Momentum is building across the European Union to cut Russia from the SWIFT payments system, the “nuclear” option for the financial sanctioning and isolation of Moscow.
Resistance from Germany, Italy, Austria, and Hungary, the EU member states with the closest commercial ties to Moscow, seems to be easing, but it is still there.
The European Central Bank and European Commission are at this moment preparing an analysis of what removing Russia from SWIFT would likely entail, and what the consequences would be for EU countries, which is to be ready within hours.
That will be a significant step forward. The goal is to present this analysis to EU governments as soon as possible so that they can in turn make an informed decision.
In what seems like a shift in a long-established position, Germany’s Finance Minister Christian Lindner said regarding SWIFT sanctions today, after talks with other EU finance ministers and central bankers in Paris, “we [Germany] are open, but you have to know what you’re doing”.
There is a good deal of resistance to SWIFT sanctions still from German industry, and Germany opposed cutting Russia off when it was discussed at the summit of EU leaders yesterday, as did Italy, which also very much depends on Russian gas for its energy needs. Both Italy and Germany, plus Austria and Hungary, share the concern that if Russia is blocked from SWIFT, it would leave them with no way to pay for gas deliveries from Russia (see SGH 02/24/2022,” Ukraine: EU and US Response to Russian Invasion“).
The very fact that the ECB and EC are preparing a formal analysis for governments is a sign however that the SWIFT option is being taken seriously, and in delineating the exact costs it raises the pressure on the standouts and fortifies the statements from top politicians that all options, including SWIFT, are still on the table.
The UK and the United States are pushing hard to include SWIFT in the sanctions package, with political pressure in both countries mounting for a more resolute show of force on the sanctions.
We shall see.