by Someshwar Singh
South-North Development Monitor – Third World Network
Geneva, 21 Dec 99 — More than half of the world’s population in 75 countries is subject to unilateral coercive economic measures or ‘sanctions’ by one country alone – the United States of America – according to a recent report by the United Nations.
The report, “Unilateral economic measures as a means of political and economic coercion against developing countries” (A/54/486), was considered by the UN General Assembly as part of the macroeconomic policy questions related to trade and development. The issue is to receive greater focus by the United Nations in the coming years, particularly by its human rights arm.
It is in response to General Assembly resolution 52/181 of 18 December 1997, that the report was prepared. In that resolution, the Assembly, inter alia, expressed grave concern that the use of unilateral coercive economic measures, particularly, adversely affected the economy and development efforts of developing countries and had a general negative impact on international economic cooperation and on worldwide efforts to move towards a non-discriminatory and open multilateral trading system.
In the same resolution, the General Assembly urged the international community to adopt urgent and effective measures to eliminate the use of unilateral coercive economic measures against developing countries that were not authorized by relevant organs of the United Nations or were inconsistent with the principles of international law as set forth in the Charter of the United Nations, and that contravened the basic principles of the multilateral trading system.
The Assembly reaffirmed that no State might use or encourage the use of unilateral economic, political or any other type of measure to coerce another State in order to obtain from it the subordination of the exercise of its sovereign rights.
In addition to replies received from 13 States on the subject (including from the United States), the report also contains a gist of the views of internationally renowned think-tanks on the subject. An ad hoc expert group meeting was convened by the Department of Economic and Social Affairs of the United Nations Secretariat.
The members of the expert group participating in their personal capacities were: Claude Bruderlein (Switzerland); David Cortright (United States); Margaret P. Doxey (Canada/United Kingdom of Great Britain and Northern Ireland); Kimberly Ann Elliott (United States); Helga Hoffmann (Brazil); Randhir B. Jain (India); Hasan-Askari Rizvi (Pakistan); Nicolaas J. Schrijver (Netherlands); and Geedreck Uswatte-Aratchi (Sri Lanka).
The group had before it five working papers presented to the meeting: “Coercive economic measures: the risks and costs of unilateralism” by Margaret P. Doxey; “The use of coercive economic measures: an international law perspective” by Nicolaas J. Schrijver; “Making sanctions smarter? The effects of financial sanctions” by Kimberly Ann Elliott; “Targeting financial sanctions: a review of the Interlaken process” by Claude Bruderlein; and “Bombs, carrots, and sticks: the role of economic sanctions and incentives in preventing the proliferation of weapons of mass destruction” by David Cortright
The expert group noted the low level of effectiveness of unilateral coercive economic measures which are often counter-productive in bringing about the desired policy changes, may entail unwelcome political risks and excessive economic costs, give rise to serious humanitarian and ethical concerns, run counter to development goals and limit the scope for diplomacy, positive economic measures and international cooperation in general.
In particular, the group expressed its deep concern about the potential and actual adverse effects of unilateral coercive economic measures on developing countries and the structure of international relations, especially in the area of trade and development.
Therefore, the group concluded that, in a general sense, the use of unilateral economic measures as a means of political and economic coercion, especially the practice of secondary boycotts against third-party States, should be strongly discouraged.
The group agreed that the unilateral imposition of coercive economic measures is inconsistent with core principles and norms of international economic law, such as (a) freedom of international trade, investment and navigation; (b) non-discrimination, including the so-called most-favoured nation (MFN) clause and the concept of national or equal treatment; and (c) sovereignty over natural resources and the right to regulate foreign investment and economic activities.
It was duly noted that those principles are subject to a number of restrictions, exceptions and waivers, some of which may be invoked in a self-governing fashion, primarily for the protection of national essential security interest. Nevertheless, the group felt that unilateral measures of coercion are increasingly at odds with the evolving principles and rules of international economic and social cooperation that are embodied in the Charter of the United Nations and the constituent treaties of multilateral trade and financial institutions, such as the World Trade Organization, and that seek to provide, inter alia, mechanisms and procedures for collective policy review and dispute settlement.
