Kick Russia Out Of SWIFT, UK Demands; But Beware The Retaliation…

Kick Russia Out Of SWIFT, UK Demands; But Beware The Retaliation… (ZeroHedge, Aug 29, 2014):

UK Prime Minister David Cameron came out swinging this morning; not only at ISIS but in calling for European leaders to block Russia from the SWIFT banking transaction system. European leaders have already (via unnamed sources) denied any actual new sanctions will take place (though they will be discussing them at the NATO Summit) but – as we have noted previously – this is yet another unintended consequence-driven nail in the coffin of USD hegemony

Bloomberg reports that the U.K. Said to Press EU to Block Russia From Banking Network

The U.K. will press European Union leaders to consider blocking Russian access to the SWIFT banking transaction system under an expansion of sanctions over the conflict in Ukraine, a British government official said.

The Society for Worldwide Interbank Financial Telecommunication, known as SWIFT, is one of Russia’s main connections to the international financial system. Prime Minister David Cameron’s government plans to put the topic on the agenda for a meeting of EU leaders in Brussels Aug. 30, according to the official, who asked not to be named because the discussions are private.

This has consequences…

“Blocking Russia from the SWIFT system would be a very serious escalation in sanctions against Russia and would most certainly result in equally tough retaliatory actions by Russia,” said Chris Weafer, a senior partner at Moscow-based consulting firm Macro Advisory. “An exclusion from SWIFT would not block major trade deals but would cause problems in cross-border banking and that would disrupt trade flows.”

But then we already knew that…

1) Russia is likely looking to move away from the NSA-sponsored SWIFT system’s total transparency to Western powers…

But while collecting credit card data was to be expected, what is even worse is that the NSA has also secretly planted itself in the nexus of the entire global USD-intermediated financial transactions system courtesy of SWIFT.

The NSA’s Tracfin data bank also contained data from the Brussels-based Society for Worldwide Interbank Financial Telecommunication (SWIFT), a network used by thousands of banks to send transaction information securely. SWIFT was named as a “target,” according to the documents, which also show that the NSA spied on the organization on several levels, involving, among others, the agency’s “tailored access operations” division. One of the ways the agency accessed the data included reading “SWIFT printer traffic from numerous banks,” the documents show.

What is curious is that while the NSA and its henchmen, in this case the GCHQ, had no qualms about violating personal privacy at every level, it is only when banks were threatened that someone feel like perhaps a line was crossed:

But even intelligence agency employees are somewhat concerned about spying on the world finance system, according to one document from the UK’s intelligence agency GCHQ concerning the legal perspectives on “financial data” and the agency’s own cooperations with the NSA in this area.

In other words, America’s unsupervised uber spies, when not checking in on their former significant others, spend the bulk of their time tracking who is buying what, where, and with whose money.

2) Russia is planning its own (possibly BRICS-based) payment system…

Faced with the risk of losing access to the network, Russia’s government has already drafted a bill to create a new Russian system for domestic bank transfers, Deputy Finance Minister Alexey Moiseev said on Aug. 27, according to the Itar-Tass news service.

SWIFT transmitted more than 21 million financial messages a day last month, facilitating payments between more than 10,500 financial institutions and corporations in 215 countries, the organization said on its website.

“There’s no doubt that in the short term restricting Russian usage of SWIFT would be extremely disruptive to Russian financial and commercial activities,” said Richard Reid, a research fellow for finance and regulation at the University of Dundee in Scotland. “However, it may carry a longer-term downside, namely the likelihood that large chunks of Russian international payments flows would move to much less well monitored and measured financial channels and thus be beyond sanctions at any future point.”

and 3) Russia (and China) have begun the de-dollarization…

Several months ago, when Russia announced the much anticipated “Holy Grail” energy deal with China, some were disappointed that despite this symbolic agreement meant to break the petrodollar’s stranglehold on the rest of the world, neither Russia nor China announced payment terms to be in anything but dollars. In doing so they admitted that while both nations are eager to move away from a US Dollar reserve currency, neither is yet able to provide an alternative.

This changed in late June when first Gazprom’s CFO announced the gas giant was ready to settle China contracts in Yuan or Rubles, and at the same time the People’s Bank of China announced that its Assistant Governor Jin Qi and Russian central bank Deputy Chairman Dmitry Skobelkin held a meeting in which they discussed cooperating on project and trade financing using local currencies. The meeting discussed cooperation in bank card, insurance and financial supervision sectors.

And yet, while both sides declared their operational readiness and eagerness to bypass the dollar entirely, such plans remained purely in the arena of monetary foreplay and the long awaited first shot across the Petrodollar bow was absent.

Until now.

According to Russia’s RIA Novosti, citing business daily Kommersant, Gazprom Neft has agreed to export 80,000 tons of oil from Novoportovskoye field in the Arctic; it will accept payment in rubles, and will also deliver oil via the Eastern Siberia-Pacific Ocean pipeline (ESPO), accepting payment in Chinese yuan for the transfers.

*  *  *
As we concluded previously, these short-term ‘punishments’ borne of ego and bluster merely further ‘isolate’ the status quo from the inevitable transition…

Still confused? Then read “90% Of Gazprom Clients Have “De-Dollarized”, Will Transact In Euro & Renminbi” for just how Gazprom set the stage for the day it finally would push the button to skip the dollar entirely. Which it just did.

