SWIFT SANCTIONS - is it a NUCLEAR WEAPON in financial markets?
INTRODUCTION
By now, I am more than confident that many people around the world have heard about the conflict between Russia and Ukraine. Many of us may wonder, how will it all end. I surely am one of those people who are quite anxious about our future and the impact this war may have on the global economy.
In this publication I wouldn't like to discuss the war itself, but instead a solution which is being discussed by many leaders of this world: cutting Russia out of the SWIFT financial system.
This solution is being perceived by many as a way to KNOCKOUT the Russian economy which is supposed somehow to stop the war. I would say that those solutions didn't work in the past as countries like Iran, Venezuela, North Korea and Afghanistan proved that extreme sanctions DO NOT STOP WARS.
My goal is however not to discuss if cutting Russia from the SWIFT system will end the war but to discuss consequences of such a drastic action. Consequences both sides will have to pay: Russia and the rest of the world.
That could potentially be another BLACK SWAN event. Massive one.
SWIFT System explained:
I actually do not want to explain in detail what the SWIFT system is about. Let's shortly only explain that no international bank transfers are possible without being part of it and I would also urge everyone to learn about it by watching a few youtube videos.
IT IS A REALLY IMPORTANT topic to learn about and at least understand some basics.
POSSIBLE CONSEQUENCES ??
Even at this stage it is obvious to me that consequences for many countries all over the world would be brutal and painful and I'm trying to wrap my head around this topic, since I see how many politicians are pushing towards implementing that solution. A solution which seems to be a "NUCLEAR BLAST" within financial markets.
I would LOVE To hear from those of you who are familiar with this topic ... What consequences for Russia and the rest of the world would you foresee?
I'm not sure if I have to mention, but the entire European Union does deeply rely on oil, gas and other resources coming from Russia. What can possibly happen if this trade would STOP OVERNIGHT? Without any preparations? Without seeking other sources and alternatives?
SHARE YOUR VIEW?
Would you be in favour of implementing SWIFT sanctions at this stage? If you would or you would not - can you please share reasons behind your view.
Also, what results would you guys expect on both sides (from economical point of view) if that solution would be indeed pushed forward?
Do you think that it would affect you in any possible way? (I'm fully aware that it depends on the location of each one of us).
Yours, @crypto.piotr
@project.hope founder
check out our community: https://steemit.com/trending/hive-175254
Hello friend, excellent economic and financial analysis that you present.
All wars have negative consequences in all areas, I don't think the financial and economic one is the exception.
I believe that with sanctions they will not achieve anything, Russia already knew in advance the sanctions that were going to come for invading Ukraine, therefore they were already prepared for the sanctions that are being applied and those that are yet to be applied.
Would you be in favor of implementing SWIFT sanctions at this stage? If you would or would not, can you share the reasons behind your view?
I would not agree with such sanctions, just as I do not agree with Russia invading Ukraine, just as I am not in favor of war.
Not agreeing, if it were up to me to apply such economic sanctions I would not apply them.
The reasons for not applying them are simple: those who will end up feeling the weight of such sanctions are the peoples of the countries involved, because not only the Russian people will end up affected by such sanctions, but also the countries of Europe that depend on hydrocarbons for their continued development.
Also, what results would you expect on both sides (from an economic point of view) if such a solution will actually be pushed through?
In the short term I believe that both Russia and Europe will not feel the consequences of the sanctions, but already in the medium and long term continuing with such sanctions would make calamity happen for the most humble people.
Do you think it would affect you in any way (I am fully aware that it depends on the location of each of us).
Perhaps my country Venezuela is geographically very far away from where the conflict is being forged, however we cannot rule out some negative consequences, only time will tell if the consequences are positive or negative, in the same way we have political relations with the Russian government.
Due to the remoteness I believe that we will not have negative consequences related to the war conflict, however I believe that from the economic point of view we will, since we have economic relations with Russia and also because Russia is an active member of OPEC+.
