New Delhi: The island nation of Cyprus, which has extensive business links with both Russia and Ukraine, said Saturday that it will support a proposal to cut Russia off from the SWIFT global interbank payment system, according to Ukraine’s Minister of Foreign Affairs Dmytro Kuleba.
“Ukrainian diplomacy keeps working 24/7 to achieve important decisions and protect Ukraine from Russian invaders,” he added.
Cypriot Finance Minister Constantinos Petrides has also said his country has not opposed proposals to exclude Russia from the payment system.
#EU Leaders responded to the #unlawful Russian military actions in #Ukraine by economic sanctions on Russia. In the name of EU unity and solidarity to #Ukrainian people #Cyprus has NOT objected to ANY EU sanctions including cutting Russia off Swift. Everything is on the table
— ConstantinosPetrides (@Petrides_C) February 25, 2022
The SWIFT, which stands for Society for Worldwide Interbank Financial Telecommunication, is an international banking system that enables rapid cross-border payments.
Over 11,000 banks and institutions in more than 200 countries are connected to it. It is overseen by the G-10 central banks in Belgium, Canada, UK, US, France, Germany, Italy, Switzerland, Sweden, Japan and Netherlands.
Experts have pointed out that Cyprus not being opposed to the ban is significant not only because the country is known to be a “haven” for Russian money laundering carried out by Moscow’s oligarchs, but also because it is a non-NATO member.
If Russia is excluded from SWIFT, it could hurt the country’s trade and make it tougher for Russian companies to do business. Moscow was threatened with similar sanctions when it annexed Crimea in 2014.
A ban is expected to come in the next few days, but it has not yet been revealed which Russian banks will be targeted in particular.
Parallel to Cyprus’ new decision, videos have emerged on social media of anti-war demonstrations in solidarity with Ukraine in Cypriot cities of Limassol and Paphos.
‘Cyprus a Putin bank’
Prior to Saturday, as Cyprus was still mulling over its stance on the SWIFT ban issue, Daria Kaleniuk, executive director of Ukraine-based Anti-Corruption Action Centre, accused Cyprus and other countries of “sabotaging sanctions against Russia”.
Arthur Kharytonov, president of the Liberal Democratic League of Ukraine, Friday referred to Cyprus as a “Putin bank”.
Not just Cyprus, Italy and Germany have been in the spotlight too over the SWIFT ban this week. Over the past two days, Italy and Cyprus have extended their support to Ukraine on the issue, but Germany is still holding out.
Germany’s Foreign Minister Anna Baerbock and Economy Minister Robert Habeck said Saturday that Berlin is looking for a way to “limit” collateral damage caused by the ban. However, it is not yet clear how the German government aims to make the SWIFT restrictions more targeted.
American legal commentator Tristan Snell went as far as to suggest that if countries like Cyprus continued to hold out, they should face consequences as well.
‘Potentially a bigger deal than even Germany’
Following Kuleba’s announcement about Cyprus coming on board, Max Seddon, Moscow bureau chief at Financial Times, said this is significant because the island nation is allegedly home to several offshore companies of Russian elites.
“This is potentially a bigger deal than even Germany signing on — Cyprus is one of Russia’s biggest foreign investors (Russians with Cypriot offshore companies investing back in Russia) and the second biggest bank in Cyprus is Russian,” he said.
Earlier this week, in response to Russian aggression in Ukraine, the UK and other Western nations sanctioned Russian businessmen with close ties to Putin, like Gennady Timchenko, and Igor and Boris Rotenberg.
According to the ‘Pandora Papers’, a leak of financial documents obtained by the International Consortium of Investigative Journalists that exposed several heads of states and wealthy elites across the world, there are large loans involving shell companies based in Cyprus connected to Timchenko.
Mike Martin, visiting fellow, Department of War Studies at King’s College, London, said Cyprus’ move is making Putin “nervous”, given that Cyprus is the “the home of Russian money laundering”.
Meanwhile, experts like Casey Michel, a Hudson Institute fellow and the author of American Kleptocracy, have remarked that for sanctions and restrictions against Moscow to have a full impact, they will need to come from a range of countries, including those like Cyprus, who don’t belong to the NATO alliance.
“It’s great that the US is taking leadership on this, but it has to be done in tandem with partners elsewhere…whether that’s the UK, whether that’s France, whether that’s non-NATO members like Switzerland or Cyprus. It can’t happen in the US alone,” he told Axios Saturday.
(Edited by Saikat Niyogi)