In conclusion we will merely say what we have said previously, and it touches on what will be the most remarkable aspect of Obama’s legacy, because while the hypocrite “progressive” president who even his own people have accused of being a “brown-faced Clinton” after selling out to Wall Street and totally wrecking US foreign policy abroad, is already the worst president in a century of US history according to public polls, the fitting epitaph will come when the president’s policies put an end to dollar hegemony and end the reserve currency status of the dollar once and for all, thereby starting the rapid, and uncontrolled, collapse of the US empire. To wit:

In retrospect it will be very fitting that the crowning legacy of Obama’s disastrous reign, both domestically and certainly internationally, will be to force the world’s key ascendent superpowers (we certainly don’t envision broke, insolvent Europe among them) to drop the Petrodollar and end the reserve status of the US currency.

And once China and Russia show that not only can it be done but thanks to US prodding it has been done, expect other countries to promptly follow the anti-SWIFT axis on their own…

china russia flags_0

Gazprom deal

*  *  *

Isolation… indeed.


4 thoughts on “Kick Russia Out Of SWIFT, UK Demands; But Beware The Retaliation…

  1. As we have been saying, if they are that stupid, Putin has another system in the wings. Didn’t the credit card debacle teach these idiots anything? Russia simply launched the well established Chinese version……..and within months (not years) their card will be used all over their considerable association of nations…….far outweighing the west in assets and stability.
    The UK currently suffers under a debt level of over 400% to GDP. Yet, here is this idiot prancing around like a circus horse decrying the Russian leadership. He acts as if it were 1928, and England ran the world……..he is nearly 100 years behind the times.
    What a fool.

  2. Points 2 & 3 sum it up.
    You can be assured BRICS will have their own system in readiness.
    The UK is literally 100 years behind the times. Their demands on the EU would be laughable, but we know it is fool US leaders pulling their strings…….and the US is dropping like a stone in world esteem, financial power and politically……not to mention the re ascension of Russian military powers enhanced by Chinese scientists well versed in all US military and cyber technology. Thank the greedy gut corporations for that.
    While greedy gut corporations were looking ahead at 25 years of slave labor and growing profits from such labor during (and firing millions of engineers, and other high end people in the US…..made the bottom line look great) the years beginning around 1990, and ending with total environmental burnout in China in 2014; they didn’t care what they gave to China. The price for slave labor was total access to corporate blueprints for the Chinese government. Now, they have it all, including nuclear power plants courtesy of GE.

    China was looking towards the next 100 years, not just 25.

    2010 was the beginning, and end of so much. That was the year electronic currency was introduced by Hugo Chavez. That same year, Russia and China adopted their model, and Putin brilliantly built it into a world economy by 2014. 2010, the same year China started slowing (and eventually stopping) sale of rare earth materials to the west. They are essential in building first rate cyber systems…….
    2010 was the year the rest of the world decided to follow Chavez’s quiet example, and slowly, but surely, move away from the US, and its allies.

    So much happened that year, and none of it was covered by US media. So, the dumb fools who only go to TV for their news are clueless…….they don’t realize how close the dollar is to collapse.

    The UK, and other fools might shout to toss Russia out of SWIFT, but I am sure the Russians already have a sister system in place. That is the genius of Putin. He didn’t waste time re-inventing the wheel, he simply took the same model, and established one for the east.

    The credit card nonsense ought to have shown them. I only hope for the sake of good people in the UK and other nations that enough cool heads are in power to prevail.

    Even the UK and Israel won’t join the US in war against Putin. The EU is sharply divided. Four nations of the 27 members put sanctions on Putin, and the others are already demanding they be removed. UK and other nations are already suffering from Putin’s responses to their fool sanctions. Until the watered down sanctions were enacted, Russia was providing E120 billion a year to EU GDP.

    The EU has many members who are teetering on bankruptcy……and as a whole, they cannot afford such a loss. Russia also provides lots of heating oil to the EU, and Winter is coming. Economic wars are only for the wealthy.

    It is just a matter of time before the sanctions are lifted, and the EU joins BRICS. Switzerland already had joined. When that day happens, the dollar will collapse.

    Yelling and strutting won’t change a thing, it is too late.
    We have been led off the cliff by fools, all that is left is the fall.

  3. Rotten deal for UK energy consumers…….one more thing they will attempt to blame on Putin instead of their own corrupt energy corporations………..

    If UK leadership has an ounce of sense, they will run, not walk away from US bullying, and not buy into their rot about Putin.

    The US is angry because he so easily outwitted them. If I could see it just by following the money on the web…….they could not? They are drinking too much, and working too little.

    The US is a perfect example of why corporate group thinking is very defective, especially if applied to government…………..

    From The Telegraph:

  4. Fortunately, Marilyn, the EU leaders consider Cameron a total dick.

    Equally, only a total dick would think it good to suggest the barring of Russia from the SWIFT system just as those particular countries are having second thoughts on the severity of the sanctions anyway, especially as climate indicators are forecasting a cold, early winter…….and who has the gas again?

    Ukraine must either be given up by the west to be annexed by Russia, thus at least guaranteeing a flow, or Europe will most certainly deteriorate into an economic and social quagmire of hardship.

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.