Perhaps if NATO stops the provocative advance of adding to its ranks some countries that border Russia, this conflict and others that may be to come will end, the president of the Russian federation said that if NATO added to its ranks Sweden and Finland, then these countries would be the next to invade.
Hi @carlos84
I actually do not think they prepared themselfs well enough. It does look like they expected some small sanctions only and what they are experiencing is a total anihilation of their financial system and economy. This will cause huge unrest and tons of deaths within Russia in upcoming months.
In my opinion, Putin never expected that Europe can (for once) unite themselfs.
That's sad but so very true.
In the end I think that more than limiting Russia, at least Putin, what will do more harm will be to the people in general, because heads of state never cease to be well, with his sick mind, he will really continue to live opulently, he will not lack anything for himself or his family member.
Now, very probably he can exert pressure by limiting or eliminating the sale of Gas to Europe, there if I consider that it can damage, however, in the long term it would detract confidence to his government, because he has had gas contracts with many countries for decades, and if he fails to do that, fines could even come.
I believe that a great economic chaos could be generated, especially due to speculation in the large markets.
In fact, currently electricity and gas prices have risen a lot in Europe, as far as I know, and this will already have repercussions on the prices of many things at a global level.
An economic disaster is coming, indeed, if some measures are implemented where the poorest will be the most damaged.
Greetings @crypto.piotr ❤️💕
There's really no doubt that almost everyone of us is aware of the recent crisis occurring between Russia and Ukraine. I think swift sanction in Russia will also have it's effect on some other countries economy even though the Russian government maybe drastically be affected in such a way that they are only limited to make use of their available funds within their economy to buy weapons and other things. Another advantage about this is that there's high chance this process affect cryptocurrencies because most of their transactions would be made internationally via cryptocurrency since that will still keep them a bit anonymous.
Thanks for sharing this great post with love from @hardaeborla and I hope you have a great day ahead 💕❤️💕
These sanctions are not able to stop future wars and aggressions as wars are tools in hands of powerful people who earns huge profit from wars. These sanctions will make Russia to lean towards China more and it will be dependent on China for its economy. So, it will increase influence of China in the world economy.
hello @crypto.piotr,
I mentioned some time ago that war was the solution for the US economy, as now their competitor is being taken out of the game.
The sanctions are not intended to hurt Vladimir Putin, the sanctions are intended to economically hurt Russian billionaires who support Vladimir Putin, pulling the plug on SWIFT will put pressure on the Russian economy and cause its population to be forced to put internal pressure on Vladimir Putin
In the globalized world no country can prosper without the support and cooperation of the free world, in that sense Russia will be forced to negotiate a ceasefire with Ukraine. NATO, more united than ever, will increase its power, while the United States achieves what it set out to do, to prevent Europe's total dependence on Russian natural resources.
The Venezuelan state acts in a very similar way to the Russian government, it also thought that the United States was very dependent on our oil and would never take measures against them because of the dependence, but when there are political forces, the welfare of the population is the last thing . In other words, whoever sells the natural resource will always be in a weaker position than whoever buys the natural resource.
In short, Russia lost the war when the European countries were forced to act all together against Russia, because for them it is more important to contain a nuclear war, the energy demands of their countries. From my point of view, the only way out for Russia is to seek a negotiation in which its weakness is not seen and which will eventually allow the sanctions to be reversed.
Very sad, but so very true.
Hello @crypto.piotr friend, I believe that the exclusion of Russia from the Swift system will not be a direct sanction for the government, but for the citizens of that country, since many of them need to make transfers and send/receive international remittances in some way, some for work or family reasons. and commercial.
I think the citizens will be the most affected.
In the same sense, I think that somehow the exclusion of Russia from the swift system could trigger some kind of blockade in shipments and supplies of fuel, gas and oil to other countries, which although they are far from the conflict, will pay these consequences.
All in all, it's still worrying.
Greetings @crypto.piotr, interesting questions you raise and trying to answer about some generalities of the conflict, I think that such drastic sanctions can increase the tension between the European Union + USA and Russian interests.
