by Kakaouskia for the Saker blog
Greetings to the Saker community and readers.
For some time now, US and its vassal states and Russia are engaged in an economic war. The first salvo was when VISA and MasterCard – which are US based banking institutions – were forced to stop accepting transactions performed by cardholders of certain Russian banks. The latest indication, as Saker has mentioned in the near past is that the US government is thinking to block Russian access to the SWIFT system.
What is SWIFT
SWIFT is basically a cooperative message exchange system. It is targeted at banks, investment companies, money brokers, basically anyone which needs to transfer money from A to B. To use it you apply for membership; once accepted you get your SWIFT code plus some shares of the SWIFT cooperative, pay a one-off signup fee and from then on you pay per message (aka transaction) or per file sent, other processing / services fees plus an annual support fee. The value of fees and other charges depends on the membership level. Profits are distributed in a similar way. SWIFT also provides reports and other analytic features to help members generate more business.
The reason behind SWIFT’s success is the fact that it provides a standardized, secure and reliable way of moving money around. Regulatory compliance is expensive as it requires constant, dedicated, high quality manpower to monitor, develop, implement, test and deploy changes to IT systems and networks as well as business processes. Thus, banks and other financial institutions prefer to have someone else take care of all such requirements.
Impact of kicking Russia out of SWIFT
The immediate effect will be the inability to exchange SWIFT messages between Russian members of the SWIFT system and the rest. Note that SWIFT itself does not facilitate the actual money transfer; all it does is exchanging money orders – the fund transfer must take place using mechanisms and under the agreements that the two exchanging institutions already have in place. As such, while it will become more risky and difficult to transfer money – not to mention more expensive – money transfers cannot be completely stopped. Such difficulties will drive Russian investors to seek other more investor-friendly destinations for their money; this will probably hit the EU quite hard as it is a favourable place for Russian investment. Consider this scenario: you have 1 million which you like to invest. You go to your bank, tell them you like to transfer said million to country X and the teller comes back and says “we can do that, however it is deemed high-risk and as such please sign a waver that if something happens to your million, bank bears zero responsibility”. Of course you can insist to proceed with the transfer, however a safe bet is that the majority of people will chose a less risky destination.
SWIFT also stands to lose. Communication is a two-way street which means messages go from and to Russia. If one assumes 10,000,000 daily Russia-related messages per day between SWIFT members, at the rate of €0,01 per message that is €36,500,000 per year in transaction fees alone. There is a good chance that a number of Russian institutions will either be removed or otherwise decide on their own that there is no more meaning in being a SWIFT member therefore there will be a loss of other fees, not to mention the cost of all the legal battles to sort out the contractual agreements.
Can Russia build an alternative to SWIFT?
Technically speaking – yes. In response to VISA’s and MasterCard’s boycott, Russia has launched NSPK as a replacement bank card scheme.
Allow me a few points on NSPK:
– As it stands now it is a card payment system and a direct response to the coercion by US government to VISA and MasterCard not to honour their agreements with Russian banks and stop accepting their own cards for which Russian banks paid licensing fees for the privilege of issuing them. The first six digits on any of your bank cards are called the BIN number; the logo on the card (VISA, AMEX, MasterCard etc) shows which scheme owns the BIN. Your bank – the issuer – pays said scheme a license fee to exclusively use that particular BIN and as such the scheme has to honour their end of the deal; that is ensure the card is accepted by all terminals brandishing the same logo. Few people know that VISA et al are in reality banking institutions.
– NSPK scheme has been active for a couple of years now; already a number of Russian banks use it. For the time being it operates only within Russia.
– The first iteration is a “Russianised” clone of China Union Pay scheme, which in itself is based off VISAs specs (properly licensed). I always laugh when thinking of the irony; instead of VISA making money out of card transactions made by Russians, they lose money while Russia is using their own design.
Russia can choose to repeat this by enhancing NSPK to function as a SWIFT alternative. NSPK could use the same file formats and mechanisms with SWIFT with different headers to allow proper identification, thus minimising needed system modifications on behalf of users. A big plus in this effort is that SWIFT messages are using an ISO standard, namely ISO20022. This will make development a whole lot easier and since ISO20022 is an open standard, no one can use any copyright claims to stop the alternative solution.
