SWIFT Retaliation: What Would Happen if US Tried to Unplug Russia From Global Payments System

Washington has been threatening to disconnect Russia from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) for years, with the threats going back to the Obama era. Moscow has responded by creating a domestic alternative to the payment system known as the SPFS, a Russian acronym for “System for Transfer of Financial Messages.”

Unnamed sources said to be in the know about President-elect Joe Biden’s plans have told Reuters that his team is considering financial sanctions, cyberattacks on infrastructure, and possibly even shutting Russia off from SWIFT “in response” to a massive, months-long hack attack on US federal government agencies, Fortune 500 companies, and a host of other entities which Biden has blamed on Moscow.  However, the US has yet to present any evidence proving Russia’s culpability.

Disconnecting Russia from the payments system would create temporary problems for Moscow, both in international settlements and foreign exchange markets, but would also hit a US economy struggling to pull dig out of the worst economic crisis since the Great Depression, Artyom Tuzov, director of capital markets at Univer Capital, a Moscow-based investment firm, says.

According to the analyst, Russia can adapt to the new restrictions rather quickly, with Iran serving as an example of a country that has done so successfully. Furthermore, he recalls that Russia already has a backup alternative at the ready in the form of SPFS, which was created after Washington and its allies threatened to cut Moscow off from SWIFT amid the Ukraine crisis in 2014. Hundreds of institutions have already connected to SPFS, and in 2019, the Russian Central Bank announced that eight foreign banks had joined or were in the process of joining.

What’s more, Tuzov says, if Russia moves forward with its recently announced plans to launch a digital rouble, the need to rely on an international payments system could disappear altogether, since entities doing business with their Russian counterparts will no longer need to rely on it.

In October, Bank of Russia Governor Elvira Nabiullina announced that the bank was collecting feedback on a prospective digital rouble, with a pilot project being considered for launch toward the end of 2021.

Central Bank of Russia.

Possible SWIFT restrictions aside, the US has a number of other options to “punish” Russia for the hack attack it has yet to show was committed by Moscow. The Obama and Trump administrations have already sanctioned dozens of Russian officials, companies, and private individuals, closed consulates, expelled diplomats, and threatened to impose secondary sanctions against companies and countries doing business with Moscow. The restrictions have been introduced over a range of pretexts, from the Ukraine crisis to election meddling. Earlier this year, acting secretary of Homeland Security Chad Wolf boasted that the White House had actually “run out of” Russian individuals to sanction.

Last week, the US Department of Commerce squeezed out another round of sanctions against Russian and Chinese companies, designating 45 Russian and 58 Chinese firms as “foreign entities” over alleged military ties and restricting export, reexport, and transfers with them. Russian Ambassador to the US Anatoly Antonov called the sanctions “unacceptable,” and suggested Washington was depriving its own businesses of opportunities to sell their wares to Russia in areas including civil aviation, precision machinery, metallurgy, and instrument engineering.

Sourse: sputniknews.com

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