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The U.S. and its European allies have ruled out for now barring Russia from a core part of the international banking-payment system because it would cause too much collateral damage, officials familiar with the matter said.

Republican U.S. senators including John McCain of Arizona and Marco Rubio of Florida, seeking harsher penalties over the Ukraine conflict, want Russia ousted from the Society for Worldwide Interbank Financial Telecommunication, the Belgium-based hub for financial transactions used by more than 10,000 institutions. U.K. Prime Minister David Cameron has said “there is a logic” to barring Russia from the system, known as SWIFT, as two dozen Iranian banks were in 2012.

Yet the U.S. and European governments have kept the tool off the table so far, preferring to exhaust other options and avoid a ban that would penalize companies engaged in legitimate trade with Russia, according to the officials, who asked not to be named because of the sensitivity of the issue.

The U.S. Treasury Department said in a statement to Bloomberg News this week that the Iranian cutoff was “unprecedented and extraordinary,” without commenting on Russia. SWIFT didn’t respond to questions e-mailed to Brunswick Group, a public-relations firm that represents the cooperative.

Russian Prime Minister Dmitry Medvedev said in January that his country’s response to any SWIFT restrictions would be “without limits” in economic and other ways, without elaborating. The nation last year threatened to bar European and North American airlines from flying over Siberia. It has also threatened to cut off Ukraine’s gas supplies over a payment dispute, which may imperil transit flows to Europe.

Obscure Network

SWIFT has risen from an obscure messaging network backed by banks in 15 countries to become a core part of the world’s financial plumbing. It was conceived in 1973 as a more efficient and secure way to send information between banks, which until then relied on Telex machines. Now, it processes about 24 million messages a day among 200 nations and territories, enabling banks to clear transactions ranging from currency and derivatives trades to grocery purchases.

Shutting Russian banks out of the network could cripple the nation’s financial system, said Darrell Duffie, a Stanford University finance professor who serves on an advisory council to the cooperative.

“It would make it extremely difficult to run the commercial side of an economy. It would affect everyone,” Duffie said in a phone interview. “How would you pay for things? There’s almost nothing you do these days where you’re not moving funds through the banking system, and a lot of that moves through SWIFT.”

Any company or bank outside Russia that does business with the country would probably be affected too, Duffie said. “If they were due to get money from a Russian financial institution, they’d have to work out another means.”

End Stage

Juan Zarate, who served as deputy national security adviser for combating terrorism under U.S. President George W. Bush, said a cutoff is the “kind of thing you would do at the end stage of an isolation campaign to completely and utterly cut off their banking system.”

Such a move would have bigger spillover effects on the global economy than banning Iran has, said Zarate, now a senior adviser at the Center for Strategic and International Studies in Washington.

Still, the calculus could change if pro-Russia rebels try to take more territory in Ukraine’s east and shatter a cease-fire negotiated last month in the Belarusian capital of Minsk, or if an increase in U.S. military aid to Ukraine caused the crisis to escalate, as some U.S. officials fear it would.

Training Delayed

Planned U.S. training of Ukrainian soldiers has been delayed to allow more time to see that the cease-fire and the full agreement to pull back opposing forces could be implemented successfully, Lieutenant General Ben Hodges, the U.S. Army’s senior officer in Europe, said Tuesday in Washington.

While the cease-fire is largely holding, both sides are trading accusations of violations and blame each other for a lack of effort to achieve a lasting resolution. Leaders in Moscow deny involvement in the conflict, which has killed more than 6,000 people and devastated Ukraine’s economy.

There is a precedent for using SWIFT as a foreign-policy weapon. In 2012, the network disconnected about 24 Iranian lenders sanctioned by the European Union, including Iran’s central bank, after years of efforts by the U.S. and the EU to compel Iran to abandon any effort to develop the ability to produce nuclear weapons.

While the ban has rippled across Iran’s economy, affecting trade in basic items such as food that the nation can legally buy and sell abroad, the impact on the rest of the world has been limited to effects such as movements in oil prices owing to the restrictions on Iran’s crude exports.

Russian Economy

For Russia, with a $2.1 trillion economy and $866 billion in annual trade that are each more than five times the size of Iran’s, effects of a SWIFT ban would almost certainly be wider. A 2012 presentation on SWIFT’s website shows the two biggest hubs for messages to and from Russia are the U.S. and Germany. That suggests companies and banks in those nations would bear the biggest overseas brunt of a move to expel Russia.

A cutoff would make a cyberattack on foreign banks more likely, as Russia won’t “attack a financial system on which it so heavily depends itself,” said Clifford G. Gaddy, a senior fellow at the Brookings Institution in Washington.

“Russia is a cyber superpower fully capable of destroying the entire global financial system,” Gaddy, an economist specializing in Russia, said in an e-mail. “So far, we have been protected against that outcome.”

European Options

Barring Russia from SWIFT was absent from a European Commission options paper that laid the ground for sanctions in July 2014 and continues to guide EU actions. An EU official, who declined be named under official policy, wouldn’t say whether a SWIFT cutoff was considered in the preparation of the paper.

So for now, the U.S. and the EU are discussing other moves from deepening sanctions on Russian financial, energy and defense companies, to imposing penalties on other parts of the economy, the officials familiar with the matter said.

EU leaders at a summit in Brussels pledged early Friday to extend the existing sanctions on Russia to the end of the year, including bans on cooperation with Russia on Arctic, shale and other unconventional oil exploration.

As for SWIFT, “those who discuss it as a possible sanction need to be aware of the breadth and depth of its footprint,” Stanford’s Duffie said.

(Updates with EU summit below European Options subheadline.)