quite a few commenters have pointed out SWIFT as a hand of soft power and i think its important to understand the twitter post doesnt mention an important fact:
SWIFT was created in order that Europe may resist Kissingers increasingly capricious hand of soft power as it emerged as a lead sap in an increasingly arbitrary US foreign policy. 40 years ago the US had become effectively drunk on soft-power moves against states it perceived as even remotely objective to US interests. Is your president elect too socialist? you get an aircraft carrier floating in your strait for a year. did you nationalize your oil fields? sanctions mean you cant sell it to anyone. Cuba to this day still enjoys endless sanctions for resisting regime change.
in 2022 sanctions are to international diplomacy as a tantrum is to a toddler. theyre effectively meaningless as most capable, observant countries have managed to sidestep in part or in whole the once dominant US hegemony of finance and trade. even the threat of a blue-water naval presence is an unspeakable taboo as Russia is one of a handful of emerging countries you wouldnt dare send an aircraft carrier to patrol, unless its goal was to secure the ocean floor.
The only meaningful threat SWIFT offers is the ability to assuage short-term market fears among traders that dont fully understand just how inapplicable SWIFT is in this case.
> in 2022 sanctions are ... effectively meaningless as most capable, observant countries have managed to sidestep in part or in whole the once dominant US hegemony
This is only true to the extent that the US unilaterally imposes sanctions. The proposed sanctions involving SWIFT are multilateral, with the support of the entire EU. That's around double the economic power of the US alone, and roughly half of the entire world's GDP. Being sanctioned by half of the global economy (more, if Asian democracies participate) is very punishing indeed.
this is an excellent point, one i hadnt considered. SPFS only has 23 banks connected to it as of 2020, so if its to be an alternative Russia would have to consider it as an alterative of last resort. just how strong is it?
the consternation im still faced with is "with the support of the entire EU." It may be difficult to secure a resounding vote with the bemoaned sword of Damocles. much heating fuel comes from Russia in the dead of winter.
still other HN posters make a great point (and in other posts too) that every time SWIFT is disconnected, it popularizes alternate markets at the expense of US and EU interest. certainly a stronger SPFS must be taken into account.
Yeah I actually have no idea where India stands geopolitically and I had totally forgotten their considerable impact.
I wonder how their government views these events?
They did not condemn it but they also did not signal support like China did - I suspect Modi expected Putin to stop at Donbas and sees his best option right now as a ceasefire, which is what he's openly asked for as well.
Unlike Russia's allies other than China, India cannot afford to be shut out of the US and supported by Russia, and unlike China, Europe and the US can impose fairly strict sanctions on India in the short-term.
The EU would only go along with this because the US has them by the proverbial balls. European militaries are a joke and there is no domestic political support for building them up.
America represents 40% of NATO forces. America guarantees the physical security of Europe in consultation with the governments of these nations, but there is an inherent power imbalance here.
A reminder that two of Western Europe's militaries are nuclear, which hardly makes them "a joke". You seem to be projecting the state of Germany's military to all European forces, which is... questionable.
The nuclear arsenals of France and the UK are a bit meager relative to Russia and the US. That doesn't mean that they can't inflict a good bit of damage but MAD isn't in play with them unless the US is backing them up with its own nuclear arsenal.
French (and probably British, although I know it less) doctrine is not MAD - it is to incur "unacceptable damages" to an offender. And 500-ish combined warheads sure sounds like it can achieve that.
Keep in mind that most modern nuclear warheads are MIRV weapons, which dramatically amplifies the scope of the damage. These aren't Truman's nukes anymore.
The EU collectively outclasses every likely regional aggressor or likely regional coalition, and can project power better than any but a handful of other states (most of which are unproven against that challenge). Throw in Britain and only the US—which is in a mutual defense pact with several EU states—is clearly ahead of them. How's that "a joke"?
European countries could barely sustain bombing runs during the Libya intervention. They struggled to consistently field single digit number of planes at the same time.
In this particular conflict, the stakes for the EU is much higher than for the US.
Sure, the US is historically (recent) more happy to go into conflicts around the world, but this is a conflict bordering many EU states.
The Baltics, Poland, Slovakia, Hungary, Romania definitely aren't happy seeing Putin on their doorsteps.
> in 2022 sanctions are to international diplomacy as a tantrum is to a toddler. theyre effectively meaningless
Earlier today a report on BBC said existing sanctions on Russian already made their economy suffer to a significant extent. I forgot the percentage points they mentioned but it was surprisingly high. Applying even more sanctions will unfortunately hurt the Russian people the most and the discontent that will create among the people over the many years to come should not be underestimated.
> ...theyre effectively meaningless as most capable, observant countries have managed to sidestep...
In this case, though, one wants to apply pressure not on the country, but on the surrounding oligarchs. When a nation is, essentially, a syndicate of organized criminal oligarchs around a strongman, financial pressure on those people is exactly what you need.
> in 2022 sanctions are to international diplomacy as a tantrum is to a toddler. theyre effectively meaningless
This is just straight up wrong. This is why the Magnitsky Act got Putin so rattled. It is also why Putin has said being cut off from swift is an act of war. If it's meaningless, why does Russia care so much?
> Cuba to this day still enjoys endless sanctions for resisting regime change.
