Read news from:
Austria
SHARE
COPY LINK

UKRAINE

Germany working on limiting Russia access to Swift

Germany said Saturday it was working on excluding Russia from the Swift interbank system in a "targeted and functional" way that would limit any collateral damage.

Published: 26 February 2022 19:01 CET
Protester in a crowd holding a placard reading 'No Swift for Russia
A protester holds a placard reading "No Swift for Russia" during a rally against Russia's invasion of Ukraine on February 26th, 2022, in Frankfurt. (Photo by Yann Schreiber / AFP)

“We are working at the same time urgently on limiting the collateral damage from an exclusion from Swift so that (the measure) hits the right people,” Foreign Minister Annalena Baerbock and Economy Minister Robert Habeck said in a joint statement.

“What we need is a targeted and functional limitation of Swift,” they added.

More EU nations – including France and Italy – have been moving to exclude Russia from using the Swift banking network, but Germany has been more cautious.

Russian gas makes up a higher share of energy supplies in Germany and other parts of Europe than in France, which backs the move. 

Ukrainian President Volodymyr Zelensky on Saturday again asked European nations to sever Russia from the banking system.

Swift’s messaging system allows banks to communicate rapidly and securely about transactions, and cutting Russia off would cripple its trade with most of the world.

“There is already almost full support from the EU countries to disconnect Russia from Swift. I hope that Germany and Hungary will have the courage to support this decision,” Zelensky said earlier in a video address posted online.

The Hungarian government has angrily denied suggestions it had blocked moves to exclude Russia from Swift.

‘Unyielding egoism’
Ahead of a meeting with German Chancellor Olaf Scholz, his Polish counterpart Mateusz Morawiecki criticised the “unyielding egoism that we see in certain Western countries, including here in Germany”.

Olaf Scholz in a face mask in front of armed guards

German Chancellor Olaf Scholz waits for the Polish Prime Minister and the Lithuanian President on February 26th, 2022 at the Chancellery in Berlin, as they meet for talks following Russia’s invasion of Ukraine. (Photo by Tobias SCHWARZ / AFP)

He urged Berlin to “finally decide on sanctions that are actually crushing”, including the exclusion from Swift.

Earlier this week, German Finance Minister Christian Lindner said he was “open” to including Swift in the EU’s sanctions response package.

But he added that it “would mean that there is a high risk that Germany will no longer receive gas, raw material supplies from Russia”.

Iran has been disconnected from the Swift system in the past over its nuclear programme.

Russia meanwhile has been developing domestic financial infrastructure to counter such a threat, including the SPFS system for bank transfers and the Mir card payments system.

Cutting off Russia could complicate remaining trade with Europe.

READ MORE:

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
For members

GERMANY AND UKRAINE

What a Russian victory in Ukraine would mean for Germany

For German residents, there is reason to fear a Russian victory in Ukraine. A new mass exodus of refugees would create bottlenecks in housing, childcare and schools, among other issues.

Published: 13 June 2024 11:48 CEST
What a Russian victory in Ukraine would mean for Germany

Recent news from Ukraine has been bleak. The surge in missile and drone attacks on Ukrainian power plants over recent weeks has plunged whole districts of the capital into darkness for hours on end.

Kyiv has outlined a five-point strategy to weather the storm, including electricity rationing, urging help from abroad, receiving more air defence systems, and overhauling the grid.

Ukrainian President Volodymyr Zelensky this week said Ukraine needed “quick” and “cost-effective” repair work ahead of winter.

“We need your equipment and financial support to respond now and maintain normal life,” he told a reconstruction conference in Berlin.

While a plan to use frozen Russian assets for war-torn Ukraine dominates G7 talks in Italy on Thursday, there are voices in Germany – especially among the far-right AfD party – that would rather Germany cut off all its support for Ukraine. But these pro-Russian positions, veiled as arguments for peace, tend to ignore how dramatically a Russian victory in Ukraine would shake Germany.

An investigation by Tagesspiegel looked at what exactly a Russian victory would mean for people living in Germany. Here are the main impacts.

Germany would need to dramatically increase military spending

Andreas Schwarz, the SPD budgeter responsible for the defence budget has warned that if Ukraine lost the war, Germany would be forced to spend even more money on defence in one fell swoop.

Russia would suddenly be at the NATO border in Europe feeling militarily superior.

German defence expert Roderich Kiesewetter suggests that Germany would run out of ammunition after a few days in the event of a direct war. Kiesewetter has called for at least three percent of Germany’s gross domestic product to be invested in armaments.