Next comes the question of the actual communications between the users of the new system. While everybody is using the Internet these days, few people realise that it relies on a backbone of backbones; a series of high-capacity cables – usually underwater – and satellites linked to extremely high-end routers utilising the BGP protocol to setup the paths for intra-county linking. While quite a few business entities can own a satellite or an underwater cable, only a handful have the technical know-how and expertise to create such infrastructure. US can go full retard and force the owners of such backbone elements (say AT&T) to block certain messages originating from Russia. Thankfully Russia is quite capable of building and deploying its own satellites and cables. It will be costly and time consuming, but it can be done. At first, existing infrastructure can be used for establishing communications between important business partners, most likely in Asia.
Finally, the big question is who will be accepting any SWIFT alternative? Here is were things get tough. US is certain to try and bully other countries into “either use SWIFT exclusively or else!”. This can even be achieved via the “ethical way” like it was attempted way back when Google cited pressure from society and people “to promote democracy and freedom of speech” in an effort to try to avoid following Chinese legislation while doing business in China. While users in countries like China probably will not be intimidated – who would like to lose Chinese investments – or can be allowed to work around the limits (example: keep the main business entity SWIFT only and set up a subsidiary for Russia only communications. The subsidiary is as such expendable and if one complains can be dissolved and replaced within a matter of days), smaller or vassal states (hello EU) can be bullied enough to go against their own interests. This has happened in the past between VISA and China Union Pay, and it took years of WTO litigation to resolve. Russian diplomacy will have to be very efficient and creative to overcome a global monopoly.
Easy to read, follow and understand. I would like more articles from this author Kakouskia.
Agreed. Excellent for its clarity.
Economics seemed under represented on this blog, then recently there have been a couple great articles. Thanks for these and please keep them coming. Hot wars seem unaffordable these days (at least in terms of public support) but economic wars are more than vogue. Moving forward, this seems a critical subject.
Agreed. What I find remarkable is that the US is applying sanctions against Russia and is thinking about excluding it from SWIFT, yet at the same time the US has forgotten how many factories have been closed down in the US – according to analysts 28.000 have been closed down, while according to Trump 60.000 have been closed down. This has always been explained by the profit motive, companies moving factories out of the US and opening them in China, India, etc, where operating costs are lower. I always had trouble accepting this. Who in his right state of mind destroys the manufacturing base of ones country ? Did this happen by accident, or by design ? Somebody pulling the strings from the shadows ? Is the aim to weaken the US ? Perhaps The Saker could elaborate. Looking forward to his answer.
Agree with everything you state – except I believe 70,000 factories in the US have closed since 2001. These of course have mainly migrated to China with the help and blessing of Wall Street traitors. God willing – if there ever is a revolution in that accursed country – I hope it will be more like the French and Russian revolutions instead of the so called American “revolution”, I say French/Russian because there will need to be a mass reckoning that will see the complete elimination of the 1% and their Wall Street and DC lackeys.
Even that 1 % is an exaggeration, as 1% implies more than 3 million people. Its far less than half of 1 %. In effect the US is a feudal state, run by robber barons called bankers and corporate presidents who, ofcourse, think of themselves first and the country second. Ukraine is now an even worse personification of the US.
