Russia faces the 'nuclear option' of being ousted from the SWIFT banking system

February 24th, 2022

Demonstrators protest in support of Ukraine, in Los Angeles, on February 24, 2022.
Patrick T. Fallon / Patrick T. Fallon

Russia should be cut off from the SWIFT bank messaging system as a punishment for invading Ukraine, three countries in the Eastern European Union said on Thursday. Their call was echoed by Ukrainian President Volodymyr Zelenskyy, who is calling on the international community to help protect his country’s sovereignty.

On Thursday, the foreign ministers of Estonia, Latvia and Lithuania called for the move in a joint statement that condemned Russia’s attacks on Ukraine.

The ministers called on the international community to impose the “strongest possible sanctions on Russia, including disengaging Russia from SWIFT, isolating it politically” and supporting Ukraine.

In remarks on Thursday, President Biden said the U.S. and allies would not take the step of cutting Russia from using the SWIFT system for global banking transactions because Europe did not want to, but said it would be held in reserve.

White House officials predicted last week that the first sanctions triggered by a Russian invasion would not likely include a ban from SWIFT, citing the potential for “spillover effects.”

SWIFT underpins the global financial system, handling millions of secure messages every day to help banks manage transactions around the world. SWIFT was founded in the 1970s, and its headquarters are outside of Brussels.

“It doesn’t move the money, but it moves the information about the money,” Alexandra Vacroux, executive director of the Davis Center for Russian and Eurasian Studies at Harvard University, said in an interview with NPR last month.

Cutting Russia off from the SWIFT messaging system is seen as the “nuclear option” because of the wide impact such a move would have, Vacroux said. When Iran was removed from the system, she added, “they lost half of their oil export revenues and 30% of their foreign trade.”

Vacroux said Russia started working on its own version of SWIFT years ago, out of concern that it might be cut off because of its illegal annexation of Crimea in 2014.

With Russia now attacking Ukraine in a full-scale invasion, Zelenskyy said on Thursday that the country shouldn’t be allowed to remain in the banking system.

“We demand the disconnection of Russia from SWIFT, the introduction of a no-fly zone over Ukraine and other effective steps to stop the aggressor,” he said via Twitter, adding that he discussed those measures with French President Emmanuel Macron.

Even though it is an international organization that is jointly owned by its members, SWIFT has said in the past that because it’s incorporated in Belgium, it is obligated to comply with decisions that are confirmed by its home country’s government.

A version of this story originally appeared in the Morning Edition live blog.