Whether Russia’s aim in creating and implementing an alternative to SWIFT is based chiefly on protecting its own economy or not, the move further illustrates how the concentration of international power is steadily moving eastward. (Photo: Mikhail Voskresensky/Sputnik)
MINNEAPOLIS– In 2011, a Swiss study confirmed what many already knew or suspected: bankers run the world. The study, completed by the Swiss Federal Institute of Technology in Zurich, found that “a large portion of control flows to a small tightly-knit core of financial institutions,” essentially forming a network of global corporate control. This economic “super-entity,” as the authors called it, dominates the international banking system.
Among the most influential entities in the system are international financial institutions like the World Bank, the International Monetary Fund (IMF) and the Society for Worldwide Interbank Financial Telecommunication (SWIFT). These institutions represent the only source of financial recourse for nations that require the services they offer, as no alternatives have existed until quite recently.
The World Bank and the IMF, for instance, provide financial support to developing nations and member states, serving as the last resort for governments that are in a state of financial ruin or that are set to default on their debt. SWIFT, on the other hand, provides a much different service – offering financial institutions the means to send and receive messages from other such institutions in a secure manner. Without SWIFT access, nations and the businesses operating within them become unable to complete international transactions and are thus cut off from the global economy at large.
While each of these institutions and service providers are ostensibly unbiased towards the politics of any given nation, the undue influence of countries like the United States has made itself known within these institutions, with the U.S. using their power to force political or economic changes within any number of countries. John Perkins, author of Confessions of an Economic Hitman, described the World Bank’s activities as “pure economic colonization on behalf of power corporations and banks that use the United States government as their tool.”
The U.S.’ influence over key financial institutions has pushed other countries, namely the BRICS group and other economic rivals to American hegemony, to build their own alternatives. Years of efforts to create rival institutions culminated in 2015, when the 100-billion dollar BRICS-funded New Development Bank (NDB) was launched, a move widely recognized as a direct challenge to the supremacy of the U.S. dollar as an international reserve currency. This was heightened just months later, when China launched the China International Payment System (CIPS), which aimed to reduce the nation’s reliance on SWIFT while also propelling its own currency into greater international prominence.
Russia’s Efforts To Move Away From Global Banking Hegemony
From left: Brazil’s President Dilma Rousseff , Indian Prime Minister Narendra Modi, President of Russia Vladimir Putin, President of China Xi Jinping and South African President Jacob Zuma sit during a signing ceremony at the BRICS Summit in Ufa, Russia, Thursday, July 9, 2015. (Sergei Ilnitsky/AP)
One of the factors that drove the push to consolidate international banking alternatives in 2015 was the Ukrainian coup of 2014 and subsequent threats by Western countries to isolate Russia from the international financial order. Following Western accusations of Russian aggression in Ukraine and the subsequent annexation of the Crimea after a contested referendum vote, Western nations called for sweeping economic retaliation against Russia, including banning them from SWIFT entirely and essentially paralyzing the banking system within the Crimea.
Russia was not ultimately banned from SWIFT, but the threat of being prohibited from the dominant means of realizing financial transactions made it clear to Russia and other BRICS nations that their dependency on the Western-dominated international financial system was not in their best interest. Iran’s prohibition from using the SWIFT system from 2012 to 2015 made it clear that the West, and particularly the U.S., could and would use its influence within international banking institutions to cripple a nation’s economy for geopolitical reasons.
Not willing to wait for the next attempt by Western countries to cut it off from key financial institutions and services, Russia has now created an alternative to SWIFT to protect its economy and financial sector. Western governments have yet to respond to the creation of this alternative system.
During a meeting with Russian President Vladimir Putin last Wednesday, Central Bank governor Elvira Nabiullina stated that:
“There were threats that we can be disconnected from SWIFT. We have finished working on our own payment system, and if something happens, all operations in SWIFT format will work inside the country. We have created an alternative.”
The alternative system, known by its abbreviation SPFS, is analogous to SWIFT for financial transactions taking place in Russia and has been in the works for years, with 330 Russian banks connected over a year ago. This number will likely increase now that it has been successfully developed and implemented. Nabiullina also added during the meeting that 90 percent of ATMs in Russia are now compatible with Mir, a Russian version of the Visa and Mastercard payment systems that is used domestically. However, the SPFS is still far from perfect, not operating from 9 pm to 5 am Moscow time and with a transfer cost of 5 cents per transaction.
Whether Russia’s aim in creating and implementing an alternative to SWIFT is based chiefly on protecting its own economy or not, the move further illustrates how the concentration of international power is steadily moving eastward. Along with parallel efforts by China and other BRICS nations, U.S. and Western economic hegemony is unraveling, a stark reality that U.S. interests – particularly those of the “deep state” – are desperate to avoid.
The U.S. and its allies have taken to using geopolitical pressure and economic threats, like banning nations from SWIFT, in order to accomplish this – a move that ironically seems to be pushing more countries away from U.S.-dominated economic systems and into the arms of its direct competitors.
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