Ukraine & Donbas Rebels Both Begin Withdrawal from Contact Line; Iran and Russia Set to Utilize SWIFT-Free Alternative Payment System, China and India to Follow Suit; Russia Moves Up to 28th Place in World Bank’s Ease of Doing Business Rankings

After Ukrainian president Zelensky confronted armed ultra-nationalist members of the notorious Azov battalion in the Donbas earlier this week for their obstruction of what was supposed to be a mutual withdrawal of forces from the contact line weeks ago, it has been confirmed by the OSCE that both sides have started the disengagement process near the Lugansk People’s Republic (LPR):

KYIV, 30 October 2019 – The Chief Monitor of the OSCE Special Monitoring Mission (SMM) to Ukraine, Yaşar Halit Çevik, welcomed the beginning, yesterday, of the disengagement of forces and hardware from the Zolote disengagement area. 

Additional SMM patrols in the Zolote area, assisted by static cameras and unmanned aerial vehicles, on 29 October observed the launch of flares by the Ukrainian Armed Forces and the armed formations, signaling both sides’ readiness to disengage, and subsequently Ukrainian Armed Forces personnel and members of the armed formations exiting the disengagement area, together with their weapons.

This was the next step of the Steinmeier Formula agreed to weeks ago by both sides as overseen by the Trilateral Group (Russia, Ukraine, and OSCE). If the withdrawal is completed successfully, the groundwork will have been laid for a meeting of the Normandy Four (Russia, Ukraine, Germany and France) to negotiate implementation of the Minsk 2.0 Agreement of 2015. AP reports:

The heavy weapons disengagement in eastern Ukraine, which was delayed for weeks, is seen as the final hurdle before the leaders of Ukraine, Russia, France and Germany can get together to discuss a peace settlement for the conflict that has claimed more than 13,000 lives since 2014.

Vladislav Surkov, an adviser to Russian President Vladimir Putin, told the Tass news agency that the pullback was “good news” and said the much-anticipated summit could take place if a weapons pullback in another location [in the DPR] goes ahead as well.

Representatives of Russia, Ukraine and the rebels met in the Belarusian capital Minsk on Tuesday to talk about further steps. OSCE representative Martin Sajdik, who mediated the so-called Contact Group talks, said after the meeting that the disengagement in another area near the village of Petrovske was discussed.

With respect to those talks in Minsk on Tuesday, the Russian news agency TASS reported that the representative of the LPR said the Kiev side had expressed a more cooperative tone:

“We can note that at least the tone of [Ukraine’s] envoy to the talks Leonid Kuchma was different today. He was much more understanding and practically talked openly about how Ukraine is interested in holding a summit in the Normandy format,” Miroshnik said.

He added that Kiev has high hopes for the Normandy summit. “Ukraine wants to discuss there, most likely, key issues of the special status and its inclusion in the constitution, as well as several other issues of Donbass settlement. That’s why Ukraine partially fulfilled the prerequisite in the form of the Steinmeier formula,” he noted.

Whether this actually translates into a meeting of the minds that yields a workable agreement that can be bring peace and stabilization to Eastern Ukraine remains to be seen. In the meantime, however, there was cautious optimism in Russia for this step forward as expressed in the news segment by Vesti News below. According to this report, the regular Ukrainian military had to trick the ultra-nationalist obstructionists near the contact line in order to proceed with the withdrawal:

Iran, which is now a member of the Russian-led Eurasian Economic Union, has announced that it will be conducting business with Russia using each country’s SWIFT-free alternative banking system. RT provided the following details:

Instead of SWIFT, a system that facilitates cross-border payments between 11,000 financial institutions in more than 200 countries worldwide, the two countries will use their own domestically developed financial messaging systems – Iran’s SEPAM and Russia’s SPFS.

“Using this system for trade and business exchanges between EAEU [Eurasian Economic Union] member states can help develop and expand trade exchanges between the member states as well,” [Iran’s central bank governor] Abdolnaser Hemmati said, as cited by Mehr News Agency on Tuesday.

Tehran is set to officially join the Russia-led free-trade zone, the EAEU, next month [October]. The document on Iran’s participation was ratified in June by the nation’s parliament (Majlis) and President Hassan Rouhani has already ordered that the free trade zone agreement be implemented.

In further reporting this week from RT, Russia, China and India will be setting up a cross-border alternative to SWIFT to facilitate business among the three BRICS countries:

Members of the BRICS trade bloc Russia, India, and China have decided to connect their financial messaging systems to bypass the SWIFT international money transfer network.

Russia’s financial messaging system SPFS will be linked with the Chinese cross-border interbank payment system CIPS. While India does not have a domestic financial messaging system yet, it plans to combine the Central Bank of Russia’s platform with a domestic service that is in development.

The new system is expected to work as a “gateway” model when messages on payments are transcoded in accordance with a certain financial system.

As Washington continues its pattern of weaponizing its economic power via sanctions and threats to cut countries it doesn’t like off from the SWIFT banking transfer system, there will continue to be push-back that eventually diminishes Washington’s influence.

The World Bank has just announced its annual Ease of Doing Business rankings. Russia is now ranked 28th, having moved up almost 100 spots in 7 years.

One thought on “Ukraine & Donbas Rebels Both Begin Withdrawal from Contact Line; Iran and Russia Set to Utilize SWIFT-Free Alternative Payment System, China and India to Follow Suit; Russia Moves Up to 28th Place in World Bank’s Ease of Doing Business Rankings”

  1. “The Deutsche Borse owns and controls international central securities depositories such as Euroclear and Clearstream. SWIFT does not have a monopoly in international intra-banking transactions. The EU has legal and regulatory powers to combine asset and cash swapping and clearing houses and create a parallel system to SWIFT in order to accommodate transactions of Iranian financial institutions in the light of the recent agreement between Iran and the major western economies, including Russia, after the withdrawal of the current USA administration. This parallel system of financial infrastructure represents a type of financial utility which could be linked to the European Investment Bank and provide denominated credit facilities in euros,” Bovis added. Academics Esfandyar Batmanghelidj and Axel Hellman have argued, for example, that during a previous Iranian SWIFT ban in 2012-16, several European banks were able to maintain their relationships with Iranian financial institutions by using “ad hoc messaging systems” and this could be revived.

Comments are closed.