SWIFT, the network that makes possible the fiat international transfers and remittances on the current banking network, has cut support for Iranian based banks. This measure is taken as a result of the harsh sanctions that the USA took against Iran last week. Iran supposedly breached of the nuclear agreement between these two nations.
SWIFT, the organization and network for international payments, has decided to cut their service from the whole Iranian based banking system, taking them one more step closer to isolation. This happens in a terrible climate of disarray as a result of several sanctions from the USA.
President Trump administration announced that his government would apply sanctions to everyone that buys Iranian oil. But even if they omit this warning, he is also taking care of that. SWIFT is the service that lets money flow between nations in the regular channels. So by disabling its service for the Iranian banks, he is severely hampering Iran’s ability to receive payments.
Even if buyers still want to buy its oil, payments would be a difficult thing to handle. But it is not like SWIFT jumps to help the American Government. In fact, SWIFT as a defacto standard should be neutral. And it wanted to remain like that.
SWIFT Gets Moved
The SWIFT network was going to remain neutral from this whole issue. But pressures applied from the American side of the conflict made them concede. Even the secretary of state, Steve Mnuchin declared that:
We have advised SWIFT that it must disconnect any Iranian financial institutions that we designate as soon as technologically feasible to avoid sanctions exposure,”
indirectly referring to the possible application of sanctions to the entity.
In the end, the SWIFT system sided with the USA due to the immense pressure exerted by their top officials. But this behavior will not go unnoticed.
EU Sanctions And Outcome
The EU is likely to exert is own sanctions over this economic institution. And by behaving like this, it has evidenced the need for another alternative payment network. The EU has already decided that it should be created, and the whole block is working to this end.
But it will likely not be ready in time to influence the resolution of what President Hassan Rouhani of Iran has referred to as “economic war”. Unironically, the Venezuelan President Nicolas Maduro uses this term often to blame USA’s sanctions for most problems that Venezuelans face daily.