Western leaders are split on whether Russia should be ejected from the Swift international payments system, a move that would deliver a heavy blow to the country’s banks and its ability to trade beyond its borders.
Boris Johnson, the UK prime minister, is pushing “very hard” to remove Russia. However, Olaf Scholz, German chancellor, warned on Thursday that his country would not support such a dramatic move and neither would the EU, according to officials close to sanctions negotiations. A German official declined to comment, saying only that “all options are still on the table”.
Johnson has faced criticism in the UK for deploying what critics described as “peashooter” sanctions in response to the first stage of Russian aggression in Ukraine; he is now trying to push western colleagues to deploy very tough reprisals.
“The PM is very keen on this – he’s pushing it very hard,” said one British official, referring to his efforts to eject Russia from Swift. Johnson also raised the idea at a meeting with the City of London executives on Wednesday.
But Downing Street conceded that any move regarding Swift could only be done with an international agreement, a position shared by the Biden administration. “We have to do it together,” the British official said.
Johnson was expected to push for international support for Russia to be cut out of the Swift system in a call with G7 leaders later on Thursday.
The US has so far suggested that it was too early to consider the move, while saying that no option was off the table.
Daleep Singh, a deputy White House national security adviser, earlier this week said there were “other severe measures we can take that our allies and partners are ready to take in lockstep with us, and that don’t have the same spillover effects”.
The EU is locked in discussions over how to approach the issue. While Baltic countries and Poland are among those who are advocating a hawkish line on the topic, other member states are more wary.
Swift has long been on the table as an option within the EU’s sanctions package, but it has not been seen as a likely part of any early round of measures, and has instead been held in reserve for extra deterrence. But the scale of Russia’s invasion of Ukraine has prompted a debate about whether to speed up its use.
Milos Zeman, Czech president, on Thursday said he wanted to impose tougher EU sanctions on Russia, including ejecting its banks from Swift, arguing that it was important to isolate Vladimir Putin, Russia’s president.
EU leaders will convene on Thursday evening in Brussels to discuss the bloc’s sanctions package.
Removing Russia from Swift would be a heavy blow to its biggest banks and would hamper the country’s ability to trade outside its borders. It would also stimulate the ability to recoup international profits from its oil and gas exports, which account for more than 40 per cent of its revenue.
Swift, a Belgian co-operative, is used by more than 11,000 banks and financial institutions worldwide and handles 42mn messages a day, facilitating trillions of dollars worth of transactions. Russia accounted for 1.5 per cent of transactions in 2020.
Being cut off from Swift would not prevent Russian banks from carrying out cross-border transactions, but doing so would become more costly and arduous. Foreign deals would rely on the use of less efficient communication tools, such as email and telex.
Dmytro Kuleba, Ukraine’s Minister of Foreign Affairs, tweeted: “I will not be diplomatic on this. Anyone who now doubts whether Russia should be banned from SWIFT has to understand that the blood of innocent Ukrainian men, women and children will be on their hands too. BAN RUSSIA FROM SWIFT ”.