One Twitter user welcomed the news, commenting: “Make no mistake that Boris Johnson and the UK’s refusal to take no for an answer on Russian removal from SWIFT played a vital role in securing this huge financial penalty against Putin’s Russia.” Another said: “This has been due to a brilliant effort by BorisJohnson.”
The UK, US and allies on Saturday moved to block certain Russian banks’ access to the international payment messaging system as further punishment on Moscow which continues its military assault against Ukraine.
While some Russian banks – including Gazprombank which services hefty oil and gas payments – have escaped full blocking sanctions, traders and analysts have said the time it takes to switch to new systems will still mean major upheavals to flows.
Amrita Sen, co-founder of the Energy Aspects think-tank, said: “While trying to exempt energy transactions, SWIFT can still cause significant disruption to energy trade flows in the near term, at least until buyers switch to alternatives like Telex or other systems.
“On other commodities – I can’t see how trade continues without the exemptions.”
Belgium based SWIFT, which stands for the Society for Worldwide Interbank Financial Telecommunication, is a secure messaging system that facilitates rapid cross-border payments, transferring trillions of dollars a year in what has become the principal mechanism for financing international trade.
Russia produces 10 percent of global oil and supplies 40 percent of Europe’s gas. It is the world’s largest grains and fertilisers exporter, top palladium and nickel producer, third-largest exporter of coal and steel and fifth-largest wood exporter.
The bid to exclude from the trading system whole chunks of the world’s 11th largest economy – and supplier of one-sixth of all commodities – has no precedent in the globalised age.
The measures will also include restrictions on the Russian central bank’s international reserves and are due to be implemented in the next few days.
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Britain also announced asset freezes and travel bans on members of Russia’s political and financial elite, including those who have enjoyed high-rolling London lifestyles.
More than 100 individuals, entities and subsidiaries will ultimately be sanctioned.
Germany suggested on Saturday that the allies were looking for “targeted and functional restriction of SWIFT” to limit collateral damage.
SWIFT is used by more than 11,000 financial institutions in over 200 countries.
Analysts have said Russian institutions are better able to cope with sanctions than eight years ago, but that does not mean they would not hurt.
The actions aim to prevent Russian president Vladimir Putin from using £470 billion ($630bn) in central bank foreign currency reserves in the invasion of Ukraine and to defend a plunging rouble.