Last week, members of the US Senate presented draft new sanctions against Russia, including restrictions on “Swift service providers” to Russia.
According to analysts, “Swift” is the most difficult Western option for the Russian and international financial markets; It is enough to isolate the Kremlin from the world financially, and it will cost the West, especially Washington and Berlin, a heavy price.
Why Swift System?
Discussions are taking place in the corridors of Western politics, during the past days, about this scenario, which is the removal of Russia from the international financial system SWIFT, which has no alternative globally so far.
The Society for Interbank Financial Communications (SWIFT) is a global banking communications network that connects thousands of banks and financial institutions around the world.
It was founded in 1973 and headquartered in Belgium as a result of the growth in the volume of international trade, and includes 209 countries, including most of the Arab countries.
Currently, it is used by more than 11,000 financial institutions around the world, exchanging secure messages and orders to pay money in a unified and trusted environment.
According to economists, isolating Russia from the SWIFT system will make it almost impossible for its financial institutions to send money in or out of the country.
It will also lead to a major crisis for Russian companies and their foreign clients regarding oil and gas purchases and exports.
Impossible threats
And former Russian Finance Minister Alexei Kudrin estimated, earlier, that this would lead to a contraction of the Russian economy by 5 percent.
And through “Swift” passes annually about 4 billion payment transactions, and daily amounts estimated at trillions of dollars, until it controls the entire global financial payments.
One of the consequences of isolating Russia is causing fluctuations in the currency market, as well as an outflow of capital, says Maria Shagina, a researcher at the Finnish Institute of International Affairs.
But the United States and Germany, in turn, have a lot to lose. Because their banks are more connected to SWIFT than to Russian banks, according to Shagina’s interview with CNN.
looks like an atomic bomb
Agreeing with her, from Moscow, Ashraf al-Sabbagh, a specialist in Russian affairs, says: “The demands to separate Russia from this regime come within the framework of impossible threats, or “impossible assumptions.”
In exclusive statements to “Sky News Arabia”, he warns of the consequences of the decision, which he estimated to “explode an atomic bomb” in the financial markets, goods, services and banking transactions, and even paralyze the global financial system, because it “will break the back of the international payments movement.”
Among the other risks of isolating Moscow, is the destabilization of financial markets, which will need an alternative system of banking interactions in which the West will not have the upper hand, according to Al-Sabbagh.
As for researcher Mohamed Hamed, director of the Eastern Mediterranean Forum for Political Studies, he expects international sanctions to be imposed on Russia without the “SWIFT” system.
In exclusive statements to “Sky News Arabia”, he explained that “this measure will paralyze the markets of Russian gas exported to Europe and wheat exported to third world countries.”
Russian stress papers
As for Russia, it has some cards and measures against the West; Including the imposition of severe sanctions on American and European banks and politicians.
An indication of this became evident during its recent decision to prevent a number of representatives of European Union countries and institutions from entering Moscow.
Moscow also created its own payment system, known as SPFS, after it was hit by Western sanctions in 2014.
Through this system, about 20 percent of domestic remittances are transferred, according to Russian financial expert Artyom Tozov, to the Russian “Sputnik” agency.
As an alternative to Swift, Moscow may turn to the Chinese payment system known as CIBS, or endorse the cryptocurrency system.
proactive move
In a proactive step, the Russian Central Bank introduced the digital ruble currency into financial transactions, to make payments without an international credit transfer system, and thus it could avoid the repercussions of “SWIFT”.
But the sudden isolation of Russia will cause panic in its financial markets, but the turmoil will subside after a while due to the support of the ruble with gold reserves, according to “Tozrov”, who confirmed that Moscow is storing reserves of gold and the dollar, which makes it wait for the end of any economic storm.
Disagreeing with him, researcher Muhammad Hamid says: “Russia has no tools to respond other than the invasion of Ukraine, as a pressure card to protect its national security and confront the West.”
He adds: “Russia has a weak economy that is subject to the international system and is always subject to sanctions.”
According to him, it “lacks the ability to face sanctions, because it is a rentier state that lives on oil and gas exports, despite its strength stemming from its membership in the Security Council and its possession of nuclear weapons.”
Agreeing with Hamid, Al-Sabbagh says, “Russia does not have any possibility to respond, because its economy is weak and depends on the export of raw materials, unlike the diverse and developed Western economies.”
And he added, “Russia will only have a military response in an adventure that could lead to a third world war that harms everyone.”
Atomic bomb
Last week, Germany suspended consideration of the issue of separating Russia from “Swift”, during the discussion of possible Western sanctions, according to German media.
In this regard, the leader of the German Christian Democratic Union, Friedrich Merz, warned against isolating Russia financially.
Meretz said: “Swift” may be an “atomic bomb explosion” in the financial, goods and services markets, according to the German news agency.
While predicting an “economic catastrophe for Russia”, he asserts that the decision “will cause huge setbacks to our economies, and we will harm ourselves greatly.”
Russian analyst Ashraf al-Sabbagh rules out isolating Russia in order to avoid a worsening of the situation on Ukraine’s borders and the outbreak of war. Because “Russia will feel that it has nothing to fear.”
He says: “Although the isolation will cause terrible damage to the Russian economy, it will hit the European and American economies with unwelcome setbacks.”
Iran model
In 2012, Iranian banks were isolated from the SWIFT system after US and European sanctions over Iran’s nuclear program, which included the oil and financial sectors.
At the request of the Trump administration, the “Swift” group was excluded from the Iranian financial institutions included in the US sanctions list.
Iran, according to economists’ estimates, lost nearly half of its oil export earnings and 30 percent of foreign trade.