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European leaders have moved closer to cutting Russia off from the SWIFT banking system as Germany remains the sole holdout over implementing the extreme measure following the invasion of Ukraine.
Russia launched a full-scale invasion of Ukraine Thursday local time. World leaders and diplomats widely condemned the attack and promised strong sanctions in response.
Foreign ministers of the Baltic States and Poland wanted to cut Russia from SWIFT as part of the initial wave of sanctions, but Germany, Italy, Hungary and Cyprus resisted the move.
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But after non-stop negotiations, Ukraine has managed to convince the leaders of Italy, Hungary and Cyprus to stand down and agree. Only Germany remains wary, as its leaders say they remain open to the possibility but must “calculate the cost” to its own citizens, Reuters reported.
The Society for Worldwide Interbank Financial Telecommunication (SWIFT) is the main global network that allows financial institutions to send and receive information on international bank transfers.
SWIFT is incorporated and headquartered in Belgium with 26 offices across the world, providing messaging services to banks in more than 200 countries. It is overseen by the central banks of the G-10, comprised of Belgium, Canada, France, Germany, Italy, Japan, the Netherlands, the United Kingdom, the United States, Switzerland and Sweden.
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Cutting access to SWIFT requires approval from the U.S., Japan and the European Union (EU), but EU decisions require universal approval, making the holdouts all the more frustrating for leaders who wanted to hit Putin and Russia with the most severe punishments.
The impacts of such an action can be crippling, and the tool has been used before as an international response. SWIFT booted EU-sanctioned Iranian banks from its network in 2012 and again in 2018.
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European leaders approved personal sanctions on Russian President Vladimir Putin and Foreign Affairs Minister Sergei Lavrov, but could now approve the action on SWIFT if Germany can agree.
Germany has consistently acted a stumbling block due to its significant reliance on Russian oil.
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Germany resisted calls to sanction Nord Stream 2, which supplies gas from Russia to Europe, and only supplied 5,000 helmets to Ukraine when Zelenskyy requested weapons.
Germany switched gears following the start of Putin’s invasion, agreeing to shut down approval of Nord Stream 2.
