SWIFT SANCTIONS - is it a NUCLEAR WEAPON in financial markets?

carlos84 (72) · 3 years ago

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.

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6 votes

crypto.piotr (70) · 3 years ago

Hi @carlos84

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.

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.

those who will end up feeling the weight of such sanctions are the peoples of the countries involved

That's sad but so very true.

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josevas217 (79) · 3 years ago

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.

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hardaeborla (68) · 3 years ago

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 💕❤️💕

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akdx (66) · 3 years ago

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.

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5 votes

trabajosdelsiglo (65) · 3 years ago

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.

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crypto.piotr (70) · 3 years ago

but when there are political forces, the welfare of the population is the last thing

Very sad, but so very true.

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tocho2 (77) · 3 years ago

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.

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madridbg (69) · 3 years ago

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..

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crypto.piotr (70) · 3 years ago

hi @madridbg

Thanks for always being so responsive and for actually taking the time to share your thoughts.

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ga38jem (61) · 3 years ago

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! :)

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crypto.piotr (70) · 3 years ago

Reading this article a lot of thoughts went trough my mind so I try to connect them in an order that makes sense.

Thanks for sharing those thoughts with me buddy :)

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fijimermaid (70) · 3 years ago (edited)

So let me address this by the numbers:

The Russian economy is 1.75% of the world's GDP, a little less than Italy.
Oil and gas composes 40.5% of the total Russian export market and 51.3% government revenue.
The Russian economy is heavily dependent on petrol revenue, and has a low diversification index.
About 40% of the EU’s Natural Gas and 25% of its crude oil is from Russia.
About 50% of Russian exported oil and gas goes to the EU.
Germany and France are the largest economies in the EU and NATO. 49% of German natural gas and 24% of France natural gas, is from Russia.

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.

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crypto.piotr (70) · 3 years ago (edited)

As always, one of the best and most valuable comments is coming from you @fijimermaid :)

The Russian economy is 1.75% of the world's GDP, a little less than Italy.

Seriously? I didn't know that Italian economy is bigger ... shocking.

thanks buddy

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fijimermaid (70) · 3 years ago

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.

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krabgat (62) · 3 years ago

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.

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fijimermaid (70) · 3 years ago

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.

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dgalan (69) · 3 years ago

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

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amestyj (69) · 3 years ago

Greetings dear friend @crypto.piort, no doubt some wars are waged for profit and I think at this point Russia managed to get the territory it wanted and possibly other countries wanted. Russia already knew about the blockades that were going to be imposed on it, but it has something to negotiate with, which are the natural resources it has and you mentioned in the article oil, gas among other resources.

I do not agree with wars, since those who are affected are the population, the most innocent, and if the blockade that you mention comes to fruition, it will deeply affect the population, unless Russia strengthens its transactions with cryptocurrencies for the commercialization of its resources.

There are many scenarios that can be envisioned, let's wait for what the financial market has in store for us.

See you later, have a great week.

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rbalzan79 (71) · 3 years ago

Hello friend @crypto.piotr.

I enjoyed your content, I really think that we are in a world where we depend on each other, talking about energy distribution just to mention one example.

Any sanction beyond limiting the Russian government would limit the economic stability first of all of its inhabitants and consequently of the whole European region, so I would not agree with these sanctions.

It is very important what you mention regarding the fact that other countries have tried to do the same and without achieving that goal, highlighting also that they are countries with much less technological and industrial potential than Russia, so in my opinion this would affect the whole world in the long term.

In reality these are very complex situations in which the powerful countries always armor themselves and try to take control of their region's economy so that any type of sanction will not only affect them but also the rest of the countries that depend on their imports and exports, in this case to Russia.

There is a lot of work to be done and let's hope that another way of escape is found to stop the armed conflict since this will never benefit anyone and this in all senses.

Greetings my friend and thank you for sharing your interesting point of view with us and allowing us to do the same. Greetings.

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crypto.piotr (70) · 3 years ago

so in my opinion this would affect the whole world in the long term.

You nailed it @rbalzan79

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karupanocitizen (64) · 3 years ago

Unfortunately, as you comment friend @crypto.piotr, recent experience shows us that these types of financial sanctions do not usually fulfill their purposes and end up becoming one more weight for the population of said countries.

Additionally, Russia has been preparing for an eventuality of this type since it invaded Crimea, so in the end, I think that those most affected by the measure will end up being those who are proposing it. I was just writing an article referring to the SWIFT system when I read your very interesting and important publication, I allow myself the abuse of sharing the link of my publication with you. ¡I hope you like it!

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krabgat (62) · 3 years ago

I agree with you that a SWIFT sanction can back fire on the West.

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qsyal (62) · 3 years ago (edited)

Despite all those warnings and threats that had been circulating in the media for months, I didn't really expect such crazy war to happen. And now things are getting worse and worse. No one would be in favor of economic sanctions because they always harm the regular people, not the heads. (I live in Syria and I damn well know that), but the problem is there is literally no other way of trying to stop this war. Western countries cannot militarily fight Russia and if they did, then welcome to World War III.
So maybe implementing Swift sanctions will help remind Putin of the nightmare of the collapse of the Soviet Union, making him stop this war (at least I hope so)

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crypto.piotr (70) · 3 years ago

Hi @qsyal

I didn't really expect such crazy war to happen

Indeed. I was in the very same camp.

