Putin masterplan to outsmart Europe with SWIFT payback – Russia will pivot towards Asia
Boris Johnson slams Putin for ‘barbaric’ tactics in Ukraine
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With Western powers piling on the pressure against Russian President Vladimir Putin, the increasing demand to stop Moscow from using the SWIFT system is mounting. However, according to one academic, Russia is seeking an alternative version of the valuable tool and will transition seamlessly into the new version.
Speaking exclusively to Express.co.uk, Christopher Bovis, a Professor of International Business from the University of Hull said: “Excluding Russian financial institutions from Swift has an immediate to short-term negative effect.
“The Russian banks will eventually seek access to an alternative system for payments and transactions.
“However, Russian authorities have prepared an alternative own payment system which is quite advanced and it is likely that it will provide a painless transition from SWIFT, but it will need time and volume of transactions to mature to an alternative system to SWIFT to perform in an acceptable manner to businesses and financial institutions.
“It would also need the acceptance of other states, which would have to endorse the system for completing transactions in a parallel fashion to SWIFT.”
When discussing how the blockade on SWIFT will filter down and affect the people of Russia, the Professor suggested the ends justified the means.
He said: “Ordinary people and businesses will be affected adversely by the exclusion of Russian financial institutions from SWIFT.
“The Russian Government is prepared for such repercussions and has factored in such reprisals.”
Many have claimed that sanctioning Russia is the best solution to curbing Putin’s ambitions and punishing his actions over the invasion of Ukraine.
Prime Minister Boris Johnson, US President Joe Biden and many other national leaders have called on global cooperation in sanctioning Russia.
However, the Russian President may have a lifeline to the East when it comes to international trade.
Professor Bovis said sanctions may in fact benefit Russia in the long term. He said: “I believe that these sanctions will stimulate Russia to make a pivot towards Asia.
“It is a widespread assumption that Russian financial institutions could seek access to payment systems operating in the Far East.
“Such move will challenge eventually SWIFT’s dominance in international financial markets as a universal payments system.”
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Furthermore, the Professor suggested the move could spark a change of behaviour in global financial transactions, yet added a notion of caution.
He said: “I think that Russia’s expulsion from SWIFT encourages other countries to switch to trading in national currencies.
“It is possible to see a switch to different methods of payments which deviate from SWIFT.
“However, these will take time and have a rather limited effect, as the effects of globalised trade patterns in establishing uniform payment systems which are universally acceptable will negate any moves to switch to national currency clearing systems.”
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Professor Bovis also highlighted the fact Russia was a member of the so-called BRICS pact, offering options for international trade.
He said: “It is also possible that the BRICS countries should create their own payment system.
“The possibility of BRICS countries establishing an autonomous payments system in competition to SWIFT has been already in motion for some time.
“It depends on the political appetite of BRICS countries to create such a system at such a moment in time.
“There is also a factor which involves multiple states which may have different perceptions in geopolitical developments, a fact that makes agreement rather difficult.”
Adding further evidence of Russia’s eye on the East, Professor Bovis concluded: “China already has an alternative to SWIFT – CIPS.
“Severing Russia’s access to SWIFT can encourage Russian financial institutions to join CIPS and Russia and China will team up for a joint payment system.
“The possibility of Russian financial institutions joining CIPS is high.“It also depends on the conditions which China might require to facilitate inclusion to the payment system.”
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