“No one in New York was even thinking of natural rights, let alone speaking of them. The ‘principal citizens’ held the French Revolution in devout horror… One heard nothing here but the need for a strong government, able to resist the depredations which the democratic spirit was likely to make upon ‘the men of property’ and quick to correct its excesses. Many even spoke in a hankering fashion about monarchy…
“In sum, then, the primary development of republicanism in America, for the most part under the direction of Alexander Hamilton, effectively safeguarded the monopolist, the capitalist, and the speculator. Its institutions embraced the interests of these three groups and opened the way for their harmonious progress in association. The only interest which it left open to free exploitation was that of the producer…
“The French had the measure of matters in America. They knew that no issue of academic political theory had set the country by the ears. State rights, anti-Federalism, antimonarchism, and all that kind of thing were but the American equivalent of their own liberté, egalité, fraternité. What really had divided the country, in their view, was a mode of constitutional development inaugurated by a bold seizure of power and designed to subordinate the interests of the producing class to those of the monopolist and the exploiting class… Fauchet, in so many words, ascribes to Hamilton’s policy the solid intrenchment of a class which ‘shows a threatening prospect of becoming the aristocratic order’, nontitular, indeed, but in solid substance of economic control, precisely like that which the French proletarians had just ousted; and Fauchet puts his finger firmly upon the consequent formal opposition between the producing interest, l’intérêt foncier ou agricole, and the monopolist exploiting interest, l’intérêt fiscal”.
– “Mr Jefferson”, Albert Jay Nock
The American and French Revolutions were like trains that pass going at high speed in opposite directions.
It happened by design. The USA has a privately owned central bank, called the Federal Reserve. There are secrecy laws regarding the ownership of it. You can do a google search for “federal reserve ownership chart”. How does a privately owned central make honey? By printing dollars.
If the US hollows out its industrial base and allows its trade deficits to soar, as it did in the 70’s, then the profits of the owners of the Federal Reserve will soar as a result of the dollar printing and outflows to the rest of the world.
Additional dollar demand for US dollars was also created by OPEC in the 70’s agreeing to only accept dollars for oil.
The aim is to perpetuate an inflation/devalued dollars scam on the US public and the rest of the world by the Fed and Wall Street. This is the underlying reason why Russia, China and Iran are on Uncle Scam’s shit list and why Iraq and Libya were invaded. This is also the reason why there’s a huge asset inflation bubble in the stock markets now.
All the “democracy”, “responsibility to protect” and “human rights” talk is self-serving BS.
F William Engdahl and Michael Hudson would be good sources of info.
Yes, I too suspect all those factories were closed by design. Instead of the US producing, it is seeing bankers playing with paper which they call “dollars”, and which are printed in huge amounts backed by nothing, the US military excluded. Countries are offered the choice of either using the dollar or getting either regime change or a heap of bombs and cruise missiles. No wonder both Russia and China started accumulating gold, preparing to introduce gold backed currencies, while China has announced the introduction of the petro-yuan.
The US is facing a very dangerous situation once the dollar loses its world reserve status. A heap of dollars will return to the US, causing economic, financial and social distress, and no doubt even more encouraging secessionist movements.
Back in 2010 Igor Panarin, dean of the Russian Diplomatic Academy, stated that the US will break up into six parts. I think that he is most probably right. The northern US states will join Canada, which is logical.
You got it, BF.
The US dollar is only backed by the “greatest military in world” scam.
“A heap of dollars will return to the US, causing economic, financial and social distress, and no doubt even more encouraging secessionist movements”.
True. But the rich and powerful, who deliberately brought about that state of affairs, will be in various distant places such as Argentina and New Zealand – protected by their security forces, and having transferred their wealth into land, other productive resources, or even gold.
The 99% will be left to tear themselves to pieces and, if they so choose, to eat one another.
That is correct. Analysts have for years been warning that the elite are preparing hideaways for themselves, buying up property outside the big cities and property in foreign lands. George Bush Jr., the former President, bought himself an estate in Paraguay, while the elite is also finding Tasmania attractive.
You are also right about the gold. According to one analyst, there is almost no gold left in Fort Knox, it being shipped away. Apparently Fort Knox is being used to store nerve gas. I wonder why.
watch this prophetic interview about that subject (outsourcing) – everything James Goldsmith predicted became was true and everything the Clinton idiotic ‘adviser’ said was false -and she has been rewarded for her idiocy by a teaching position at Berkeley:
the interview has been broken in a few parts (Charlie Rose looks dumber than usual):
Paul Craig Roberts has written extensively on thuis subject. Also see the book ‘ Killing the host’.
