US-Europe divide on SWIFT could derail Ukraine peace talks – Responsible Statecraft

If allowing Russia limited access to the payment service moves negotiations forward, it's well worth it
A disagreement between America and Europe on reducing low impact Russia sanctions may have big consequences for peace talks on Ukraine. Tariff wars will only complicate matters. President Trump may need to weigh in to break the deadlock.
For the first time since the Ukraine crisis bubbled up in 2014, a split has emerged within the Western alliance on sanctions policy towards Russia. U.S.-brokered peace talks in Saudi Arabia late last month edged Russia and Ukraine closer to reviving a 2022 Black Sea grain deal through a maritime ceasefire. However, what promised to be a helpful, small step forward became hijacked by European and Ukrainian efforts to block minor concessions to Russia.
As part of the proposed revival of a maritime ceasefire, a European spokesperson was quick to shut down suggestions that Russia might receive sanctions relief. At the Paris Summit of the coalition of the willing on March 26, European leaders and President Zelensky weighed in further, calling for no sanctions relief for Russia, repeating the line that more sanctions are key to bringing Putin to the negotiating table.
The U.S. and Europe are no longer in lockstep on sanctions policy. Since 2015, the Ukrainian government has worked hard both to encourage Western powers to impose more sanctions on Russia and to minimize any possibility of sanctions removal as part of peace efforts. Still reeling from the seismic shift in U.S. policy towards Ukraine under President Trump, Europe is siding with Ukraine.
Yet, the argument over sanctions relief appears somewhat of a phoney debate that has the potential to disrupt meaningful steps towards a much-needed peace.
Specifically, this argument over the maritime ceasefire has been triggered by the question of whether to allow some limited access by a major Russian bank to the payment messaging service SWIFT. That would allow importers to make payment for Russian agricultural exports more easily. This is a tiny concession in the context of a Russian sanctions regime that includes more than 20,000 measures against individuals, companies and types of goods.
Agricultural exports, while significant, are small compared to Russia’s oil and gas exports which continue to make up the bulk of Russia’s $433 billion total exports in 2024. The proposed limited easing of sanctions on SWIFT usage would not extend to relief for Russian trade in oil and gas.
But, in any case, the impact of the SWIFT ban is questionable. When war broke out in 2022, it was described as the “nuclear option.” Severing Russia’s ability to transact international trade would have had devastating short-term consequences on the volume of its import revenue, so the argument went.
But that didn’t work.
In 2022 and following the outbreak of war, Russia generated a record-setting $592 billion from exports, and exports since that time have returned to the pre-war trend. There is little evidence that partially excluding Russia from SWIFT has had any substantive impact on Russia export volumes.
The idea that the SWIFT option was nuclear was only vaguely valid in 2014, the year that Western sanctions were first imposed on Russia. In that year, Russia exported more ($497 billion) than it exported in 2024, as the price of Brent crude hovered about $100 per barrel for the first half of the year, compared to around $72 today.
However, European nations vetoed U.S. moves to cut Russia off from SWIFT. They did so precisely because it would have had nuclear consequences for European energy security, at a time when Europe was more dependent, compared to now. It would also have been difficult in 2014 to remove Russia from SWIFT because Russia had a seat on the SWIFT Board, by virtue of the volume of its international financial transactions.
In the eight years of indecision that followed, Russia worked hard to reorient its economy away from overdependence on dollar denominated trading. This helps to explain why its economy has remained resilient since the war started.
The SWIFT ban is not, in any case, a sanction per se, but rather an impediment on the processing of international payments, by cutting access to payment messaging services. Hard currency doesn’t flow through SWIFT. Sanctioning SWIFT has stimulated a race to create alternatives to a legacy system that is now over 50 years old through crypto networks. Russia, China and other countries have been developing their own alternatives too.
As Russia has progressively shifted its exports to Asia, these transactions are increasingly settled in local currencies, including yuan, rupees and rials.
The agreement in Saudi to allow one Russian state bank to access SWIFT for agricultural exports will help smooth the process. But it won’t boost the volume of those exports, which have continued throughout the war.
