Kiev furious as EU hesitates to ban Swift payment system from Russia | European Union

The EU faced furious protests from Kiev as European leaders appeared ready to refrain from imposing the potentially most damaging sanction on Russia, even as the Kremlin besieged Ukraine by land, air and maritime.

Ukrainian Foreign Minister Dmytro Kuleba expressed anger as EU heads of state and government seemed likely to decide not to block Russia from an international payment system through which it receives foreign currency.

With losses mounting, Kuleba warned European and American politicians would have ‘blood on their hands’ if they failed to impose the heaviest price on Moscow by cutting Russia off from the so-called Swift payments system .

“I won’t be diplomatic on this,” he tweeted. “Anyone who doubts now that Russia should be banned from Swift should understand that the blood of innocent Ukrainian men, women and children will also be on their hands. BAN RUSSIA FROM SWIFT.

Quick guide

What is Swift?

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What is that?

Swift (Society for Worldwide Interbank Financial Telecommunication) is the leading secure messaging system used by banks to make fast and secure cross-border payments, allowing international trade to flow smoothly. It has become the main financing mechanism for international trade. In 2020, approximately 38 million transactions were sent to the Swift platform every day, facilitating trillions of dollars in transactions.

Who owns it?

Swift, founded in the 1970s, is a cooperative of thousands of member institutions that use the service. Based in Belgium, it remains neutral in commercial disputes, being mainly run as a service to its members.

Why would a Swift ban be so serious?

Boris Johnson told MPs it would hurt Russia’s economy if he was kicked out of Swift. Routine transactions would have to be carried out directly between banks or routed through nascent rival systems, which would increase costs and create delays.

Why is the United States reluctant to impose a ban?

One reason is that the impact on Russian businesses might not be so severe. The head of a major Russian bank, VTB, recently said he might use other payment channels, such as phones, messaging apps or email. Russian banks could also route payments through countries that have not imposed sanctions, such as China, which has set up its own payment system to compete with Swift. A ban on Russia using Swift could accelerate the use of rival Chinese system Cips. It is also feared that it will undermine the status of the US dollar as the world’s reserve currency and accelerate the use of alternatives such as cryptocurrencies.

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The Society for Worldwide Interbank Financial Telecommunications (Swift) is used by more than 11,000 financial institutions to send secure payment orders and is essential for the movement of funds to the Russian oil and gas sector.

Russia’s withdrawal from the system, it is claimed, would make it almost impossible for financial institutions to send money to or from the country, with consequences for both the country’s oil and gas sector and for its European customers.

A number of member states believe there is nothing to be gained by waiting, a position shared by the UK government.

In a call with German Chancellor Olaf Scholz, British Prime Minister Boris Johnson urged allies to respond with the toughest measures, warning that “Western inaction or under-reaction would have unthinkable consequences “.

British sources said Johnson also played a major role in getting leaders to revoke Russia’s access to Swift during his G7 speech to other world leaders. Canadian Justin Trudeau was the only other leader to voice support for finding a way to enforce the ban.

“On Swift, I think we all recognize that this is something that needs to be done in conjunction with our key allies and will only be successful if it can be achieved as such, we are continuing those discussions,” the doorman said. -word of Johnson. “There are a range of views on this and we recognize that it is a challenge. But that is certainly the Prime Minister’s intention, so we will continue to have these discussions. »

Irish Taoiseach Micheál Martin said his government would also support “the toughest possible sanctions”.

Lithuanian President Gitanas Nausėda said the EU must learn from the fact that the bloc’s previous sanctions had been “too weak”.

“We can’t afford the luxury of being a discussion club,” he said. “Discussions are useful but we cannot be in discussions forever… They need our support today, tomorrow may be too late.”

Polish Prime Minister Mateusz Morawiecki said the EU must unite around tough sanctions “against Putin, against Russia” if Europe is to be relevant in the world.

“Now is a critical moment for the history of the European Union, the history of Europe,” he said. “Everyone free is watching us, what kind of sanctions, what kind of reactions”

Diplomatic sources suggested that Germany, Cyprus and Italy were among the member states most concerned about taking the measure at this stage, arguing that some leverage needed to be maintained.

“Someone started a war and we want this war to end here and now,” an EU diplomat said of the caution over Swift. “You always need to have open doors to be able to dialogue in order to stop a war.”

The diplomat added that the measures which had unanimous support within the EU would be “much more effective with high cost and consequences than making a single issue about Swift, which might be needed for things which are very relevant. for certain EU Member States”.

The crack in the united front with Ukraine came as EU leaders gathered in Brussels for what is expected to be one of the toughest summits in a generation, with the bloc’s ability to strike in a convincing the Russian interests in question.

Arriving at the top, Scholz confirmed that he was opposed to cutting Russia off from the international payment system.

He said: “It is very important that we accept the measures that have been prepared and save everything else for a situation where it may be necessary to go beyond that.”

Why did Putin's Russia go to war with Ukraine?  – explanatory video
Why did Putin’s Russia go to war with Ukraine? – explanatory video

Following a meeting with NATO Secretary General Jens Stoltenberg, European Commission President Ursula von der Leyen says the EU will downgrade Russian industry, plunge its economy into recession and block exports irreplaceable components.

“These sanctions will suppress Russia’s economic growth, raise borrowing costs, increase inflation, intensify capital outflows and gradually erode its industrial base,” she said. “We want to cut off Russian industry from the technologies it desperately needs today to build a future.”

Von der Leyen said the Kremlin would be held to account through “massive and targeted sanctions” for its “barbaric” action. “Our measures will weaken Russia’s technological position in key areas, from which the elite actually make most of their money. And it ranges from high-tech components to state-of-the-art software,” she said.

“It will also seriously damage the Russian economy in all areas in the future. Let’s be very clear: it is President Putin who will have to explain this to his fellow citizens. I know that the Russian people do not want this war.

Belarus will also be subject to an as-yet-unprepared set of sanctions for its role in helping Russia invade from its territory, according to a leaked draft of a statement from the EU summit.

But at a meeting of EU ambassadors, a consensus on the need for a significant set of sanctions in the financial and energy sectors was marred by a lack of support for what many see as the most urgent action. damaging, both for Moscow and for the European countries with the closest trade ties to Russia.

Opponents – dubbed the “incrementals” – would lobby to refrain from imposing the most onerous measures.

Officials have suggested that Swift could be held back under a “third tranche” of sanctions. Some diplomats in Brussels argue that Russia could find ways not to be locked into Swift and that the other measures would be equally important to tighten the Kremlin.

The more hawkish European capitals have also privately expressed concerns that a number of key oligarchs will be left out of the EU’s next package of measures. The Dutch government has been vocal behind the scenes in seeking to include more of the wealthy and powerful around Putin, sources say.

There is irritation in Brussels that the British government is not strong enough to hit oligarchs such as Roman Abramovich, whose private jet was reportedly tracked leaving Monaco for Russia earlier on Thursday.

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