Russia has an alternative already in place in case it is cut off from SWIFT – and possible short-term difficulties would undoubtedly be followed by long-term gains. Although the alternative system to SWIFT of Russia is not yet fully functional, it is sure to emerge winning in the long term.
According to a recent report, Russia has successfully developed and implemented an alternative if it is excluded from the international banking system. Taking into account Western sanctions, Russia’s greatest vulnerability lies in its banking sector. If Russia keeps to the status quo, there is not much we can do to remedy it. But very soon after the sanctions were announced in 2014 in Moscow, the worst case scenario was for Russia to be cut off from the International Interbank Telecommunications System (SWIFT). For the layman, SWIFT allows fast and (supposedly) safe international transfers.
Two questions arise, about the “break” of Russia with SWIFT: 1) Can it happen? And (2) Is Russia prepared?
As for the first question: in reality, the European Poodles of Washington realize that cutting SWIFT from Russia would be a disaster. In 2015, the European Central Bank’s decision-maker, Ewald Nowotny, “warned against the expulsion of Russian banks from the SWIFT transfer system, which was envisaged as aggravation of sanctions against Moscow”
According to Nowotny : ” Such a decision” seems very problematic because it could undermine confidence in this system, “said the Governor of the Central Bank of Austria to the journalists who interviewed him in Brussels after he met there The European Commissioner Pierre Moscovici. .
This obviously did not prevent Europe and Washington from threatening to disconnect the SWIFT
We have no illusions about European and American geopolitical strategies, but that being said, we are hardly inclined to believe that Washington would bother to cut SWIFT’s access to Russia.
If they do, however, things could become really interesting. And this brings us to our second question: is Russia prepared?
In the short term, certainly not. But in the long run it could be one of the best things that could happen to Russia and to all the other nations that have had enough of Washington’s economic and military shenanigans.
According to a recent report:
If the World Bank Financial Telecommunications Company (SWIFT) ceases its activities in Russia, the banking system of the country will not go bankrupt, said the governor of the Russian Central Bank Elvira Nabiullina. Russia has an alternative.
“There have been threats to cut us off from SWIFT. We have finished developing our own payment system, and if something happens, all operations in SWIFT format will work within the country. We have created an alternative, “Nabiullina said at a meeting on Wednesday with President Putin.
She added that 90% of ATM s in Russia are willing to accept the MIR payment system, which is a Russian version of Visa and MasterCard.
The daily Izvestia reports that since January 2016, 330 banks have already been connected to the alternative system of financial message transfer (SPFS).
However, the alternative system is far from being fully functional. “It does not work between 9 am. Evening and 5 pm. Of the morning, Moscow hours, and it costs up to 5 cents [€?] Per message transfer, which is considered expensive.
If we take the Crimea as an example (Western banks refuse to transfer payments in foreign currencies from Crimea via the SWIFT system), there would be many headaches that could last long enough.
But as Naked Capitalism wrote in November 2014:
Configuring a payment channel outside of SWIFT could help Russia to set up a financial system for all those who no longer want to be subject to US dictates. .
Banks that did business with Iran before and after the SWIFT sanctions were subject to money laundering sanctions. Payments were made in dollars and cleared by the New York branches of these banks, which were subject to US law.
All dollar transactions between banks are settled at the end of each business day in New York; Interbank payment systems are ultimately dependent on the support of a central bank, and many large payments are made on the Fedwire Fed inter-bank system.
Moreover, it seems that there are companies in Europe that do not really want to comply with the US sanctions against Russia because they are doing their business harm. It is unclear how many of them would be willing to take on the maquis and challenge sanctions, but transactions through a Russian-controlled payment system would be much less easy to detect than via SWIFT.
In other words, this measure aims to reduce the scope of this habit of using the domination of the dollar in payments as a weapon. To what extent are the Russians able to quickly launch a fairly robust system? This is an issue we do not have the answer to, but it would be a defensive, even offensive, measure of common sense. It may even have long-term extensions, if other countries that the United States do not make happy decide to use it for practical or political reasons.
It is certain that all that Washington would gain in the short term by cutting SWIFT from Russia would ultimately result in an economic and strategic benefit for Moscow.
We know this because any attempt to apply “sanctions” to Russia has had such results.