We have people screaming to establish Islamic states without realizing the implication of various punitive measures (economic, military, commercial, industrial, medical, etc) the antagonistic West can exercise to cripple these nascent Islamic countries. Even Iran is struggling to get on its feet with the economic embargoes sanctioned against it. Barring access to the international transaction system called SWIFT alone had been sufficient to stagnate its economy.
Russia is now learning this cold-hard truth being faced with economic embargoes placed by EU & USA over the contentious issues of Crimea, Ukraine & MH17 flight saga. Like the maxim goes - "Necessity is the mother of invention", Russia is now working to circumvent SWIFT system by instituting their own. It is trying to replace VISA, MasterCard with their own just like China has already done with UNION Pay. The other things Russia is doing is to establish BRICS Bank to shrug off reliance on World Bank, IMF or other western banks for loans. So far it has signed agreements with China, Iran and Turkey to do business in local currencies rather than dollar in a bid to curtail the dominance of US economic might. But that is a whole new discussion on its own merit and I shall shed light on that topic in a separate post.
SWIFT is West’s ‘nuclear weapon’ against Russia
AFP, 7 March 2015
WARSAW: Excluding Russia from the SWIFT banking system would be a measure of last resort if the crisis in Ukraine escalates, the British and Polish foreign ministers said Friday.
“When it comes to sanctions, SWIFT is the nuclear weapon. It is the last resort and we are all aware of that,” Polish Foreign Minister Grzegorz Schetyna said at a joint press conference in Warsaw with British counterpart Philip Hammond.
Russia last month said it would retaliate strongly if it were to be cut off from SWIFT, the global financial industry’s secure messaging system to facilitate transactions.
“To be clear, this would be a very extreme sanction measure. It would have a very significant impact on the Russian economy,” Hammond said, adding that discussion on the option was taking place “primarily in the US.”
Western sanctions in 2012 cutting Iran off from the system for defying UN resolutions over its nuclear programme dealt a severe blow to the Islamic republic’s economy.
Last year, the European Union and United States levied sanctions primarily targeting senior officials in Russian President Vladimir Putin’s administration, amid fighting between pro-Russian separatists and Ukrainian government forces in the eastern regions of Ukraine bordering Russia.
EU foreign policy chief Federica Mogherini was upbeat on Friday about the sputtering so-called Minsk II cease-fire between the warring sides that the EU and Russia brokered last month.
“For sure the trend is a positive one, even if not perfect,” she said in the Latvian capital Riga.
Both Ukrainian government forces and rebels claim to be withdrawing heavy weapons as called for in the truce.
But international monitors say they need greater access to their weapons inventories in order to verify the pullback.
Hammond on Friday urged the West to prepare “a whole range of potential sanctions options, so that we have maximum flexibility, maximum agility and maximum speed in reacting to any provocation, whether a breach of the Minsk implementation or whether it’s a military offensive somewhere else in the Donbas region.”
Note: The payment system created by Russia is a credit card payment system. That is not the same as SWIFT. The Russian system interlocks with Visa and Mastercard for foreign payments, while inland it assumes all transactions. A SWIFT system assumes international financial transactions, not credit card payments, i.e. transactions from bank to bank in foreign currencies including dollars. That seem different. And that is what is cut from Crimean companies. Which is really illegal, because Crimean companies are still Russian companies and as such have a right to use SWIFT. Time for Russia and China to institute their own SWIFT system and for Russian banks not to fear sanctions. The US is clearly trying to cut Russia off of world trade. But Russia is a member of the WTC and as such has a right to trade with he world, including Europe. Russian banks abroad may have to repatriate their funds before doing business in Crimea as the US/EU will freeze their funds immediately. But to think that the US will not move every lever to cut Russia off of trade with the west is wrong. It may take a bit longer, but the US will just go on and on trying again.
