EghtesadOnline: The Trump administration abandoned the Iran nuclear deal this year and is reimposing sanctions. The sanctions leave western companies and banks with a stark choice. If they do business with Iran, they lose access to the American market and financial system. Not surprisingly, businesses and banks have been cutting ties with Iran or shelving plans to invest there. But one important financial link to the country remains: the financial messaging service that plays a crucial role in moving money around the international banking system.
The messaging service is run by a Belgian cooperative called Swift. The service, which is owned and used by banks around the world, plays a central role in the flow of money across the globe.
According to the New York Times, because the next wave of United States sanctions target financial messaging, Swift now finds itself under pressure from Washington to disconnect from Iran. But it has not done so yet — and time is running out. Those sanctions take effect after Nov. 4.
The Trump administration now has to weigh some tough choices. It could take a hard-edge approach and impose penalties on Swift or the banks and people connected to the entity. But that could unsettle the major financial institutions that own and rely on Swift. The importance of the messaging service is hard to overstate. Swift connects more than 11,000 banks across more than 200 countries, and there is no other entity that could quickly step in and take its place, according to Financial Tribune.
Donald Trump’s national security adviser and a recycled neocon, John R. Bolton, has taken a hawkish approach to the Iran sanctions. Last month, he said executives at entities like Swift needed to ask whether doing business in Iran was “worth the risk.”
The European Union is trying to maintain trade and financial connections with Iran and is actively trying to frustrate the US’ Iran policy. Swift may fear that relations with the bloc may deteriorate if it bows to Washington. The European Union is working on its own payments system to support trade with Iran. In a statement, Swift said it was consulting with authorities from both the US and the EU.