Live updates on the Ukraine-Russia war: news about Putin, Kiev, SWIFT and Zelenskyy
WASHINGTON — The Biden administration and its key European allies have reached a tentative agreement to ban sanctioned Russian companies, oligarchs and government officials from using the SWIFT system, essentially barring them from international financial transactions — but without the Gas supplies affecting European nations.
The deal, commonly referred to by German officials and endorsed by American and European diplomats, is not enough to blanketly cut Russia off from the financial intelligence system, which some officials see as some sort of nuclear option. Such a move would have essentially cut Russia off from much of the global financial system.
The targeted approach also means Russia can still generate revenue from its gas sales to Germany, Italy and other European powers, at least for now.
By the time Russian military attacks began last week, Germany and Italy had been protesting adamantly against a blanket ban on transactions with Russia that would have cut about 40 percent of the Russian government’s revenue. But in the last few days, her attitude has changed.
On Saturday, German Chancellor Olaf Scholz announced that his government was authorizing the transfer of anti-tank weapons to Ukraine’s military, ending his insistence on only providing non-lethal supplies such as helmets.
At the same time, in a post on TwitterGerman Foreign Minister Annalena Baerbock and German Economy Minister Robert Habeck acknowledged that the country’s government is now moving from opposing a SWIFT ban to a strictly targeted ban.
“We are working hard to limit the collateral damage of a #SWIFT breakup so it hits the right people,” they wrote. “What we need is a targeted and functional restriction of SWIFT.”
European officials said they had lengthy, sometimes tense, talks with American and British officials, who urged a halt once Russia’s invasion of Ukraine began.
But even some American officials had reservations about completely seceding from Russia. Among other things, they feared that it could strengthen alternatives to the SWIFT system that Russia and China have been developing. Over time, this could undermine the United States’ ability to track and control payments.
According to three European diplomats and another person familiar with the matter, US and EU leaders are currently debating how many and which Russian institutions should be blocked. Officials considered possible spillover effects and unintended effects of the targeted restrictions.
SWIFT, a Belgian messaging service officially known as the Society for Worldwide Interbank Financial Telecommunication, connects more than 11,000 financial institutions around the world. It does not hold or transfer funds but allows banks and financial institutions to notify each other of upcoming transactions.
For weeks, the Biden administration has publicly downplayed the idea of cutting Russia off the system, implying that while all options are on the table, such a move could create more problems that it would solve.
But behind the scenes, American officials have been urging European allies to give President Vladimir V. Putin some sort of indication that Europe is moving toward greater economic isolation from Russia, as part of a broader containment policy.
In addition, since SWIFT is a European organization, the United States has allowed European countries to take the lead on this issue. The only unilateral leverage the United States could use would be to impose or threaten sanctions on the SWIFT organization itself if it continues to transmit messages for Russian institutions.
Matina Stevis-Gridneff contributed reporting from Brussels.