The Trump administration seems determined to cut Iran off from the global financial system. As it reimposes sanctions on the country next month, it may take aim at the SWIFT messaging network that enables cross-border payments worldwide. This is a bad idea.
Meddling with SWIFT would widen a growing rift between the U.S. and the European Union.
Europe has insisted on upholding the 2015 nuclear agreement with Iran, which the U.S. nullified in May. In doing so, it is resorting to increasingly outlandish steps to facilitate Iran’s commerce with the outside world. A furious Trump administration is now weighing whether to target SWIFT, which would prevent European companies from doing just about any business with Iran. It might require SWIFT (based in Belgium) to violate European law, which the network says it won’t do. Some Trump officials have even mused about fining its member banks or freezing the assets of its board members (two of whom are American).
Using SWIFT as an instrument of foreign policy isn’t just a new threat to U.S.-EU relations. SWIFT acts as a nervous system for global finance, sending billions of messages among more than 11,000 banks each year. Politicizing that crucial network while placing its overseers in legal jeopardy would be destabilizing. It could also accelerate efforts to create non-dollar alternatives to SWIFT — as China, Europe and Russia are all doing — further diminishing U.S. influence and harming American companies.
Such risks might be still worth it if the benefits were clear. Far from it: Cutting Iran off from the financial system — as the U.S. and the EU did from 2012 to 2016 — could unite moderates and hardliners in opposition. It might even tempt Iran to revisit its nuclear ambitions, given that SWIFT access was a cornerstone of the 2015 deal.
At the moment, the Trump administration can’t even say what it wants from Iran. The president has merely asked that the country “make a good deal.” (“Deals,” he added, “you never know.”) Secretary of State Mike Pompeo, meanwhile, has specified a dozen demanding requirements that Iran must satisfy before any such deal would even be on the table, including getting out of Syria and cutting off funding for Hezbollah.
None of those goals is realistic without help from America’s allies. Europe could help by accepting that the nuclear deal is dead and working more constructively on an alternative.
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