Many around the world and in Congress continue to advocate for extensive painful sanctions against Russia for its attack on Ukraine, including SWIFT sanctions, which ABC News calls the “nuclear option” as far as sanctions go. What is SWIFT and why is it such a powerful sanction to use against Russia?
According to Washington Post, “SWIFT” stands for Society for Worldwide Interbank Financial Telecommunication. It is a messaging network that connects banks worldwide, and as WaPo reported, is considered “the backbone of international finance.” Because of those connections, banks can easily send and receive international payments and make transactions, and membership is critical to banks around the world. SWIFT is one of the first sanctions mentioned by Eastern European countries, France, and the UK to cripple Russia and force it out of Ukraine. Experts believe that blocking Russia from SWIFT would hit Russia’s economy hard, as the country would be virtually unable to process transactions or do business outside its own country. Putin, of course, is too smart to rely only on something over which he has no control.
Russia created its own alternative network to SWIFT called the System for Transfer of Financial Messages (“STFM”). The problem, according to financial experts, is that STFM is “inadequate” to replace SWIFT. A system is only as powerful as its members, and STFM has only 400 participants from 23 countries, which would still severely limit Russia’s ability to do business worldwide. Unfortunately, as WaPo reported, Russia may have access to China’s Cross-Border Interbank Payment System, which would allow Russia to bypass SWIFT and still conduct business. This is not good news, as CNN reported that China blames the U.S. for the invasion of Ukraine.
China has traditionally claimed to support state sovereignty and had nothing to say about Ukraine wanting to join NATO — at first. In other words, China stayed out of things. Now, its stance regarding sovereignty will be put to the test, as Foreign Minister Hua Chunying pointed to the U.S. Friday as the “culprit” that “fanned the flames,” causing the invasion. This is a crock. The U.S. caused nothing. It did the same thing that China claims it does—it sought to protect the sovereignty of Ukraine by supporting the country’s wish to join NATO. China is not our friend, so it makes sense that they will try to find a way to blame the U.S. while contradicting its own stance of state sovereignty. Likely, this explains why they have not come out neither for nor against the invasion. As the war goes on, China may have to take a stand, whether it wants to or not.
In the meantime, U.S. officials want the stiffest possible sanctions imposed against Russia. Liz Cheney appeared on “Face the Nation” and suggested targeting Russia’s oil sector, the families of Putin, and Putin’s inner circle. As Cheney said, we cannot stand idly by and allow this aggression against Ukraine without consequences. To do so gives Russia unlimited power to invade countries at will, and that cannot be allowed.
Shirley is a former entertainment writer and has worked in the legal field for over 25 years