Bitcoin is most certainly NOT a solution. It's a fad that will soon be gone. Russia and Crimea must respond as adults - not with the 'cat-video currency' of Bitcoin. I think this may be a good opportunity for Russia to exercise the SWIFT alternative that has been developed with China via SCO. The West must no longer have a monopoly on financial transactions.
Russia is now learning this cold-hard truth being faced with economic embargoes placed by EU & USA over the contentious issues of Crimea, Ukraine & MH17 flight saga. Like the maxim goes - "Necessity is the mother of invention", Russia is now working to circumvent SWIFT system by instituting their own. It is trying to replace VISA, MasterCard with their own just like China has already done with UNION Pay. The other things Russia is doing is to establish BRICS Bank to shrug off reliance on World Bank, IMF or other western banks for loans. So far it has signed agreements with China, Iran and Turkey to do business in local currencies rather than dollar in a bid to curtail the dominance of US economic might. But that is a whole new discussion on its own merit and I shall shed light on that topic in a separate post.
SWIFT is West’s ‘nuclear weapon’ against Russia
AFP, 7 March 2015
WARSAW: Excluding Russia from the SWIFT banking system would be a measure of last resort if the crisis in Ukraine escalates, the British and Polish foreign ministers said Friday.
“When it comes to sanctions, SWIFT is the nuclear weapon. It is the last resort and we are all aware of that,” Polish Foreign Minister Grzegorz Schetyna said at a joint press conference in Warsaw with British counterpart Philip Hammond.
Russia last month said it would retaliate strongly if it were to be cut off from SWIFT, the global financial industry’s secure messaging system to facilitate transactions.
“To be clear, this would be a very extreme sanction measure. It would have a very significant impact on the Russian economy,” Hammond said, adding that discussion on the option was taking place “primarily in the US.”
Western sanctions in 2012 cutting Iran off from the system for defying UN resolutions over its nuclear programme dealt a severe blow to the Islamic republic’s economy.
Last year, the European Union and United States levied sanctions primarily targeting senior officials in Russian President Vladimir Putin’s administration, amid fighting between pro-Russian separatists and Ukrainian government forces in the eastern regions of Ukraine bordering Russia.
EU foreign policy chief Federica Mogherini was upbeat on Friday about the sputtering so-called Minsk II cease-fire between the warring sides that the EU and Russia brokered last month.
“For sure the trend is a positive one, even if not perfect,” she said in the Latvian capital Riga.
Both Ukrainian government forces and rebels claim to be withdrawing heavy weapons as called for in the truce.
But international monitors say they need greater access to their weapons inventories in order to verify the pullback.
Hammond on Friday urged the West to prepare “a whole range of potential sanctions options, so that we have maximum flexibility, maximum agility and maximum speed in reacting to any provocation, whether a breach of the Minsk implementation or whether it’s a military offensive somewhere else in the Donbas region.”
Note: The payment system created by Russia is a credit card payment system. That is not the same as SWIFT. The Russian system interlocks with Visa and Mastercard for foreign payments, while inland it assumes all transactions. A SWIFT system assumes international financial transactions, not credit card payments, i.e. transactions from bank to bank in foreign currencies including dollars. That seem different. And that is what is cut from Crimean companies. Which is really illegal, because Crimean companies are still Russian companies and as such have a right to use SWIFT. Time for Russia and China to institute their own SWIFT system and for Russian banks not to fear sanctions. The US is clearly trying to cut Russia off of world trade. But Russia is a member of the WTC and as such has a right to trade with he world, including Europe. Russian banks abroad may have to repatriate their funds before doing business in Crimea as the US/EU will freeze their funds immediately. But to think that the US will not move every lever to cut Russia off of trade with the west is wrong. It may take a bit longer, but the US will just go on and on trying again.
Bitcoin is most certainly NOT a solution. It's a fad that will soon be gone. Russia and Crimea must respond as adults - not with the 'cat-video currency' of Bitcoin. I think this may be a good opportunity for Russia to exercise the SWIFT alternative that has been developed with China via SCO. The West must no longer have a monopoly on financial transactions.
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