Financial transaction

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WASHINGTON — The Biden administration and its key European allies have reached a preliminary agreement to ban sanctioned Russian companies, oligarchs and government officials from using the SWIFT system, essentially banning them from international financial transactions — but without interfering with gas deliveries to European nations.

The deal, discussed in general terms by German officials and confirmed by US and European diplomats, does not amount to a blanket cut by Russia from the financial messaging system, which some officials see as a kind of nuclear option. Such a move would have essentially cut Russia off from much of the global financial system.

The targeted approach also means that Russia, at least for now, will still be able to earn revenue from its gas sales to Germany, Italy and other European powers.

Until the start of Russian military attacks last week, Germany and Italy had opposed a blanket ban on transactions with Russia, which would have cut about 40% of Russian government revenue. But in recent days, their posture has begun to change.

On Saturday, German Chancellor Olaf Scholz announced his government approved the transfer of anti-tank weapons to the Ukrainian military, ending its insistence on providing only non-lethal aid, such as helmets.

At the same time, in a post on TwitterGerman Foreign Minister Annalena Baerbock and her Economy Minister Robert Habeck have acknowledged that the country’s government is moving from opposition to a SWIFT ban to a narrowly targeted ban .

“We are working intensely on how to limit the collateral damage of a disconnection from #SWIFT so that it reaches the right people,” they wrote. “What we need is a targeted and functional restriction of SWIFT.”

European officials said they had long, sometimes tense discussions with American and British officials, who demanded a cut from the start of the Russian invasion of Ukraine.

But even some US officials had reservations about separating completely from Russia. Among other concerns, they feared it would bolster the alternatives to the SWIFT system that Russia and China have been developing. This could, over time, erode the ability of the United States to track and control payments.

US and European leaders are currently discussing how many and which Russian institutions to block, according to three European diplomats and another person familiar with the matter. Officials were deliberating about the possible ripple effects and unintended fallout from the targeted restrictions.

SWIFT, a Belgian messaging service formerly known as the Society for Worldwide Interbank Financial Telecommunication, connects more than 11,000 financial institutions around the world. It does not hold or transfer funds, but allows banks and financial institutions to alert each other of transactions about to take place.

For weeks, the Biden administration has publicly played down the idea of ​​cutting Russia out of the system, suggesting that while all options are on the table, such a move could create more problems than it solves.

But behind the scenes, US officials were pressing European allies to give President Vladimir V. Putin some sort of indication that Europe was heading for greater economic isolation from Russia, as part of a containment policy. wider.

Moreover, since SWIFT is a European organization, the United States has allowed European countries to take the lead on the issue. The only unilateral leverage the United States could use would be to impose sanctions, or threaten them, on the SWIFT organization itself if it continued to deliver messages for Russian institutions.

Matina Stevis-Gridneff contributed reporting from Brussels.