Economic sanctions and International laws

 

In last 3 months or so, International sanctions have been in the news in light of Russia-Ukraine conflict. The moves initiated by United States have been followed up by its allies mainly in Europe. It’s imperative to examine nature of these sanctions and further, do such sanctions carry any validity under International Law. 

Sanctions are primarily, political decisions which graduate into diplomatic and economic steps, initiated by countries unilaterally or multi-laterally (through United Nations) against other countries or organizations or specific persons, under the notion of disciplining them. Real aim is to protect security interests of the sanctioning country while the purported aim could be maintenance of world peace. Sanctions are interventions for punishing an adversary, short of waging war with them, virtually bridging the gap between mere protest /denunciation and use of force.  But the political character of these sanctions cannot be negated. These are generally used by countries as a foreign policy tool to protect their own geo political interests and to score a political point against adversaries viz. US sanctions against Iran, Syria, Venezuela or Russia. As the cliché goes, sanctions are steps between “words and wars”. 

 

Sanctions can take several forms eg imposition of trade restrictions, downgrading of diplomatic relations including withdrawal of diplomatic staff from the sanctioned country) or restrictions on sports persons (like barring of players from Russia and Belarus by Wimbledon). Sanctions nevertheless, remain political in nature and the main thrust is to hit trade and commerce of the adversary sanctioned country.

 

We shall focus on the economic and trade aspect of sanctions since they are capable of affecting global economy (as against localized impact of diplomatic or sports sanctions) and even countries which are not directly or indirectly involved in the dispute as we have seen through  US/EU  sanctions on Russia. 

 

Economic Sanctions

Economic sanctions may be defined as imposition of a ban on customary trade and commercial relations, either with an entire country or blocking dealings with specific organizations or individuals. Sanctions may include

 

-         Trade embargoes which may include a total ban on trade with a country (including a full naval blockade) with possible exceptions within the total basket  eg for medicines, food etc.

-         Export /import controls restricting export to or import from the sanctioned country, of certain specific items

-         Capital controls – Putting restrictions on movement of capital from and to the targeted country

-         Asset freezes  – Physical or financial assets of the targeted country may be frozen preventing their withdrawal or disposal in any other form ;

 

Earliest recorded economic sanctions refer to Napoleon's blockade of Great Britain in 1806-07, through what is known as the Continental system. In modern era , League of Nations imposed sanctions against Italy (1935) and then United Nations has imposed sanctions against South Africa (for apartheid), Rhodesia (now Zimbabve), Iraq, Cuba, Burma (Myanmar) etc.

 

Why sanctions ?

Although various reasons have been propounded for imposition of sanctions viz. threat to global security, breach of international peace , violation of human rights, terrorism activities  etc. but the fundamental motive behind sanctions are political. Sanctions are being used as a tool of foreign policy for furtherance of own geo political goals of the sanctioning country.  Sanctions are being used as an instrument of political power.

 

Sanctions have been imposed to coerce, deter, stigmatize or punish political adversaries who may harm interests or impinge on sphere of influence of sanctioning countries. Sanctions come into force in situations where a war of words fails to influence or deter the targeted country and the sanctioning country doesn’t want to escalate the situation to an armed conflict.

 

Effectiveness of economic sanctions  Do they really work?

Sanctions are generally arbitrary. It has been observed that sanctions with limited objectives have a greater chance of attaining the desired objective. To be effective, sanctions should be able to change the behavior of the targeted country. Except in rare cases (South Africa, Rhodesia) sanctions have not been very effective in impacting behavior of target countries (Cuba, Russia ). 

Instead of affecting the deviant behavior of rulers of the target country, economic sanctions generally bring misery to the general public of that country in the form of food shortages and general collapse of economy. They affect businesses and trade flows. In such cases, general public hardly has any choice of changing the ruler and on the contrary, the economic miseries make the public more nationalistic thus strengthening hold of the deviant ruler.

Sanctions also damage the sanctioning country, in some cases in equal measure. For example EU’s Russia sanctions, have caused economic impact in EU countries as well through shortages of oil and gas. Viktor Orban, the Hungarian Prime Minister and an admirer of Russian President Vladimir Putin is reported to have stated that by imposing economic sanctions on Russia, EU has "shot itself in the foot". Incidentally Hungary is a member of EU.