Of course, Russia will value any easing of access to SWIFT because of the signal it sends of a gradual normalization of relations, in particular with the U.S. That would also build confidence about the possibility of more substantive sanctions relief as a longer-term peace process unfolds.
However, President Putin will also know that this is essentially an argument over a minor sanctions concession with negligible economic benefits for his country. He’ll be aware of the potential for tension to build between President Trump and European leaders, as Zelensky urges Europe to resist any compromise advanced by the White House.
In the context of President Trump’s April 2 announcement on the imposition of tariffs against the European Union and other countries, Putin will watch as relations are further soured. Still eking out small gains on the battlefield most days, Putin can afford to sit back and claim that the Europeans and Ukrainians are blocking progress, and that he’s the reasonable guy.

The European Union likes to portray itself as the last principled bastion of the “rules-based international order” and global justice standing. Yet its true commitment to that order is a bit suspect. By applying double standards, the EU is actually undermining it, rendering hollow its own exhortations to other international players to respect it.
The collisions around the International Criminal Court (ICC) are a case in point.
The EU itself has no standing with respect to the ICC. That means that its members have a sovereign right to decide to join the Rome Statute that established the court — or not. That said, since the inception of the ICC, Brussels has encouraged its current and aspiring members, as well as other nations, to ratify the 1998 Rome Statute and support the Court’s work.
The EU’s leverage on this matter is more political than legal, but it appears to be deploying it selectively, depending on who the Court chooses to place in the dock.
This week during a visit of Israeli Prime Minister of Israel Benyami Benjamin Netanyahu to Budapest, Hungary announced that it will withdraw from the ICC.
The catch, however, is that the ICC has issued an arrest warrant against Netanyahu, having charged him for war crimes and crimes against humanity committed during Israel’s ongoing campaign in Gaza in which more than 50,000 people, mostly civilians, have been killed in retaliation for Hamas’ October 7, 2023, terrorist attacks (thousands more are presumed dead, still missing under rubble). Hungary’s withdrawal from the Rome Statute, assuming it is ratified by parliament, could still take months to take legal effect. Nonetheless, so long as the process is not finalized, Hungary has an obligation to arrest Netanyahu during his four-day stay.
The EU’s reaction has thus far been muted. The European Commission’s spokeswoman Anita Hipper, reacting to the reports of Hungary’s intent to withdraw from the ICC, only offered platitudes about the EU’s support for the Court, and predicted “deep regret” if Hungary were indeed to leave.
It remains to be seen how the EU’s top brass will react, should such be the case. However, that is not the point. When the EU summons political will, it could theoretically apply sufficient pressure to prevent undesirable outcomes before they materialize, rather than having to react after the deed.
In 2023, for example, the EU exerted pressure on South Africa concerning the potential attendance of the BRICS summit there by Russian President Vladimir Putin, who by then, like Netanyahu now, had already been indicted by the ICC for war crimes in Ukraine. Brussels reminded South Africa that, as a member of the ICC, it had an obligation to arrest Putin if he were to show up in the country, and that his status as a head of state did not grant him any immunity in this case.
The statements of EU officials, including the then-High Representative for Foreign Affairs Josep Borrell, generally expressed a “with-us-or-against-us” kind of mindset. It left little room for countries like South Africa, which sought to chart a neutral course — neither condoning the Russian invasion of Ukraine nor joining in the U.S.- and EU-promoted sanctions and isolation of Russia.
Such professions of neutrality — common in the Global South — were routinely dismissed as a sign of “siding with Putin.” While there were no overt threats of sanctions, European diplomats at the time hinted that Pretoria’s access to European markets and foreign investment could be affected should Pretoria fail to comply with its ICC obligations.
The EU pressure and the prospect of strained ties clearly played a role in the internal deliberations in South Africa; in the end, Putin did not attend the BRICS summit in Johannesburg and sent his foreign minister, Sergei Lavrov, instead.
