MIMUN 2016 ELIMINATION OF UNILATERAL EXTRATERRITORIAL COERCIVE ECONOMIC MEASURES AS A MEANS OF POLITICAL AND ECONOMIC COMPULSION

Transcription

1 ECONOMIC AND SOCIAL COUNCIL EXPERT REPORT ELIMINATION OF UNILATERAL EXTRATERRITORIAL COERCIVE ECONOMIC MEASURES AS A MEANS OF POLITICAL AND ECONOMIC COMPULSION

2 Contents 1 I. Introduction 2 II. Extraterritorial Coercive Measures (Sanctions) 3 History of Sanctions 3 III. Economic Sanctions 5 A) Purposes of Economic Sanctions 5 B) Types of Economic Sanctions 5 C) Effectiveness of Economic Sanctions 6 D) Multilateral economic sanctions 7 E) Unilateral economic sanctions 8 IV. Sanctions under International Law 9 V. Appendix 12 A) UN key documents on sanctions 12 B) Other links 12

3 i. introduction A nation that is boycotted is a nation that is in sight of surrender. Apply this economic, peaceful, silent, deadly remedy and there will be no need for force. It is a terrible remedy. It does not cost a life outside the nation boycotted, but brings a pressure upon the nation, which, in my judgment, no modern nation could resist. Woodrow Wilson, U.S. President, Extraterritorial coercive measures are often viewed as an alternative to military force. By punishing an offending party economically, socially, or politically, rather than militarily, those who impose extraterritorial coercive measures hope to solve a conflict without the mass suffering and sacrifice required by war. They represent something between a diplomatic slap on the wrist and more extreme measures such as covert action or military measures. As to economic coercive measures, they have been effective sometimes, and are widely used. But their use is much more common than their success: only five to, at most, 30 percent of extraterritorial coercive measures result in the desired change 2. Nowadays some states` economic strength, combined with a reluctance to deploy their military force to address economic, moral, or political problems resulted in a sharp increase in unilateral extraterritorial coercive measures. In most cases they seem to be inadmissible as 1 Woodrow Wilson, Address in Peter Wallenstein, "A Century of Economic Sanctions: A Field Revisited." Uppsala Peace Research Paper No. 1. Department of Peace and Conflict Research, Uppsala University, Sweden it is reasonably believed that only the United Nations should be empowered to impose any kind of coercive measures. Unfortunately, mechanisms of taking extraterritorial coercive measures including economic ones were not developed in time and in addition were not clearly defined. This makes elimination of unilateral extraterritorial coercive economic measures a topic worth deliberating on.

4 ii. extraterritorial CoeRCive MeasuRes (sanctions) Extraterritorial coercive measures or sanctions are tools used by states or international organizations to try to alter the strategic decisions of state and non-state actors that threaten their interests or violate international law by restricting trade, investment or other activity. Sanctions involve one party (the sender) that attempts to change another party's (the target) behavior without the use of weapons or other military establishment. Sanctions can be divided into several groups: Diplomatic sanctions The suspension of diplomatic relations or their degradation; Economic sanctions typically a ban on trade, possibly limited to certain sectors such as armaments, or with certain exceptions (such as food and medicine); Military sanctions military intervention; Sport sanctions preventing one country's people and teams from competing in international events. Extraterritorial sanctions (sometimes called secondary sanctions or a secondary boycott) are designed to restrict the economic activity of governments, businesses, and nationals of third countries. As a result, governments typically consider these sanctions a violation of sovereignty and international law. The controversy came to a head in the mid s after President Bill Clinton signed the Cuban Liberty and Democratic Solidarity Act (so called Helms Burton Act). The law, which strengthened the embargo on the President Fidel Castro s regime, permitted U.S. companies and individuals to sue foreign 3 entities that trafficked in confiscated U.S. property. In retaliation, Canada, Mexico, and the European Union all passed mitigating laws or regulations. Economic sanctions area tool used by states or international organizations to persuade a particular government or group of governments to change their policy by restricting trade, investment or other commercial activity. Economic sanctions include: Limiting exports to the target country; Limiting imports from the target country; Restricting investment to the target country; Prohibiting private financial transactions between citizens of a sender country and target country and their governmentsand the target country's citizens or government; Restricting the ability of a sender country's government programs to assist the target country with trade and investment. Economic sanctions may be comprehensive, prohibiting commercial activity with regard to an entire country, like the longstanding U.S. embargo of Cuba or Iran (which both are currently being softened though), or they may be targeted at, blocking transactions of particular businesses, groups, or individuals. History of sanctions Sanctions have been a tool of economic statecraft for many years. Pericles, a statesman in Athens in the 5th century B.C. ordered all trade to be banned between the Athenian Empire and Megra. These sanctions ulti-

