Could the Saudis pressure Washington to axe Qatar's access to SWIFT?
There is nothing worse than a called bluff. One of these days Saudi Crown Prince Mohammed bin Salman will learn this. But, so far he hasn’t. Today was the initial deadline for Qatar to comply with his insane list of demands.
A list no one in their right mind thought Qatar would comply with. The question was never Qatar’s response, it was bin Salman’s and Saudi Arabia’s reaction once Qatar said no.
And, we have the answer. Qatar gets another two days to think about how they can more creatively say no again. At that point, they might actually face financial wrath from the Saudis.
The problem with that is the Saudis would have to have the backing of the U.S. at the most fundamental level. It would have to issue sanctions against Qatar that carry expulsion from SWIFT for these threats to mean anything in the long run.
Oh, the short-term pain of SWIFT expulsion for Qatar would be horrendous. But, in the long-run, it would free the country from that future Sword of Damocles. Just like Iran is now.
And, given that Qatar is being pushed quickly into the arms of Iran, who know a thing or two about surviving such a sanctions regime, that threat doesn’t carry the same weight it once did on the world stage.
No one is talking about SWIFT expulsion for Qatar at this point. But, this is looking forward, past the moment when bin Salman has to make good on his threat to cut Qatar off from doing business with banks in the region.
What happens when Qatar survives that?
The next step is to get the U.S. to back the play further, stepping up the consequences.
When the U.S. threatened Switzerland with SWIFT expulsion over their banking privacy laws interfering with U.S. anti-money-laundering laws, we saw the peak of the power of SWIFT. The Swiss caved but it set a dangerous precedent.
Because once you go nuclear, there’s no threat below that which is credible anymore. If you had the power to force a resolution without resorting to that option, you would have used it.
So, when the U.S. went through with Iran’s expulsion from SWIFT, Tehran began the development of competitive systems with the U.S.’s chief competition, i.e. China and Russia.
Now these countries have alternative electronic money transfer systems that can eventually, if needed, replace SWIFT.
And the U.S. knows this. This is why it seems unlikely that Trump is going to back bin Salman in this ploy to that end. But, it’s a possibility.
What’s the end game then if Qatar continues to say no?
If reports like this one are correct (and I do mean salt this liberally to taste), Trump is stuck now with a bad policy decision handed to him by his son-in-law Jared Kushner.
In the month since this spat between Saudi Arabia and Qatar started, the signals coming from the Trump administration have been mixed. Qatar is not our enemy but bin Salman is trying to force us to choose between them and Saudi Arabia. The longer this goes on the more likely nothing drastic will be agreed to by the U.S.
Bin Salman will be left twisting in the wind to double-down on his bluff again after it has already been called.
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