No such leverage was apparent in the case of Netanyahu’s visit to Hungary. That is ironic as Brussels already has a rather confrontational relationship with the Hungarian prime minister. Brussels and Budapest have clashed regularly over domestic governance issues, particularly regarding Orban’s implementation of his “illiberal democracy,” in Hungary. Yet what really made Orban a pariah in Brussels is his insistence on opening space for diplomacy with Moscow to bring the war in Ukraine to an end.
Frustrated with Orban’s position (which, in fact, is widely shared across the political spectrum in Hungary, but also, increasingly, in other EU countries), senior officials in Brussels are reportedly discussing ways to get Hungary expelled from the EU altogether.
Yet, it would seem that Brussels is only exercised with Orban’s perceived flirting with Putin, but not Netanyahu, despite their both having been indicted by the ICC. Indeed, if the EU’s concern with the ICC and global justice were as consistent as it claims, it could already consider the failure to comply with the ICC orders as a breach of the rule of law — to add to the pile of other, preexisting disagreements Brussels has with Budapest. Yet political will is needed for the European Commission to move in that direction, and there is none.
Perversely, Orban is being hammered for all sorts of issues, including diplomatic initiatives to end the war in Ukraine, but gets a pass for hosting a man accused of war crimes.
And there lies the crux of the matter: The Brussels “blob” no longer appears to be worried about optics. Commission President Ursula von der Leyen is as staunch a supporter of Israel as she is a Russia hawk. The contrast is even more pronounced in the case of the new EU high representative for foreign affairs, former Estonian Prime Minister Kaja Kallas. She is obsessively focused on Russia. Just this week, she spoke in the European Parliament about the need to establish a special tribunal on Russian crimes in Ukraine — presumably in addition to Putin’s ICC indictment. Yet a few days earlier, she talked up friendship and cooperation at a meeting with Israel’s foreign minister, Gideon Saar.
Of note, she also parroted hawkish Israeli talking points about Iran posing an “immense threat to the region and global stability” even though that has never been the EU’s official position.
Such arbitrariness could create a domino effect: Hungary is not the only Israel’s ally in the EU. Other countries, such as the Czech Republic and Austria, may follow suit by ignoring their obligations under the ICC, literally with no consequences. And Netanyahu will have every incentive to exploit these cracks in the EU to vindicate his claim to his increasingly restive domestic audience that he is respected and authentic statesman.
When the EU pressures other countries, such as South Africa and others in the Global South, to align with its geopolitical priorities (on Ukraine/Russia), while giving itself a pass when convenient (on Israel/Palestine), it grates in other parts of the world and undermines the very case for the “rules-based international order” that the EU purports to defend and exemplify.
Between 2015 and 2018, the United States supplied Saudi Arabia with tens of millions of dollars worth of jet fuel in support for the kingdom’s bombing campaign in Yemen. Seven years later, the Saudis refuse to repay most of their debt. And they are being rewarded for it.
A Department of Defense report that was sent to Congress last October, reviewed by Responsible Statecraft, and previously unreported suggests that Pentagon officials are becoming increasingly desperate to recoup an outstanding $13.7 million in fuel costs that Saudi Arabia owes the U.S.
“DLA energy and US central command will continue to engage the Saudi Ministry of Defense and Ministry of Finance through United State Military Training Mission – Saudi Arabia scheduled meetings, various MOD/MOF and DoD Key Leader Engagements, face to face meetings within the CONUS and Saudi Arabia, and through email correspondence until the SLC fuel debt is paid in full,” the report stated.
In 2018, the Pentagon realized it had made an accounting error. The Pentagon had undercharged Saudi Arabia and the UAE by $36 million for jet fuel and another $294 million in flight hours for U.S. tanker aircraft that refueled Saudi and Emirati warplanes in midair.
With Washington’s help, the arrangement allowed Saudi and Emirati jets — which, besides actual military targets, bombed hospitals, schools, marketplaces, and weddings — to stay in the air for up to three hours instead of a mere 15 minutes. But instead of the two oil-rich Gulf nations footing the bill for the aerial-refueling process, as is required by law, it was the American taxpayer.
Seven years later — while the larger flight hours bill has been paid — Saudi Arabia has yet to pay $13.7 million worth of its jet fuel debt. The UAE, which owed the U.S. around $15 million for jet fuel, has reimbursed Washington in full.