For US particularly, frequent usage of sanctions may harm it in the long run. Right now it holds dominant position in International trade due to wide acceptance of US Dollar as international currency. Arbitrary freezing of assets parked in US Dollars and blockage of international trade transactions routed through US Dollars platform, shall force countries to look for other options. This process may weaken US Dollar as well as US dominance, in the long run. 

 

Sanctions in international law

International sanctions have been described as “deliberate, government inspired withdrawal or threat of withdrawal of customary trade or financial relations” (Sanctions by Kimberly Ann Elliot and Gary Clyde Hufbauer 1990). The term generally refers to coercive measures, taken by one State or in concert by several States, which are intended to convince or compel another State to desist from engaging in acts violating international law (Joyner, Christofer. 1995. Collective Sanctions as Peaceful Coercion: Lessons from the United Nations Experience)

 

Sanctions are generally expected to affect economic ties between the sanctioning and sanctioned countries, but in several recent instances they have had global impact in the sense that sanctions prohibit anybody and everybody from dealing with the sanctioned country. eg US sanctions on Iran. Such instances are perceived to impinge on the sovereign rights of third countries.

 

International sanctions are imposed either by the United Nations (UN)  representing the global community or by individual countries or by a group of countries acting in concert. While the UN is empowered to impose sanctions by virtue of its charter, it’s the latter ie unilateral sanctions which invite flak as having no validity under international law. This brings us to the core of this discussion that Unilateral Sanctions are a political tool (enforced through national laws) but they may not carry any validity under International law .

 

UN backed sanctions

UN Security Council (UNSC) is authorized to impose sanctions (short of war) by virtue of powers given by Articles 39 and 41 under Chapter VII of the UN Charter.

Article 39 states that: “The Security Council shall determine the existence of any threat to the peace, breach of 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”. Article 41 goes on to say “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.”

 

Thus sanctions mandated by Article 41 are meant to push erring nations to maintain international peace These powers were first used against Rhodesia (now Zimbabwe) in 1966, followed by several such instances in case of South Africa,  Haiti, Iraq, Angola, Sierra Leone, Somalia, Eritrea, Liberia, Democratic Republic of Congo (DRC), Côte d’Ivoire (Ivory Coast), Sudan , Lebanon, North Korea, Iran, Libya, Yemen, South Sudan etc etc These powers have also been used against organizations like Al Qaeda and Taliban.

 

Non-UN Sanctions

In October 2002, the UN General Assembly adopted a Libya sponsored resolution calling on all States not to recognize or apply Unilateral coercive economic measures or legislation imposed by any State across territorial boundaries, which were contrary to recognized principles of international law. It is interesting to note that the said resolution was adopted  by a recorded vote of 133 in favour to 2 against (Israel, United States) and two abstentions (Australia, Latvia), But UNGA’s resolutions lack enforceability . While Article 2(4) of the UN Charter expressly prohibits use of force, there is no express provision prohibiting coercive economic measures.

 

Unilateral sanctions without UNSC’s authorization have been criticized as they infringe the sovereign right of a state to economic and social development. While terming such unilateral actions as “counter measures” the International Law Commission (ILC) has talked of exceptions covered by provisions of Articles on Responsibility of State for Internationally Wrongful Act (ARSIWA), 2001, eg in case of self defence. But such counter measures should not involve any use of force or infringe human rights..


Thus unilateral sanctions are just a foreign policy tool, carrying a very limited validity under International law. Such sanctions, generally imposed under national laws,  run the risk of disrupting the established international order, as governed by the UN charter.

 

The Bottom Line

It has to be accepted that economic sanctions fall in a grey area within the ambit of International laws as neither there is a definition of economic sanctions under international law nor there is an organization or mechanism for deciding the legality of such sanctions. Economic sanctions have been and are being used as a foreign policy tool in furtherance of goals and priorities of the sanctioning country.  The global scenario underwent a change after 09/11 with US waging a war on terror. US utilized the dominance of US Dollar in global financial system to coax and coerce Banks around the world to squeeze Al Qaida. The success achieved, has guided aggressive  US stance in subsequent years, whereby the power of US Dollar is being used to further its political goals or weaken its adversaries. The whole gamut of economic sanctions has become power-based, rather being rule based.

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