Germany has made efforts to up its defence spending recently, but it is still unclear if the country will maintain a two percent GDP target for defence spending going forward.

But a sense of urgent need to ramp up Germany’s military defences does seem to be growing. On Wednesday Defence Minister Boris Pistorius announced a plan to bring back conscription to the armed forces.

Recently, former British Armed Forces Minister James Heappey estimated that a Ukrainian defeat would cost the West collectively trillions of dollars.

READ ALSO: Is Germany gearing up to reintroduce compulsory military service?

Pistorius with members of the army

Ukrainian President Volodymyr Zelensky (centre left) and German Defence Minister Boris Pistorius (centre right) stand with Ukrainian and German soldiers during a visit to a military training area in Mecklenburg-Vorpommern, north-eastern Germany, on June 11, 2024. Photo by Jens Büttner / POOL / AFP

Higher prices

Ukraine is one of the largest agricultural exporters in the world and also has stocks of rare earths and critical minerals.

A Russian takeover of the country would likely spell massive price fluctuations for goods like Ukrainian grain – which would spell increased grocery prices in Germany as a start, according to many economic projections.

More war refugees in Europe

Migration researcher Gerald Knaus told the Tagesspiegel that a Russian victory in Ukraine could “turn another ten million people into refugees”.

In parts of eastern Ukraine, such as the metropolis of Kharkiv, Russia has been wearing down peoples’ will to stay with near constant bombardment. 

Hundreds of thousands of people living there regularly go without electricity due to destroyed substations and infrastructure. Kharkiv alone is home to 1.3 million, including 200,000 internally displaced persons.

According to Eurostat, since the beginning of the war, 4.3 million Ukrainians have fled to neighbouring European countries. At 1.27 million, Germany has taken in the majority.

READ ALSO: Two years later, two Berlin residents from Ukraine on how war affects their lives

Germany’s interior ministries don’t expect tensions to ease soon. The Federal Office for Migration (BAMF) continues its efforts to distribute refugees across the country, but there is no doubt that in many places resources are running thin.

Helmut Dedy, Chief Executive of the Association of German Cities has called on federal and state governments to provide more facilities.

Increased pressure on the welfare system

Many refugees from Ukraine, and indeed many refugees broadly, are dependent on state benefits for some period of time after arriving in Germany.

As of January the employment rate among refugees from Ukraine was around 25 percent. In December of last year 710,000 Ukrainians received citizen’s allowance.

Refugees are obliged to apply for a work permit in Germany before they can join the workforce. Additionally they face a language barrier, and many of their professional qualifications may not be immediately recognised.

School and day care spots running thin

Since the outbreak of Russia’s invasion of Ukraine, nearly 220,000 children and young people who have fled the country have enrolled in German educational institutions.

So far German states have managed to handle the situation relatively quietly, but there is reason to believe that further stress on the system would be more than it can take.

A Ukrainian student in a German classroom

A name badge with an Ukrainian name seen in an international class at the Max-Ernst comprehensive school (Gesamtschule) in Cologne. (Photo by Ina FASSBENDER / AFP)

The president of the North Rhine-Westphalian Teachers’ Association suggests that the region he represents is already at its limit.

The German Association of Cities and Towns and the Association of Towns and Municipalities (DStGB) have also identified a shortage of school and day care places, as well as shortages of language courses and staff for integration services.

Germany’s educational system has already shown signs of stress – in the form of teachers’ strikes and school dropouts – before an additional influx of students are added into the mix.

Exacerbating the housing shortage

In response to the initial wave of incoming Ukrainian refugees, a section of the Building Code was enacted which allowed for the construction of new refugee accommodation without a development plan.

In some places, especially in parts of eastern Germany with growing vacancies, the influx of Ukrainians actually helped to stabilise the housing market.

But in cities where a severe shortage of housing has already been growing for years, there is no doubt that any number of incoming residents only adds stress.

Such is not only the case in popular cities like Berlin, Hamburg or Munich. In Mecklenburg-Western Pomerania, for example, the local Ministry of the Interior sees municipalities facing a major challenge in providing housing.

READ ALSO: ‘Tense housing situation’: Why a Berlin renter can’t be evicted for two years

German defence expert Roderich Kiesewetter emphasises that the aforementioned impacts on German life are not yet a foregone conclusion. He told Tagesspiegel that Ukraine could still defend itself and restore its 1991 borders according to international law, “But only if we support them accordingly and stop setting red lines for Ukraine and us”.

With reporting by AFP.

SHOW COMMENTS