The kingdom certainly does not lack the funds. The Saudi sovereign wealth fund oversees $925 billion in assets.
Rather, Saudi Arabia appears to be pleading ignorance; the Intercept reported that Saudi officials told representatives of the Defense Logistics Agency and U.S. Central Command last year that they were “not aware of the outstanding debt and requested some additional time to investigate the issue.”
This defense is at odds with the recent Pentagon report, which maintains that Department of Defense officials are exhausting various avenues to bring up the debt, including email, virtual meetings, and in-person meetings with multiple agencies.
The report also notes that the last payment, just over $1 million, was made in 2023. The Defense Logistics Agency confirmed it submitted the report, but did not elaborate if there have been any further payments since it was submitted in October.
Annelle Sheline, a research fellow at the Quincy Institute, told RS that Saudi Arabia’s refusal to pay up speaks to the “privilege the Saudis enjoy with the U.S., as they fear zero repercussions for failing to repay a debt to American taxpayers.”
Despite groveling about an unpaid debt privately, the U.S. continues to reward Saudi Arabia. Since 2018 when the accounting error was discovered, Washington has showered the kingdom with $14 billion in major arms sales, according to a tracker from Forum on the Arms Trade. Most of those transfers took place during the presidency of Joe Biden, who memorably fist-bumped Crown Prince Mohammed bin Salman after promising to make the de facto Saudi ruler “a pariah” during his 2016 campaign for office.
Trump is now reportedly eyeing Saudi Arabia as the destination for his first overseas trip next month, just as he did during his first term.
“I said I will go if you put a trillion dollars to American companies,” Trump told reporters in March. “Meaning the purchase over four years of a trillion dollars. They agreed to do that. So I am gonna be going there.”
While he’s at it, he could ask for the couple million in pocket change that Saudi Arabia owes the American taxpayer. The paltry $13.7 million sum may be small, but the foot-dragging speaks volumes.
The NATO foreign affairs ministers’ meeting began in Brussels on Thursday amid frosty U.S.-EU relations, brought upon largely by the Trump administration’s recalculus toward a negotiated political solution for the Ukraine war.
At the meeting, U.S. Secretary of State Marco Rubio reiterated the Trump administration’s commitment to NATO — assuming its members bolster their defense spending, a talking point repeatedly pressed by the Trump team.
“The United States President Trump's made clear he supports NATO, we're going to remain in NATO,” Rubio explained to reporters in Brussels. “The only way NATO can get stronger and more viable is if our partners, the nation states that comprise this important alliance, have more capability.”
“A full-scale ground war in the heart of Europe is a reminder that hard power is still necessary as a deterrent,” Rubio explained, referencing the three-year-old Ukraine conflict. He hopes to leave the NATO foreign ministers’ meeting with a commitment from allies to spend 5% of GDP on defense.
En route to the meeting, NATO head Mark Rutte likewise emphasized Europe’s recent commitment to upped defense spending. “It's my assumption that what we need to spend, the Canadians and Europeans together, will be north of 3%,” he said.
Meanwhile, Russian President Vladimir Putin has sent investment envoy and top negotiator Kirill Dmitriev to Washington to meet U.S. special envoy Steve Witkoff.
Dmitriev said on social media that the meeting was meant to facilitate a U.S.-Russia dialogue “completely destroyed under the Biden administration.”
The visit comes amid what appears to be snags in Trump’s efforts to get both sides to the negotiating table.
"We take the models and solutions proposed by the Americans very seriously, but we can't accept it all in its current form," Deputy Foreign Minister Sergei Ryabkov told Russian magazine "International Affairs" in an interview released on Tuesday.
"As far as we can see, there is no place in them today for our main demand, namely to solve the problems related to the root causes of this conflict. It is completely absent, and that must be overcome,” Ryabkov explained.
Trump, meanwhile, had also rejected Russia’s recent suggestion that a third party take control of Ukraine as part of a negotiated end to the war. Namely, the Russians want the United Nations and other countries to facilitate a transitional administration in Ukraine, which would include overseeing elections.
