Ukrainian woman confronts Russian soldier in the street
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Sanctions are being placed on Russia left, right and centre as the deadly incursion into Ukraine continues unabated. But one key instrument that could destabilise Russia and put an end to its belligerence is still not being tabled despite pressure from some EU states.
The removal of SWIFT would be one of the harshest sanctions the West could impose on Russia, and analysts are united in their belief it could bring a stop to Russia’s tyrannical invasion of Ukraine.
But Western leaders are split on whether to remove Russia from the crucial banking system.
Prime Minister Boris Johnson reportedly pushed for Russia’s removal in a call with the G7, and later admitted to MPs it was “vital that we have unity” on the issue among western allies.
Labour leader Sir Keir Starmer has also called for the UK to back the removal of Russia from Swift.
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Canada’s Prime Minister Justin Trudeau also backed action on Russia’s SWIFT membership.
But some parties in the EU are reluctant to impose such an extreme measure, claiming they need to keep further sanctions at bay for use in the future.
German chancellor Olaf Scholz warned on Thursday that his country had reservations about such a dramatic move, a sentiment reflected within the upper echelons of the EU, according to officials close to sanctions negotiations.
You may have noticed you have a SWIFT code linked to your own bank account – but what exactly is SWIFT, and what damage could removing Russia do?
What is SWIFT?
SWIFT is the Society for Worldwide Interbank Financial Telecommunication.
It is the world’s main international payments network and is a secure messaging system used by banks to send money across borders.
Founded in the 1970s, SWIFT is based in Belgium and is neutral in trade disputes.
It is used by more than 10,000 financial institutions across almost every country in the world.
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What effect would a SWIFT ban have?
Removal from SWIFT would have a catastrophic impact on the Russian economy – but it could also severely damage the West too.
The result of banning Russia from SWIFT would be immediate, and it would cut Russia off from most international financial transactions, including international profits from oil and gas production, which in all accounts for more than 40 percent of Russian revenue, and would severely dampen President Putin’s ability to finance the war.
But creditors around the world would also be negatively impacted, and the USA and Germany would stand to lose the most if a removal were implemented, as their banks are the most frequent SWIFT users with Russian banks.
Have any countries been removed from SWIFT?
SWIFT was instructed by the European Council to remove Iran from its system in 2012 over its nuclear programme – but many of its banks have since been reinstated.
The repercussions were enormous – Iran lost half its oil export revenue and an estimated 30 percent of its foreign trade.
At the time, SWIFT’s CEO said: “Disconnecting banks is an extraordinary and unprecedented step for SWIFT.
“It is a direct result of international and multilateral action to intensify financial sanctions against Iran.”
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