If the answer is "no", they have nothing to worry about. Russia has already shown that anything less than this results in little more than a slap on the wrist.
If the answer is "yes", or even "maybe", then yeah, they're going to have to stay out of international institutions. As it should be.
Saudis have a perfect answer to that
At some point response would be forced anyway.
[1] https://www.washingtonpost.com/news/the-intersect/wp/2017/01...
[2] https://www.thewrap.com/vox-media-co-founder-ben-shapiro-is-...
[3] https://www.npr.org/2022/03/01/1083677765/putin-denazify-ukr...
> However, if the principle is to be neutral until someone does whatever polite society has deemed unacceptable
Why talk in hypotheticals? We have SWIFT for almost 50 years now and Bretton Woods system since late 40's. That is a long enough time to judge their track record. How many countries were banned because their behavior was deemed unacceptable? Wikipedia says only Iran and now Russia: https://en.wikipedia.org/wiki/SWIFT#Use_in_sanctions
Any alternative system would likely be based in China and that would mean that currencies would be backed by China's debt. China would need to take on debt levels that would leave China in an impossible situation. It would mean crushing levels of taxation that would drain China's wealth to the benefit of nations like Russia. There would be a major imbalance in payments. Russia and other nations would make net gains and China would have net losses. Even seizing assets in these nations China would need to sell the assets internationally using the same US/UK/EU system that provides the liquidity and access to markets.
It would require China to become even more reliant on business with Western nations to fund this system making the whole thing illogical and circular in structure. If the Western nations pulled out of Chinese manufacturing it would mean the US/UK/EU could collapse the whole parallel system over time and make it insolvent.
tl;dr: If you want to "own" the financial system, you need to be willing to be an importer of last resort, follow the rule of law, have deep financial markets, a freely exchangable currency, and freely tradeable debt. You also have to be willing to accept either rising debt or unemployment.
These can cause pain to countries who have them. Here's a quote from the piece:
"The one thing both sides agreed on, however, was that the US enjoyed an advantage because of the reserve currency status of the US dollar, with some people even assuming that the US was somehow repressing the ability of Europe, China and Japan to gain the advantage for themselves. No matter how many times the US engaged in policies that tried to shift the benefits to those countries, or these countries engaged in policies that prevented them from receiving the benefits, it was somehow clear to both sides that reserve currency status is a wonderful thing that everyone wants but only the US is allowed to have." (Emphasis mine.)
https://www.brookings.edu/blog/ben-bernanke/2016/01/07/the-d...
https://www.brookings.edu/blog/ben-bernanke/2016/01/07/the-d...
[1] https://www.scmp.com/economy/china-economy/article/3168684/w...
Would you trust the yen? Or the ruble?
https://www.reuters.com/world/asia-pacific/exclusive-russia-...
Doesn't that say something about them not trusting each others currency?
Would you trust the yuan? Chinese people can't exchange to other currencies freely, or transfer money abroad. It's effectively held up by a captive audience (subjugated people).
The problem with your type of thinking is that it can lead someone to sit on its tools until they're rusty and useless, out of fear of "using them up."
It's probably an inevitability that these "global payment systems" stop being global, because globalization never brought the political unity it promised. Countries will inevitably recognize the vulnerabilities created by dependence on rival's systems, and if they're big enough, they'll eventually build alternatives to solve that.
Honestly, I think the main problem with sanctions is they let political leaders delude themselves into thinking they're doing something to solve a problem, when they really aren't. Sanctions aren't going to get Putin to leave Ukraine: that's an immediate military problem that requires an immediate military solution. There's a small chance they'll destabilize the Russian regime over the long term, but I think the more likely outcome is they'll push Russia deeper into Chinese orbit, solidifying an alliance of rivals. Just look what happened to Belarus very recently.
[1] https://blog.nationalbulkbag.com/produce-packaging/how-is-th...
[2] https://investingnews.com/daily/resource-investing/agricultu...