I think they are trying to corner a wolf that is about to react and this would trigger serious damage to many societies or countries.
With respect to the use of natural resources, we can observe that they are already looking for new routes to obtain oil and natural gas, since recently a group of North American political leaders traveled to Caracas for possible negotiations of these items, regardless of the economic restrictions they had previously imposed on the Venezuelan government.
A scenario that allows us to understand what interests are prevailing and what the actions of the great powers are..
hi @madridbg
Thanks for always being so responsive and for actually taking the time to share your thoughts.
Greetings @crypto.piotr
Reading this article a lot of thoughts went trough my mind so I try to connect them in an order that makes sense.
Talking about the rest of Europe: It would hit the countries in the mid term the hardest as they have enough oil and gas reserves on their own. There are plans to get more independent from these resources by forcing the renwable energies but this can take some time. That is why I am thinking that European countries can see a major problem in the coming winters but not in the next few months.
Thinking of Russia I must say that the economy there was already on a declining path. I think that these sanctions will put Russia in a very bad position for the future. There might be the possibility that they make their own system, maybe even with crypto but this is just a wild guess. I think it all depends on the outcome of the war and wheter the current dictator is still in power or not. I think there are plenty of opportunities if Russia manages to go away from the oligarchy that it is right now.
I hope I could share my view understanbale but if not I am always open for discusion! :)
Like always, this was a great opic to publish about! :)
Thanks for sharing those thoughts with me buddy :)
So let me address this by the numbers:
Most likely, the war in Ukraine will not impact global GDP that much, nor global supply chains, due to the size of the Russian economy, and it's diversification. And since Ukraine is much smaller than Russia economically, I didn't even mention it.
The SWIFT sanctions will more than likely be limited to trade outside of the EU/Russia oil and gas arrangement, because of the dependence of the EU on Russian oil and gas. And since a large portion of the Russian economy is oil and natural gas, and the largest trading partners beyond Europe, for Russia, is China, and other Asian states, they have already established a bilateral economic trading regime, largely independent of SWIFT.
Plus, this war in my opinion (after a lot more history lessons), is not going to last too much longer, maybe a little bit longer than the Russo-Georgian War in 2008. Ukraine and Russia will enter into a peace arrangement sooner rather than later. Russia is more than likely to hold territory in eastern Ukraine, and the periphery around Crimea, maybe give back land taken in the north as a negotiating piece as a sign of good will. Europe and the US will drop some of these sanctions because they'll be happy the shooting stopped.
Unfortunately, this is bad for Ukraine and it’s economy. But that is another subject.
As always, one of the best and most valuable comments is coming from you @fijimermaid :)
Seriously? I didn't know that Italian economy is bigger ... shocking.
thanks buddy
I know, it seems crazy, because we see Russia is the largest country in land mass, but its economy is smaller than a country that is 1/60th its size.
That's right, Russia is 60 times larger than Italy, with a smaller economy. And the Russian population is more than twice Italy's population.
So, what you are saying is that the West will keep the oil flowing and because Russia is so dependent on the oil, it will not counter-sanction the West by not delivering any oil to them. Like your view.
That is a good way to look at it. Russia and Europe are joined at the hip with oil and gas. There is no viable alternative for both parties. The Russians need the money from Europe, and Europe needs the nat gas. Europe doesn't have a viable alternative, contrary to what the Americans say.
But necessity is the mother of invention, so Russia needs to wrap up their campaign in Ukraine quickly, so it doesn't push the Europeans and the Americans to develop the technology to offer a viable alternative to Russian oil and natural gas.
Greetings @crypto.piotr
Wars in this new era are no longer through shooting, they are unconventional by suffocating countries economically and financially, I think Russia is in a position to withstand these sanctions and any more severe blockade of any kind that may exist later on.
I particularly think that if Russia is removed from the SWIFT financial system, it will lead to look for other financial alternatives to make their transfers and cryptocurrencies are one of them. No doubt it will be very beneficial for the crypto world.
Thank you very much for sharing