The US and EU are heading for a showdown over how to handle one of the linchpins of the global financial system following Donald Trump’s decision to re-impose sanctions on Iran.
The US has declared its determination to sever Iranian banks and the Tehran central bank from foreign financial institutions as it increases sanctions in the coming months. Part of doing so will probably involve ensuring the Belgium-based Swift network, whose financial messaging system facilitates cross-border payments, cuts off the Iranian banking system as it did before the Joint Comprehensive Plan of Action in 2015.
Swift, which sent more than 7bn messages last year, severed links with Iran in 2012 after the US pressured the EU to impose sanctions. Following the passage of the Iran nuclear deal in 2015, Swift reopened links.
The question now is whether the EU will co-operate with any US requests for those connections to be severed again and whether Swift will find itself caught in the crossfire of a transatlantic dispute over sanctions, analysts say.
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