© Given Ruvic
The European Union has proposed excluding “a number of Russian banks” from the Swift system, an essential channel for international financial transactions.
make russia “a global economic and financial pariah”, in the words of a senior US official. And more concretely “paralyze” the assets of the Russian Central Bank and exclude “a number of Russian banks” of the Swift system, an essential channel for international financial transactions, as proposed on Saturday by the President of the European Commission, Ursula von der Leyen. The last salvo of sanctions decided on Saturday evening by the EU should seriously disrupt the functioning of the Russian economy. That’s the point. The exclusion of many Russian banks from the Swift system is undoubtedly the measure that hurts the most. Clearly, when a bank is “de-swifted”, it can no longer pay or receive funds from another State on behalf of its customers. Inconvenient when you want to do international trade.
But for the time being, the name and number of the banks concerned are not yet known. It is therefore likely that a few chosen banks will retain their access to Swift, if only to allow gas trading with states that are dependent on it, such as Germany or Italy. It will be particularly interesting to see if Gazprombank, the banking subsidiary of the Russian energy giant, is “de-swifted”. Same questioning for the country’s two leading financial institutions: VTB and Sberbank, whose assets are already frozen in the United States.
Nevertheless, this measure will not be without consequences, according to the analysis of Olivier Dorgans. For fifteen years, this lawyer from the firm Ashurst has been working on the consequences of economic sanctions for companies: “Banks that will not be excluded from Swift will in any case not be able to support transactions from other banks that no longer have access to this system.” This measure is not a first. Between 2012 and 2016, Iran was excluded from Swift. Russia, which obviously anticipated this sanction, has for its part developed an alternative international transaction tool called SPFS. The only problem for Moscow is that it is limited to trade with China and a few former Soviet republics. But the circumvention of the Iranian embargo has shown that there is still a D system. Lionel (1), a trader in gas and oil experienced in these markets, evokes older methods which have never really stopped. ‘to exist : “It will always be possible to make compensation. This or that energy or agricultural raw material will be exchanged for other products for an equivalent amount.
Penalizing freeze
The other significant sanction proposed by the European Union is therefore the freezing of the assets of the Russian Central Bank, the total amount of which is estimated at more than 600 billion euros. Asked by Release Sunday, the CEO of a large French bank remained quite skeptical: “We can imagine that the power in Moscow has invested in virtual currency or has simply stocked up on 20 dollar bills. It might have been more dissuasive to prohibit the use of the ruble in international transactions, which would effectively prevent the Russian Central Bank from buying dollars, yen or euros.” Still, this freeze should prove penalizing. First by blocking funds that may have been deposited outside Russian borders, then by limiting the movements of the Central Bank, which will no longer be able to use its billions for transactions with the United States or Europe. “Let’s imagine that a European customer has a payment default with a Russian company, the Central Bank will not be able to come to the aid of the company by taking charge of the unpaid”, explains Olivier Dorgans.
Moreover, it is not just the mobility of capital that will be seriously hampered. That of people also with the total closure of European airspace to Russian companies and private planes. According to the Ministry of Transport, Russian aircraft parked in France will not be able to take off again. What potentially upset the plans (of theft and others) of the oligarchs who would have been tempted to stay in France.
(1) The first name has been changed.