Lethargic Biden... Western Divide Over Key 'SWIFT', Energy Issues Untouched

[Image source=EPA Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] "The sanctions package does not mention the international financial messaging network (SWIFT). Is there disagreement among the allied countries?" "So far, the sanctions have not been sufficient to stop Russian President Vladimir Putin."

These remarks came immediately after U.S. President Joe Biden unveiled additional sanctions in a national address at the White House on the 24th (local time) in response to Russia's invasion of Ukraine. President Biden announced sanctions on major Russian banks and export controls akin to the so-called ‘Huawei kill’ strategy, officially initiating the previously warned ‘phased sanctions against Russia.’

However, the package fell short of the "massive sanctions package" promised just before the speech. Despite the invasion already underway, the proposal to exclude Russia from SWIFT, which would deal the greatest blow to the Russian economy, was not included. This was due to opposition from Germany, the Netherlands, and Italy, despite demands from hardliners including UK Prime Minister Boris Johnson.

If excluded from SWIFT, which is used by over 11,000 major banks and financial institutions worldwide, Russia would effectively be expelled from the international financial network. German Chancellor Olaf Scholz and others opposed this measure as a ‘last resort,’ but underlying this opposition are complex national interests. A senior EU diplomat stated, "Economic interests are prevailing in the debate." The explanation is that the closer the economic ties with Russia within Europe, the harder it is to choose this card. When asked about this during his speech, President Biden responded, "Some European countries do not want it at this time." However, he added, "It is always an option on the table."

President Biden, who must unify the opinions of various countries, cannot avoid considering the repercussions after excluding Russia from SWIFT. Russia is the world’s 12th largest economy. Western companies trading with Russia will inevitably be affected. Western banks also face the risk of not being able to recover loans extended to Russia.

Moreover, the more the U.S. uses sanctions, the more China could become a beneficiary, which adds to President Biden’s concerns. Eswar Prasad, a trade policy professor at Cornell University, evaluated, "All financial sanctions will promote trade between China, the world’s second-largest economy, and Russia, weakening the dollar-centered global financial system."

President Biden also refrained from targeting the energy sector this time. A U.S. government official explained, "There is no choice. If we sanction the energy sector, it would actually benefit Russia in terms of prices (due to soaring oil prices)." The plan to directly sanction President Putin was also excluded. The Wall Street Journal (WSJ) reported that such sanctions are being reserved as a response card for the next phase, such as Russia’s occupation of Kyiv. Ultimately, for President Putin, the cards and their order that President Biden plays are inevitably predictable.

Furthermore, the fact that the invasion of Ukraine materialized despite extensive diplomatic efforts has put President Biden on the defensive. When asked whether he underestimated President Putin, Biden replied, "I did not underestimate him." While stating that all options are on the table, he did not answer repeated questions about why President Putin is not being sanctioned today.

This content was produced with the assistance of AI translation services.