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European Parliament calls on EU to cut Russia off SWIFT bank message system

September 18, 2014, 18:37 UTC+3 MOSCOW
The European Parliament discussed at its plenary session on Thursday the Ukraine crisis and the relations between the European Union and Russia
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MOSCOW/STRASBOURG, September 18. /ITAR-TASS/. European Parliament deputies called on the European Union on Thursday to consider cutting Russia off the SWIFT inter-bank financial message system.

The European Parliament discussed at its plenary session on Thursday the Ukraine crisis and the relations between the European Union and Russia.

The resolution adopted by the European Parliament “calls for the EU to consider excluding Russia from civil nuclear cooperation and the SWIFT system.”

In March 2012, the EU cut off Iranian banks from SWIFT, the world’s biggest electronic payment system, as part of its sanctions over Iran’s controversial nuclear program.

In late August 2014, media reports said the UK had proposed banning Russia from the SWIFT network as part of an upcoming new round of sanctions against Moscow over its stance on developments in neighboring Ukraine. However, this proposal was not supported by the EU countries.

Russian Deputy Finance Minister Alexei Moiseyev said in late August Russia’s government had already drafted a bill to create a local alternative to the SWIFT payment system.

How SWIFT works

The Society for Worldwide Interbank Financial Telecommunications (SWIFT) transmits 1.8 billion communications a year, remitting payment orders worth $6 trillion a day. The system comprises over 10,000 financial organizations from 210 countries.

Under the SWIFT charter, groups of members and users are set up in each country covered by the system. In Russia, these groups are united in the RosSWIFT association.

Possible consequences for Russia

Russian former finance minister Alexei Kudrin said on Tuesday that a possible decision to block Russian access to the SWIFT international banking transaction system under an expansion of western sanctions over the Ukraine crisis might cause Russia’s GDP to shrink by 5%

“If the SWIFT system is cut off after all, this factor alone may cause a GDP contraction by up to 5% during the year since the restriction is imposed,” Kudrin said.

What else the EP’s resolution suggests

The European Parliament’s resolution passed on Thursday also calls on the EU member states “to cancel planned agreements with Russia in the energy sector, including the South Stream gas pipeline.”

The European Parliament members said “the EU needs to rethink its relations with Russia, abandon the strategic partnership concept and find a new, unified approach.”

The European Parliament members came to the conclusion that the EU member states should “adopt a clear set of benchmarks which, when achieved, could prevent adoption of the new restrictive measures against Russia or lead to the lifting of the previous ones.”

At the same time, the European Parliament members welcomed the restrictive measures against Russia and urged the European Council and the EU member states “not to consider lifting any sanction before these conditions are met and to remain ready to impose further sanctions.”

Reaction to the EP’s resolution

The European Parliament’s resolution will hardly have big practical significance as it is not a direct guidance for the governments of the EU countries, Chairman of the Presidium of Russia’s Council for Foreign and Defense Policy Fyodor Lukyanov said on Thursday.

The European Parliament’s resolution is an extremely tough document, which makes Russia solely responsible for all issues, the Russian expert said.

The resolution completely excludes the EU’s readiness to take Russia’s interests into account, Lukyanov said.

At the same time, the resolution does not exclude a possibility for a dialog in areas where the EU’s interests are concerned, the expert said.

“The conditions that are advanced for Russia cannot be fulfilled for many reasons,” the expert said.

Compared with the European Parliament, which does not bear responsibility for anything, the European Council comprising the heads of state and governments of the EU member countries holds a more weighed position, the Russian expert said.

“But this is a division of roles: the European Parliament can say whatever it wants while the European Council and the European Commission will act as they deem necessary,” the expert said.

The European Parliament’s resolution will not have any special consequences because it is not a guide to action for the EU governments. At the same time, the document reflects the general atmosphere in Europe, which should be borne in mind, the expert said.

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