5 For most of the 20th century, sanctions were rarely used. During the Cold War, both the U.S.S.R. and the United States tried to gain a competitive edge over each other by cooperating with corrupt leaders of third countries. Such a policy reduced dramatically the effectiveness of sanctions. Before the fall of the Berlin Wall in 1989, there were only two U.N.-approved sanctions, against Rhodesia and South Africa. After the Cold War, the U.N. Security Council imposed sanctions on a number of countries: Afghanistan, Angola, Haiti, Iraq, Serbia, Somalia, Sudan, and others. The violations of international law committed by those countries include external and internal aggression, support for terrorism, and suppression of democracy. Also, after the collapse of the USSR, the USA, which influence in the world increased, resorted frequently to unilateral sanctions. 4

6 iii. economic sanctions a)purposes of economic sanctions The term economic sanctions encompasses the deliberate, government-inspired withdrawal, or threat of withdrawal of customary trade or financial relations. ( Customary refers to the levels of trade or financial activity that would probably have occurred in the absence of sanctions.) The motives behind the use of sanctions parallel the three basic purposes of national criminal law: to punish, to deter, and to rehabilitate. World leaders often decide that the obvious alternatives to economic sanctions are unsatisfactory: military actions are too massive, and diplomatic protests too meager. Sanctions can provide a satisfying theatrical display, yet avoid the high costs of war. Sanctions are also costly, but the cost is not that high. Prior to the 1990s, institutionally endorsed sanctions were rare. The League of Nations imposed or threatened to impose economic sanctions only four times in the 1920s (Italy (1923), Weimar Germany (1923), Turkey (1923), Bulgaria (1925), where Bulgaria and Turkey are successful examples. But the League faded from history when its inefficient response failed to deter Benito Mussolini s conquest of Ethiopia in 1935 and Freed from the restraints of the superpower rivalry, the role of the UN in international relations increased drastically during the 90s. This new approach to the role of the UN resulted in the fact that the Security Council imposed mandatory sanctions thirteen times in response to instances of civil strife, regional aggression, or grave violations of human rights compared with just two cases (against South Africa and Rhodesia) in previous decades.in many instances, however, the new 5 threats were not of paramount concern for the major powers, and only weakly enforced arms embargoes were imposed. As a result, U.N. sanctions enjoyed limited success. With the exception of those imposed against Libya in response to Pan Am terrorist attacks (1988) and, possibly, those imposed against Yugoslavia over the civil war in Bosnia, U.N. sanctions have failed to achieve their objectives. Moreover, the decade-long comprehensive sanction regime against Iraq (under Saddam Hussein s rule) generated considerable political backlash. B) types of economic sanctions A sender country tries to inflict damage on its target in two main ways: (1) through trade sanctions that limit the target country s exports or restrict its imports; and (2) through financial sanctions that impede finance (including reducing aid). Governments that limit exports from the target country intend to reduce its foreign sales and deprive it of foreign exchange. Governments may also limit their exports of vital goods to the target country. If the sender country exports a large percentage of world output, this may also cause the target to pay higher prices In order to find another source, but only if the sender country also reduces its overall output. When governments impose financial sanctions by interrupting commercial finance or by slashing government loans to the target country s government, they intend to cause the target country to pay higher interest rates and to scare away alternative creditors. When a poor country is the target, the government imposing the sanction can use the subsidy component of official financing or other development assistance to gain further leverage.

