The United States, the European Union, the United Kingdom, France, Germany, Italy and Canada decided to increase pressure against Russia and announced this Saturday that they began to use the “nuclear option”, the elimination of several Moscow banks from the SWIFT interbank system, a sanction that will dramatically hit the financial heart of Vladimir Putin’s regime.
What’s more, will punish the Russian Central Bankwhich will cause greater suffocation to the economy of that country.
In a statement issued by the White House and the EU at the same time, the leaders of the powers noted that “as Russian forces unleash their assault on Kiev and other Ukrainian cities, we are determined to continue to impose costs on Russia that will further isolate more to Russia from the international financial system and from our economies. We will implement these measures in the coming days.”
The text announces that they are committed to “ensuring that the selected Russian banks are removed from the SWIFT transfer system” and states that “this will ensure that these banks are disconnected from the international financial system and harm their ability to operate globally”.
This measure started for now with some “selected Russian banks” and is the toughest sanction imposed on Moscow after the invasion of Ukraine. The disconnection for now will not be total since it is sought to continue allowing the payment of certain products.
But it is already part of the so-called “nuclear” option, which in practice would kick Russia out of the world banking system. Banning it completely from the SWIFT payment network will prevent, for example, transferring the benefits of energy production, which account for more than 40% of the country’s income.
When fully implemented, this measure would cause Russian export commodities such as oil, gas, coal or metals to be frozen, as well as the foreign assets of the Russian state and Russian oligarchs. In addition to practically blocking international trade and transactions, it would leave Russian banks without access to dollars and euros.
The countries were hesitant to apply it because it could also have considerable repercussions on the international financial system, but finally they chose to start implementing it with some banks.
In addition, the leaders committed to “impose restrictive measures that prevent the Central Bank of Russia from deploying its international reserves in a way that undermines the impact of our sanctions.”
This is an additional punishment because the Russian Central Bank has reserves of 600,000 million dollars that will not be freely available abroad. Thus, assets will be frozen to make it impossible to convert them into liquid resources with which to finance the war.
The sanction to the Central Bank will have “a dramatic effect on the Russian economy and its banking system, similar to what we saw in 1991,” expert Elina Ribakova, from the Institute of International Finance, told the Bloomberg agency. “This could lead to a massive bank run and dollarization, with sharp falls in reserves and possibly a collapse of the Russian financial system.”
They also took extreme measures against the Kremlin environment. They said they will act “against individuals and entities that facilitate the war in Ukraine and the harmful activities of the Russian government.”
In a heavy blow to Russian billionaires, they say they will take steps to limit the sale of citizenship, so-called “golden passports,” which allow wealthy Russians connected to the Kremlin to become citizens of our countries and gain access to our financial systems. .
In addition, they announce that next week “a transatlantic working group will be formed to guarantee the effective application of our financial sanctions by identifying and freezing the assets of the sanctioned individuals and companies that exist within our jurisdictions.”
White House SWIFT Statement
The allies say they are further committed to “applying 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 assets held in our jurisdictions.” .
They also note that they will 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 around the world.
Finally, they say, they will intensify coordination against disinformation and other forms of hybrid warfare.
Global protests against Putin’s decision to invade Ukraine took over the main cities of the planet. In the photo, a protester holds up a poster comparing the Russian president to Hitler. AFP photo.
The full 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 the attacks against the sovereign nation and people of Ukraine. We support the Ukrainian government and the Ukrainian people in their heroic efforts to resist the Russian invasion. Russia’s war represents an assault on fundamental international rules and norms that have prevailed since World War II, which we are committed to upholding. We will hold Russia accountable and we will collectively ensure that this war is a strategic failure for Putin.
Last week, along with our diplomatic efforts and collective work to defend our own borders and help the Ukrainian government and people in their struggle, we, as well as our other allies and partners around the world, cracked down on the institutions key Russian companies and banks and the architects of this war, including Russian President Vladimir Putin.
As Russian forces unleash their assault on Kiev and other Ukrainian cities, we are determined to continue to impose costs on Russia that will further isolate Russia from the international financial system and our economies. We will implement these measures in the coming days.
Specifically, we are committed to taking the following actions: First, we are committed 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 Central Bank of Russia from deploying its international reserves in ways that undermine the impact of our sanctions.
Third, we commit to taking action against individuals and entities that facilitate the war in Ukraine and the harmful activities of the Russian government. Specifically, we commit to taking steps to limit the sale of citizenship, so-called golden passports, which allow wealthy Russians connected to the Russian government to become citizens of our countries and gain access to our financial systems.
Fourth, we commit to launching a transatlantic task force next week 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 part of this effort, we commit to applying sanctions and other financial and enforcement measures to additional Russian officials and elites close to the Russian government, as well as their families and facilitators to identify and freeze assets held 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 around the world.
Finally, we will intensify coordination against disinformation and other forms of hybrid warfare.
We are with the Ukrainian people in this dark hour. Even beyond the steps we are announcing today, we are prepared to take further action to hold Russia accountable for its attack on Ukraine.