26 Oct Does Banning Iran from SWIFT Matter?
The Society for Worldwide Interbank Financial Telecommunications (often referred to as “SWIFT,” and will be for the rest of this article) is a Belgium based messaging network that is focused on helping financial institutions communicate with one another. Currently, Trump (and specifically, his Treasury Secretary Steve Mnuchin) has been pressuring SWIFT to cut itself off from Iranian banks to prevent potential issues with sanctions.
The Iranian regime has long been a problematic one – from nuclear issues to the fact that they are causing much of the unrest throughout the Middle East. As a result, the United States has developed a number of “crippling sanctions” that are meant to take down their banks and oil industry, making it difficult for them to thrive and possibly causing them to fall in line and start listening to the demands of the rest of the world as a result – at least, that’s the intention behind it.
Why would them being in SWIFT matter then? Well, the fact is, if they are able to communicate with other banks easily, it means that they may also be able to do the transactions associated with them easily as well. While some of the transactions may be innocent enough, it would be hard to police what was being done there. And, if there’s still that open interaction, there may be some activities that were sanctioned that could get through – totally nullifying the reason in which the United States would have decided to do this whole thing in the first place. The fact is, the banks basically need to be cut off in order to ensure that the sanctions are going to be upheld in the way that the United States wants them to be upheld – even though SWIFT is a European communication channel.
So, why is SWIFT hesitating? There are a few reasons. The first one is related to humanitarianism. Why should the people of Iran suffer for the mistakes and problems that the regime is causing to the world? Not only that, but if the people are not able to access their needs, then they could end up in a bigger humanitarian crisis than they are now. The Iranian government is not known for caring for their citizens well, and would likely allow many lives to be lost before it got to a point where they may end up “falling in line” so to speak.
While the Trump Administration claims that they have never, ever targeted humanitarian efforts or goods in that situation, it’s likely that a complete lockdown may make it almost impossible for people to be able to go ahead and get the goods that they need. Another claim is that food and medicine to Iran won’t be sanctioned, either – and that’s one of those things that is left to be seen when the sanctions fall into places in the near future.
Granted, there is a lot to be said about this process. While it is the United States that is putting these sanctions into place in the first place, it is likely that it would be a lot more effective if Europe joined them. Not only because a collective effort would make a difference, but because most businesses in Europe would rather stay working with the $19 trillion plus American economy rather than the $400 billion economy that the Iranian regime currently has – and the connection between Europe and the US economies is huge for the future of the world as well.
As the Trump administration said, they want to “squeeze” Iran so that they do what is good and get on the right path so that they aren’t a problem to the world and the Middle East. While this could damage the entire Middle East for a short period of time, it’s likely that Iran is always going to be the most effected, and it may get the results that the Trump Administration is looking for. It will take time for the whole thing to fall into place, and we’ll see if Europe decides to come along for the ride, but disallowing them to use SWIFT could be a big first step to ensuring that Iran gets its act together in the future.