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Q: What do Western governments want from SWIFT? A: They want SWIFT to enforce sanctions on Iranian banks by not allowing the banks to send or receive financial messages. Western nations hope that this will make it much more difficult for Iran to buy and sell goods and services, increasing the financial pressure on Iran. Q: Why is this strategy being pursued now? A: It's part of a broader effort by Western nations to tighten economic sanctions that so far have not forced Iran back to nuclear talks. High global oil prices have boosted Iran's oil income and blunted the effect of other economic sanctions. It also may help the U.S. buy time to persuade Israel not to launch a pre-emptive military strike on Iran. Q: Will Iran be able to sell its oil without access to SWIFT? A: Probably. But Iran could have difficulty selling as much oil as it would like and could be forced to accept below-market prices. Banks in countries such as India and China, which are still planning to buy Iranian oil, could communicate outside of the SWIFT network and use wire transfer services to send money to Iran. Iran could also accept hard assets such as gold for its oil, though that would be inefficient and risky. Even if financial institutions can find a way to trade with Iran, they may choose not to in order to avoid being banned from doing other business with Western nations. Q: Are there any other ways Iran might work around the sanctions? A: SWIFT outsources some of its message processing to regional contractors. That practice could open a loophole for Iran. Iran could try to mingle some of its oil with oil that flows through international pipelines, which would help mask its origin. Iran could also accept payment for oil in a bank outside of Iran and that money could then be used to buy goods or services that then flow into Iran.
[Associated
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