SIt was already clear at the special EU summit on Thursday evening that the second package of sanctions against Russia that had since been passed would not be the last. EU leaders also gave the order to prepare a third package aimed at targeting both Russia and Belarus for supporting Russia’s invasion of Ukraine. It is now becoming apparent that this will also include the exclusion of Russia from the international bank payment network SWIFT. After the development of the past few days and hours, it is hard to imagine anything else, according to EU diplomatic circles in Brussels on Saturday.
In the hours before, one country after the other of the opponents of such a radical step had given up their resistance. According to diplomats, Germany, Italy and Hungary in particular, but also Cyprus and Austria, were skeptical at the special summit. With the exception of Germany, these states had changed their position by Saturday afternoon. A short time later, however, there were also signs of a change in Berlin.
“A targeted and functional restriction of SWIFT”
Federal Foreign Minister Annalena Baerbock and Economics Minister Robert Harbeck (Greens) said that the federal government is now in principle in favor of Russia’s exclusion from SWIFT. Baerbock and Habeck shared, “At the same time, we’re working flat out on how to limit the collateral damage of a Swift disconnect in a way that hits the right people.” What we need is a targeted and functional restriction of SWIFT.”
Russia could be excluded from SWIFT as early as next week. ECB circles said a decision to cut off Russia from the payment system could be made within days, Reuters news agency reported. Brussels diplomatic circles said that the European Commission must prepare such a step. However, this should not be a matter that takes more than a few days.
Earlier, Cyprus Finance Minister Konstantinos Petrides tweeted that his country was not opposed to Russia’s exclusion from SWIFT. Italian Prime Minister Mario Draghi also made it clear that he fully supports the EU’s line on sanctions against Russia, including Swift. This was announced by both Ukrainian President Volodymyr Zelenskyy and Draghi on Twitter. Austria had already spoken out in favor of the SWIFT exclusion on Friday.
Zelenskyj’s speech helped to change the mood
French finance minister Bruno Le Maire said on the fringes of a finance ministers’ meeting in Paris that his country was ready to detonate the “financial nuclear bomb”. As the last head of government alongside Chancellor Olaf Scholz (SPD), Hungarian Prime Minister Viktor Orbán gave way on Saturday.
The debate was given enormous momentum by Zelenskyj’s speech at the special summit, it was said in Brussels. After that, the mood changed noticeably. The second package of sanctions did not include an exclusion of SWIFT from the outset. However, many Eastern European countries, but also the Netherlands and Belgium, had spoken out in favor of it.
On Friday morning, former EU Council President Donald Tusk, now President of the European People’s Party (EPP), sharply criticized the fact that the summit did not support it: “The only thing that is fake is your sanctions. The governments that blocked tougher decisions – Germany, Italy and Hungary – brought shame on themselves.” Germany, in particular, drew criticism. SWIFT is the new Nord Stream 2, where Germany puts its own interests above everything else, according to EU diplomatic circles.
Excluding Russia from SWIFT would not completely decouple its financial economy from the international financial markets, but transactions would be much more difficult and expensive. However, the move would also have serious consequences for the EU. For example, billing for deliveries of gas and coal from Russia, on which the EU and above all Germany depend, is hardly possible without SWIFT. The EU imports around 40 percent of its gas from Russia, Germany just over half.
In addition, the country could no longer easily service its national debt. Baerbock had defended the German resistance with these arguments on Friday. 50 percent of hard coal imports come from Russia. “If we don’t have this coal, the coal-fired power plants in Germany will not be able to continue.” They also pointed out that payments to civil society in Russia or in the cultural sector would also be affected.
Special meeting of EU energy ministers convened
The European Commission, in turn, said on Friday that such steps would hit the EU harder than the USA, also because of intensive trade with Russia. The EU currently exports goods worth 80 billion euros a year to Russia. A lot therefore ultimately depends on how Russia’s exclusion from SWIFT is implemented.
It is quite conceivable that it could be tailored in such a way that, for example, it would still be possible to service government debt or pay the bills for importing oil, gas or coal from Russia. On the other hand, this would also greatly weaken the effect. France has now convened a special meeting of energy ministers to discuss the consequences of Russia’s war against Ukraine for energy supplies on Monday.