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A major cog in the global financial system has succumbed to pressure from the Trump administration and the breakdown of ties with Iranian banks.
The Belgian company Swift, whose courier service connects more than 11,000 financial institutions while transferring money around the world, said it was disconnecting from Iranian banks after the United States United have announced Monday sanctions against 50 financial companies nationwide.
The service refused to say it was deleting all the targeted banks. But on Friday, Treasury Secretary Steven Mnuchin said Swift was to cut off any Iranian bank on the list.
Swift's decision will help the Trump government isolate the Iranian government. But this move could deepen US dissent with the European Union and strengthen the bloc's resolve to put in place a payment system that can function independently of Washington's influence. The European Union has declared this year working on such a system, but faces big obstacles. Payment channels are complex and need to be secure. No European country has yet agreed to host the entity for fear of US retaliation.
In a statement, Swift called "regrettable" its decision to suspend some Iranian banks from its service, but said it had been done to maintain the stability and integrity of the global financial system.
The Trump administration announced in May that it was pulling out of the 2015 Iran nuclear deal and reimposing sanctions in order to reach a new deal with the Iranian government.
The European Union has taken steps to preserve the 2015 agreement and is working to maintain Iran's economic ties with the rest of the world. But there may be few things the block can do.
Large global corporations, faced with the prospect of being excluded from the US market if they continue their activities in Iran, have remained out of the country.
Major international banks have been particularly reluctant to do business in Iran. In the last decade, the United States hit several banking giants with harsh penalties to help customers escape US sanctions against Iran.
Since US banks can not deal with Iran and the big European banks chose to stay out of the country, Iranian banks were already cut off from most of the global financial system before Swift's decision. As a result, Swift's withdrawal could inflict a softer blow than some would expect, some sanctions experts said.
"The impact this time will not be as important as before because they are already isolated, but it will make their task more difficult," said Katherine Bauer, a researcher at the Washington Institute for Near East Policy.
Swift cut the Iranian banks when the Obama administration imposed sanctions against the country in 2012. However, at the time, the European Union had also introduced sanctions-friendly rules and, as a that entity within the jurisdiction of this block, Swift had no choice but to disconnect.
Although Western banks have largely withdrawn from Iran, supporters of harsh measures against the Iranian government have pushed Mr. Swift to sever ties, fearing that Iran's leaders will use it to evade state sanctions. -United. But they said the approach would only be effective if Swift actually broke ties with all the entities on the list.
"If Swift disconnects all the designated banks, it's really a tougher policy," said Richard Goldberg, senior advisor at the Democracy Defense Foundation, a group that supports sanctions against terrorism. # 39; Iran. weaker policy with better rotation. "
