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| Syria-Lebanon-Iran |
| SWIFT To Cut Off Iran - No Financial Telecommunications |
| 2012-02-18 |
| The Society for Worldwide Interbank Financial Telecommunication, known as SWIFT, the financial clearinghouse used by virtually every country and major corporation in the world, agreed Friday to shut out Iran from its network, effectively barring it from every form of international electronic finance and commerce based on electronic money transfer. In February 2012, the U.S. Senate Banking Committee unanimously approved sanctions against SWIFT aimed at pressuring the Belgian financial telecommunications network to terminate its ties with blacklisted Iranian banks. Expelling Iranian banks from SWIFT would potentially deny Iran access to billions of dollars in revenue. SWIFT transports financial messages in a highly secure way, but does not hold accounts for its members and does not perform any form of clearing or settlement. SWIFT does not facilitate funds transfer, rather, it sends payment orders, which must be settled via correspondent accounts that the institutions have with each other. Each financial institution, to exchange banking transactions, must have a banking relationship by either being a bank or affiliating itself with one (or more) so as to enjoy those particular business features. SWIFT is a cooperative society under Belgian law and it is owned by its member financial institutions. SWIFT has offices around the world. SWIFT headquarters are located in La Hulpe, Belgium, near Brussels. |
| Posted by:Anonymoose |
| #15 Yeah right, that did stop North Korea, didn't it? |
| Posted by: European Conservative 2012-02-18 19:57 |
| #14 China was talking about using trainloads of gold to pay for their oil from Iran. They are stocking up last I saw. It is certainly a currency dis-order and will confuse markets. |
| Posted by: newc 2012-02-18 18:36 |
| #13 Probably not much more than an inconvenience wrt their nuclear weapons program. Then what? |
| Posted by: gorb 2012-02-18 17:19 |
| #12 Iran has a huge trade surplus and can spread their money around as needed. India will be the prime beneficiary The other problem is Iran's 'charitable foundations'. They own businesses outside of Iran (mostly in the the Mid-East and Asia), plus maintain sizable investments in others. |
| Posted by: Pappy 2012-02-18 15:38 |
| #11 Lone Ranger, sure, Iran can use hawala, but most hawaladars are Sunni, and there's a limit to how much can be realistically transferred in a short period of time... But the most salient point of all the comments so far is from JohnQC about whether this will prevent Iran's nuclear race. Unfortunately, it probably won't. Stopping the nukes is supposed to be the driving reason behind the entire sanctions regime. But we have seen that site explosions, computer viruses, and assassination of scientists are far more effective in slowing Iran's nuclear program. Economic sanctions, even supposedly "smart" targeted sanctions, are too broad to prevent fungible transfers from Iran's coffers of whatever money it has left toward its nuclear program. |
| Posted by: American Delight 2012-02-18 13:11 |
| #10 Mizzou-------I read the same thing last week. Iran was to barter petro installations with China for oil. But China has been looking into alternatives for Iranian oil imports. It seems to me that they could get around electronic funds transfers with paper as long as both banks go along with it. |
| Posted by: Alaska Paul 2012-02-18 12:53 |
| #9 It means the Iranians will trade some oil in the local currency and leave the proceeds in those countries banks to pay for imports. Iran has a huge trade surplus and can spread their money around as needed. India will be the prime beneficiary. Exports $131.8 billion (2011 est.): China 19%, India 14.8%, Japan 11.6%, Turkey 8%, South Korea 6.7%, Italy 6.2%, Spain 4.7% (2010) Imports $76.1 billion (2011 est.): China 17.4%, UAE 16.7%, Germany 7.6%, South Korea 6.3%, Russia 5.7%, Turkey 4.8%, Italy 4.2% (2010) |
| Posted by: Shimble Guelph5793 2012-02-18 12:19 |
| #8 Was it at Rantburg, or somewhere else, that I read that China was working out a semi-barter system with Iran for oil? Maybe with an eye towards something like this? |
| Posted by: Mizzou Mafia 2012-02-18 12:12 |
| #7 I wonder - does Iran have access to the "hawala" funds transfer system? |
| Posted by: Lone Ranger 2012-02-18 11:19 |
| #6 Another lovely kick to the nuts, which they will feel. |
| Posted by: Fat Bob Unotch3711 2012-02-18 11:09 |
| #5 What's the likelihood that shutting Iran out of SWIFT will result in a shutdown of their nuke weapons program? |
| Posted by: JohnQC 2012-02-18 11:03 |
| #4 When they rock up in person, what will they get? A check. How will they clear it? I believe we will shut down the clearing mechanisms for Iran through western central banks if we have not already. It's going to be hard for Iran to trade with anybody except Russia and China. And how much will the mullahs want to leave on deposit there? |
| Posted by: Nimble Spemble 2012-02-18 11:00 |
| #3 How trade works in Asia, is a buyer gets a letter of credit from his bank that basically says he is good for $x. The bank is obligated to honour that LofC. Normally the transfer happens thru SWIFT but in principle the seller could rock up in person to the buyers bank with the LofC. But obviously a serious inconvenience. |
| Posted by: Phil_B 2012-02-18 08:53 |
| #2 Pretty much every international bank to bank funds transfer goes thru SWIFT. AS Moose says this is a big problem for Iran. |
| Posted by: Phil_B 2012-02-18 08:46 |
| #1 Iran will have no choice but to react to this, as otherwise their entire economy will collapse. They will no longer be able to import or export anything, unless they have physical cash on the barrel head. |
| Posted by: Anonymoose 2012-02-18 08:02 |