7 Total embargoes are rare. Most trade sanctions are selective, affecting only one or several goods. Thus, the economy-wide impact of the sanction may be quite limited. Since sanctions are often unilateral, the trade may be only diverted rather than cut off. Whether import prices paid by (or export prices received by) the target country increase (or decrease respectively) after the sanctions are applied depends on the market in question. If there are many alternative markets and suppliers, the effects on prices may be very modest, and the economic impact of the sanctions will be negligible. Financial sanctions, in contrast, are usually more difficult to evade. Because sanctions are typically intended to foster or exacerbate political or economic instability, alternative financing may be hard to find and is likely to carry a higher interest rate. Private banks and investors are easily scared off by the prospect that the target country will face a credit squeeze in the future. Moreover, many sanctions involve the suspension or termination of government subsidies to poor countries large grants of money or concessionary loans from one government to another which may be irreplaceable. Another important difference between trade sanctions and financial sanctions lies in the parties that are hurt by each. The pain from trade sanctions, especially export controls, usually is diffused throughout the target country s population. Indeed, political elites in the target country may benefit from trade sanctions by controlling lucrative black markets. Financial sanctions, on the other hand, are more likely to hit the pet projects or personal pockets of government officials who shape local policy. On the sender s side of the equation, an interruption of official aid or credit is unlikely to create the same political 6 backlash from domestic business firms and allies abroad as an interruption of private trade. Finally, financial sanctions, especially those involving trade finance, may interrupt trade even without the imposition of explicit trade sanctions. In practice, however, financial and trade sanctions are usually used in some combination with one another. The ultimate form of financial and trade control is a freeze of the target country s foreign assets, such as bank accounts held in the sender country. In addition to imposing a cost on the target country, a key goal of an assets freeze is to deny an invading country the full fruits of its aggression. C) effectiveness of economic sanctions Senders usually have multiple goals and targets in mind when they impose sanctions, and simple punishment is rarely at the top of the list. Judging the effectiveness of sanctions requires sorting out the various consequences, analyzing whether the type and scope of the chosen sanction were appropriate to the occasion, and determining the economic and political impacts on the target country. If governments that impose sanctions embrace contradictory goals, sanctions will usually be weak and, ultimately, ineffective. In such cases, the country or group imposing sanctions will not exert much influence on the target country. Thus, it may be the policy not the instrument (sanctions) that fails. For example, the Reagan and Bush administrations began economic sanctions against Panama in 1987 in an effort to destabilize the Noriega regime. However, as they wanted to avoid destroying their political allies in the Panamanian business and financial sectors, they imposed sanctions incrementally and

8 then gradually weakened them with exemptions. In the end, the sanctions proved inadequate, and the U.S. military invaded Panama and took Noriega by force. In many cases, sanctions are imposed primarily for signaling purposes for the benefit of allies, other third parties, or a domestic audience. The intended signal is not always received. Instead, it may be overwhelmed by a cacophony of protests from injured domestic parties, which may force a premature reversal of the policy. Sanctions intended to change the government of a target country are even more difficult to design. In such cases, sanctions must be imposed as quickly and comprehensively as possible. A strategy of turning the screws gives the target leaders time to adjustby finding alternative suppliers or markets, by building new alliances, and by mobilizing domestic opinion in support of its policies. It is obvious that effective sanctions, in the sense of coercing a change in target country policy, are achieved infrequently. Economic sanctions were relatively effective tools of foreign policy during the first two decades after World War II. The evolution of the world economy, however, has narrowed the circumstances in which unilateral economic leverage can be effectively applied. For multilateral sanctions, increasing economic interdependence acts as a double-edged sword. It increases the latent power of economic sanctions because countries are more dependent on international trade and financial flows. Since 1970, over a third of multilateral sanctions in which the United States participated scored as a success (twenty successes out of fifty-three cases). 7 d) Multilateral economic sanctions The United Nations and its member states implement sanctions under Article 41 of the UN Charter. Article 41 stipulates: The Security Council may decide what measures not involving the use of armed force are to be employed to give effect to its decisions, and it may call upon the Members of the United Nations to apply such measures. These may include complete or partial interruption of economic relations and of rail, sea, air, postal, telegraphic, radio, and other means of communication, and the severance of diplomatic relations. The measures listed in Article 41 are illustrative, not comprehensive. Under Article 39 of the Charter, The Security Council shall determine the existence of any threat to the peace, breach of the peace, or act of aggression and shall make recommendations, or decide what measures shall be taken in accordance with Articles 41 and 42, to maintain or restore international peace and security. The power to impose sanctions rests with the Security Council, consisting of five permanent members the United States, Russia, China, France and the United Kingdom and ten non-permanent members. To impose sanctions under Article 41, nine members of the Security Council must vote for the sanctions. All permanent members must either vote in favor or not oppose (i.e. nonparticipation in the voting or participation in, but abstention from voting). After the Security Council decides to impose sanctions, all UN members required under the applicable resolution(s) must implement them. Such voting rules makes sure that UN sanctions cannot be applied against any permanent