I have posted this comment in the past but as this article is specifically dedicated to SWIFT, I repost it, as a suggestion to, act in the spirit of “best defense is an offense” & COUNTER SWIFT:
S.W.I.F.T. is a private corporation in Belgium but it still falls under the jurisdiction and human rights laws of E.U. in general and Belgium in particular.
Specifically in Belgium, it’s “War Crimes Law” claims universal jurisdiction and allows for prosecution of those involved, in Belgian courts.
S.W.I.F.T. cut down services to Iranian banks thus by default participated in indiscriminate punishment of the whole population thus the former falls under the definition of the Belgian “War Crimes Law” and is prosecutable.
As an example, in my particular case, my gravelly ill father-in-law was unable to find Ambison (Liposomal Amphoteracin B, as it was not possible to import that drug due to the lack of the ability of private parties to settle their financial accounts) used in severe fungal bloodstream infections). Multiple families, not involved in interstate conflicts, suffered similar faiths.
Bringing legal action against that company costs money that the affected private individuals can not bare, let alone the fact that most are not well informed and do not even know about this.
However is a third party brings a court case against S.W.I.F.T., it would be mired in controversy and taking another indiscriminate attempt to boycott the whole population would become impossible at the very least. In a best case scenario reparations can be sought, representing another death nail in the coffin of the dollar’s status as reserve currency.
We need to prosecute S.W.I.F.T. and bankrupt or at least curtail them.
yes more please on monetary, banking crash course
That such a catastrophe should occur by itself is an interesting method of analysis, but surly it is unrealistic. In the reality of war one must also expect material violence, possibly the inflection node for the ignition of real violence might be, as the author seems to know, the cable system.
The latency between cable failure and cable fix is not realistically met, either…years…during which time…what?
Fighting, I propose…seems, er, “realistic”, since that’s the ordinary condition anyway.
Ultimately the Heartland States, being land-based, will do better than the Sea People, especially when global economy goes…poof! (cause that what’s down the tracks, I expect)
Thank you Kakaouskia for your article.
I would like to add the following:
“Russia has introduced safeguards against the risk of being shut out of international transaction systems such as Society for Worldwide Interbank Financial Telecommunication (SWIFT)…..”
Russia has been planning ahead for the potential removal from SWIFT.
Also in addition to the above in parallel, Russia and China are advancing their own payment systems. With the yuan now enjoying the status of a global currency, China has been swiftly promoting their payment system, CIPS, careful not to antagonize the internationally accepted SWIFT.
Russia’s form of the Mir payment system — a Russian version of Visa/ MasterCard. What’s implied is that were Washington inclined to somehow exclude Russia from SWIFT, even temporarily, at least 90 percent of ATMs in Russia would be able to operate on Mir.
China’s UnionPay cards are already an established fixture all across Asia – enthusiastically adopted by HSBC, among others. So combining “alternative” payment systems with a developing gold-backed system – and “toxic” does not even begin to spell out the reaction of the US Federal Reserve. And it’s not just about Russia and China; it’s about the BRICS.
What First Deputy Governor of Russia’s Central Bank Sergey Shvetsov has outlined is just the beginning: “BRICS countries are large economies with large reserves of gold and an impressive volume of production and consumption of this precious metal. In China, the gold trade is conducted in Shanghai, in Russia it is in Moscow. Our idea is to create a link between the two cities in order to increase trade between the two markets.”
Russia and China already have established systems to do global trade bypassing the US dollar. What Washington did to Iran — cutting their banks off SWIFT – is now unthinkable against Russia and China.
So Russia is already on its way, slowly but surely, towards a BRICS “gold marketplace.” A “new financial architecture” is being built. That will imply the eventual inability of the US Fed to export inflation to other nations – especially those included in BRICS, EEU and SCO.
Well. High finance is not my prime forte, far from it. On the other hand, I know how important financial communication is to business large and small and this fact is almost worldwide.
Couple of observations.
1. For the US to try to or actually accomplish cutting Russia from SWIFT, it will have repercussions far flung in addition to the financial uproar. For starters, it is an open act of war and economic war is barely a gnat’s eyelash from shooting war. The economic chaos that follows such an act will be the stuff of legend, world wide.
