An alternative to SWIFT will help Iran and hurt the Mideast

A defanged Iran translates into a safer Middle East and a better world.

August 28, 2018 21:54
4 minute read.
An Iranian Officer of Revolutionary Guards with Israel flag drawn on his boots

An Iranian Officer of Revolutionary Guards, with Israel flag drawn on his boots, is seen during graduation ceremony, held for the military cadets in a military academy, in Tehran, Iran June 30, 2018. (photo credit: TASNIM NEWS AGENCY/HANDOUT VIA REUTERS)


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Sanctions hurt and Iran is feeling the pain. The Persian nation has started to feel the sting of the sanctions imposed upon them by the United States, and this is just the beginning, the first stage. The pain will intensify come November, when the second stage of sanctions takes effect.

That’s good news. A defanged Iran translates into a safer Middle East and a better world. It’s the simple truth. The not-so-good news is that sanctions also necessitate collateral damage. And there are industries, companies and countries that stand to sustain significant losses because the United States chose to impose sanctions on Iran.

The airline industry has already started to make accommodations to meet the new sanctions and is shuffling around their schedules. British Air, Air France and KLM have stopped all flights to Iran. The European banking industry is also beginning to share Iran’s pain. And so there is a plan afoot to find a way around the sanctions without defying the sanctions.

The US Congress, under an initiative led by former presidential hopeful Texas Senator Ted Cruz, is attempting to further step up the pressure on Iran and remove them from SWIFT, the money transfer service. SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication. It is the safest and best way to transfer monies almost everywhere in today’s world.

SWIFT took the banking industry out of wire and telex transfers and catapulted it into the world of telecommunication. The old system had no central code system for bank identification, it was not secured and it was, at best, haphazard. With SWIFT, more than 200 countries and tens of thousands of banks are in sync and connected.

The SWIFT system is based out of Belgium, but because of US banking involvement, it falls under US federal banking supervision. It is US involvement that makes using SWIFT safer and more protected than other methods of money transfer. It also guards against the pitfalls of money laundering – a favorite tool of terrorists and drug kingpins – and it also serves as a protection against potential financial crashes. As a supervising body, the United States receives information about all transactions taking place via SWIFT.

In essence, the combination of SWIFT and US law makes certain that banks are not used to help carry out nefarious, destructive and murderous deeds. That includes terrorist activities perpetrated by Iran, ISIS and al-Qaeda around the world.

Certain forces in parts of Europe and in China, however, are trying to create an alternative to SWIFT that will avoid those safeguards that are so valuable.

German’s Foreign Minister Heiki Mass is at the forefront of the movement to create another, independent, SWIFT-like money transfer system specifically in order to keep the United States off their back and out of their Iran-related hair. If the plan works, the implications are devastating and the impact will be far greater than US sanctions against Iran.

Mass’s plan was outlined in a very long piece in the German daily Handelsblatt. The foreign minister laid out a strategy to check the United States and to create a counterbalance to the United States. He used the term “counterbalance” several times, especially when pointing out how the United States has overstepped their role and crossed, to use his expression, red lines. Translation: the United States is interfering big time with their business dealings with Iran.

Mass wrote: “In this situation, it is of strategic significance that we say clearly to Washington: we want to work together, but we will not allow you to act over our heads to our detriment... That is why it was right to legally protect European companies from sanctions... That is why it is indispensable to strengthen European autonomy by setting up payment channels that are independent of the U.S., creating a European monetary fund and setting up an independent SWIFT system.”

If Europe follows through and succeeds in developing an independent money transfer system, there is certain to be a flaw in that system’s security network. A central axiom in that system will be the protection of anonymity, and that is nothing but a glorified open invitation for those who engage in terrorism and illegal activity. It will make cryptocurrency – bitcoins and the like.

China would love this new banking scheme. The underbelly of the world will jump all over it. The lack of supervision and the fact that there will be no reporting or regulations are too enticing to pass up. US banking regulations are very strict, much stricter than in Europe or in China.

Creating an alternative to SWIFT will successfully insulate Iran’s banking industry from US actions and prevent the ultimate victory over Iran that the United States is working toward. It has the very real potential to destabilize the region by keeping Iran above water and out of reach.

If successful, this will be a huge blow to American banks, which have until now, through the use of SWIFT, been the conduit for world business.

Those promoting this suggestion want to help themselves by helping Iran. They are being short-sighted. What they will really be doing is hurting the West and hurting the Middle East – including, of course, Israel.

The writer is a columnist and a social and political commentator. Watch his new TV show Thinking Out Loud on JBS-TV.

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