After Russia started the war against Ukraine this week, most of the countries condemned and stood firmly against this aggression which shows clear violation to the international law. One of instances of embargo or economic sanctions was immediately taken by preventing Russia from using “SWIFT” system for banking transfers and transactions. The SWIFT system is the backbone of all global money transfers in very efficient, fast, not costly & secured way.
The word “SWIFT” came up high in the talks of many people these days. It is an old banking word and “SWIFT” stands for the Society for “Worldwide Interbank Financial Telecommunication”. It is a global payments system, which is used by more than thousands of financial institutions and companies around the world in many countries. All banks in Bahrain are using SWIFT, in replacement for the old classical mood of using “TELEX” for banking transfers. The Global Financial Messaging through “SWIFT” carries over five billion financial messages a year, if not more. All this because it has been proved that this system is fast, reliable and secure support for business.
Economic sanctions are commercial and financial penalties applied by one or more countries against certain targeted self-governing state, group, or certain individual. Herein, sanctions were taken against Putin and the close group working with him. However, “SWIFT” sanctions are intended against Russia as a country violating world peace and international law. Economic sanctions are not necessarily imposed because of economic circumstances, as in this case of aggressive war, they may also be imposed for a variety of political, military, and social issues. Economic sanctions can be used for achieving domestic and international purposes, through disabling Russian banks from the international banking system and accordingly weakening the Russian economy.
The efficacy of sanctions is debatable and, if we could say, as there are many failures and economic sanctions can have unintended consequences. We have seen such experience in the economic sanctions taken against Cuba, Sudan, Iran .., etc. Economic sanctions may include various forms of trade barriers, tariffs, and restrictions on financial transactions as in this case of using “SWIFT” system as a penalty sword against Russia. An embargo is similar, but usually implies a more severe sanction. As consequence to disallow Russia from using “SWIFT” system, the Russian economy is directly affected as the Russian Currency “Ruble” came down sharply, interest rates were changed and there is big drop in shares prices that led to the closure of “Moscow Bourse”. Such instances are hard for any economy and its occurrence shows the direct & fast effect of using “SWIFT” as penalty against Russia. Those are the direct present consequences of the sanctions and also more bad hard consequences could take place in future.
Generally, economic sanctions are used as a tool of foreign policy by many governments. They can be used as a coercive measure for achieving particular policy goals related to trading activities or for other violations. Economic sanctions are used as an alternative weapon instead of going to war to achieve desired outcomes. Let’s hope, no new world war to take place as the very bad memories of earlier wars are still in the mind.
However, economic sanctions have been criticized on humanitarian grounds, as they negatively impact a nation’s economy and can also cause severe damage on ordinary citizens. Many people believe that imposing trade restrictions only serves to hurt ordinary people as opposed to government decision makers as Putin and his comrades.
Dr. AbdelGadir Warsama
LEGAL COUNSEL
Email: AWARSAMA@WARSAMALC.COM