2. If this act is brought to fruition, I have few doubts that SehSha’s eastern colonies on The Continent will follow suit in lockstep. I don’t know what Foggy Bottom and Five Points have on the various heads of state in The Colonies but whatever it is, it is enough to make said heads of state almost willingly put their collective necks on the headsman’s block.
3. The Colonies will be damned cold in winter. No Russian gas and no Russian POL. Industry will grind to a halt in may spheres of production and prices will go through the roof for The Colonies as US will try to replace the gas and POL supplies bought for a quite low price from Russia with expensive gas and POL shipped from US at ghastly cost of transport. Toss in the fact that I would just about bet the farm that there will be an ‘accident’ at one of the LPG facilities which will look like a small nuke in the end and said ‘accident’ will put paid to any willingness to comply with the orders from Foggy Bottom if for no other reason than any existing politician will be stretching his neck from a lamppost.
4. Russia is building pipelines to China as fast as possible. I predict that in 5 years Russia will do far more business in gas and POL with China than all The Colonies combined. Time is on Mother’s side, not Foggy Bottom’s.
5. This continuous nudging towards war by SehSha is getting dangerous in the extreme. At this moment The World is teetering on the edge of the hideous abyss of War that no one wants to view. Problem is no one will listen to we OPW’s, not a damned thing we can do but stand back and get ready to fight when the call goes out. So be it. It’s not in our hands.
Never The Last One http://www.amazon.com/dp/B00ZGCY8KK A Deep Look In To Russia, Her Culture And Her Armed Forces
An Incident On Simonka https://www.amazon.com/dp/B01ERKH3IU NATO Is Invited To Leave Sevastopol, One Way Or The Other.
An additional note: If somehow North America did become a major Gas supplier for the EU then the cost of heating, and to a lesser extent electricity, would skyrocket in the US.
You can ask Poland about that deal. They stopped at least some purchase of Russian gas a few months ago and now buys that amount from US, sent via tanker. If memory serves it’s almost triple the cost of Russian gas.
You can also ask Orcland, they are buying Russian gas from EU at a higher price than they would pay Russia. Seems they are miffed over something.
This reminds me of a joke made by Putin in Germany,
“I don’t get why Germans don’t like nuclear energy. I don’t want to comment on it, but… I don’t understand how you’re going to keep warm. You don’t want gas, and you don’t want to develop nuclear energy, so what are you going to do, burn firewood? Of course, though, you’d have to get the wood from Siberia…”
Putin trolls Germans: You don’t want gas or the nuclear energy, so you will heat on a firewood?
The news that the US is planning to exclude Russia from SWIFT is basically old news. Russia has introduced their own version of SWIFT, and so has China. Both Russia and China have introduced their own debit cards, the Russian called “MIR” and the Chinese called “UnionPay”.
Yes, the US can exclude Russia from SWIFT and cause some damage. And yes, the US can bully countries not to use Russian or Chinese alternatives. However, the US will only shoot itself in the foot. Any bully boy tactics, and countries will look even more to China and Russia, more than they are doing now.
The US is showing all the characteristics of a collapsing empire, using brute force. This always backfires in the end. As I have written before, Washington and Wall Street are having trouble accepting changes in the world, still living in the past. If they don’t accept reality, they will end up turning the US into a rogue nation, being left all alone in the world.
Agree, the empire excluding Ru from SWIFT is suicidal…see satire: https://www.youtube.com/watch?v=Z_JOGmXpe5I
One more step….
America has been a ‘rogue state’ since 22nd November 1962.
Retaliate Russia. Ban the U.S. soccer team from the 2018 World Cup . And stop giving, or issuing visas to American soccer fans. Cancellation of all hotel reservations with funds returned after a lot of heel dragging. Please note the US failed to qualify for the World Cup 2018 – so won’t be attending. Mod
Cancel effective immediately the Uranium deal with no more refinement and/or storage from the U.S. to Russia.
Cancel and stop supplying the U.S. the RD-180 rocket engines.
