By Enforcing Sanctions On Russia, SWIFT May Commit Suicide, by Michael Maharrey

Putin and company knew for a long time that Russia might one day be subject to cutoff from the SWIFT interbank clearing system. That day has come, and Russia’s workarounds appear to be sound. From Michael Maharrey at libertarianinstitute.org:

The government of the United States has intervened militarily in other countries for decades, against the council of founders like George Washington who advised America should “observe good faith and justice towards all nations; cultivate peace and harmony with all.”

But the U.S. doesn’t only project power across the globe through its massive military. It also weaponizes the U.S. dollar, using its economic dominance and its privilege as the issuer of the reserve currency as a carrot-stick tool of foreign policy.

The U.S. government showers billions of dollars in foreign aid to “friends.” On the other hand, “enemies” can find themselves locked out of SWIFT, the global financial system that the U.S. effectively controls using the dollar.

SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication. The system enables financial institutions to send and receive information about financial transactions in a secure, standardized environment. Since the dollar serves as the world reserve currency, SWIFT facilitates the international dollar system.

SWIFT and dollar dominance give the U.S. a great deal of leverage over other countries.

The U.S. has used the system as a stick before. In 2014 and 2015, the Obama administration blocked several Russian banks from SWIFT as relations between the two countries deteriorated. Under Trump, the U.S. threatened to lock China out of the dollar system if it failed to follow U.N. sanctions on North Korea. Treasury Secretary Steven Mnuchin threatened this economic nuclear option during a conference broadcast on CNBC.

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