White House and EU nations announce expulsion of 'selected Russian banks' from SWIFT
The White House, along with the European Commission, France, Germany, Italy, the United Kingdom and Canada, announced Saturday evening that they would expel certain Russian banks from SWIFT, the high-security network that connects thousands of financial institutions around the world, pledging to "collectively ensure that this war is a strategic failure for (Russian President Vladimir) Putin."
"This
will ensure that these banks are disconnected from the international
financial system and harm their ability to operate globally," they wrote
in a joint statement released by the White House, also pledging
"restrictive measures that will prevent the Russian Central Bank from
deploying its international reserves in ways that undermine the impact
of our sanctions," and restricting the sale of "golden passports" that
allow Russian oligarchs to avoid the brunt of sanctions already levied.
US
and European officials have also discussed targeting the Russian
Central Bank with sanctions, according to two people familiar with the
talks, a step without precedent for an economy of Russia's size.
No final decisions have been made, the people said, and the structure of the sanctions under discussion remains unclear.
But
the moves made for a dramatic escalation of the West's attempts to
isolate and punish Putin, and appeared to come together quickly over the
past hours and days. At a press conference Thursday, Biden was pressed
on why he had avoided removing Russia from SWIFT or sanctioning Putin
personally. Less than 48 hours later, he'd done both.
Targeting the central bank would strike at the heart of Putin's yearslong efforts to insulate his economy from sanctions.
Russia
has built up the fourth-largest foreign currency reserves in the world
at more than $630 billion while shifting away from US dollar holdings.
Both moves provide a buffer from US sanctions, even as the sweeping
package unleashed this week has already created significant disruption
across the Russian economy.
While
discussions regarding Russia's central bank were described as still in
their early stages, their consideration underscores the scale of the
willingness to significantly escalate penalties in Washington and
Brussels.
A
senior Biden administration official, on a call with reporters,
heralded Saturday's joint move as an "unprecedented act of global
sanctions coordination."
"We
are collectively planning to impose measures to ensure Russia cannot
use its central bank reserves to support its currency, and thereby
undermine the impact of our sanctions," the official said. "This will
show that Russia's supposed sanctions-proofing of its economy is a myth.
The $600 billion-plus war chest of Russia's foreign reserves is only
powerful if Putin can use it, and without being able to buy the ruble
from Western financial institutions, for example, Putin's central bank
will lose the ability to offset the impact of our sanctions."
Meanwhile,
expelling Russian banks from the SWIFT network, the official said,
would make transactions with "de-SWIFTed" banks all but impossible,
prompting most banks to "simply stop transacting altogether" with those
targeted.
But,
pressed if the Russian Central Bank was on the list of banks to be
removed from SWIFT, the official said the administration and partners
were "still finalizing this specific execution modality for the Central
Bank sanctions."
Still,
sanctions against the Russian Central Bank would prevent Moscow from
shoring up the ruble and offset sanctions already in place, effectively
"disarming fortress Russia," by undermining its massive war chest.
In
addition, the administration hopes actions against the Central Bank
will effectively hamstring Russia's military campaign in Ukraine.
"To
be clear, this is a sad outcome for the people of Ukraine, the people
of Russia, and many others," the official said. "This is not where we
want it to be. But this is Putin's war choice. And only Putin can decide
how much more cost he's willing to bear. The United States and our
allies and partners are unified and will continue to impose costs."
The
US and its allies have already levied major sanctions targeting
Russia's financial sector, including major sanctions on Russia's largest
lenders.
The
US and other nations on Saturday also announced the launch next week of
a "transatlantic task force" to "ensure the effective implementation of
our financial sanctions by identifying and freezing the assets of
sanctioned individuals and companies that exist within our
jurisdictions."
The
senior Biden administration official said the task force would
effectively target Putin-aligned oligarchs and their financial holdings
abroad, going after "their yachts, their luxury apartments, their money
and their ability to send their kids to fancy colleges in the West."
As part of the announcement, they also promised to step up efforts to combat misinformation.
"We
stand with the Ukrainian people in this dark hour. Even beyond the
measures we are announcing today, we are prepared to take further
measures to hold Russia to account for its attack on Ukraine."
The
statement still leaves the actual technical details -- and the specific
Russian lenders that will be cut off from SWIFT -- unclear, with US and
EU officials still in the midst of hammering out the final details of
the action.
But
the commitment to take action that just days ago appeared to be off the
table due to European objections marks a targeted, but seismic
escalation in response to Russia's invasion of Ukraine. Biden and his
aides have highlighted how complicated blocking Russia from SWIFT would
be, noting the US cannot move unilaterally. "That's not the position
that the rest of Europe wishes to take," Biden told reporters Thursday.
But
since Biden's press conference announcing new sanctions against Russia
for its unprovoked attack, the administration appeared to be moving
closer to this position as other European allies started giving it their
backing.
The
administration has discussed the matter with the Federal Reserve, which
would have a stake in any decision, according to an official.
The
White House had faced calls from Ukraine, and US lawmakers in Congress,
for Russia to be removed from SWIFT after Putin ordered the invasion of
Ukraine on Thursday. The United Kingdom, Lithuania, Estonia and Latvia
were among the early countries to back Kyiv's calls to cut Russia off
from the network.
On
Saturday, Germany, which had earlier warned of the "massive impact" on
German business if Russia were banned from SWIFT, indicated support for
restrictions in some form.
German
Foreign Minister Annalena Baerbock and German economy Minister Robert
Habeck said in a joint tweet that they were "under high pressure to
avoid collateral damage when decoupling (Russia) from SWIFT so it will
hit the right people. What we need is a targeted and functional
constraint of SWIFT."
Earlier
in the day, Italy signaled that it would also support taking measures
to expel Russia from SWIFT after Prime Minister Mario Draghi told
Ukrainian President Volodymyr Zelensky that "Italy fully supports the
European Union's line on sanctions against Russia, including those
regarding SWIFT, and shall continue to do so."
Draghi's comments were particularly notable given the Italian economy's exposure on energy.
One
administration official said earlier that additional sanctions were
likely to come if Kyiv, the besieged Ukrainian capital, fell.
A
White House official told CNN that "as the President and administration
officials have made clear, we are focused on coordinating with allies
and partners to impose further costs on Russian President Vladimir Putin
for his war of choice" but declined to comment further.
Removing Russia from SWIFT would damage Russia but also big economies in Europe and impact energy exports to the continent.
It
would make international financial transactions more difficult,
delivering a shock to Russian companies and their foreign customers --
particularly buyers of oil and gas exports denominated in US dollars.
Meanwhile, the US has imposed other sanctions on Russia, targeting Moscow's banking, technology and aerospace sectors. On Friday, the US announced that it would impose sanctions on Putin directly and on Russian Foreign Minister Sergey Lavrov.
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