https://www.wsj.com/articles/europes-not-so-swift-diplomacy-1539730896
Another trans-Atlantic showdown is looming as the Trump Administration prepares its next tranche of financial sanctions on Iran, and the puzzle is why Europe keeps backing itself into a corner. Brussels and European Union states seem ready to stage a battle with Washington over an obscure but important financial-service network—against Europe’s own interests.
The looming brouhaha concerns Swift, the Belgium-based cooperative that manages the global system that banks use to communicate with each other for cross-border transactions. The Trump Administration will soon lay out its plans for financial sanctions on Tehran to take effect in November, as Washington reintroduces sanctions lifted under the Obama Administration’s 2015 nuclear deal. One question is whether the new sanctions include Swift.
They will have to in order to be effective, because cutting Iran off from Swift’s services is one of the best ways to ensure that financial sanctions bite. Were Swift to sever ties with Iranian banks, Iranian companies and financial institutions would struggle to transfer money to and from the rest of the world.
Alternatives exist, but none offer Swift’s global reach or security. Europe’s much-vaunted “special-purpose vehicle” for trading around U.S. financial sanctions, announced last month, is expected to be little more than a glorified barter arrangement with limited scope.
Swift is particularly prone to U.S. pressure because the American financial system looms so large in the world. Swift’s board includes representatives of European and American banks, and many messages across its network travel to or from the U.S. Some Europeans believe Washington wields too much influence over a network they think should operate on a multilateral consensus like a financial EU.