Last year during the height of controversy over the Kerch Strait incident, while two dozen Ukrainian sailors were still being held by Russia, Washington’s special envoy to Ukraine at the time, Kurt Volker, floated the possibility of Washington blocking Russian banks from SWIFT. He told Voice of America at the time that it was considered "a nuclear option" and it would have huge costs which would even inadvertently impact US allies.
"People refer to it as a nuclear option. It would have costs for everybody involved," he said. "Big costs for Russia, but big costs for allies as well. Ultimately, we have to keep it on the table as a possibility because we just can't continue to see Russia launch further steps of aggression in its neighborhood like this."
No doubt it's still in Washington's playbook as a 'nuclear option' long after the Kerch Strait incident was diffused with an historic prisoner swap, and the Kremlin has taken note.
On Thursday Prime Minister Dmitry Medvedev took Washington to task over the prior warning, telling reporters that Moscow is well aware of discussions to take sanctions further, even cutting off the country's access to some 11,000 banks and financial institutions in over 200 countries by blocking SWIFT. This is exactly what the Trump White House did vis-à-vis Iran months after it pulled out of the 2015 JCPOA.
Medvedev said such far-reaching action would be tantamount to a declaration of war. According to statements reported in Russian media:
Speaking to reporters on Thursday, Medvedev recalled the West once seriously considered the option, and Moscow is aware of it.
“This would in fact be a declaration of war, but nevertheless it was discussed,” the Russian prime minister said, adding that this is one of the reasons why the government is looking into ways to protect the Russian part of the internet.
Though unlikely barring further major escalation between the US and Russia, the possibility is so much on the Kremlin's radar because it was also threatened in 2015 at the height of tensions over the war in eastern Ukraine.
At that time, citing threatened financial sanctions "from the West" — specifically impacting access to the prime global interbank system, Medvedev let it be known that Russia's response would be "without limits".
"We’ll watch developments and if such decisions are made, I want to note that our economic reaction and generally any other reaction will be without limits," he said in those prior comments. Indeed the unforeseen consequences of such a major global power (and energy provider to much of Europe and now even China) being suddenly isolated to that extent along with its fierce reaction, would likely create a global financial Armageddon and uncontrollable ripple effect.
Meanwhile Russia has over the past months flirted with the possibility of joining INSTEX — the special purpose vehicle set up by Europe to facilitate trade with Iran — and has thrown its political weight behind the project as it gains momentum with more EU countries joining in the past days.