Professor Elif Nuroğlu / Anatolia
According to the French finance minister, the decision to exclude Swift is a “financial nuclear weapon, but the decision will also negatively affect the countries that made the decision”.
Iran has been excluded from the SWIFT system, which has caused serious damage to its trade.
Russia was included in the SWIFT system in 1989, and its daily transactions make up 1.5 percent of the total transactions in the system.
Germany has shyly signed the decision to exclude Russia from the Swift system, due to its commitment to Russia to obtain energy and its fears that Russia will react to this move.
There are plans to reduce the damage to countries dealing with Russia in the energy sector, so Sberbank, which is the largest bank in Russia, and Gazprom Bank, have been excluded due to its importance in the energy sector.
The European Union, in cooperation with the United States, Britain and Canada, took criminal decisions against Russia last Wednesday, including the exclusion of the latter from the global financial transfer system “SWIFT” in response to the military operation it launched against Ukraine. .
These sanctions are aimed at hindering Russian exports and imports by making it difficult for them to carry out any financial transactions anywhere in the world.
Russia was faced with a similar threat in 2014, when Russian Finance Minister Alexei Kudrin announced the decision to exclude his country from the “Swift” system to a 5% contraction of Russia’s. economy can lead.
Although the situation of the Russian economy in 2022 is better than in 2014, the decision to exclude from the SWIFT system is expected to lead to significant losses for the Russian economy.
There is no consensus in the European Union on the decision
In the words of the French finance minister, the decision to exclude Swift is a “financial nuclear weapon”, with which Western countries could cause major problems for Russia in international payments, exports and imports.
But the decision will also negatively affect the countries that took the decision, so we see that this decision is not unanimously supported in the European Union.
Berlin, for example, believes that “such an effective weapon would affect business and industry in Germany, so exclusion from the Swift system should be against certain objectives and that this – the financial nuclear weapon – should only be used in its place and this decision should not be allowed to harm European economies. ” .
These sanctions will harm Russia – dependent countries for any commodity, and businessmen in the countries that have made the decision will be forced to look for alternative means and more complex systems to continue trading with Russia.
As for the other solution, it will be the search for an alternative to Russia, but all countries, especially the countries that support the resolution, know very well that no alternative to Russia can be found in the short term, especially in this area. of energy.
Countries that shyly support the decision
The Association for Global Interbank Financial Telecommunications (SWIFT) was established in Belgium in 1973 with the aim of conducting foreign exchange transactions between banks. It is a communications system that connects 11,000 banks and financial institutions in more than 200 countries and regions.
Iran has been excluded from the system, which has caused serious damage to its trade. Russia was incorporated into the SWIFT system in 1989, and its daily transactions make up 1.5 percent of the total transactions in the system.
Some countries in the European Union are cautious about sanctions against Russia due to the fact that the latter is the first supplier of oil and natural gas to the European Union. Because to suffer again from high energy prices will be a new bleed for the economies that have recently begun to recover from the repercussions of Covid-19.
Governments do not want to stop energy supply or raise prices again. Germany was one of the countries that signed the decision to exclude Russia from the Swift system, due to its commitment to Russia in acquiring energy and its fears that Russia would respond to this move.
Does Russia have an alternative to Swift?
Russia was previously threatened with exclusion from the Swift system due to the Crimean crisis and in 2014, Russia developed its own payment system SPFS and began testing and using this system with some countries. With its exclusion from the Visa and MasterCard systems in 2016, Russia started using its MIR debit card system, but these two systems were only used on a small scale.
Impact of the decision on Turkey
The non-final list announced by the United States and the European Commission included several Russian banks, “Otkrit Bank”, “Novicombank”, “Russia Bank”, “Promsviazbank”, “VTB”, “VEP” and Sofcombank . countries dealing with Russia in the energy sector are therefore excluded “Sberbank”, which is the largest bank in Russia, and “Gazprom Bank” because of its importance in the energy sector.
Turkey is expected to be affected by the crisis between Russia and Ukraine in the energy, tourism and trade sectors. However, trading with it is not expected to stop completely as it is possible to continue payments by the Russian banks exempt from the decision.
Russian and Ukrainian tourists accounted for about 27 percent of the total tourists visiting Turkey in 2021. It is likely that the number of tourists in the summer of this year will be greatly affected due to the impact of the two countries’ economies on the war.
The rise in oil and grain prices will also affect Turkey, which is suffering from high inflation rates.
– Final mode
Exclusion from the SWIFT system will cause Russia many problems with export and import payments, and will increase the cost of looking for alternative routes. However, excluding some Russian banks from the decision will mitigate the negative consequences.
On the other hand, it will hurt the Russian economy due to the decline in exports and the imposition of restrictions on the reserves of the Russian Central Bank in the international arena, which will lead to a decline in the Russian currency and a rise in inflation.
The impact of sanctions will not only be limited to the Russian economy, but will also indirectly affect the countries that trade with Russia. For example, the rise in inflation in Russia and the devaluation of the ruble will lead to a decrease in the number of Russian tourists coming to Turkey. Higher energy and grain prices will also increase the cost of importing them into the European Union and thus increase inflation.
And if Russia complies with the decision to exclude it from the SWIFT system by reducing its exports, it will affect production and industry, increase costs and cause energy security problems in countries trading with Russia, led by Turkey and the European Union.
The announcement of the official list of Russian banks excluded from the SWIFT system will make clear the extent of the damage to Russia and other countries from this decision.
Taking into account the additional sanctions, we find that Russia and the entire world system that trades in it will be affected by the decision to be excluded from the SWIFT system.
The European Union must pay close attention so that these sanctions do not directly affect Russia’s oil and natural gas exports. Because no one would want Russia to cut off the supply of gas and oil it exports, for which it cannot be paid due to Swift’s decision. It is therefore difficult to carefully characterize the decision to exclude Russia from the SWIFT system as a “financial nuclear weapon”.
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