Russia to be cut off from SWIFT only as last resort

The British and Polish foreign ministers have announced that blocking Russia’s access to services provided by the Society for Worldwide Interbank Financial Telecommunication (SWIFT) would be a measure of last resort in case the crisis in eastern Ukraine worsens.

“When it comes to sanctions, SWIFT is the nuclear weapon. It is the last resort and we are all aware of that,” Polish Foreign Minister Grzegorz Schetyna said at a joint press conference with UK Foreign Secretary Philip Hammond in Warsaw on Friday.

“To be clear, this would be a very extreme sanction measure. It would have a very significant impact on the Russian economy,” Hammond for his part said, adding that discussion about cutting off Russia from the SWIFT system is being conducted “primarily in the US.”

The top British diplomat also called upon Western states to draw up “a whole range of potential sanctions options, so that we have maximum flexibility, maximum agility and maximum speed in reacting to any provocation, whether a breach of the Minsk implementation or whether it’s a military offensive somewhere else in the Donbas region.”

On February 24, British Prime Minister David Cameron stated that London would press for hard-hitting sanctions against Moscow if the shaky truce between pro-Russian forces and Ukrainian government forces falls apart.

On September 12, 2014, the European Union announced the so-called ‘tier three’ sanctions, targeting Russia’s state finance, energy and arms sectors. Accordingly, Russian state banks are banned from raising long-term loans in the EU, exports of dual-use equipment for military use in Russia are banned, more arms deals between the bloc and Russia are banned, and the EU will not export a wide range of oil industry technology to the country.

In a non-binding resolution in September 2014, the European Parliament called on the EU member states to consider excluding Russia from the SWIFT banking transaction system.

Moscow has said it would retaliate strongly if it were to be excluded from the SWIFT.

In December the same year, the Central Bank of Russia (CBR) launched a domestic SWIFT-style payment service to decrease dependence on Western financial services.

The new service allows Russian credit institutions to transmit messages in a SWIFT format through CBR to all parts of the country without any restrictions.

Both Ukrainian government forces and pro-Russians claim to be withdrawing heavy weapons from the frontline in eastern Ukraine in compliance with the Minsk peace deal.

During peace talks in the Belarusian capital city of Minsk on February 11-12, the leaders of Germany, France, Russia and Ukraine agreed on the withdrawal of heavy weapons from Ukraine’s frontlines and a ceasefire, which officially went into effect late on February 14. The warring sides, however, have continued to engage in sporadic clashes.

The fighting in eastern Ukraine has taken a heavy toll on thousands of people. More than 6,000 people have died in the conflict, the UN says. Around 1.5 million people have been also forced from their homes over the past months of turmoil.

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