But it is a “risky” weapon; In terms of its repercussions, which may extend at the same time to European countries that have extensive economic relations with Moscow.
While European officials stressed, on Friday, the need to withhold “Swift” from Russia, as a punitive measure, US President Joe Biden said that this step, which “is still an option,” has not yet been accepted among Europeans, in reference to the differences between European countries on this. the decision.
The decision faces German concerns in particular, while Berlin does not oppose taking it, at the same time stating that it is “considering the consequences.” With more doubts about the feasibility of this step, German Chancellor Olaf Scholz said that the separation of Russia from Swift should not be part of the sanctions package against Russia . While other countries such as France and Britain announced their support for the resolution.
What is the “Swift” system, and what are its possible effects on Russia if a decision is taken to withhold it from it, and how do those repercussions extend to Europe, and are there financial alternatives to it?
The economic expert, Suleiman Al-Assaf, speaks in exclusive statements to “Sky News Arabia”, about the importance of the SWIFT system, which was established in 1973 and actually began its activity in 1977, in light of the rapid development and growth of global trade.
The system offers tremendous advantages, especially in terms of process security and execution speed, in addition to being less expensive than other conversion methods. In addition, it includes more than 200 countries, and thousands of financial institutions and banks (11507 institutions as of March 2020).
The SWIFT system works to match customer orders between the parties involved in financial operations, and certify them as in cash transfers related to the operations and the results of financial settlements, as well as certify the implementation of trading operations and their settlement between the participating parties.
According to Al-Assaf, “When a country is blocked from the SWIFT system, its financial movement becomes very difficult and it is unable to transfer and receive funds, which affects import and export operations and various economic activities.”
And if Russia is separated from the SWIFT system, this means “the impossibility of sending money to it, which puts Russian companies and their customers – including Europeans – in a wide crisis that affects energy exports as well.”
SWIFT (Association for International Financial Communications between Banks) allows linking and exchanging messages and information between all financial markets through banks responsible for carrying out those operations in different countries. It thus covers the various financial and banking operations that take place between banks and financial institutions.
The economic expert points out that the issue of withholding countries from the Swift regime – as happened earlier with Iran and incurring huge losses – represents an economic pressure tool that has very difficult repercussions on the economic situation and the currency, a measure being studied against Russia in light of the recent developments that accompany the sentence economic repercussions at different levels.
Iran suffered its separation from the Swift regime in 2012, in light of the tightening of international sanctions against it against the backdrop of its nuclear program, which led to Tehran losing half of its oil export revenues and up to 30% of its foreign trade, according to the statistics of the Carnegie Moscow Research Center.
According to the Russian Realist Center for Experts, “It is possible that Russia will consider any exception to the SWIFT payment system as a declaration of war, and it may respond militarily.”
The CEO of the Corum Center for Strategic Studies in London, Tariq Al-Rifai, comments in exclusive statements to “Sky News Arabia”, saying: “The separation of Russia from the “Swift” network remains a Western option on the table, but it faces an internal dispute in Europe, in terms of the rejection of some powers. Especially Germany, the Moscow chapter.
Al-Rifai indicates that the plan to separate Russia from the regime seems ready, while it is facing a German protest, in light of the broad and very strong economic relations that unite Russia and Germany, and the large volume of trade exchange between the two countries, and thus Berlin’s position hinders decision-making.
At the same time, the economic expert notes that, “Since it entered Ukraine in 2014, Russia has taken notice of this, and has begun preparing alternatives linked to a new system instead of the Swift system.”
alternative russian system
This Russian system that was introduced in 2014 is known as SPFS, and it is a auxiliary system that was adopted by the Russian Central Bank in 2017 as a replacement for SWIFT. Russia has also prepared its own Internet.
The deputy head of the Russian Security Council, Dmitry Medvedev, had commented weeks ago on Western threats to separate Moscow from the Swift network, saying: “They constantly intimidate us with this matter, which prompted us to create our own system for transmitting information, in anticipation of emergency situations… The same thing happens with the Internet.”