by Kenneth Schortgen Jr
While the U.S. reels from the triple bombshells of this week that have left the Superpower nearly impotent to act, an astonishing occurrence is taking place in diplomatic circles as Washington no longer feels it has the authority to simply impose economic sanction on Russia, but must beg to Europe to stand with them in a move where they hope will allow them to restrict the use of the SWIFT system by Russia.
Earlier this week, the U.S. faced three critical events in which President Obama appeared stunned and without the fortitude to act against. First, Russia placed several more chips on the table by cracking the decades long petro-dollar system, and will now allow for oil to be purchased directly in the markets with either Roubles or Yuan. Secondly, the President was cornered by the media on what the U.S. intends to do regarding ISIS, and what plans Obama is ready to implement to contain or destroy the Muslim Caliphate. In a press conference where Obama wore a taupe suit and grey tie instead of his normal blue power suit and red ensemble, the leader of the free world acknowledged that they had no plan ready to go, and as yet have no idea on how to confront the Muslim terrorists.
Finally, the worst fears for NATO and the U.S. appear to have happened as Ukrainian soldiers failed in their attempts to crush the Eastern rebels, and signs indicate that Russia is now going on the offensive to shut off Kiev from their vital energy links and ports by seeking control over Mariupol.
And with all these things crashing down simultaneously on Barack Obama, the American President is reaching out to the one partner he thinks he can rely upon to implement a financial bomb towards Russia in response to their cracking of the global reserve currency.
The U.K. will press European Union leaders to consider blocking Russian access to the SWIFT banking transaction system under an expansion of sanctions over the conflict in Ukraine, a British government official said.
The Society for Worldwide Interbank Financial Telecommunication, known as SWIFT, is one of Russia’s main connections to the international financial system. Prime Minister David Cameron’s government plans to put the topic on the agenda for a meeting of EU leaders in Brussels Aug. 30, according to the official, who asked not to be named because the discussions are private.
“Blocking Russia from the SWIFT system would be a very serious escalation in sanctions against Russia and would most certainly result in equally tough retaliatory actions by Russia,” said Chris Weafer, a senior partner at Moscow-based consulting firm Macro Advisory. “An exclusion from SWIFT would not block major trade deals but would cause problems in cross-border banking and that would disrupt trade flows.” – Bloomberg
Unfortunately for both Europe and the United States, any attempted restrictions on Russia through the use of the international SWIFT system is now relatively short-sighted, and a little late to the party. Russia has already been anticipating this move by the West for sometime, and this is why they paved the way for trade agreements outside the dollar which negates any potential harm that may come from cutting them off from the dollar and international trade.
The U.S. has had nearly all of their financial weapons de-fanged in the past few months, and all that remains in their arsenal is their strong military. However, with troops and missions already spread out in Iraq, Syria, the South China Sea, and in and around the Hormuz Straits, fomenting a head to head conflict, or even a much smaller proxy war against Russia and their major ally China, is something both Europe and the U.S. are ill prepared for, despite calls now from France and Britain to usher in World War III due to the coming collapse of their domestic economies.
About the author
Kenneth Schortgen Jr is a writer for Secretsofthefed.com, Examiner.com, and hosts the popular web blog, The Daily Economist. Ken can also be heard Friday evenings giving aweeklyeconomic report on the Angel Clark radio show.
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