supplies.

This Friday, Karl Nehammer, the head of the Austrian government (a country that buys 70% to 80% of its gas from Russia) went from opposing the measure to asking “an exclusion of Russia from Swift”.

“We must not wait for shootings and dead bodies on the streets of Kiev”, stated the Latvian Minister of Foreign Affairs, Edgars Rinkevics, indignantly.

French Finance Minister Bruno Le Maire also declared himself in favor of this sanction: “Several countries expressed their reservations, but France is not part of them”. A statement that distances him from his German partner.

“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.

“Inexpensive nuclear weapon”

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.

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

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.

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

“If Russian banks are disconnected from Swift, import and export payments with Russia will be more difficult”, confirms Eric Dor, director of Economic Studies at the French school IESEG School of Management.

Dishonor

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.

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

On average, 40% of gas imports in Europe come from Russia, with significant differences between 70%-80% from Austria, 55% from Germany and 17% from France.

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.

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.