I mean, I suspect we agree that the embargo should be lifted, but that's a really poor way of saying "communist dictatorship with a penchant for, among other things, lining up homosexuals against a wall and shooting them".
Hopefully the last few days have reinforced that even if one country does things wrong sometimes, it doesn't mean the other side is a good guy.
> in 2022 sanctions are to international diplomacy as a tantrum is to a toddler. theyre effectively meaningless
I don't see how this follows from your (correct) description of US influence in the cold war. Soft power works now the same way it always has, all it requires is coordination on a "pool of influence" large enough. It's absolutely true that the US can't unilaterally do what it did in the 70's. But the e.g. USA+EU+Japan+Korea? That's pretty dominant, still.
Russia's only out from something like that would effectively mean becoming a sattelite state to the PRC. And... maybe that's where we're headed. But it's surely not where Putin wants to head, so it remains leverage.
Nah -- Bill Browder seems to be a expert on this exact topic. He's saying to pull Russia from Swift. His experience suggests he is intimately familiar with the financial world and the consequences.
He's the genesis of the Magnitsky Act -- the one thing that actually scares Putin. I know this because Putin even said if Russia was removed from Swift he would consider it an act of war.
Him thinking that, however qualified he is, does not mean he's right. Being the CEO of a hedge fund, with a personal grudge against Russia, does not make you infallible.
The US benefits enormously from owning the reserve currency and running the world financial system, and the ultimate effect of our trigger-happy approach to sanctions is to push countries away from those, especially with the US becoming a smaller percent of the world economy every year. Even the Europeans are sick of it. The Europeans only play along still because they are militarily dependent on the US, in part because their populations have, under the comfort of the US security umbrella, developed irrational political beliefs against building up their own militaries.
> The US benefits enormously from owning the reserve currency and running the world financial system, and the ultimate effect of our trigger-happy approach to sanctions is to push countries away from those
That seems belied by actual history. The US has been a "trigger happy" sanctioner for basically the entirety of the post-war era, and the dollar has been dominant throughout. What would change now that didn't when we sanctioned Iran, or Iraq, or Cuba, or Yugoslavia, or...
Eventually a tipping point is reached and a seemingly minor event can cause irreversible change many magnitudes larger than the event itself. This is ok if you're certain where the tipping point exists and can keep from getting too close to it but in economics, especially when intertwined with geopolitical matters, it's doubtful anyone even knows the ballpark of where that tipping point exists until they're looking at it in the past.
As opposed to random commenters on HN who are likely SWE and not experts in finance or geopolitics?
I hate this trend of "well he's an expert so he might be wrong". Okay, sure, we are all human and make mistakes, but, he's also an expert and you don't become an expert by being wrong all the time. Not sure how many people here are qualified to comment on these events instead of him.
>I hate this trend of "well he's an expert so he might be wrong".
Trotting out an expert who you agree with, to end discussion, is just as bad. You can find reasonable experts on all sides of issues. It's almost always used as a rhetorical technique to shut down debate.
Trotting out an expert is far better than just random comments from uninformed people. I'd just rather say "I have this expert I agree with" vs "I'm a SWE that has no background in this and my opinions are somehow weighted the same" or "this expert is wrong despite the fact that I have no understanding of this subject"
Might be worth considering that some of the people in this conversation are well versed in foreign policy debates and don't need to cite to names to invoke reasonable ideas.
Might be worth to consider that HN commenters clearly are not foreign policy experts and should be citing people that are. Lots of armchair "experts" around here thinking that because they are smart people who work in a stem field, that their opinions should carry any weight. Would you take tech advice from a history professor? No? Then why is it ok to do it for geopolitics?
If the Magnitsky Act actually worked then we would expect changes in the behavior of the people it sanctioned to get off the list. Looking at https://en.wikipedia.org/wiki/Magnitsky_Act#Individuals_affe..., it doesn't seem too effective. Dan Gertler is still a billionaire even though he's on the list. In practice I suspect OFAC designations just mean the designated individuals need to pay some lawyers a fee to get their assets held in the names of nominees.
Access to SWIFT is one of several economic tools which work together to limit and essentially “bleed out” the target economy. Although Russia acts like a big bully, their economy is relatively small (e.g. smaller GDP than Italy) which makes economic actions especially impactful (even if it will take a moment for them to fully reach their potential).
SWIFT was created in order that Europe may resist Kissingers increasingly capricious hand of soft power as it emerged as a lead sap in an increasingly arbitrary US foreign policy. 40 years ago the US had become effectively drunk on soft-power moves against states it perceived as even remotely objective to US interests. Is your president elect too socialist? you get an aircraft carrier floating in your strait for a year. did you nationalize your oil fields? sanctions mean you cant sell it to anyone. Cuba to this day still enjoys endless sanctions for resisting regime change.
in 2022 sanctions are to international diplomacy as a tantrum is to a toddler. theyre effectively meaningless as most capable, observant countries have managed to sidestep in part or in whole the once dominant US hegemony of finance and trade. even the threat of a blue-water naval presence is an unspeakable taboo as Russia is one of a handful of emerging countries you wouldnt dare send an aircraft carrier to patrol, unless its goal was to secure the ocean floor.
The only meaningful threat SWIFT offers is the ability to assuage short-term market fears among traders that dont fully understand just how inapplicable SWIFT is in this case.