German minister calls for independent EU Swift payments network
Germany’s foreign minister Heiko Maas is calling for the creation of a new payments system independent of the US to keep the Iran nuclear deal afloat.
“It’s essential that we strengthen European autonomy by establishing payment channels that are independent of the US, creating a European Monetary Fund and building up an independent Swift system,” he writes in German publication Handelsblatt.
Politics and payments meet in this issue as US president Donald Trump withdrew from this deal in May following up from its action regarding North Korea.
Back in February 2016, Iranian banks were being reconnected to Swift’s international payments system after a four-year hiatus. This was before Trump became president.
Maas says the US couldn’t act “over our heads and at our expense” – “us” meaning Europe.
As the EU attempts to honour the Iran deal, Trump has threatened sanctions to businesses dealing with Tehran. Despite the EU having sworn protection over these, companies still see the US as more lucrative than Iran.
Swift, the global payment system for cross-border transactions, will be forced to isolate Iranian banks from the network by November, or face the consequences by its board members and the financial institutions that employ them – such as asset freezes and US travel bans, as wells as banks’ restrictions to do business in the US.
Maas adds that Europeans must “form a counterweight when the US crosses red lines”.
But Swift would be at a crossroads. The aforementioned threats from the US government would be a deterrent to act, but an independent network would remove all power that the US may have over the global Swift network.