It begins.
In 2017, the head of the Central Bank, Elvira Nabiullina, said at a meeting with President Vladimir Putin that Russia is ready for disconnection from SWIFT.RT
Strategic Russian firm dumps SWIFT in favor of domestic bank transfer alternative
12 comments:
On a similar theme, imagine the misery the Greek population could have been spared if all Eurozone citizens were allowed checking accounts at the ECB itself. Such accounts would constitute a risk-free, 100% liquid payment system in addition to the at-risk, not-necessarily-liquid payment system that must work thru commercial banks, etc.
But that won’t solve the problem of international transfers - right?
If one day sanctions prevent Russia from connecting to SWIFT the country will not be able to pay for imports, receive proceeds from exports and in general transfer or receive money from abroad, including to buy and sell assets etc.
How could Russia respond to such a hit to its economy? That’s the key question, apparently not answered by this domestic development.
Those wishing to trade with Russia won't be able to use the dollar system. Read China. This is a further step in de-dollarization, which both Russia and China are aiming at to take the US down.
This is an integration in the conflict between Global North and West, and Global South and East.
The US views this as a zero-sum game. So it will lead to regime change in Russian and China, their capitulation, or war, unless the US folds its cards at the prospect of nuclear winter.
Those wishing to trade with Russia won't...use the dollar system
Yes, that might ease Russia’s problems, because she would still be able to engage in normal intercourse with important partners such as China, India, other BRICS and in general countries not part of the North Atlantic system.
However, the US might try to also impose sanctions on any third parties trying to overcome the SWIFT blockade against Russia. It has already done so in the case of connections to Iran and/or Cuba: for instance, French banks suffered heavy US fines for facilitating transactions with those countries, even tough they were breaking no domestic laws (either French or European) for doing that.
Chinese firms would thus have to choose between engaging with Russia and be sanctioned for that in the US, or drop Russia in order to keep their business ties in the large US (and maybe also in the EU) market.
Under that scenario, the Russian and Chinese leaders would have to try to come up with an innovative solution to such a conundrum.
They could try a new block chain maybe...
I read Putin is thinkng about banning the import of Scotch....I don’t know if that is a good idea...
Branko Milanovic mentions this in a recent post that I linked to here.
He thinks that Russia will be forced into autarky.
I am not so sure. I doubt that China will let Russia be isolated and fail since that puts NATO on China's Western flank. The US and allies are also on Southern flank, which is a key factor wrt to the US being in Central Asia and the Middle East. The 7 Fleet and US allies on the Eastern front. And realizes that it, not Russia, is the prize. And the US is already threatening China militarily as China reacts to being surrounded.
The US is surrounding China, just as it commenced surrounding Russia after the collapse of the USSR.
This is all set forth in Mackinder r, nSpykman, and Bzrezenski (The Grand Chessboard), for example. This is Geostrategy 101.
While the goings-on in the world may look somewhat crazy and incoherent, they are not. This is a long-standing plan, from the end of WWII in Europe and the 1949 victory of Mao.
The timetable has speed up now that Russia and China are arming up and developing countermeasures. The US sees the window of opportunity closing.
The preferred solution is regime change, but that failed with Putin's reelection and the bleak prospect of that happening anytime soon. The next alternative is strangulation and collapse through economic warfare, being mounted now. If that fails, then war, e.g, the US will aim at forcing Putin to attack in Ukraine to put the blame for war on Russia, or just lie the way into war, blaming Russia. The propaganda is already in full swing.
The US is also developing a high tech military, alliances, and proxies to preclude the need for conscription, which would be disruptive politically. The police state is already in place, too, to prevent dissent.
Watch the scenario unfold.
It's also true that there are some risks for the US in trying to hit Chinese firms with sanctions for trading with Russia, since many of those firms are key parts in the supply chain of US firms. Some of the effects might thus boomerang on the US economy.
In any case a SWIFT blockade would create many headaches for Russia - and would carry a high price tag by heating up the temperature in an already very stressed international scene.
It's an extreme measure that would create issues for the dollar as other countries saw the handwriting on the wall if they remain under the thumb of the US by using the USD. This would just hasten the unfolding of de-dollarization. China would welcome it as a serious blunder, weakening the US.
BTW, the US, UK and France disregarding the UN Charter and international law in attacking Syria is also a serious blunder that will have repercussions. You can't impose rules on others that you don't follow yourself.
Yes, banning Russia from SWIFT would involve risks and the US might well come to regret the move in the long run.
Russia and especially China are playing the long game.
Meanwhile, the US is in the position of watching the window of opportunity closing and is getting anxious. That's when you make mistakes.
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