Biden, EU Ban Russia From SWIFT Network: How Will It Affect the U.S.?

by Samantha Whidden

Following the news that President Biden as well as European leaders have banned Russia from the SWIFT (Society for Worldwide Interbank Financial Telecommunication), many are now wondering how this move will impact the U.S. 

According to USA Today, in a joint statement with leaders of the European Commission, France, Germany, Italy, the UK, and Canada, it was revealed that Russia is being excluded from SWIFT. Which is a global financial messaging system. The exclusion from SWIFT ensures that Russian banks remain disconnected from the international financial system. It also harms the banking groups’ ability to operate globally. 

The statement about SWIFT came after President Biden announced another round of sanctions against Russia. Biden stated that the sanctions may include more consequences than SWIFT.

USA Today reports that SWIFT recorded 42 million messages a day on average in 2021. It actually recorded 82 million messages over this past month alone. The messages include currency exchanges and trades. Banning Russia from SWIFT is actually damaging the country’s economy. In the long term, the banning will cut Russia off from a large amount of international financial transactions. These include international profits from oil and gas production, which makes up more than 40% of Russia’s revenue.  

However, this isn’t the first time a country is ban from SWIFT. Iran lost access to the international financial messaging system in 2012. The ban was part of the sanctions over the country’s nuclear program. However, many of the country’s banks eventually reconnected to the system four years later. Alexandra Vacroux, executive director of the Davis Center for Russian and Eurasian Studies at Harvard University, states that when Iran was off SWIFT, it lost half of its oil export revenues. It also lost 30% of its foreign trade.

Ukraine President, Volodymyr Zelenskyy, Urged World Leaders to Remove Russia From SWIFT

Newsweek reported on Saturday (February 26th) that Ukrainian President, Volodymyr Zelenskyy, urged world leaders to remove Russia from SWIFT following the country’s invasion of Ukraine last week. In a press conference, Zelenskyy stated, “It seems that Ukraine has gained the sincerity and attention of the whole normal, civilized world. And the practical result is here – SWIFT. There’s a lot of meaning in this world for the Russian Federation. Disconnection from global financial civilization.” 

The Ukrainian President also gave credit to Ukrainian diplomats for the accomplishment. “Our diplomats have been fighting around the clock for all countries in Europe to agree on a. Very strong and fair decision to cut Russia off from the international interbank network. We also have this important victory.”

Newsweek also reports that in order to cut off a country from SWIFT, there must be a full consensus of all 27 member nationals of the European Union (EU). Some experts notably shared with the media outlet that the move to ban Russia from the system is a “last resort” tactic. It is also a “nuclear weapon” for the economy.