Moscow’s suggestion comes in tandem with its repeated allegations that Ukrainian President Volodymyr Zelensky, whose term expired in May 2024, is no longer Ukraine’s legitimate leader.
Trump administration officials had initially hoped for a Ukraine peace keeping deal in upcoming months. Now, due in part to statements like Ryabkov’s, they’re recalculating their efforts for a longer diplomatic road ahead.
“The White House has extensively engaged Russia on the central items of a peace deal, including NATO membership for Ukraine and questions regarding territorial claims, but it has so far proven difficult to arrive at anything approaching a consensus on these issues between the war’s four main stakeholders: Ukraine, Russia, Europe, and the U.S.,” Mark Episkopos, a research fellow at the Quincy Institute for Responsible Statecraft’s Eurasia Program, told RS.
“The problem is that Moscow will not agree to a complete ceasefire without a roadmap for settling these issues on terms it considers favorable, and the West lacks the coercive leverage necessary to get it to significantly dial back its demands. Breaking this diplomatic logjam requires working toward a shared set of viable aims with Kyiv and European leaders, and engaging Russia on a wider diplomatic front with the goal of inducing Moscow to soften its baseline conditions for war termination in Ukraine.”
This is unwelcome news for the American president, who, on Sunday, had said he was “pissed off” at Putin for slow deal making progress. Indeed, Trump threatened Russia with additional tariffs.
"If Russia and I are unable to make a deal on stopping the bloodshed in Ukraine, and if I think it was Russia’s fault…I am going to put secondary tariffs on oil, on all oil coming out of Russia,” Trump threatened.
Some Europeans, meanwhile, are throwing more money — and troops — at the equation. Berlin pledged a further €130 million ($140 million) in stabilization funding and humanitarian aid for Ukraine on Tuesday.
"We will make it clear to the American side that we should not engage with Putin's stalling tactics," outgoing German Foreign Minister Annalena Baerbock said in a statement about her Tuesday trip to Kyiv. "It is Putin who is playing for time, does not want peace and continues his illegal war of aggression.”
During her trip to Kyiv, Baerbock said Russia should accept a Ukraine ceasefire without conditions.
And on Tuesday, Berlin, which will be sending up to 5,000 soldiers to Russia-bordering Lithuania, launched its first permanent troop deployment since World War II. "We have a clear mission. We have to ensure the protection, freedom and security of our Lithuanian allies here on NATO's eastern flank,” German Brigadier General Christoph Huber said in a statement.

According to Al Jazeera, Finland has left the Ottawa convention banning antipersonnel landmines. It follows fellow Ukraine allies and Russia neighbors Estonia, Latvia, Lithuania and Poland, who did so last month, citing the perceived Russian threat. "Withdrawing from the Ottawa Convention will give us the possibility to prepare for the changes in the security environment in a more versatile way," Finnish Prime Minister Petteri Orpo explained the decision at a press conference.
Ukrainian incursions continue into Russia’s Belgorod region. A Finland-based military analyst told Newsweek, however, that while Ukrainian forces have advanced to several villages in the area, they’re unlikely to threaten critical Russian infrastructure or the city of Belgorod itself.
According to CNN, Russia’s ongoing conscription drive, the largest in years, has heralded about 160,000 new troops between the ages of 18 and 30.
The latest State Department briefing addressed recent Ukraine war negotiation hiccups. “There was an idea from Russia about a temporary administration that was not appreciated by the president,” State Department spokesperson Tammy Bruce said, citing Russia’s recent proposal for a third party to control Ukraine. “Ukraine is – well, I don’t think I need to remind everyone, but it’s a good reminder – is a constitutional democracy. Governance in Ukraine is determined by its constitution and the Ukrainian people.”
Despite the hurdle, Bruce emphasized the Trump administration’s push for a negotiated political solution in Ukraine. “We are committed to the diplomacy necessary to achieve a full ceasefire and to bring the parties to the negotiating table for a final and lasting settlement,” she said. “President Trump has made clear that Russia and Ukraine need to move to a full ceasefire now. None of that has changed.”
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