In particular, the group expressed its deep concern about the extraterritorial jurisdiction and third-party effects of certain unilateral measures of economic and political coercion against developing countries (namely, the 1996 United States legislation on sanctions against Cuba, the Islamic Republic of Iran and the Libyan Arab Jamahiriya) and shared the view that such measures were irreconcilable with basic norms and principles of international law and inconsistent with the objectives of the multilateral trading system.
To minimizing the adverse effects of coercive economic measures on the general population, particularly its most vulnerable groups, the expert group reviewed the current unilateral and multilateral approaches.
These options include: (a) sparing use of unilateral coercive economic measures; (b) choosing non-coercive measures of a symbolic or persuasive nature (for example, a wide range of diplomatic, political and cultural measures can serve to convey a message of disapproval rather than attempt to force a change in policy by disrupting the economy); (c) mandatory humanitarian exemptions from trade embargoes or comprehensive sanctions regimes with regard to export of food, medicine and other essential humanitarian goods; (d) employment of smart or targeted sanctions which are designed to penalize directly those individuals or policy makers who are responsible for an objectionable action; and (e) combining sanctions with incentives or inducements for cooperation and compliance.
The group observed that among various improvements and alternatives, the concept of smart sanctions has recently attracted the widest attention, at both the national and international levels. The rationale behind this approach is twofold: (a) to target the effects, as much as possible, on the political, military or economic elites responsible for objectionable policies or criminal individuals, thus enhancing the effectiveness of sanctions; and (b) to spare the innocent victims who have no control over policy or power to change it, thus making sanctions less blunt.
Smart sanctions include targeted financial measures, particularly asset freezes, visa-based restrictions on international travel, and participation bans. Under the heading of smart sanctions, reference is also made to selective trade sanctions that may involve restrictions on those particular products or services (for example, weaponry and luxury items) that are more likely to affect the targeted elites or criminal entities rather than the general population.
Particular attention was paid to the issue of targeting financial sanctions and their effects. There is evidence to suggest that financial sanctions may be relatively more effective than trade embargoes., the experts contend.
In the most comprehensive empirical analysis of economic sanctions to date, financial sanctions were found relatively more likely to contribute to the achievement of foreign policy goals than either financial sanctions imposed in conjunction with trade controls or trade sanctions employed alone.
In general, financial sanctions are perceived as measures of greater effectiveness because they are relatively easier to enforce by senders, harder to evade by targets and often spur market-reinforcing effects. However, unilateral financial sanctions will be less effective than similar multilateral measures. Targeting financial stocks (for example, overseas government-owned or private assets) is relatively easier than focusing on financial flows, especially those from private sources. In principle, money is fungible and the problem with targeting financial flows is that the more targeted the sanctions are, the easier they will be to evade.
The expert group reviewed the potential effects of various types of financial sanctions on the target country from the perspective of their targetability (that is to say, making them not only more effective, but also less blunt). It was concluded that narrowly targeted financial sanctions, such as freezing the overseas assets of individuals from the target country, would have the fewest and lowest collateral impacts on the general population, but are often difficult to implement and may be relatively easy to evade, especially with political constraints impeding the ability of the sender Government to act quickly.
Moreover, the effects of such measures may be limited or diminish over time if the targeted individuals can successfully hide their assets or have unrestrained access to economic resources within their country or new financial flows from abroad. Nevertheless, financial sanctions narrowly targeted against individuals have been used unilaterally to address, inter alia, such issues as drug trafficking and terrorism.
On the other hand, broad restrictions on international lending and foreign investment can cause significant economic disruption and social hardship in the target country and are therefore not necessarily more humane than trade embargoes. The impact on the target will be harder to evade and will be reinforced by market perceptions and mechanisms. However, targeting these measures more precisely is also likely to make them easier to evade. The ability to evade targeted financial sanctions tends to increase with income in the target country and the degree of sophistication of its financial markets. Outside comprehensive sanctions regimes, restrictions on private financial flows have been relatively rare. Although broad financial sanctions may have potentially high costs to creditor countries, they are likely to entail lower enforcement burdens than broad trade embargoes.
The most commonly used financial sanctions affect government programmes or official flows, including economic and military assistance, trade credits and political risk insurance. From the sender’s perspective, this type of financial sanction is relatively low-cost and difficult to evade. Although the utility of this tool decreases as aid flows decline, the denial of aid from traditional donors may produce rather harmful effects on low-income and least developed countries which have little access to private financial markets. For humanitarian reasons, it is essential that food aid and concessional multilateral lending be consistently exempted. However, restrictions on economic aid, other than humanitarian assistance, may have limited effects on the population of target countries with corrupt Governments.
