Key moment in Ukraine conflict: Diplomacy or military resolution?
The resolution of key issues surrounding Ukraine is approaching a critical moment. Will it be resolved diplomatically, or will military action remain the primary path?
Russia's SWIFT Access Hinges on the EU
As a condition for reinstating the Black Sea Grain Initiative, which previously allowed the export of both Ukrainian and Russian grain (with Russia's participation blocked), Moscow has demanded that Rosselkhozbank (Russian Agricultural Bank) and other key banks be reconnected to SWIFT international payment system.
However, since SWIFT is headquartered is in Belgium, it operates under EU regulations, making EU's stance crucial in determining Russia's access.
On March 26, major EU leaders reaffirmed their refusal to lift sanctions on Russia:
- French President Emmanuel Macron stated that sanctions will not be lifted until Russian troops withdraw from Ukrainian territory to 1991 borders.
- Germany also clarified that it is not aware of any planned changes in EU sanctions against Russia.
EU extends sanctions every six months, with the next extension scheduled for July. Technically, Hungary – which previously opposed extending the sanctions – could again threaten to block the extension unless Russia's SWIFT restrictions were lifted. There are indications that other countries may also push for this revision.
Can the US Offer Russia an Alternative to SWIFT?
At the same time, US Treasury Secretary Scott Bessent suggested on March 26 that Russian banks could indeed be reconnected to SWIFT. He stated that "all options are on the table" – Donald Trump could either lift or strengthen sanctions against Russia.
However, existing US sanctions tools are limited, and lifting them would not bring immediate leverage over Russia. In fact, such a move could escalate bilateral tensions rather than force Russia into a peace agreement.
This could also hurt Trump's political capital, given his peace-oriented campaign messaging on Ukraine.
To bypass SWIFT, the US may propose an alternative:
- Allowing Russian banks to open correspondent accounts in the US;
- Facilitating dollar-based transactions via CHIPS and FedWire instead of SWIFT;
However, Russian banks would need to establish subsidiaries in the US, and cross-border payments would be slower than through SWIFT.
The Moment of Truth for Ukraine's Future
One way or another, the moment of truth is approaching.
If Washington moves toward lifting financial sanctions on Russia, diplomatic negotiations may advance alongside military actions.
However, for diplomacy to fully replace military engagement, Russia's core demands (primarily territorial issues) must be met – something Moscow will not compromise on.
On the Battlefield: Russia Advances
On the ground, there is no indication that Russia sees a need to negotiate from a position of weakness.
The Russian Army continues to advance, while the Air Force (VKS) has adopted new tactics targeting Ukrainian supply hubs and military deployments.
Daily drone strikes (Geran UAVs) hit key locations in major cities:
- Odesa
- Kryvyi Rih
- Kharkiv
- Dnipro
These strikes suggest that the Russian General Staff has ambitious offensive plans.
The US must act swiftly. Otherwise, Washington may run the risk of coming too late to colonize what remains of Ukraine.