Good chance to sneak in a few more expulsions of U.S. NGO’s and Attaches/Diplomats.
Accelerate financial agreements already made ( and make new ones)between Russia and China. With an intra-banking link firmly established and backed.
For every action , there is a reaction.
Regardless, this is a lot like the Roman Emperor who was moving his legions around while the Barbarians were massing at the gates of Rome.
Its still unclear how the U.S. plans on sabotaging the Chinese One -Belt, One-Road global link. I do know that its moving along at a rapid pace.
The Chinese are pragmatic business men who come to the table with mutually beneficial win-win model , for any nation who engages with it, and links up to the OBOR.
Its a new model and system that the worlds countries will find very attractive indeed.
Or stay with the same -same current system of Anglo-Zionist manipulation, domination and subjugation. Coups, subversion, sanctions and the treat of such, sloppy standing at the U.N and other international institutions.
So, the story is to see things strategically, because these little jabs at Russia are acts of frustration. The game is up, and the Anglo-Zionist know it. But yet they still dream of bringing Russia to kneel before them. Too little, too late.
US soccer team is not even qualified(eliminated by…Panama).
I propose much stronger retaliation,as the ‘joke’ lasted for more than 4 years now.Freezing ALL US/EU/CAN assets in Russia even nationalize them if further retaliation.Don’t worry the only thing which matters for the western capitalists is money.
This would clearly be an act of war.
This would give Putin even more popularity against the fith column candidates:”look your friends from the West how they like you.
Pulling the string on SWIFT won’t occur until a shooting war starts, either in Syria or the Ukraine. It’s a step in escalation that leads quickly to an all out war. It’s not a petty tactical move like the shenanigans at the Olympics or bankrolling a protest in St. Petersburg.
One thing I’m certain of is that a determined Russia would be unbeatable in economic siege warfare. All they have to do is withhold their energy exports and the Western economies will collapse. I can’t imagine this hasn’t been gamed out by the Pentagon already.
Copyright boycot: this should be Russia answer to Swift or other blockage.
What is Copyright? You acknowledge the “intellectual” property of the creator of industrial patents or products (software, hardware, songs, movies, books etc.) and accept to pay if you use that or reproduce that.
Now, just thick that Russia would temporary suspend any direct copyright right to Nations that apply sanctions deemed as “war act” (and Russia herself will define properly what such war acts are).
All the copyrights earnings will be deposited in a Russian Bank (one subjected to sanctions hence technically unable to transfer money, not for her fault but due to “major force”) and only when sanctions will end the money accumulated would be transferred without any interest, since previously any transfer was impossible.
Moreover, Russia could turn a “blind eye” any type of large scale pirate reproductions….
The Empire would be very, very hardly hit…
Copyright boycot: :)
First time I heard that, but I really liked the idea.
In fact all copyright (and the rest of the bullxxxx “intellectual property” )should be terminated as per human rights article 19.
Or per religious freedom via kopimi.
From all “intellectual properties” the only ones that make sense is signature and right to attribution. All the rest is balloney made up to further the riches of the 1%.
As I recall, art 19 of udhr goes something like: everyone as the right to seek, receive and impart information, regardless of media or frontiers…
excellent suggestion, should things go really bad (swift /CLS or most CCP bans)
Better idea – debt repayment boycott.
Freeze repayments of all loans to western banks and institutions.
Put the money into a blocked Moscow account for the duration.
Maybe this will cause another 2008 banking collapse.
Embargo titanium, nuclear fuel, rare earths, rocket engines to US.
End the joint space programme with US.
Close the Afghanistan supply route.
Impose a real cost on US satraps supporting sanctions.
Ban imports from them of cars, motorcycles, alcohol, tobacco, clothing, footwear, electrical appliances, watches, jewellery, cosmetics, perfume.
Produce these things domestically or import them from friends like China, India, Iran, South America, South Korea.
Make them face the prospect of a permanent loss of markets and trade deficits.
Advise Russians not to hold any assets in western countries where it is liable to arbitrary seizure/ confiscation at any time. Bank accounts, residential and commercial property, equity and bond holdings, ownership of western businesses.