I live in Syria and I damn well know that

I'm fully aware of it and I often wondered how Syria look like right now. I always wanted to visit Allepo, but now this wonderful city doesn't even exist any more.

So maybe implementing Swift sanctions will help remind Putin of the nightmare of the collapse of the Soviet Union, making him stop this war (at least I hope so)

I'm afraid that it won't happen. War will most likely continue. And Russia will fall into economical dark-hole. And because size of Russia's economy and economic connections with the rest of the world ... we will all be dragged into that hole. Heavier and longer sanctions -> more painful future for all of us.

Unfortunatelly, it does seem to be price we need to pay :)

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qsyal (62) · 3 years ago (edited)

I'm fully aware of it and I often wondered how Syria look like right now. I always wanted to visit Allepo, but now this wonderful city doesn't even exist any more.

Nearly 50% of Aleppo has been destroyed, and most of the other cities are in an even worse situation. I live in Damascus, which has slightly better conditions.

Here is a well-known YouTuber who visited Aleppo only 3 months ago and did a vlog about it. It's a nice and sad one.

It may be hard at the moment, but if things get better (even if in the distant future) and you decide to visit Syria, please let me know… I will make sure to be the first who welcome you there :)

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crypto.piotr (70) · 3 years ago

Thanks for sharing

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mccoy02 (69) · 3 years ago

First i did like to say this war is affecting every nation either directly or indirectly its indeed has economic impact on both side of the nation.

On the other hand swift sanction might also make the Russians to reconsider their actions and likely call off the war except for some other reasons i'm yet to understand.

If implementation of the sanction can end these war then its a yes for me the sanction is a good idea otherwise it might cause more economic implications in the world as Russian supply of natural energy is very important to the world.

I hope good measures are introduced soon to help stop these war.

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crypto.piotr (70) · 3 years ago

On the other hand swift sanction might also make the Russians to reconsider their actions and likely call off the war except for some other reasons i'm yet to understand.

Hi @mccoy02

I would not have any expectations at all that any form of sanctions will make Putin re-think their actions. Unfortunatelly, it doesn't seem to work that way so far :(

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karamyog (72) · 3 years ago

Even if they do implement SWIFT sanctions, the majority of Russia's trade is now with China and they do not settle using the SWIFT system. They have been doing non-dollar settlements for a couple of years now.

Banning a country out of the SWIFT system will have implications, but as I also discussed in my post from yesterday, Russia is more prepared for this than it ever was. I am also sure, those who need to will find ways around such sanctions. Banks will suffer and those he deal through banks will suffer. Trade will be impacted, however, not as much as one thinks. Businesses will suffer, those that want to import and export goods. However, it will not be as bad. Also, as you said, Russia is one of the largest exporters of Fertilizers, Wheat and Metals. What happens when you ban such a country from SWIFT? It won't just impact Russia.

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jeanglou (61) · 3 years ago

Good evening friend, I send you a big greeting from all my family.

In response to your question on the subject, I will answer you according to the experience of my native country Venezuela, currently after the restrictive actions by the United States, not only the companies affected by the government were affected but the entire country, that is an irremediable domino effect.

Here all small, medium and large businesses suffer to this day the disastrous consequences of everything that has already been done, many people do not have food, there is no stable economy, the price of the dollar fluctuates too much and there is a scheme with presence of anarchy in our nation.

If you ask me if the actions of the United States worked, I would say to the whole planet: it didn't work because he has not come up with a political improvement but rather continues the hegemony of power by the chavizta movement.

Greetings dear @cripto.piotr

JEAN IMAGEN.png

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crypto.piotr (70) · 3 years ago

It's great to know that you're still around @jeanglou

Thanks for dropping by and sharing your thoughts with me.

not only the companies affected by the government were affected but the entire country, that is an irremediable domino effect.

Indeed. And regular population of common people always suffer the most :(

I'm quite fearful. Collapse of small countries like Venezuela, North Korea or Iran may not cause any real global crisis. But collapse of Russian economy will be painful for VERY MANY people out there.

Wouldn't you agree?

Yours, Piotr

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aplausos (71) · 3 years ago

Hi @crypto.piotr What happened with SWIFT is a clear example of the dilemma that has arisen in the European Union at the moment of reacting with sanctions despite the seriousness and drama of the total invasion of Ukraine by Russia. Many countries of the European Union are highly dependent on Russian gas, although this has recently dropped from the usual 40% to 22% according to the European press, and a total cut-off of access to the international transaction system also means risking the payment of Russian hydrocarbons. Germany has been one of the countries that have found it hardest to take this step, thinking of Russia's reactions to this and its power over Europe's energy.

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lightsplasher (68) · 3 years ago

I don't think economic sanctions have ever had their intended result. Aggressive action followed by a economic sanctions have historically caused more aggression like WW2 and the attack on Pearl Harbor.

