Forbes India – Russia: Cut “all ties” between Russia and the global financial system: EU

French Economy and Finance Minister Bruno Le Maire talks to the press with the German Finance Minister (unseen) about Russia’s invasion of Ukraine at the Economy Ministry in Paris on February 25, 2022, before the start of an informal Ecofin and Eurogroup meeting. (Photo Eric PIERMONT / AFP)JThe European Union wants to cut all ties between Russia and the global financial system, France’s finance minister said on Friday, adding that Moscow’s withdrawal from the SWIFT interbank system remained a “last resort”.

Speaking hours after European national leaders agreed new sanctions on Russia for its attack on Ukraine, Bruno Le Maire said the EU “wants to cut all ties between Russia and the global financial system “.

“We want to financially isolate Russia… We want to dry up funding,” he added as EU finance ministers met in Paris to discuss economic measures.

The Mayor and his German counterpart Christian Lindner said Russia’s removal from the Belgium-based SWIFT system remained “on the table”.

“It’s the very last resort, SWIFT, but it’s one of the options that remains on the table,” said the French minister.
But Lindner insisted that “we already have a complete blockade of Russian banks, which means that business relations with Russia are practically at a standstill”.
Reacting on Thursday to sanctions decided by the EU, Britain, the United States and other Western countries, Ukrainian President Volodymyr Zelensky said that “the pressure on Russia must increase” compared to what has already been announced.

“Not all possibilities of sanctions have yet been exhausted,” he added.

Foreign Minister Dmytro Kuleba had been more explicit on Thursday, writing on Twitter that “who now doubts that Russia should be banned from SWIFT must understand that the blood of innocent Ukrainian men, women and children will also be on his hands”.

hard choices

SWIFT’s messaging system allows banks to communicate quickly and securely about transactions, and cutting off Russia would cripple its ability to trade with most of the world.

Iran has been disconnected from the system in the past because of its nuclear program, while Moscow has developed a national financial infrastructure to counter such a threat, including the SPFS system for bank transfers and the Mir card payment system. .

Cutting off Russia could complicate remaining trade with Europe, including vital natural gas imports for the continent’s energy supply as well as oil shipments.

While emphasizing that Europe must be prepared to make tough choices in the face of Russia, Le Maire said on Thursday that Paris would protect French households from any resulting rise in energy prices.

And Lindner clarified that “in specific cases, payments (to Russia) remain possible, for example to pay for gas deliveries”.

Berlin announced this week that it would halt certification of a new pipeline bringing gas from Russia known as Nord Stream 2, but an existing direct link remains in service.

Lindner added that “other measures are possible but their consequences must be weighed, the idea is to inflict consequences on the Russian economy” rather than harm Europe.

© Agence France-Presse

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Don F. Davis