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Civic Register
| 2.26.22

U.S., Canada, & European Union to Remove Some Russian Banks From SWIFT Over Putin's Invasion of Ukraine

Do you support or oppose the latest sanctions on Russia?

UPDATE - 2/26/22

  • The U.S., Canada, and the European Union announced in a joint statement Saturday that select Russian banks will be cut off from the worldwide SWIFT financial transactions and payments system due to the invasion of Ukraine. The announcement comes after some European countries had been reluctant to remove Russia from the system altogether.
  • SWIFT is a messaging network for global payments between financial institutions involved in a transaction. Full removal of Russian banking institutions from the SWIFT system is considered the "nuclear option" of financial sanctions, so removing just a few Russian banks is an attempt to limit the financial fallout while still dealing a blow to Russia's economy.
  • Additionally, the leaders of the U.S., Canada, and the EU will impose measures to prevent the Russian Central Bank from using its reserves of international currency to undermine the impact of sanctions.

The original article appears below.

What’s the story?

  • President Joe Biden on Thursday announced new sanctions on Russia following Vladimir Putin’s decision to launch an invasion of Ukraine. The new sanctions will be joined by 27 members of the European Union, including France, Germany, and Italy; the United Kingdom; plus Canada, Japan, Australia, and New Zealand.
  • The latest sanctions announced by Biden will target Russian financial institutions and markets, high-tech exports to Russia, and certain Russian elites, but stop short of cutting off Russia from the SWIFT financial system or sanctioning Putin himself.

What’s in the sanctions package?

  • This tranche of sanctions also includes a number of Russian elites and their family members by cutting them off from the U.S. financial system, freezing assets, and blocking their travel to the U.S. 
  • Thirteen of the most critical Russian state-owned enterprises with estimated assets of nearly $1.4 trillion will be barred from issuing or trading debt and equity using U.S. financial markets.
  • Further sanctions will block Russia’s ability to import advanced, sensitive technological goods like semiconductors, avionics, lasers, sensors, navigation technologies, and software that originated in the U.S. by using export controls.

What’s not in the new sanctions package?

  • Biden was asked by reporters why the U.S. isn’t also announcing the removal of Russia from the SWIFT banking system, which serves as a financial messaging system for international banking transactions. He explained, “That’s not the position that the rest of Europe wishes to take.” Germany and Italy are the main countries opposed to that move, with German Chancellor Olaf Scholz telling reporters that cutting Russia off from SWIFT should be preserved as an option in the future. 
  • Another possible option in terms of sanctions that are being reserved, for now, by the U.S. and its allies are personal sanctions against Vladimir Putin and his vast financial holdings. Biden said Thursday that sanctions against Putin are on the table but didn’t respond to questions about why sanctions aren’t being imposed on Putin personally.

What else did Biden say?

  • During his remarks, Biden reiterated that Russia’s military is conducting a “brutal assault on the people of Ukraine without provocation, without justification, without necessity.” The president said, “Putin is the aggressor. Putin chose this war. And now he and his country will bear the consequences.” Biden added: 
“Putin will be a pariah on the international stage. Any nation that countenances Russia’s naked aggression against Ukraine will be stained by association. When the history of this era is written, Putin’s choice to make a totally unjustifiable war on Ukraine will have left Russia weaker and the rest of the world stronger. Liberty, democracy, human dignity — these are the forces far more powerful than fear and oppression. They cannot be extinguished by tyrants like Putin and his armies. They cannot be erased by people — from people’s hearts and hopes by any amount of violence and intimidation. They endure.”
  • Biden also emphasized that the U.S. will uphold its mutual defense commitments to its NATO allies and announced the deployment of about 7,000 additional troops to Europe. He said, “The United States will defend every inch of NATO territory with the full force of American power.” 
  • Biden was asked whether he is urging China to help the international community isolate Russia and he responded, “I’m not prepared to comment on that at this moment.” During the Beijing Olympics, China and Russia announced a deeper economic and strategic partnership, and thus far Chinese Communist Party officials have rejected using the phrase “invasion” in discussing Russia’s attack on Ukraine.

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— Eric Revell

(Photo Credit: White House photo by Adam Schultz via Flickr / Public Domain)