Does the world need a different kind of payment system, free from US influence, to uphold the spirit of the Iran nuclear deal? Germany's foreign minister, Heiko Maas, seems to think so; he argues for greater EU autonomy and an “independent payments system” but also calls for an openness to cooperation with the US, writing in German daily Handelsblatt yesterday (in English):
“It is therefore essential that we strengthen European autonomy by establishing payment channels independent of the US, a European monetary fund and an independent SWIFT [payments] system. The devil is in thousands of details. But every day that the Iran agreement lasts, is better than the potentially explosive crisis that threatens the Middle East otherwise.”
Iran deal and sanctions
The German minister's comments relate specifically to the need to maintain the European position on the 2015 agreement between Iran and some of the world's leading powers. The deal curbed Iran's development of nuclear weapons in return for lifting economic sanctions that were imposed in 2012. The Iran nuclear deal – officially known as the Joint Comprehensive Plan of Action, or JCPOA – was signed in 2015 by Iran and seven other world powers: China, France, Russia, UK, US, Germany and the EU. Sanctions were lifted the following year. The US then announced in May 2018 that it would withdraw from the JCPOA, causing concern that Iran could also renege on the deal. The US also threatened to impose sanctions on European companies that do business with Iran. The EU responded with a 'blocking statute', by giving European firms legal protection to operate in Iran and banning them from complying with US sanctions. All of which has brought transatlantic political relations to a new low.
Swift, the global banking network, comes into play because Iranian banks were effectively shut out of its global cross-border transaction network for four years as a result of the 2012 sanctions and in 2016, following the signing of the Iran nuclear deal, Iranian banks were permitted to rejoin the Swift network.
However, suggesting that an “independent Swift system” would make it easier to maintain the spirit of the Iran deal seems odd. Swift itself emphasises that it is both neutral, global, and acts in the interests of its entire member community. The system connects about 11,000 banks across the world and Swift is owned by around 3,500 shareholder financial institutions. If anything, the organisation, although global, is managed mainly by European authorities: it is based in Belgium and is overseen by central banks of eight major European countries, as well as the ECB, plus the central banks of Canada, Japan and the US.
Swift's official comment on the matter is as follows: “SWIFT notes the US decision to exit the JCPOA and to revoke the US sanctions waivers related to financial messaging services. We understand from US Treasury guidance, that the financial messaging revocation will not come into effect until after 180 days, in November 2018. As there has been no related change to EU legislation we will naturally be consulting with and seeking clarification from both EU and US authorities. Our mission remains to be a global and neutral service provider to the financial industry.”
Finextra reports that German Chancellor Angela Merkel said yesterday, when asked about her foreign minister's views on Swift, that the network is “very important” in combatting terrorist financing, suggesting that she does not see an option for creating a Swift alternative.
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