February 26, 2022, 10:24 p.m. | Updated: February 26, 2022, 11:12 PM
A number of Russian banks will be pulled from the SWIFT global payment network in a bid to “cripple Putin’s ability to finance his war machine”.
European Commission President Ursula Von Der Lyon announced a new round of sanctions against Russia on Saturday, after a deal was reached between Western allies the UK, EU and US. United.
She confirmed that a number of Russian banks will be removed from SWIFT, so they will not be able to operate globally, and the assets of the Central Bank of Russia will also be crippled.
Ms von der Leyen said: “As Russian forces launch their assault on Kyiv and other Ukrainian cities, we are determined to continue to impose massive costs on Russia that will further isolate Russia from the international financial system and from our savings.
“In coordination with President Biden, President Macron, Chancellor Olaf Scholz and Prime Minister Draghi as well as Prime Minister Trudeau and Prime Minister Johnson, we have considered a significant tightening of our international response.
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First, we are committed to ensuring that a number of Russian banks are removed from SWIFT.⁰
This will prevent them from operating worldwide and effectively block Russian exports and imports.
—Ursula von der Leyen (@vonderleyen) February 26, 2022
“The European Union and its partners are working to cripple Putin’s ability to fund his war machine.”
She said the Russian military was committing “barbaric actions” as she condemned Putin’s invasion of Ukraine.
“It’s about bombing and launching missiles, killing innocent people,” she said.
“At the same time, the whole world is witnessing the determined and courageous resistance of the Ukrainian army and people.”
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The move – which will affect Russian trade and make it harder for its companies to do business – was introduced to step up economic sanctions against Vladimir Putin’s regime after it launched what he called a “special military operation” on Thursday. .
SWIFT, the Society for Worldwide Interbank Financial Telecommunication, is the primary secure messaging system that banks use to make fast and secure cross-border payments, allowing international trade to flow smoothly.
In 2020, around 38 million transactions were sent every day via SWIFT.
British Defense Secretary Ben Wallace had pushed for Russia to be banned from SWIFT, but said on Friday it was not under Britain’s control.
Allies on both sides of the Atlantic considered the SWIFT option in 2014, when Russia invaded and annexed Ukrainian Crimea and backed separatist forces in eastern Ukraine.
Russia then declared that kicking him out of SWIFT would amount to a declaration of war.
The allies – since criticized for responding too weakly to the Russian aggression of 2014 – abandoned the idea. Since then, Russia has tried to develop its own financial transfer system, with limited success.
The United States has already succeeded in persuading the Belgian-based SWIFT system to expel a country – Iran, because of its nuclear program.
But kicking Russia out of SWIFT would also hurt other economies, including those of the United States and key ally Germany.
The disconnection of SWIFT announced by the West on Saturday is partial, leaving Europe and the United States the option of further tightening sanctions later.
Boris Johnson has said the SWIFT banking system is “incredibly important” in exerting economic pressure on Russia.
Asked if the UK should do more to push other countries to ban Russia from accessing Swift, Mr Johnson said: “I think what you saw today, is that more countries are joining the UK’s call to use Swift.
“Swift is the mechanism that prevents people from making payments to Vladimir Putin’s Russia.
“It’s extremely important to tighten the ligature – the economic ligature – around Putin’s regime.
“And today you saw more and more countries, France and others, coming forward to say they wouldn’t block a ban, a boycott of Swift.”
Ms von der Leyen said the closure of several commercial banks “will ensure that these banks are disconnected from the international financial system and will harm their ability to operate globally”.
She said more banks could be affected “if appropriate”.
Ms von der Leyen said the EU would “commit to taking action to limit the sale of citizenship – the so-called golden passports – which allow wealthy Russians linked to the Russian government to become citizens of our countries and access our financial systems”.