Syrian central bank mulls joining Russian SWIFT financial network

The Director of Banking Operations in the Syrian Central Bank discussed the possibility on Tuesday of Syria joining Russia’s financial messaging network – an alternative to the western SWIFT system.

The Director, Dr Fouad Ali, told pro-regime paper Tishreen that while Syria "hopes" that Russia's financial system will expand, Syria still has reservations about joining the network.

"Currently it does not benefit us financially, but we would use it when it widens and includes China, Iran and other BRIC countries," Ali said.

SWIFT, the Society for Worldwide Interbank Financial Telecommunication, is one of the largest financial messaging networks in the world and is used in over 200 countries. It enables banks to communicate with one another to make international payments.

In March, the US, EU and UK blacklisted seven Russian banks from the SWIFT network as part of a larger punitive regime against the country for its invasion of Ukraine.

The SWIFT ban came alongside financial sanctions and US payment firms VISA and Mastercard suspending operations in Russia due to the invasion of Ukraine.

Russia founded its own alternative to the SWIFT network in 2014 after the US threatened to cut Russia out of SWIFT in retaliation for its invasion of eastern Ukraine.

The network, SPFS, remains limited in scope, with just a little over 23 foreign banks connected to the network since 2020.

Since the slew of financial sanctions against Moscow, it has shopped SPFS to friendly countries to help ease its economic isolation.

At the Shanghai Cooperation Organisation (SCO) conference in August, a Russian economic official asked attending countries to join the network "to ensure uninterrupted cooperation between our banks."

Syrian officials had previously signalled their willingness to join SPFS, with the Syrian Ambassador to Moscow saying in July that it could provide relief from western sanctions.

However, analysts have said full adoption of the payment network is unlikely.

"The Syrian regime does not want Russia to know the sources of all of its money and its trade movements," Younes al-Karim, the executive director of the Economic Forum, told The New Arab.

Russia, Syria and Iran, have grown closer economically as a result of being under western sanctions.

Russia in particular has succeeded in winning contracts in key economic sectors of Syria, such as phosphate and natural gas.

Its ability to obtain investments in Syria has been helped by the skittishness of China and the EU, both of which are hesitant to engage in Syria due to western sanctions, al-Karim explained.

In 2020, Iranian officials announced that Syria and Iran were creating a bilateral version of SWIFT to facilitate financial cooperation between the two countries. Despite the official saying that the system was in its "final stage" of preparation, it has yet to come to light.

Trading with Iran and Russia is often more expensive for Syria than it would be with other countries, but the regime has little choice due to trade sanctions, al-Karim said.

Syria suffers from a lack of foreign currency, increasing the price of imported goods and devaluing the national currency. The Syrian lira has decreased almost 100 times in value relative to the dollar since the Syrian revolution in 2011.