9 member of the UN Security Council, although Article 32 of the UN Charter stipulates that Any Member of the United Nations which is not a member of the Security Council or any state which is not a Member of the United Nations, if it is a party to a dispute under consideration by the Security Council, shall be invited to participate, without vote, in the discussion relating to the dispute. In 2000, the first report of the Secretary- General was addressed to the General Assembly concerning elimination of unilateral extraterritorial coercive economic measures as a means of political and economic coercion. The report consists of replies received from Governments of Cuba and Iraq addressing the problem. It was followed by a large number of resolutions of the General Assembly. In the next reports, as that to the fifty-eight session, the list of the countries extended, but nothing has changed radically. UN sanctions regimes, including most of the sixteen in place in early 2015 (the most in history), are typically managed by a special committee and a monitoring group. The global police agency Interpol assists some sanctions committees, particularly those concerning al- Qaeda and the Taliban, but the UN has no independent means of enforcement and relies greatly on member states. 8 environmental pollution, or other policy. The goal of unilateral economic sanctions is to punish the targeted nation and give it to change its policies. The unilateral economic sanctions mean that a company may not have a business with the offended country, including employing labor, investing funds, importing raw or consumer goods, or exporting their own products. e) unilateral economic sanctions Unilateral economic sanctions are imposed by one country or a group of countries against another state to cut off trade and business relations, such as import and export of goods and financial loans. These are assets offoreign policy instituted when a country has a disagreement with another country over its political regime, human rights violations,

10 iv. sanctions under international law Economic coercion is in principle not prohibited under international customary law, but the limits posed by the principle of nonintervention must be investigated. Apart from the general principle of non-intervention, there are other reasons why sanctions may be considered illegitimate. The Security Council has an explicit competence to impose sanctions according to Article 41 of the UN Charter. However, there is a broadly shared opinion that such a competence is not exclusive. Indeed, states and regional organizations can also take unilateral measures, provided that if they respect certain limits. First of all, unilateral measures are admissible when they are merely unfriendly acts that do not violate any international norm and thus qualify as retorsions. Secondly, even when they do violate certain norms, they may be admissible if they qualify as countermeasures. Unlike sanctions adopted by the Security Council, countermeasures necessarily presuppose that the target state has violated an international law. Regional organizations can also take autonomous measures against their own members when this is provided by their Charter. The problem of evidentiary standards remains to be unsolved. Sanctions are often unilateral measures taken on the basis of a previous allegedly wrongful act; however, no general mechanism is set to test the validity of the allegation and, as a consequence, the lawfulness of the countermeasures. The possibility for a judicial review is provided only in self-contained regimes or when there is a BIT in force that contains an arbitration clause. Yet full judicial review of autonomous sanctions remains highly unlikely. 9 An effort should be made to regulate the issue at the international level. The shift to smart and targeted sanctions was mostly due to human rights concerns vis-à-vis economic sanctions regimes, which may cause serious and widespread harm among the civilian population. However, the new type of sanctions has raised its own set of questions concerning the possible violation of individual rights: in particular, the system of listing is susceptible to violating not only the right to effective judicial protection, but also other rights including the right to respect for personal and family life and the right to property. It is believed that not only states but also the Security Council is bound by certain human rights obligations. However, when claims of human rights violations by Security Council sanctions were first raised, courts held that no scrutiny over the legitimacy of Security Council decisions could be exercised according to Article 103 of the Charter. More recently, the European Court of Justice has rather made recourse to a technique d évitement de l article 103 by reviewing national acts implementing sanctions. Consequently, the question of whether, under Article 103, the obligation to carry out Security Council resolutions has priority over human rights obligations has been left unsolved. The Security Council has recently responded to criticisms by creating new mechanisms such as the Focal Point for Delisting and the Office of the Ombudsperson. Moreover, the mandate of sanctions committees has progressively undergone a shift from mere administration to rule of law-based governance. While commendable, these improvements cannot be equated to actual judicial remedies. As for the impact of sanctions on existing contracts, this must be investigated under domestic law, which may provide remedies in order to trigger contract termination.