Impoverishing a nation leads to those in power to have better control over the people they lead.

I would suggest that the leadership responsible for the actions be charged with war crimes. You and I could not order people to take actions that lead to the death of people, why should our leaders be any less responsible?

I think there would be a lot more diplomatic solutions applied if leadership on both sides were held responsible for their actions as well as the parties who provide the weapons that are used. (Weapons manufacture should be non-profit and fined heavily if weapons are used in aggressive conflicts.)

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crypto.piotr (70) · 3 years ago

Hi @lightsplasher

I don't think we've ever met. Thanks for dropping by and sharing your thoughts with me.

Aggressive action followed by a economic sanctions have historically caused more aggression like WW2 and the attack on Pearl Harbor.

That's such a good point.

You and I could not order people to take actions that lead to the death of people, why should our leaders be any less responsible?

Well. Truth be told - such a life. People with power will have always different set or rules and will be less likely to be taken accountable for their actions.

Still, I'm quite fearful. Collapse of small countries like Venezuela, North Korea or Iran may not cause any real global crisis. But collapse of Russian economy will be painful for VERY MANY people out there.

Wouldn't you agree?

Yours, Piotr

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krabgat (62) · 3 years ago

I also believe by cutting Russia off the SWIFT system will not result in the desired results.

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krabgat (62) · 3 years ago

I am not in favour of the SWIFT ban for Russia. It is not going to have the desired effect and it just going to make life for the Russian population difficult.

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lanzjoseg (74) · 3 years ago

I have always said that this type of actions do not affect at all those who really should be affected, this type of actions only affect people like you and me, who live from day to day in the search to solve our family problems.

To them, to the megalomaniacs of the world, in this case to putin and his circle of followers in power, nothing they do against Russia will impact them, they are already overflowing with wealth and simply any action I repeat does not affect them.

Those who always lose out are the civilians who only want to live in peace.

It is unfortunate how a few can decide what happens in the lives of millions, simply those few who make the decisions and the other imbeciles who follow them knowing that it is wrong, all of them should be taken to the wall and given the death penalty.

Because the sanctions are for the Russians, i.e., the citizens, but they are not for Putin, and it is against Putin and his circle of evil that all kinds of sanctions should be applied.

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aplausos (71) · 3 years ago

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emimoron (65) · 3 years ago

Dear @cripto.piort

The sanctions that are, are being applied or will be applied in the case of Russia from the economic point of view and the specific issue of SWIFT sanctions are undoubtedly an issue that deserves attention, as I have read a little this sanction will be partial allowing payments of hydrocarbons case gas and oil. However, as far as its impact is concerned that implies a higher margin of consequences at the level of the world economy, even if we are aware that Russia is not everything.

The consequences of these sanctions come to cause chaos in the economy of some countries that for some time have had trade relations with Russia, for example my country Venezuela where we are not only talking about hydrocarbons, but in items at the level of food, chemicals, medicines and even the tourism sector here in my country since December 2021 we have a constant of between 100 to 200 tourists from Russia monthly coming with plans and packages paid by the Russian government to Venezuela. The closure of transactions and payments is a hard blow to the economy of Venezuela and not only at the level of government but of small traders and people who also live for example of their activities in the tourism sector.

I consider that the sanctions do not have a direct impact on those who are engaged in the war, because that is a very big, complex and long-standing business. Sanctions hurt the people, the common people who suffer every time something like this happens. It pains me to think of the poverty and death that all this means for those who have no guarantee of a roof over their heads, a plate of food and only ask to be able to have a way to get to the end of the day with something to eat and take home.

The big boys, the big fish both in government and business are not impacted in the way that all of us like me have seen first hand what it means to live in a country with sanctions. These big fish are not afraid that this month they cannot get paid because the banks have gone bankrupt losing what little they had in their accounts, because before that they have already withdrawn their money, instead the people are the last to know. They do not have to stand in line for days to buy a staple product that becomes regulated because it no longer arrives in the country or is not produced due to the lack of raw materials. So I ask myself, who are the sanctions really for?

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machnbirdsparo (65) · 3 years ago

HUGE issue. SWIFT sanction will ultimately help the crypto cause. Probably hurt at first due to the power this organization wields. Still, the main controversy will be lessened as blockchain proves a better solution.

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winy (62) · 3 years ago

Greetings @crypto.piotr

interest rates has been hiked to 20%?

I have read somewhere that Russia over the past several years has amassed a war chest of some $630 billion in foreign reserves, its highest level ever

I think which they are using now to make money flow in banks,

I can hardly imagine being able to pay any loans or mortgages in a similar situation. Especially while knowing, that all imported items will cost so much more since the value of Rubel dropped so badly.

You are correct they have to pay almost 30 % more for everything,

For now, they have enough money to face 20 % of interest but I don't think it will last much, I guess it's a short term strategy to gather money in the banks/increase deposit which they will use later in this war I guess, or in other purposes,

I hope I am making sense : |

Thank you so much for sharing, I appreciate your efforts : )

Regards,
@winy

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