Facilitate the repatriation of such assets.
Advise Russian citizens against travelling to those countries, where they may be subject to harassment/ blackmail. If Russian diplomats are treated as they have been, ordinary Russians should not expect anything else.
Treat America and its satraps as what they are – utterly vile, implacable, hate filled enemies intent on the destruction of Russia. Stop calling them partners and colleagues.
Give preference to imports from non-satraps of the US. If you buy machinery from Germany, or aircraft from America, there may be boycotts of spare parts.
Solidify and deepen the alliance with China and other nations – India, Iran, Pakistan and many others. Economic, financial, political, military, diplomatic.
Keep raising the price tag.
No way Russia can be removed from Swift as EU gets roughly 35% of it’s energy from Russia , block Russia from Swift would cause chaos
A week or so ago I posted a comment about the necessity for any country if it wants to be sovereign to control its banking system. I recall the ridicule over my comment. Now we see my point “writ large”. One of Russia’s main banks,Alfa Bank,owned by oligarch Mikhail Fridman (Fridman huh).Has announced that they will no longer have any dealings with Russian companies connected to Russia’s defense industries.Over “fear” of US sanctions.The bank told the press,” What can we do?”.Hmm,I don’t know,maybe stay loyal to your own country,might me a better choice.Just let that sink in for a moment.A Russian bank would betray their own country over the orders of a foreign state.I think my case is proved.
Top-10 Russian bank to no longer service defense industry over US sanctions fears
That bank ought to be confiscated and nationalized by the RF.
There is a bit more to that alfa announcement than that, according to the RT article ub1 linked.
“Deputy Prime Minister Dmitry Rogozin, who oversees Russia’s defense industry, offered an alternative explanation for Alfa-Bank’s decision.
“I make no ethical judgement of the behavior of the Alfa-Bank board,” Rogozin wrote on his Facebook page. “But I will draw your attention to the fact that the bank asked for, and was refused, a license to operate with defense procurement funds.”
In the comments section, Rogozin added that Alfa-Bank, Russia’s largest privately held financial institution, “wanted to make a good impression on the Americans.”
Seems that this largest privately held bank was considered a security risk by the Russian government and the government actually made the decision for alfa. Not the other way around, as the alfa parasites would like to spin it.
Russia is in a very weak position, dependent on the Swift system controlled by the West.
Russia is not “in a very weak position ” since she ( together with China) has created their own SWIFT .
do not undertsimate their will the cut R.F from CLS as well
More than half of interbank payment go through CLS (rather than SWIFT) and it’s lcoated in Murica
(shall SWIFT say no to US Neocons)
Dear Kakouskia. I would really appreciate your feedback on the following: I am Hungarian living in Hungary planning to do business with Venezuela. So far I have thought about opening a corporate bank account at Sperbank, Hungary. Sperbank (which uses SWIFT) as you know, is a commercial bank 100% owned by the Russian Central Bank . In the light of your article this may not be such a good idea. . The only other non Western bank present in Hungary is the Bank of China. Please tell me what you think. Thanks E
I would say it is much larger risk for Venezuela been thrown out of Swift then Russia or more correctly that it will be first in the queue.
So don’t worry about Sberbank/Swift worry about Venezuela having backup plan to work outside Swift (with Russia and China) and follow that lead. I’m pretty sure about China and Venezuela having already worked out plan for avoiding Swift blockade. If Russian banks are smart enough they’ve done the same.
@Хоу јес ноу Thanks for your answer. So you are saying that I should rather open a corporate account at the Hungarian office of Bank of China, instead of the Hungarian branch of Sperbank? which one is best in your view?
Thanks for a great article. However, you didn’t touch on the IBAN. This is another system that is used to transfer money internationally. I suspect that this system is also under control of Western Banks? Could Russia use this system? Also another question, is the NSPK another name for the MIR system coming into Russia? Or is this something completely different? Cheers.
