Bank Tejarat in Tehran. The European Union is expected to act within weeks to effectively cut off major Iranian banks from participation in SWIFT. Image Credit: Bloomberg

Brussels: A financial clearinghouse used by virtually every country and major corporation in the world agreed on Friday to shut out Iran from its respected network, an unprecedented escalation of global economic pressure to halt Iran's suspected drive for nuclear weapons.

Quicker than a succession of slow-acting econ-omic sanctions, expelling Iran from the banking hub could put a sudden choke hold on its oil-dependent economy. The move was made under strong pressure from the United States and the European Union, which are looking for ways to derail Iran's nuclear programme quickly without a military strike.

"If SWIFT [The Society for Worldwide Interbank Financial Telecommunication] follows through on its public commitment to ban Iranian banks, it could sever the Iranian regime's financial lifeline," said Mark Dubowitz, an Iran sanctions expert advising the Obama administration. "It would also be a significant political embarrassment for the regime: Iran would be the first country in SWIFT's history to be expelled from what is the financial equivalent of the United Nations."

The European Union is expected to act within weeks to effectively cut off major Iranian banks from participation in SWIFT. It's a move of last resort, with risks ranging from huge inflation and financial hardship for ordinary Iranians to disruption and price increases on the world oil market. Iran could also retaliate in unpredictable ways.

The EU has already imposed the first embargo on Iranian oil, to take effect this summer. The strongest-yet US sanctions on Iran's lifeblood oil sector are due later this year.


SWIFT said in a statement on its website that it will comply with the expected instruction to cut off Iranian banks. SWIFT has previously brushed off international efforts to use its network to target countries or companies, telling enforcers that it does not judge the merits of the transactions passing through the portal.

SWIFT's statement said the decision essentially to kick out a member country "reflects the extraordinary and highly exceptional circumstances of significant multilateral international support for the intensification of sanctions against Iran."

The rapid expansion of what had been a gradual, years long effort to deter a weapons programme reflects rising alarm that Iran may be on the brink of developing a nuclear weapon. Israel, which takes seriously Iran's threat to eradicate the Jewish state, is openly considering a military strike on Iranian nuclear processing facilities.

There was no immediate response from Iran. Some US lawmakers are pushing for sanctions on SWIFT itself if it were to keep up its services to Iran. SWIFT lawyers are coming to Washington this week for meetings with Congress.