A joint statement released by multiple governments, including the White House, declared measures against Russia for their ongoing military operations in Ukraine. Among the measures is removal of “select” Russian banks from SWIFT, a “nuclear option” that will quickly hamper Russia’s economy.
According to Forbes:
- SWIFT, which stands for the Society for Worldwide Interbank Financial Telecommunication, is based out of Belgium and handles payment requests and messages between 11,000 financial institutions across the world, delivering 42 million messages per day in 2021.
- The Washington Post likens the system to the “Gmail of global banking,” and the Financial Times notes that while Russia and other countries can still conduct banking transactions with other countries without SWIFT, it would be much more labor-intensive and expensive.
- Cutting Russia off from SWIFT would have a significant economic impact: When the U.S. weighed booting Russia from the platform in 2014 due to its annexation of Crimea, former Russian finance minister Alexei Kudrin estimated Russia’s gross domestic product would shrink 5% in a year without SWIFT, and then-Prime Minister Dmitry Medvedev likened the move to a “declaration of war.”
- The FT also notes the move would harm Russia’s ability to profit off the oil and gas exports that make up 40% of the country’s revenue.
- Russia has established an alternative payments system and China also has its own system Russia could use, but the Atlantic Council notes both platforms are significantly smaller than SWIFT and wouldn’t sufficiently offset the sting of being cut off.
- Ejecting Russia from SWIFT would hurt the EU’s ability to pay for the imports of Russian oil and gas it relies on, however, with one senior executive likening the move to the FT as “opening Pandora’s box.”
Here is the joint statement:
We, the leaders of the European Commission, France, Germany, Italy, the United Kingdom, Canada, and the United States condemn Putin’s war of choice and attacks on the sovereign nation and people of Ukraine. We stand with the Ukrainian government and the Ukrainian people in their heroic efforts to resist Russia’s invasion. Russia’s war represents an assault on fundamental international rules and norms that have prevailed since the Second World War, which we are committed to defending. We will hold Russia to account and collectively ensure that this war is a strategic failure for Putin.
This past week, alongside our diplomatic efforts and collective work to defend our own borders and to assist the Ukrainian government and people in their fight, we, as well as our other allies and partners around the world, imposed severe measures on key Russian institutions and banks, and on the architects of this war, including Russian President Vladimir Putin.
As Russian forces unleash their assault on Kyiv and other Ukrainian cities, we are resolved to continue imposing costs on Russia that will further isolate Russia from the international financial system and our economies. We will implement these measures within the coming days.
Specifically, we commit to undertake the following measures:
First, we commit to ensuring that selected Russian banks are removed from the SWIFT messaging system. This will ensure that these banks are disconnected from the international financial system and harm their ability to operate globally.
Second, we commit to imposing restrictive measures that will prevent the Russian Central Bank from deploying its international reserves in ways that undermine the impact of our sanctions.
Third, we commit to acting against the people and entities who facilitate the war in Ukraine and the harmful activities of the Russian government. Specifically, we commit to taking measures to limit the sale of citizenship—so called golden passports—that let wealthy Russians connected to the Russian government become citizens of our countries and gain access to our financial systems.
Fourth, we commit to launching this coming week a transatlantic task force that will ensure the effective implementation of our financial sanctions by identifying and freezing the assets of sanctioned individuals and companies that exist within our jurisdictions. As a part of this effort we are committed to employing sanctions and other financial and enforcement measures on additional Russian officials and elites close to the Russian government, as well as their families, and their enablers to identify and freeze the assets they hold in our jurisdictions. We will also engage other governments and work to detect and disrupt the movement of ill-gotten gains, and to deny these individuals the ability to hide their assets in jurisdictions across the world.
Finally, we will step up or coordination against disinformation and other forms of hybrid warfare.
We stand with the Ukrainian people in this dark hour. Even beyond the measures we are announcing today, we are prepared to take further measures to hold Russia to account for its attack on Ukraine.
Russian President Vladimir Putin has made multiple threats regarding this type of interference. Among the threats that have been made by the Russian government is to crash the International Space Station into America. Heads up!