Luxembourg fully supports the European Union’s additional sanctions against Russia over its aggressive move towards Ukraine but supports a cautious approach with the EU’s plans to eject Vladimir Putin’s country from the international payments system Swift. If that happens Russia will in essence be cut off from the world economy.
Speaking to journalists after EU heads of state and government finished their emergency meeting in Brussels early on Friday, Luxembourg Prime Minister Xavier Bettel said excluding Russia from Swift can potentially be “counterproductive.”
“It is important not to make mistakes,” said Bettel.
Bettel said that potential measures against Russia involving Swift will be discussed again when the EU meets on a third round of sanctions which will be discussed if Russia persists in its war against Ukraine. By not including Swift now the EU gives Russia an opportunity to withdraw its troops, he said. The timing of the third package will be decided by EU Council President Charles Michel, said Bettel.
Germany, Austria, Italy opposed
At the EU meeting, Belgium and Ireland spoke out in favour of including Swift measures in the second package of EU sanctions, while Germany, Austria and Italy - the three countries most dependent on Russian gas imports - opposed.
Swift, or the Society for Worldwide Interbank Financial Telecommunication, is a critical element of the international payments infrastructure that also allows European companies to export to Russia and to import products from Russia, including natural gas.
With heavily-secured headquarters south of Brussels, Swift provides a global messaging system for financial transactions that connects more than 11,000 banks and other organisations in more than 200 countries and territories.
IFW Kiel proposes safety net
A German think tank, IFW Kiel Institute for World Economics, has suggested that it would become easier for EU Member States to agree on Swift as part of sanctions against Russia when the EU adopts a special package that will compensate EU exporters for the business they lose once sanctions take effect.
“Disconnecting Russia from the Swift-system would practically fully isolate Russia from a big part of the global economy,” said Stefan Kooths, Vice President at IFW Kiel. “That would economically be the toughest measure.”
In Brussels on Friday, EU leaders agreed to impose a second package of sanctions against Russia less than one day after Russia started its invasion of Ukraine. The sanctions target The financial sector, energy and transport sectors, and include a ban on the export of aircraft spare parts while denying Russia access to important technology and adopting a more stringent visa policy.
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