Which sanction against Russia creates the least side effects on Western economies: SWIFT disconnect or denying selling of government bonds?

Question

This NBC article suggests more fragility to sanction Russia by barring its central bank to sell government bonds as opposed to disconnecting it from the SWIFT, where there is virtually an EU + UK + US consensus.

From a layman's perspective disconnecting it from the SWIFT seems to create way worse side effects than not allowing the Russian Central Bank to sell government bonds (prevents controlling the fall of the ruble).

Which sanction against Russia creates the least side effects on Western economies: SWIFT disconnect or denying selling of government bonds?

If denying the selling of government bonds creates fewer side effects on Western economies, I would have expected to unanimously apply it sooner.

Answer 1

SWIFT is basically a communication network that allows bank transitions to happen. This could potentially hurt EU a lot because EU imports 41.1% of natural gas, 26.9% oil and 46.7% coal from Russia (according to the Eurostat). Looking at the Eurostat statistics on energy production, the above implies that de facto around 25% of all energy EU needs is dependent on Russian exports.

If Russia got kicked from SWIFT I don't know how EU could continue to pay for these exports. I doubt there are transactions still done with cash. Hence, if we would assume that kicking Russia out of SWIFT would cut EU from Russian energy exports it could hurt EU economy a lot. Ultimately, disturbing the country's trade is the purpose of kicking country from the SWIFT (e.g. like done to Iran, which reportedly let to Iran loosing almost half of its oil revenue according to this article from Carnegie). Hence creating a workaround to pay for Russian energy exports would mostly defeat the purpose anyway.

If it would be possible to prevent Russia from issuing bonds that would mostly hurt Russia. It will also hurt whoever wanted to invest into Russian bonds, but bond investors would still have a lot of other countries from which they can buy bonds.

However, note the NBC article you cite only says the Russian bonds were banned from some western markets altogether. So determined people could still buy them.

Consequently, even thought it is hard to put numbers on such measures, if it was possible, banning Russia from issuing bonds would almost definitely have less negative impact on the Western economies (especially EU).