Russia: Kuenssburg outlines impact sanctions will have on the UK
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German Finance Minister Christian Lindner told the Maischberger talk show on Thursday that Berlin is hesitant about cutting Russia off from SWIFT because it would mean that there is a high risk Germany will no longer be supplied with gas or raw materials. It is believed France and Italy also opposed SWIFT sanctions behind closed doors. German Chancellor Olaf Scholz said Germany opposed cutting off Russia’s access to the payment system at this point, but suggested such a step could follow at a later stage.
Germany’s position is in stark contrast with Britain’s. Defence Secretary Ben Wallace said on Friday the UK would like to cut Russia off from the system and will continue to lobby reluctant allies to take that step.
He told the BBC: “We would like to go further. We’d like to do the SWIFT system – that is the financial system that allows the Russians to move money around the world to receive payments for its gas – but … these are international organisations and if not every country wants them to be thrown out of the SWIFT system, it becomes difficult.”
Ukraine’s foreign minister Dmytro Kuleba voiced his anger on Thursday ahead of an EU decision not to cut Russia off from SWIFT. He tweeted: “I will not be diplomatic on this topic. Anyone who now doubts whether Russia should be excluded from SWIFT must understand that the blood of innocent Ukrainian men, women and children will be on their hands. Disconnect Russia from SWIFT!”
US President Joe Biden said on Thursday that while United States and European Union opted not to cut Russia off, they could revisit the issue.
SWIFT is a messaging network widely used by banks to send and receive money transfer orders or information. It is based in Belgium and overseen by central banks in the US, Japan and Europe.
However, the head of Russian banking giant VTB has said he could use other methods, including phones, messaging apps or email, instead of SWIFT. Russian banks might also direct payments via countries which have not imposed sanctions.
Foreign ministers of the Baltic states, which were once ruled from Moscow but are now members of Nato and the EU, called on Thursday to stop Russia’s access to SWIFT.
However, other EU member states are reluctant to make such a move because while it would hit Russian banks hard, it would make it tough for European creditors to get their money back. Russia has also been building up an alternative payment system.
Western allies announced sanctions on Russian banks to members of the country’s elites in response to Russia invading Ukraine despite months of diplomatic dialogue.
Mr Wallace said Britain would continue to lobby its allies to win support for a move on SWIFT, adding: “We will work all the magic, do everything we can in diplomacy.”
Bruno Le Maire, French Finance Minister, said on Friday that the option of cutting off Russia from the SWIFT global interbank payments system remained open, but he viewed the move as a “last resort”.
Mr Scholz ordered the withdrawal of a key document needed for certification of the Nord Stream 2 gas pipeline earlier this week.
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The pipeline would have carried Russian gas to Germany, bypassing Ukraine and Poland on a route through the Baltic Sea.
Germany’s leader was hit with a barrage of calls from Western allies to scrap the £8 billion project before Russia invaded Ukraine on Thursday.
Former German Chancellor Angela Merkel was criticised for striking the pipeline deal with Mr Putin in the first place.
Bill Browder, the CEO of Hermitage Capital, speaking before the invasion, said: “Germany fears Russian gas retaliation if war breaks out.
“Maybe their leaders should have thought of that a decade ago and diversified when Russia started cutting off gas the first time.
“Instead the Germans built Nord Stream 2 to become even more dependent.”
Meanwhile, Ukrainian President Volodymyr Zelenskyy said on Friday that continued Russian aggression against his country showed sanctions imposed on Moscow by the West were not enough.
Following a late-night European Council meeting on the situation in Ukraine, European Commission president Ursula von der Leyen announced a package of further sanctions.
This included financial, energy and technological sanctions aimed to deter Mr Putin from redrawing the map of Europe by force.
She tweeted: “These events mark the beginning of a new era. Putin is trying to subjugate a friendly European country. He is trying to redraw the map of Europe by force. He must and he will fail.”
UK sanctions introduced include measures to hit five more oligarchs, including the Russian president’s former son-in-law. More than 100 businesses and individuals will also be targeted.
Prime Minister Boris Johnson said he was sanctioning all the major manufacturers that support Putin’s war machine, will ban Aeroflot from touching down in the UK and will freeze the assets of all major Russian banks, including VTB.
Mr Biden also delivered further measures to target Russian banks, oligarchs and high-tech sectors, with more troops deployed to Germany to bolster Nato.
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