IBAN is a bank account number (ID) system. Russia and a great many other countries do not use it. It operates underneath SWIFT. https://en.wikipedia.org/wiki/International_Bank_Account_Number NSPK is the operator of MIR. A large number of Russian banks including the largest – Sberbank Rossii are sanctioned and this creates problems transferring money too and from Russia. Many banks and FX companies refuse to deal with sanctioned banks.
I had a great deal of trouble transferring money from my Australian bank account to Russian bank accounts due to sanctions on Sberbank. Essentially the ANZ would not transfer money to a Russian account without a detailed explanation of who the money was going to, where in Russia (so as to refuse delivery to Crimea), and the purpose. In the short term I transferred money to my personal Sberbank account and went looking for other methods of transfer. I used two FX companies but both of them now refuse to deal with Sberbank. I now use TransferWise as I can send money in Rubles to my Ruble account and avoid double conversion costs – AUD to USD to RUB.
Thanks Stivin! You actually helped me out with another problem as my father lives in Australia and has problems transferring money over to me. I’ll get him to try the TransferWise.
Glad it helped you. I don’t know if this will help, but if your father visits Russia regularly, get him to open RUB, USD and EUR accounts and give you Power of Attorney over them. Banking PofA in Russia is only valid for three years, but allows you total access to the accounts. Because the accounts are in your father’s name it makes it difficult for Australian banks to stop him sending money to “his accounts”. I’d open the three accounts because it allows you to dodge sanctions more easily. Depending on where you live in Russia there are far better banks exchange wise to use than Sberbank. In my daughter’s town only Sberbank will take foreign transactions. Hope TransferWise works out for you.
Excluding Russia from SWIFT would just accelerate cryptocurrency growth. Ripple (XRP) was designed for exactly this: transaction between banks in different countries.
I read this article six months later but I thought the same thing. Ripple, or more specifically xRapid that really uses Ripple XRP. This is a viable option if (a) there is a sufficiently liquid XRP/RUB market and (b) XRP has moved to a more decentralized model so that even the Ripple Foundation can’t block Russia or any other country. Concerning (a), Russia is a bit sceptical of cryptocurrencies so that is a week point. Concerning (b), the decentralization of XRP is now possible — the consensus mechanism looks pretty ace to me — but lacks private nodes.
A gentle introduction to the concept of XRP for liquidity and bank transfers for those who aren’t familiar with the product:
“…satellites linked to extremely high-end routers utilising the BGP protocol to setup the paths for intra-county linking”.
That should read “inter-country”. While occasional typos will happen, once you start getting two distinct typos in one short phrase, the risk of misleading readers rises rapidly.
“The first salvo was when VISA and MasterCard – which are US based banking institutions – were forced to stop accepting transactions performed by cardholders of certain Russian banks.”
This was likely the response to the first salvo.
First salvo was fired by China and Russia – just took the US a while to get its act together and respond.
On 6th Sept., 2012, China announced that all was in place for any country to trade oil in yuan and Russia hopped on the very next day. This was the first large direct attack on the US dollar.
There was something else going on at the time (don’t remember what now) and the media paid this event no mind whatsoever at all.
Excellent geopolitical analysis:
“Finally, the big question is who will be accepting any SWIFT alternative?…
… This has happened in the past between VISA and China Union Pay, and it took years of WTO litigation to resolve. Russian diplomacy will have to be very efficient and creative to overcome a global monopoly.”
Western humanity will die of its hardcore “either-or” mentality if it keeps holding on to it. The universe is made of “and” and never ending possibilities… by cooperation. Yin and Yang.
Can Russia build an alternative to SWIFT?
Absolutely! If Russia draws from its past of being forever at the crossroad of both worlds and both philosophies for centuries, and takes the best of both, it will. Didn’t it, with ISS?
Incidentally, it is not about “Russia”, “China” or “the US and its vassals” but about humanity as a whole. Which humans will create the future? Funny that ISS works so well but humans on Earth are fighting each others over… money?
How did ISS start? On what basis and by whom?
“When you’re born, you get a ticket to the freak show. When you’re born in America, you get a front-row seat”. (George Carlin)