The expert group welcomed the Interlaken process on the targeting of multilateral financial sanctions, sponsored by the Swiss Government, with a view to improving the effectiveness of such measures as well as minimizing the negative humanitarian impact often experienced by large segments of civilian population as a result of comprehensive sanctions regimes.
Based on a growing sense of individual responsibility and accountability for internationally wrongful or criminal acts, the main objective of the Interlaken process has been to elaborate on the specific requirements of targeted financial measures as a tool for exerting pressure directly on the target country’s decision makers and supporters by localizing and freezing their wealth (that is to say, financial assets and transactions) on the world financial markets.
Although serious technical, legal and administrative difficulties remain in this area, important progress has been made on formulating draft policies that would control the movement of assets and link national and international institutions in enforcing such controls. Most importantly, the Interlaken process has established a foundation for an informal cooperation mechanism, with the participation of Governments, the financial sector and academic think-tanks and experts, to facilitate the implementation of targeted financial sanctions, the report notes.
The Commission on Human Rights, in its resolution 1999/21 of 23 April 1999 on human rights and unilateral coercive measures (see E/1999/23 (Part I), chap. II, sect. A), urged all States to refrain from adopting or implementing unilateral measures not in accordance with international law and the Charter of the United Nations, in particular those of a coercive nature with extraterritorial effects, which created obstacles to trade relations among States, thus impeding the full realization of the rights set forth in the Universal Declaration of Human Rights and other international human rights instruments, in particular the right of individuals and peoples to development.
The Commission also rejected the application of such measures as tools for political or economic pressure against any country, particularly against developing countries, because of their negative effects on the realization of all human rights of vast sectors of their populations, inter alia, children, women, the elderly, and disabled and ill people; reaffirmed, in that context, the right of all peoples to self-determination, by virtue of which they freely determined their political status and freely pursued their economic, social and cultural development; and also reaffirmed that essential goods such as food and medicines should not be used as tools for political coercion, and that under no circumstances should people be deprived of their own means of subsistence and development.
In the opinion of the United States, “there needs to be a foreign policy tool for situations in the middle, when diplomacy has been inadequate, but force is not yet appropriate. This is the place of sanctions, including economic sanctions. It is important that the international community keep this potentially valuable tool at its disposal. If sanctions are unavailable for whatever reason, nations may feel they have no choice but to give in to intolerable threats, or proceed to force. Therefore, all States should recognize that, in principle, sanctions are legitimate.”
The United States agrees that multilateral sanctions are preferable. “Nevertheless, there will come times when a nation must be prepared to act unilaterally if important national interests or core values are at issue and if attempts to build multilateral sanctions have been unsuccessful. Consequently, the United States reserves the right to use sanctions unilaterally when necessary. There will continue to be times when global responsibility will require effective sanctions. For that reason, all States should concur that such measures are legitimate.”
In the opinion of Cuba, to agree that a country, however powerful, may use force in order to compel one or more other countries, by means of economic measures, to do its bidding will lead to chaos in international relations and will detract from the World Trade Organization as a global trade regulatory agency and as a framework for resolving trade disputes through established multilateral procedures.
Cuba pointed out that unilateralism by the United States was not directed against Cuba alone. “During the past 80 years, such sanctions have been imposed on various countries on 120 occasions, 104 of them since the Second World War. According to information provided by the President of the United States’ own closest advisers, such unilateral measures were used against 75 countries accounting for 52% of the world’s population during 1998.”
Interestingly, the member States of European Union abstained in the vote on General Assembly resolution 52/181. But, it is the view of EU that economic measures must be in keeping with the principles of international law, as laid down in the Charter of the United Nations, and with the broadest interpretation of the principles of the multilateral trading system set up by the World Trade Organization.
“Unilateral coercive economic measures that violate international law must not be taken against any member of the international community notwithstanding the level of development,” in the EU’s view. “In addition, EU makes a distinction between measures imposed unilaterally by individual States and those that are undertaken with full authority of the Security Council and in conformity with the Charter of the United Nations.” (SUNS4578)
The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.
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