President Joe Biden said Thursday the United States and its international allies have decided not to cut Russia off from the SWIFT international payments system as punishment for invading Ukraine, though the measure has been left on the table as a last resort in case the situation escalates.
Biden told a press briefing on Feb. 24 that Russia would not be frozen out of SWIFT, the messaging system banks use to settle cross-border payments and that is a key mechanism for financing international trade.
The president said the sanctions imposed on five Russian banks in response to the Ukraine invasion were at least as punishing as a SWIFT cutoff.
“It is always an option,” Biden said of the ban. “But right now, that’s not the position that the rest of Europe wishes to take.”
Biden’s remarks came as Russian forces pressed forward with a multi-pronged invasion of Ukraine that Russian President Vladimir Putin has called a “special military operation” to demilitarize and neutralize Ukraine as a claimed NATO-aligned threat. Western leaders have denounced Putin’s military action as a baseless act of aggression.
While Western leaders have agreed on a series of tough punitive sanctions, they are divided over cutting Russia off from SWIFT, a move that would restrict Russia’s access to global financial markets.
A SWIFT ban would make it harder for Russian companies to get paid for goods they export to other countries and they’d find it more difficult to invest overseas or borrow from foreign lenders.
Financier and activist Bill Browder, who lobbied for Congress to pass the Magnitsky Act, a measure to punish Russian human rights violators, told The Independent that removing Russia from SWIFT would be “the one thing that would really change Putin’s calculus.”
But removing Russia from SWIFT would also make it harder for foreign buyers of Russian oil and gas to settle transactions, potentially driving energy prices higher. Discussions around the ban come at a time of elevated inflationary pressures in many of the world’s economies, driven in large part due to surging energy prices.
By Tom Ozimek