More expensive for himself: Biden was going to disconnect Russia from SWIFT

While Trump packs his things Biden’s team is preparing new crushing sanctions for Russia. According to sources familiar with the plans, the new government in Washington wants to punish Moscow for the allegedly committed hacker attack by disconnecting it from the international payment system SWIFT. Izvestia figured out how fatal it was for Russia and whether the US president-elect would take this step.

Russian hackers

Talks about the possible disconnection of Russia from SWIFT – the international interbank financial data transfer system – began back in 2014. Since then, threats have been heard constantly, and now, when Joe Biden is about to take office as president of the United States, fears are growing again: he will come down on Russia with financial sanctions.

According to Reuters, citing sources familiar with the plans of the president-elect’s team, this time these are not empty words. Biden intends to punish Russia for its alleged role in the unprecedented hacker attack, which affected the US Treasury, Department of Commerce, Department of State, as well as a number of government agencies.

In mid-December, Washington announced that hackers, backed by a foreign government, had gained access to the system of the US Treasury and the National Telecommunications and Information Administration (part of the Department of Commerce). It was also reported that hackers gained access to the communications of the US Department of Homeland Security. According to The Washington Post, the hacker group APT29, or Cozy Bear, allegedly working for the Russian Foreign Intelligence Service, is behind the cyber attacks.

As the interlocutor of Reuters said, the retaliatory measures should lead to “serious economic, financial or technological losses for Russia.” In particular, according to Edward Fishman of the Atlantic Council, who worked on sanctions against Russia in the State Department during the presidency of Barack Obama, “symbolic” measures will not be enough. “The Russians need to understand that we are fighting back,” he stressed.

And according to James Andrew Lewis, a cybersecurity expert at the Center for Strategic and International Studies in Washington, one such measure could be to disconnect Russia from the SWIFT system.

The threats are really serious: about 42% of transactions in SWIFT are carried out in dollars, this is a powerful weapon of Washington. A In terms of the volume of banking operations, Russia is one of the three world leaders operating SWIFT. The system is used by about 400 domestic financial institutions.

On their own

However, back in 2014, Russia developed an alternative to SWIFT – the Financial Messaging System (SPFS). All leading Russian banks and companies of about a dozen more foreign banks from countries from countries belonging to the Eurasian Economic Union (EAEU) are connected to it.

An analogue of SWIFT has been operating in China since 2015 – the CIPS system of clearing and settlement services. In 2019, under the control of the People’s Bank of China, the system processed 135.7 billion yuan ($ 19.4 billion) per day, involving 96 countries and regions. And in June 2019, First Deputy Prime Minister, Finance Minister of Russia Anton Siluanov and Chairman of the People’s Bank of China Yi Gang signed an agreement on the creation of a new payment system that will become “a gateway between the Russian and Chinese analogues of SWIFT.”

Thus, experts point out that Russia and its key trading partners have already prepared for a possible shutdown on SWIFT.

“Disconnecting Russia from SWIFT will further strengthen relations between the BRICS countries. As a result, the Russian financial messaging system SPFS will be linked to the China International Interbank Payment System (CIPS). India, by the way, also plans to integrate the platform of the Central Bank of Russia with the internal system, ”says Igor Kuchma, financial analyst at TradingView.

In addition, as the Central Bank said, after the introduction of the digital ruble, the start of work on the launch of which the Central Bank of the Russian Federation announced in mid-October, the need for SWIFT will disappear altogether.

In the future, digital currencies of different countries will be able to be used for international settlements, and in this case there is a possibility that the international interbank SWIFT system, used in more than 200 countries, will no longer be needed, the first deputy chairman of the Bank of Russia said during the Open Talk at the site of the Association of Corporate Treasurers Olga Skorobogatova.

Don’t dig another hole

Experts point out that the threat of Russia’s disconnection from the system may have completely different reasons than those voiced in Washington. Perhaps cyberattacks are just an excuse, but the resumption of the construction of “Nord Stream 2”, which the Americans are trying to stop by all means, is the real goal of possible sanctions, says Yekaterina Kosareva, managing partner of the analytical agency WMT Consult.

However, it should be remembered that if implemented, this measure will be extremely unpopular. First of all, American business and investors in the Russian economy will suffer.

“First, commodity relations between Russia and the United States are developing, fortunately, independently of political ones. In 2019, trade grew by 4.9%, and this is against the backdrop of sanctions and other restrictions. In 2020, the indicator will be lower, but for objective reasons – coronavirus. American business will probably speak out against it. Secondly, it’s not only that Russia will be bad. All countries that cooperate with Russia and conduct settlements thanks to SWIFT will suffer. Perhaps states interested in relations with the Russian Federation will oppose this decision of the Americans, and this particular sanction measure will be canceled“- explains Kosareva.

“Business cooperation between countries will come under attack. The growth in trade between Russia and the United States indicates the real attitude of US politicians to Russia. Disabling this system will undoubtedly put an end to the further development of trade between the countries. Moreover, this will also close the developing sales market in Russia for the United States, ”reminds financial analyst Artem Zvezdin. As the expert notes, the stories about the SWIFT outage are more likely aimed at the internal consumer, who needs to be tuned towards the future President Biden. Otherwise, there will be more problems for the United States than political gain.