11 Several discussions, resolutions and reports presented 3 to the General Assembly, the Human Rights Council, and the former Commission on Human Rights have addressed the issue of the impact of unilateral coercive measures on the full enjoyment of human rights. The Vienna Declaration and Program of Action, adopted by the World Conference on Human Rights in 1993 called upon States to refrain from any unilateral measure not in accordance with international law and the Charter of the United Nations that creates obstacles to trade relations among States and impede the full realization of the human rights set forth in the Universal Declaration of Human Rights and in international human rights instruments, in particular the rights of everyone to a standard of living adequate for their health and well-being, including food and medical care, housing and the necessary social services. Several United Nations studies have also been carried out on unilateral coercive measures and human rights including the issue of legality of such measures. These studies have analyzed the legitimacy of unilateral coercive measures from a human rights perspective and the complex and divergent views around this topic. They have also stressed the need to the further examination of the linkages between unilateral coercive measures and human rights. 3 See the Report of the Secretary General on the Situation of human rights in the Islamic Republic of Iran (A/67/327 paragraphs 41, 42). See also the Secretary General s annual report on Human rights and unilateral coercive measures (A/67/181), Report of the Secretary General, Necessity of ending the economic, commercial and financial embargo imposed by the United States of America against Cuba (A/67/118), Secretary General s report on Unilateral economic measures as a means of political and economic coercion against developing countries (A/66/138) and the Sub-Commission studye/cn.4/sub.2/2000/ So the examination continues. The Advisory Committee of the UN Human Rights Council met in Geneva in This committee called the Advisory Board is composed of 18 independent experts who are elected based on a key that reflects the continental distribution of the 47 member states of the Human Rights Council. The report of the working group deals with the issues of unilateral sanctions and their result on the human rights situation. Thus, an important issue has been taken up by the Human Rights Council that was debated for some time by international lawyers: To what extent do unilateral coercive measures violate human rights? For the general public, it has almost become habit-forming: if a state has adopted a policy that does not fit the powerful of this world, reasons are created to impose sanctions on that country. Even within the EU, the sovereign state of Austria was subjected to a sanctions regime in 2000 for alleged democratic deficits (a pro-fascist party of JörgHaider came to power). Quite often, there are economic Sanctions, whose effects are disastrous. A look at history shows that especially the US and its allies have repeatedly taken unilateral coercive measures. Cuba, for example, despite some reassuring changes, is still a victim of Western coercive measures that have left an immense economic damage. The fact that these arbitrary unilateral sanctions are highly problematic with respect to human rights can be seen by reading the investigation report, the working group has prepared on behalf of the Advisory Committee. The working group has investigated the effects on several states, which are under a sanctions regime: Cuba, Zimbabwe, Iran and the Gaza Strip. The effects of these measures are disastrous. The report adds that especially the adverse effects in the Civil Society are felt, because the most vulnerable in society, such as women, children,

12 old and disabled people and the poor are the most affected. The working group s report recommends, among other things, to appoint a special rapporteur to investigate human rights violations as a result of unilateral coercive measures and to document them in order to limit or even ban on the imposition of sanctions. 11 By reading the report in detail, one can imagine the impact on the sanctioned countries and what they mean for the population living there.

13 v. appendix useful links a) UN key documents on sanctions Security Council resolutions on issues concerning Sanctions: Resolution 1699 (2006) Adopted by the Security Council at its 5507th meeting, on 8 August Requests the Secretary-general to increase the cooperation between the UN and INTERPOL; Resolution 1732 (2006) Adopted by the Security Council at its 5605th meeting, on 21 December Decides to make the Working Group develop general recommendations on how to improve UN sanctions; Resolution 1730 (2006) Adopted by the Security Council at its 5599th meeting, on 19 December Adopts the de-listing procedure as a focal point. There are dozens of General Assembly resolutions concerning unilateral coercive measures. Here are the most relevant ones: Resolution adopted by the General Assembly on 18 December 2014 [on the report of the Third Committee (A/69/488/Add.2 and Corr.1)] 69/180. Human rights and unilateral coercive measures. Reaffirms the importance of the enhancement of international cooperation for the promotion and protection of human rights; 12 Committee (A/68/456/Add.2)] 68/162. Human rights and unilateral coercive measures. Urges all States to cease adopting or implementing any unilateral measures not in accordance with international law; Resolution adopted by the General Assembly on 20 December 2012 [on the report of the Third Committee (A/67/457/Add.2 and Corr.1)] 67/170. Human rights and unilateral coercive measures. Reaffirms the request of the Human Rights Council that the Office of the United Nations High Commissioner for Human Rights prepare a thematic study on the impact of unilateral coercive measures on the enjoyment of human rights. Other documents: Report of the Secretary-General on elimination of coercive economic measures as a means of political and economic compulsion (A/55/300/Add.2) b) Other links UN web-site ECOSOC web-site ECOSOC documentation cs.shtml General Assembly web-site Security Council web-site Resolution adopted by the General Assembly on 18 December 2013 [on the report of the Third

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