Venezuelan analysts have voiced concern over the possible expulsion of several Russian banks from SWIFT. SWIFT is an international messaging network that allows interconnection between banks. These actions could impact the Venezuelan economy as well, and other regions, by reducing their ability to move money. This is a highly dependent area on Russian bank services.
Russian Banks’ SWIFT Expulsion Could Affect Venezuela
Recent announcements of expulsion of Russian banks from SWIFT have raised concerns about potential effects on countries like Venezuela. Venezuela is closely tied to Russia’s banking system. Jose Guerra from Venezuela was among the first to discuss this possibility on social media.
Guerra stated:
It is important to understand what this means for Venezuela. It will be impossible to pay the Russian government money if it is not in Russian banks. Everything becomes complicated.
Guerra explained further that, if Venezuelan money is in Russian banks then companies such as PDVSA (the national oil company) would not be able to make payments through these accounts for goods or services. “If PDVSA has an account in a Russian bank excluded from SWIFT and wants to make a transfer to Banxico in Mexico, UBS in Switzerland, or a bank in Turkey to pay a supplier, it will not be able to do so that way,” he elaborated.
Although there are no reports confirming that Venezuela has access to Russian funds, it is known that the country relies more heavily on them due to sanctions.
The Devalued Ruble
There is another issue that Russian funds holding Venezuelan money could face, apart from the above-mentioned connection issue. After the SWIFT disconnections of Russian banks were revealed, the ruble experienced a drop of more than 30% in value. It has also been a problem for countries and institutions that have had savings converted to Russian fiat currencies.
Venezuelans who have funds in Russian banks are subject to this condition, which can get even worse if Ukraine’s conflict escalates. Juan Gonzalez, Director of the National Security Council for Western Hemisphere said that these sanctions would affect other continent countries. Gonzalez stated:
These sanctions against Russia are so strong that they will impact those countries that have economic ties with Russia. Venezuela will feel the pressure and Nicaragua, Cuba, and Nicaragua will feel it.
Venezuelans have been accused before of using cryptocurrency to avoid economic sanctions. However, current information regarding the country’s capabilities and cryptocurrency holdings is not available.
Do you have any thoughts about what the SWIFT disconnection by some Russian banks could mean for Venezuela and other countries? Leave your comments below.
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