Russia warns of 'unrestricted reaction' to possible SWIFT ban

MOSCOW

Russian Prime Minister Dmitry Medvedev warned Tuesday of "unrestricted reaction" should the EU pressure the SWIFT cooperative society to cut off Russia from its electronic financial transaction network.

"In the case of such decisions, I would like to note that our economic response, and indeed every other reaction, will be without restrictions," Medvedev said.

Talk of cutting Russia off from SWIFT's network is making headlines once again in response to renewed fighting in Ukraine in recent weeks, fighting in which U.S. and EU leaders say Russia is involved.

In August 2014, leaders in the U.K. first raised the idea of punishing Russia by cutting it off from SWIFT as a type of sanction, but the company refused.

Because SWIFT is based in Belgium, however, it must comply with European Union law and that is why it is possible for the EU to compel the cooperative to disconnect Russia's banks from its system, just as it did with Iran in 2012.

The Society for Worldwide Interbank Financial Telecommunication is a network which allows banks and other financial institutions to process transactions on a secure and worldwide basis and cutting Russia's banks out of the system would make it extremely difficult to make transactions beyond the country's borders.

"Being cut off from SWIFT is like a general sanction on the whole country," Udara Peiris, a professor of finance at the Higher School of Economics of Moscow's National Research University, told The Anadolu Agency. "It would be a very aggressive move."

Talk of new sanctions against Russia has been in the air since Saturday's rocket attack on the city of Mariupol by separatist forces that killed at least 30 people and wounded many others.

The first round of sanctions against Russia was implemented in March 2014 after its annexation of the Crimean peninsula from Ukraine. This initial round targeted mostly individuals, freezing their foreign assets and banning them from travel to the EU and U.S.

Much more stringent sanctions, including those which restrict certain Russian firms and banks from Western financial markets, were imposed by the U.S., the EU and their allies after the downing of a Malaysian passenger plane over the disputed territory in July 2014.