The United States and its allies impose new sanctions, including a ban on SWIFT on the Russian financial system

Washington/Brussels: The United States, Britain, Europe and Canada decided on Saturday to block certain Russian banks’ access to the international payment system SWIFT in order to further punish Moscow as it continues its assault against Ukraine.

The measures, which will also include restrictions on the Russian central bank’s international reserves, will be implemented in the coming days, the nations said in a joint statement.

“We will hold Russia to account and collectively ensure that this war is a strategic failure for Putin,” wrote the leaders of the European Commission, France, Germany, Italy, Great Britain. Britain, Canada and the United States.

“Even beyond the measures we are announcing today, we are prepared to take further action to hold Russia accountable for its attack on Ukraine,” they added.

The move comes after the United States and its allies this week imposed sanctions on major Russian banks as well as Russian President Vladimir Putin himself, among others, as Moscow’s forces pushed into the heart of Ukraine. towards Kyiv.

Restriction on funds

The actions are aimed at preventing Putin from using $630 billion in central bank foreign exchange reserves during the invasion of Ukraine and defending a plummeting rouble.

The exclusion of Russian banks from the SWIFT system – the world’s main international payment network – is hurting Russian trade and making it harder for Russian companies to do business.

“Putin’s government is being kicked out of the international financial system,” a senior US administration official said.

SWIFT, or the Society for Worldwide Interbank Financial Telecommunication, is a secure messaging system that facilitates fast cross-border payments, thereby facilitating the flow of international trade.

It has become the main financing mechanism for international trade. Every year, trillions of dollars are transferred using the system.

The US official told reporters that if any of the banks cut off from SWIFT wanted to make a payment with a bank outside Russia, they would likely have to use a phone or fax.

Selective ban

The United States and its allies will finalize the list of banks that will be cut off from SWIFT, the official said, adding that banks already under US and European sanctions would be considered first.

Biden on Thursday announced sanctions aimed at limiting Russia’s ability to do business in dollars, euros, pounds and yen. Among the targets were the state-backed Sberbank and VTB, Russia’s two biggest lenders.

The new measures announced on Saturday will also prevent Russia “from using its war chest”, crippling its central bank assets, freezing its transactions and preventing the central bank from liquidating its assets, von der Leyen said.

“We are disarming the Russian fortress by taking this step,” the US official said, adding that further actions targeting the central bank could be finalized over the weekend.

The United States imposed sanctions on Iran’s central bank in 2019 following attacks on oil facilities in Saudi Arabia claimed by the Iran-aligned Houthi movement in Yemen.

EU foreign ministers will discuss the sanctions package in a virtual meeting on Sunday evening, the fourth time they have met in a week.

In Britain, Prime Minister Boris Johnson said “decisive action” by allies would squeeze Russia out of the global financial system.

“We will continue to work together to make sure Putin pays the price for his aggression,” he wrote on Twitter.

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Don F. Davis