A third package of EU sanctions could see Russia cut off from the international payment system, a radical move that would also hit the bloc.
Russia's expulsion from SWIFT, the widely-used system of financial transactions, is back on the table for a third round of EU sanctions, despite previous attempts to exclude it.
As Moscow continues its invasion of Ukraine, Western countries are coming under increasing pressure to come up with extreme measures that would force the Kremlin to agree to a ceasefire and stop the violence.
EU leaders have already approved two rounds of sanctions that target Russia's financial, energy and transport sectors, tighten export control, including semiconductors, and restrict visa issuance. The penalties also include travel bans and the freezing of assets of a President Putin's inner circle.
Together, the bloc aims to cripple at least 70% of Russia's banking system in order to cut off the funds needed to bankroll the invasion.
"Second wave of sanctions with massive and severe consequences politically agreed last night," said European Council President Charles Michel. "Further package under urgent preparation."
But the Kremlin appears undeterred by threats of sanctions, which the EU is imposing in coordination with the United States, the United Kingdom, Norway, Canada, Japan and Australia.
All eyes turn now to SWIFT, which is seen as a last-resort, dramatic measure to change Moscow's mind.
EU foreign affairs ministers flew to Brussels on Friday to finalise the new raft of sanctions and discuss a third sanctions package, in which the payment system is back on the table.
"Many countries want to go beyond what's being agreed today," Simon Coveney, Ireland’s Foreign Affairs Minister, told Euronews before heading to the ministerial meeting.
"I understand that there is already a third package of sanctions that includes the [SWIFT] system, which may well be passed in the next few days," he added.
From Paris, French Finance Minister Bruno Le Maire did not categorically rule it out.
"This is the very last resort, SWIFT, but this is one of the options that remains on the table," he told reporters.
The prime ministers of Ireland, Belgium and the Netherlands have previously called on the EU to be more ambitious in its response and seriously consider Russia’s expulsion from SWIFT.
Poland, Latvia, Lithuania and Estonia are also believed to support the move, but Germany, Italy, Hungary and Cyprus have expressed their concern, Euronews understands.
EU sanctions have to be approved by unanimity and require the green-light from the 27 member states.
"It is a possibility some member states didn't think it would be wise to do it at this stage, but it's still distinctly on the table," Frans Timmermans, the European Commission's Vice-President, told Euronews.
"We should be very clear that we will not refrain from the harshest sanctions given what's happened: there's a war on in Europe."
"Over the last few days, the sanctions have come to a level which is almost good enough to affect the calculus of Vladimir Putin."
Meanwhile, Ukrainian officials continue to push for the bloc to turn words into action.
"BAN RUSSIA FROM SWIFT and kick it out of everywhere," Dmytro Kuleba, Ukraine's foreign affairs minister, wrote on Twitter in an impassioned plea.
He later tweeted that Italy had "assured" him it will support the SWIFT ban.
What is SWIFT and why is it so important?
The Society for Worldwide Interbank Financial Telecommunication (SWIFT) is a high-security intermediary system that allows banks and institutions around the world to carry out financial transactions – that is, ordinary payments – among each other.
The system was founded in 1973 and is headquartered in La Hupe, Belgium. Today, SWIFT links more than 11,000 financial institutions in more than 200 counties and territories, making it an essential piece of our globalised, fast-paced economy.
Crucially, SWIFT is used by EU member states to pay for Russian gas and oil, two resources that represent the backbone of the Russian economy.
Since the EU is Russia’s number one energy client, many are now calling for the country’s expulsion from SWIFT in order to deprive Moscow of the much-needed funds to sustain the ongoing invasion of Ukraine.
"If Russia is no longer able to actively participate in the international financial system, that has a major impact," Fabian Zuleeg, Chief Executive at European Policy Centre (EPC), told Euronews.
"It makes it very difficult to run financial institutions within Russia and it cuts off, very effectively, from outside finance. So, I think this is a move that would have helped."
Why is expelling Russia from SWIFT considered risky?
But the move is risky. A total expulsion from SWIFT would mean that virtually all EU-Russia trade would come to a sudden halt, disrupting a significant part of the bloc's economy.
Russia is the EU's fifth-largest trade partner: in 2020, total trade in goods between the two amounted to €174.3 billion, of which €79 million were EU exports, according to the European Commission.
If this enormous amount of money were to disappear overnight, member states would feel the pain in an instantaneous and painful way. Gas prices would skyrocket, sending consumer bills to impossible highs and forcing many factories to stop production altogether.
“[SWIFT] is always an option. But right now, that’s not the position that the rest of Europe wishes to take,” said US President Joe Biden when asked about the possibility.
"If Russia is disconnected from SWIFT the economy will implode, it will be a catastrophe for the Russian economy. And if the major oligarchs are sanctioned, then Putin's own wealth would be wiped out, and would be completely inaccessible. And those are two very material things to Vladimir Putin," said financier Bill Browder, head of the Global Magnitsky Justice Campaign, named after his former lawyer who was murdered in a Russian jail.
"Does he [Putin] stop attacking Ukraine on the day that happens? Surely not. But does it put him in a position where everything that he's worked for, for the last 20 years, has been sacrificed, surely yes. And at that point we are then in a position where we have some leverage," Browder told Euronews.