The Russian roulette of cutting off Moscow from SWIFT
The Russia-Ukraine crisis presents the West with yet another serious challenge. No one knows Vladimir Putin’s real intentions. However, underestimating the Russian president would not be safe either.
Let’s examine what options are available to the United States and Europe in the event of a Russian invasion. President Joe Biden has said that putting American troops on the ground in Ukraine in the event of a Russian invasion is not on the table (interference by NATO must also be ruled out). Troop deployment therefore is not in the cards and, even if Washington were to move ahead, Europe – with very few exceptions – would not follow.
A second option would be to pressure Ukraine’s government to give in to some of Moscow’s demands. If that were to happen, Putin would score a major victory and enhance his position on the global geopolitical chessboard. Meanwhile, Biden would come under fire from the right (paradoxically) as well as from the left at home.
There is always, of course, the middle-of-the-road solution, a policy which appears to be more popular in recent years: sanctions. Experience shows that sanctions sound like a good idea in theory, but they rarely prove meaningful. On the contrary, they expose the inability of the West to impose its own terms. Another option being considered, sometimes called the “nuclear option,” is kicking Russia off the interbank payment system SWIFT. Such a move would take the biggest bite out of the Russian economy and upset the Moscow elite. SWIFT is essentially the instrument, if not the weapon, that enables the US dollar to reign supreme in global markets.
However, a decision to play that card in a crisis with Russia could have unpredictable consequences. First, Europe realizes that this is a weapon that can easily be turned against itself. And although this is not something that the Biden administration would do, his predecessor Donald Trump or someone like Trump would not hesitate to threaten the EU with suspension from SWIFT, as was the case when the US withdrew from the Iran nuclear deal and European companies were seeking ways to uphold their business activities in the Mideast country. Berlin had back then declared its intention to create a payment system independent of the US. Meanwhile, China has long been trying to find ways to avoid US sanctions and establish the yuan as an alternative global currency.
The international relations system created after the Second World War has been unraveling for some time now. Yesterday’s tools have rusted. The Ukraine crisis will be yet another key test. The dilemmas are tough. Meanwhile, Beijing is patiently monitoring developments.