Germany to explore creation of alternative to SWIFT payment system

Source: Xinhua| 2018-08-22 22:51:05|Editor: Mu Xuequan
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BERLIN, Aug. 22 (Xinhua) -- Chancellor Angela Merkel's CDU/CSU conservative alliance has welcomed proposals by Foreign Minister Heiko Maas (SPD) on Wednesday to shield German companies from the impact of U.S. financial sanctions by creating a European alternative to the SWIFT payment system.

"I think that the proposal is worth exploring," Juergen Hardt, the CDU/CSU foreign policy spokesperson told press in Berlin.

Writing to the newspaper Handelsblatt on Tuesday night, Maas had urged European nations to react to the re-imposition of U.S. sanctions on Iran by bolstering their own independence from Washington.

Amongst others, the foreign minister argued that there was an urgent necessity to "strengthen European autonomy by creating payment channels independent of the United States, establishing a European Monetary Fund and building an independent Swift-System".

Maas hereby referred to the Society for Worldwide Interbank Financial Telecommunication (SWIFT) which was founded in 1973 to facilitate financial transactions between participating banks.

As of 2018, more than 10,000 institutes across the world made use of the system.

While SWIFT is based in Belgium, it is also subject to U.S. regulatory influence due to its maintenance of an operation center in Virginia and large volumes of dollar-denominated transactions conducted via the system every day.

The so-called "SWIFT agreement", in particular, officially-signed between Brussels and Washington to dismantle terror financing networks, has repeatedly been criticized by privacy watchdogs for granting U.S. intelligence services almost unfettered access to sensitive information about European companies.

Under new sanctions unveiled by U.S. President Donald Trump, Iranian companies are barred from using the U.S. dollars in international trade.

Foreign financial institutes which have subsidiaries in the United States will be targeted by the measure as well unless they refuse to become involved in any financial transactions with counterparties from Iran.

Most European banks have consequently begun winding down their operations in Iran for fear of losing access U.S. capital markets as a punishment.

Dagmar von Bohnstein, German business delegate in Iran, recently emphasized in a public plea for help to the German government that companies required political solutions which enabled them to complete financial transactions in the country while bypassing U.S. capital markets.

Responding to such complaints, Maas wrote in Handelsblatt that the time had come to recalibrate the asymmetrical partnership between the EU and the United States.

The foreign minister sketched a vision of a "balanced partnership" in which Europe acted as a "counterweight" to U.S. policies like the latest Iranian sanctions.

The SPD politician said that it was no option for European countries to "simply sit out" the Trump presidency given the fact that changes under his leadership were only symptomatic of a longer-standing shift away from multilateralism by Washington.

Although Germany and Europe still had an interest in "renewing and preserving" the transatlantic alliance, it was well-advised to continue along the path of creating a self-reliant European defense union.

Nevertheless, CDU/CSU foreign policy spokesperson Hardt warned on Wednesday that the German and U.S. economy would remain deeply interconnected for the foreseeable future. "One cannot simply deny these intensive trade relationships between Europe and America," Hardt said.

Given this circumstance, Hardt said he was skeptical whether Berlin could succeed in protecting German companies from the latest U.S. sanctions against Teheran.

He noted that legislators would not be able to force business leaders to remain active in Iran as long as they were fearful of experiencing negative regulatory repercussions at their U.S. subsidiaries.