26 February 2021, Friday, 3:45
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Economist: Disconnecting from SWIFT Will Be a Bomb for the Regime

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Economist: Disconnecting from SWIFT Will Be a Bomb for the Regime

Economic sanctions against the illegitimate government will expand.

Economist Ales Alekhnovich, Sviatlana Tsikhanouskaya's representative for economic reforms, in an interview with Radio Svaboda, told why both Europe and Belarus have changed the idea of the need for economic sanctions and explained the consequences of the disconnection of the country from the SWIFT system are.

- What is your position on the possibility of introducing economic sanctions against the Belarusian regime? In what areas do you consider these sanctions necessary, to what extent? Should they concern only enterprises directly related to the regime, or should they be broader, more structural?

- The illegitimate regime that has seized power in Belarus today is, in fact, pursuing an occupation policy. The repression against civilians is simply off the scale. We must all protect our people from repression. Of course, the regime has a monopoly on the use of armed force in the country; we cannot resist the AMAP, special forces, or the army.

Therefore, we are looking for other mechanisms of legal pressure on the regime. In order to achieve the four demands voiced by the protesters, the strike committees, the general public - to stop repression, release political prisoners, punish criminals, and hold new free elections.

The international economic sanctions you asked about are just one of the pressure elements. There are also internal sanctions - for example, refusal to purchase goods and services of those enterprises that support the regime. These are personal sanctions against those who falsified elections, rectors who fired students for political reasons, directors of state enterprises who fired their employees for political reasons, heads of law enforcement agencies, ideologists, state propaganda employees who lie and incite hostility. These are strikes at enterprises, information campaigns.

But we also have a positive agenda; we are not only working on the pressure on the regime but also creating support programs for the victims and programs of economic support for democratic Belarus, which will take effect immediately after the political crisis is resolved.

- For many years, the issue of economic sanctions was perceived very ambiguously even among opposition politicians and analysts. It was said that the sanctions could harm not only businessmen close to the authorities but also ordinary people. Has this logic changed now, is there now a certain unity in relation to this topic?

- Indeed, even my thought was different 10 and 5 years ago. However, the situation has changed, and now there is more and more understanding that it is necessary to resist the authorities, including through economic sanctions. Firstly, because the level and massiveness of repression are incomparable with anything that happened before - bullying, torture, murder. In addition, the authorities themselves are destroying the Belarusian economy, closing down small businesses that joined the nationwide strike on October 26. Some businessmen and citizens are forced to emigrate.

Therefore, the opinions of experts and politicians are now consolidated around the need for sanctions against the regime. The question is how to do this most effectively and correctly in order to minimize the consequences for people.

A powerful impetus that changed the opinion of many politicians in the West was the assassination of Raman Bandarenka. After this murder, and, in general, in recent years, many Belarusians are calling for the introduction of economic sanctions against the regime.

- Isn't the opposite thought being expressed - that the introduction of real economic sanctions can further embitter the regime?

- The level of repression already is so high that it is difficult to imagine what "anger" means. The massive use of weapons against people? It is hard for me to imagine that the repression can be increased compared to what it is now when the authorities can detain over a thousand people during the day.

It must be understood that the deployment of sanctions is a gradual and step-by-step process. First comes the lack of recognition of the authorities, their legitimacy. We have passed this stage; most of Europe, the USA, and Canada have not recognized the legitimacy of the current government. The next stage is personal sanctions against individual officials; this also already exists. The third stage is already targeted economic sanctions, including the freezing of cooperation with state-owned enterprises, freezing the accounts of these enterprises abroad.

We are just starting this third stage. The European Commission is now detailing the package of economic sanctions; this process continues. If repressions continue, and targeted economic sanctions do not produce results, then a transition to more global sanctions, semi-sectoral ones - for example, a ban on financing state-owned banks, or even sectoral ones (disconnecting Belarus from the SWIFT system) is possible.

- It is sometimes said that the West can be very fast to collapse the Belarusian economy if, for example, it stops buying Belarusian oil products. It would really be a collapse of the Belarusian budget by 30 percent, no less. Can it come to this?

- The export of oil and oil products from Belarus in 2019 amounted to almost $ 6 billion, and partly this is export to or through the EU countries. Therefore, indeed, even one such sanctions step would hit the economy very hard and quickly. After all, Belarus cannot effectively redirect these flows somewhere to other regions. And I think that the threat of such sanctions could change the repressive policy of the regime inside Belarus.

- However, can the threat of real economic sanctions stop repressions in Belarus? Until now, Minsk, it seems, simply does not believe that the West can go for real economic, and not just personal, sanctions.

- In fact, there were no economic sanctions against Belarus from the European Union before. Now the situation is different. There is a consensus in the EU countries that it is necessary to respond to the occupation policy pursued by the regime in Belarus. The European Union has already announced the third package of sanctions while stressing that no more euro will get to the Belarusian state authorities.

And these are quite large sums. In 2019, the European Bank for Reconstruction and Development and the European Investment Bank implemented or began implementing projects worth $ 800 million in Belarus. For example, for the modernization of road infrastructure, urban sewage treatment plants, energy and environmental projects. These are long-term projects that really help improve the life of Belarusians. About 30 million euros were grant (gratuitous) assistance to Belarus from the European Commission. Now this money will be gone. Therefore, this economic pressure is already tangible. And if repressions in Belarus continue, then economic sanctions will expand and deepen.

- Separate discussions are caused by the idea of disconnecting Belarus from the SWIFT banking system. Explain what this disconnection might mean in practice?

- SWIFT is the most popular international payment system. Disabling it would lead to a blockade of various international transfers, both for import-export and for private spending of citizens. This is very serious and rarely happens in international practice. In the world, this happened with Iran and North Korea. This is a very distant prospect for Belarus; I would not say that this is a matter for the near future.

Disabling SWIFT is like a nuclear bomb in banking. This can be used as a last resort when all other mechanisms are no longer working. I mean that if the Belarusian regime intensifies repressions, then such a step cannot be ruled out. This should remain a threat to the regime and protection for the Belarusian society. After all, the very same nuclear weapons for many countries are not in order to use them, but so that no one can use them. Therefore, the threat of disconnecting Belarus from SWIFT is, in a sense, such protection.