Make it too painful and you'll get a "people who want an oil free future" free future. History is littered with stories of autocrats who tried to push society too far forward too fast. Society is an amorphous blob that simply responds to inputs. It doesn't care that you have good intentions.
Hand waving about a sticks based policy makes for a great circle jerk but in the real world you need carrots, political will, consensus, etc. to go with the sticks or you are doomed to failure.
Business as usual is just not an option, and the cost of everything will rise as energy deleveraging occurs and the true costs are paid. And so, again, I support whatever mechanisms have second order effects of destroying demand for fossil fuels.
Not in this (or many) cases. If you're implying Russia has the least to lose and will somehow win some banking negotiation, they will simply get cut out of markets.
"Least to lose" winning only happens if the "least to lose" party also has more negotiating power. The Russian economy, as markets pretty clearly show, has lost.
Saudi Arabia refusing to release more oil into global supply keeps prices high and indirectly results in Russia profiting more from each petrol sale.
Europeans buying energy from Russia are helping Russia pay to bomb Ukrainians.
It doesn't matter what is intended. The effect is it helps Russia fund this and future operations.
If you think Russia, China and Belarus are going to be neutral, then you are being a bit naive. The West may not be neutral but it is rules based, so you know what you are getting before you start working with it. Russia, China and Belarus are not rules based and they will retaliate against you for a whole list of things that are not written down anywhere.
I think that most countries on the periphery of “polite society” as you put it - are not there by choice and would like to join the club and enjoy the benefits (example Ukraine) as soon as possible.
And the global actors of disorder and chaos do whatever it is they do with predictable consequences to their own prosperity.
Being global is far more important than being neutral, and countries will gladly sacrifice the latter if that is the cost to get the former.
Any meaningful global payments system requires access to the U.S. as European financial markets, either because of direct dealing with banks situated in these countries, or because of indirect dealings (virtually any other bank needs to deal with major U.S. or European banks eventually, and one can impose restrictions on the latter).
As a simple example: U.S. regulators can easily force the hands of major European banks, because every one of those banks needs access to the U.S. financial market, if only so their clients can deal there.
Want to buy Apple, Google, or Microsoft stock? Then neutrality is not an option.
The truth is that the global economy is simply too interconnected for a single country (or even group of countries) to break away and do their own thing. Trade is good. Unprovoked wars are bad. This is something literally the entire planet agrees on.
It's frankly the closest thing to a nuclear scenario you could get - in fact it's worse from the perspective that you enemies continue to live on while you wither. "At least" in a nuclear scenario both sides die.
Global systems don't need everyone to participate; they just need the key players to participate. It's really a special club, and if you're not allowed in the club then you'll probably never be able to climb to that level from outside.
I expect the federal reserve won’t be able to print trillions of dollars with ease anymore once USD loses its global reserve status.
That's not how central banking works at all, of course the Fed will find it trivially easy to print trillions of dollars without the global reserve currency. See: Japan (BoJ) and the EU / Eurozone (ECB). They both printed more per GDP or per national assets than the Fed has, and they didn't spark a gigantic wave of consumer inflation doing so either. Neither had anything remotely close to the global reserve currency.
China pours manufactured credit into its system whenever it feels like it to juice their economy, and is one of the most indebted nations (at this point it's drowning in debt). They did it all without the global reserve currency, they do not find it difficult to print at will (while leaning on a currency with far less global exposure than the Yen).
Fortunately the USD as global reserve currency is only strengthened by what Russia is doing, and what China will do next in Taiwan, rather than the opposite being the case. The USD as global reserve currency is going nowhere in the next several decades at a minimum.
If I punch you in the nose, I don’t care what institution you represent. You won’t remain “neutral” for long.
If SWIFT "is neutral" and sanction aren't applied, the sanctions are applied zero times.
Once is better than zero.
Right, but then situations emerge when it is no longer possible to be neutral.