Photo: MICHAEL REYNOLDS / EFE
The United States, its European allies and Canada agreed on Saturday to remove major Russian banks from the interbank messaging system, SWIFT, a extraordinary step that will separate Russia from a large part of the world financial system.
“This will ensure that these banks are disconnected from the international financial system and harm their ability to operate globally,” those nations wrote in a joint statement issued by the White House, in which they also promised “restrictive measures that will prevent the Russian Central Bank from deploying its international reserves in a way that undermines the impact of our sanctions” and restricting the sale of “golden passports ” than to allow the Russian oligarchs to avoid the brunt of the sanctions already imposed.
After the announcement, the Ukrainian Prime Minister, Denys Shmyhal, welcomed the measure and he wrote in a tweet: “I appreciate your support and real help in this dark time. The Ukrainian people will never forget this! Keep holding the line! We are on our land”.
Grateful to all our partners I talked today – 🇨🇦, 🇵 @EU_Commission🇪 Appreciate your support and real help in this dark time. Ukrainian people will never forget this! Keep holding the line! We are on our land!
— Denys Shmyhal (@Denys_Shmyhal) February 26, 2022
US and European officials also have discussed targeting Russia’s Central Bank with sanctions,
two people familiar with the talks told CNN, an unprecedented step for an economy the size of Russia.
Moscow’s exclusion from SWIFT, which stands for Society for Interbank Financial Telecommunications Worldwide, it means that Russian banks will not be able to communicate securely with banks beyond their borders. Iran was withdrawn from SWIFT in 2021 following the development of Tehran’s nuclear program.
Russia’s attacks in Ukraine led to a dramatic escalation of Western attempts to isolate and punish Putin, and it seems, they have come together quickly in the last hours and days.
At a press conference on Thursday, Biden was asked why he had avoided taking Russia out of SWIFT or personally sanctioning Putin. Less than 48 hours later, he had done both.
Targeting the central bank would strike at the heart of Putin’s years-long effort to insulate his economy from sanctions, CNBC said.
Unprecedented global coordination
A senior official of the The Biden administration, in a call with reporters, heralded Saturday’s joint move as an “unprecedented act of global sanctions coordination” .
“We are collectively planning to impose measures to ensure that Russia cannot use its central bank reserves to back their currency and thereby undermine the impact of our sanctions,” the official said. “This will show that Russia’s supposed protection against sanctions of its economy is a myth. The war chest of over $600 from Russia’s foreign reserves alone is mighty if Putin can use it, and without being able to buy the ruble from Western financial institutions, for example, Putin’s central bank will lose the ability to offset the impact of our sanctions.”
The United States and its allies have already imposed sanctions against Russia’s financial sector, including significant sanctions against Russia’s largest lenders.
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