The India-Russia Partnership

Adapting to a Multipolar World Order

- Douglas Daniel D'sa

Introduction

Settling international payments is straightforward today— one provides the necessary bank details, and funds can cross borders seamlessly. However, the inception of such a mechanism was conceived only recently (1973) when 239 banks from 15 countries came together to generate a solution on how to settle cross-border payments.1 This cooperative was formed in Belgium and called themselves the Society for Worldwide Interbank Financial Telecommunication (SWIFT). SWIFT is an efficient and secure method of transferring messages (i.e. financial transactions) across international boundaries and is the predominant financial infrastructure used by over 11,000 financial institutions to settle international settlements across 200 countries.

While SWIFT was established to foster global financial cooperation and neutrality,2 its evolution has seen it increasingly serve as a geopolitical tool, often wielded to enforce the policies of powerful nations like the United States. This was done in 2012 when Iranian banks were disconnected from SWIFT after surmounting pressure from the U.S. and the European Union,3 and again in 2022 when key banks in Russia were effectively excluded from SWIFT after Russia invaded Ukraine.4

The US has leveraged its unique position as a leader within the global financial system to influence SWIFT to enact favourable actions even those considered harmful to its allies. A clear illustration of this is in 2018 when President Trump withdrew from the Iran Nuclear Agreement (JCPOA), reimposed sanctions,5 and exerted political and diplomatic pressure on SWIFT to once again ban Iranian Banks.6