If the US decides to impose sanctions on Russian banks, it could say that Swift violated those sanctions by continuing to let those banks use its system. The Defending the Ukraine Sovereignty Act 2022 which Senate Democrats announced this month would authorize sanctions on specialized financial messaging service providers, such as Swift, but the Biden administration could also impose such sanctions without congressional approval.
Cutting off a country’s Swift access is not without precedent.
In 2012, Swift was deported up to 30 Iranian financial institutions, including the central bank, to comply with European Union sanctions enacted in response to Iran’s disputed nuclear energy program. Services resumed after the 2015 nuclear deal, and then cut again in 2018 after the Trump administration withdrew from the treaty and resumed sanctions.
How will Russia react when removed?
Russia has faced such threats before. In 2014, when Russia invaded and annexed Crimea, there were calls in Europe to exclude Russia from Swift. Dmitri A. Medvedev, then Prime Minister of Russia, said at the time that such a move would be a “declaration of war”. According to the Carnegie Moscow Center, Russian forecasts at the time suggested that being cut off from Swift would shrink the country’s gross domestic product by 5 percent.
Last week, Nikolay Zhuravlev, deputy speaker of the Council of the Russian Federation, told government-run news agency TASS that excluding Russia from Swift would also have economic consequences for European countries, which he said would not be able to receive Russian oil, gas and metals imports because Russia could not receive them. currency.
Mr. Smith, a former Treasury official, said the United States and Europe could find ways to exempt some Russian sectors, such as energy, from sanctions. However, moves to cut off Russia’s economy could have unintended consequences, such as Moscow’s retaliation, which could rattle global markets.
“They are not without their own cards to play,” he said.
Switch to Swift Alternatives
The threat of being cut off from Swift may not be as dire as it was in the past.
Several countries including Russia have developed their own financial messaging systems that, although less complex than Swift, could allow Russian financial companies to stay in touch with the world. Russia began developing its system in 2014 amid escalating sanctions from the United States.
https://www.nytimes.com/2022/01/31/us/politics/russia-swift.html What does disconnecting from Swift mean for Russia