Swift sanctions on Russia won’t stop gas flow to Europe. Will they blunt its war effort?

Being removed from the international payment system will make life more difficult for Russia, but the sanctions have left energy largely untouched

The sanctions are expected to still do heavy damage to the Russian economy and could push Russia and China towards alternatives to Swift

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A woman leaves an exchange office showing the exchange rates of the US dollar and euro to roubles on February 24. The sanctions imposed on Russia and the resulting crash of the rouble have the Kremlin scrambling to keep the country’s economy running. Photo: AP

Barry Wood

Barry D.

Published: 8:13am, 3 Mar 2022

Greatly limiting Russia’s participation in the global payments system is a significant escalation of sanctions. Several nations agreed on February 26 that selected large Russian banks would no longer have access to Swift, the messaging cooperative based in Belgium that is owned by 11,000 institutions worldwide, including 300 in Russia. In addition, the Russian central bank’s foreign exchange reserves being held abroad were frozen.

Swift is an acronym for the Society for Worldwide Interbank Financial Telecommunication. It provides technology that speeds money transfers and facilitates trade. Without it, Russian banks will struggle to easily move money in and out of the country. Russian citizens face restrictions on credit cards linked to foreign entities such as Visa and Mastercard.

The biggest uncertainty now concerns Russian trade with Europe. Will European firms be able to pay for Russian oil and gas? The short answer is yes because, as with the earlier round of sanctions, there is an exemption for energy. That is to say that several nations specifically exempt energy transactions from their sanctions regime.