The Legality and Effectiveness of Unilateral Sanctions

Unilateral Sanctions, simply put can be described as tools of foreign policy that a state can use, on its own volition, to bring a nation that violates international law principles into consonance with those principles. Unilateral sanctions have been used since time immemorial [1] , yet their economic and political cost effectiveness continues to be the subject matter of heated debates. The difference between the sanctions of old and the modern day sanctions is that previously, sanctions were considered as stop-gap answers to a political problem, the precursors of military assault, whereas in todays day and age they are considered viable, cost-effective alternatives to getting a particular act done without any military action. Economic sanctions in common parlance are used to indicate trade-disrupting measures, where the means undertaken to achieve the end are important (and necessarily have to be non-military). The advocates of unilateral economics sanctions perceive them as low-cost solutions to the abhorrent behaviour of foreign governments, companies or individuals. Unilateral sanctions are positioned somewhere between diplomacy and military engagement, and are imposed to dissuade military adventures, impair military potential, destabilize foreign governments and pursue both modest as well as major policy changes in the target countries [2] . Hufbauer [3] has defined economic sanctions as ‘the deliberate, government-inspired withdrawal, or threat of withdrawal of customary trade or financial relations.’It is not just the USA which uses sanctions as a tool of foreign policy, the EC/EU, Russia and the UN have used Unilateral Sanctions in the past, although the USA has imposed more sanctions than the other countries/entities put together.Unilateral sanctions primarily form a part of US foreign policy, used by the USA with great frequency during the Cold War and its immediate aftermath [4] .

A.1 The difference between Unilateral and Multilateral Sanctions-

The difference between unilateral and multilateral sanctions lies solely in the number of participants involved as ‘sender’ or ‘initiators’ of sanctions in a particular sanctions episode. Multilateral sanctions are imposed one the target country by more than one country and are usually endorsed by the international community.

A.2 The Rationale of Unilateral Economic Sanctions-

The underlying theory of the imposition of economic sanctions is that economic hardships imposed on one country causes political change in the targeted country, whereby the target country acquiesces to the demands of the sender country.

In the case of errant regimes which sponsor or support terrorist activities a similar ideology is followed- if these states do not have any money, they cannot provide the terrorists with the supplies necessary to accomplish their goals.In the case of Iran and Libya, by limiting foreign access to Iran’s and Libya’s economies-in particular each country’s oil and gas industries-revenue would decrease significantly. In essence, “fewer barrels would mean fewer dollars” and fewer dollars means less state-sponsored terrorism andfewer weapons of mass destruction.

A.3 Research Methodology-

The author has, in her attempt to analyse the effectiveness of the unilateral sanctions regimes, has reviewed the experiences of the USA when it has imposed such sanctions on the Union of Myanmar, Iran, Libya and Cuba. The researcher has perused secondary sources dealing with these trade measures that have been imposed on errant countries over a period of time.

A.4 Scope-

Through this research paper the author wishes to analyse the potential legal violations of the international trade law regime by imposition of unilateral sanctions and also to come to an assessment of whether such sanctions are the most viable foreign policy alternatives. An attempt will be made to holistically look at the issue in terms of the objectives sought to be achieved and the costs incurred in the process. The author shall deal exclusively with sanctions imposed by the USA to make a general assessment of the imposition of unilateral sanctions. The author would like to clarify at the outset that unilateral sanctions for the purposes of this paper are taken to mean unilateral sanctions as instruments of foreign policy that are not used in concert with military action.

The Effectiveness Of Unilateral Sanctions

An unbiased review of the academic text available on the issue of the effectiveness of unilateral sanctions would tend to suggest that such sanctions are largely ineffective in terms of achieving the targets they set out to achieve [5] . In this paper the author would analyse the effectiveness of the unilateral sanctions regime, based on political, economic, legal, social and humanitarian parameters, to arrive at a conclusion of whether these sanctions actually achieve their established targets or end up causing more harm than good, as some academicians have argued.

The author would like to clarify at this point that she would consider an‘effectiveunilateral sanction’ to be one which-

a. bringsabout the desired reforms in the target country (for example respect for the international human rights regime and other instrumental goals—observed change in policy, behaviour, or government of target country—not symbolic or domestic political goals),

b.which has none or very minimal, incidentaladverse effects in the target country (especiallyon the civilian population) and

c.has no negative economic or political connotationsfor the sender country.

Factors Which Determine The Effectiveness Of Unilateral Sanctions-

Previously existing economic interdependence between two nations plays a pivotal role in the effectiveness of any sanction that’s imposed. With respect to multilateral sanctions, one can be naturally be tempted to arrive at the false conclusion that multilateral sanctions are more effective than unilateral sanctions, as they have the political clout of multiple senders. The relevant parameters, however,that define the effectiveness of any sanctions procedure, be it unilateral or multilateral, are-

Economic interdependence between nations brought about by globalization and technological advancement.

The identities of the senders and non-senders and their present and future relationship with the targets [6] .

It follows that Unilateral Sanctions are more effective against friendly nations, as long-time adversaries are less likely to be affected as they would have rudimentary trade relations with the sender nation.

Unilateral Sanctions Are Not Potent, Efficacious Foreign Policy Tools-

Historically, economic sanctions have a poor track record. Between 1914 and 1990, various countries imposed economic sanctions in 116 cases. They failed to achieve their stated objectives in 66 percent of those cases and were at best only partially successful in most of the rest. Since 1973, the success ratio for economic sanctions has fallen precipitously to 24 percent for all cases [7] .

In describing the minimal results from unilateral sanctions, O’Quinn stated that:

“Unilateral economic sanctions are not likely to place a sufficiently large financial burden on a target country’s economy to persuade its government to change objectionable policies. There are few industries in the United States that dominate the global market and are unchallenged by foreign rivals. When the United States imposes a unilateral export embargo, foreign suppliers can replace the American companies with minimal damage to the target country’s economy.”

Another line of argument pointing towards the negative implications of unilateral sanctions essentially states that since the unilateral sanctions very visibly curb the growth of the middle class in such countries engulfed in political turmoil, it is quite possible that anti-American tendencies will be harboured, which does not augur well for the USA’s efforts to battle terrorism.

A further argument that can be adduced to endorse the theory that such sanctions are ineffective is that the withdrawal of trading leads to deleterious effects in the targeted country, as the American Corporations operating in developing nations tend to increase the wages and standards of living there, and often display good corporate social responsibility by investing in schools, hospitals, public parks etc [8] .

The Sender Nation Can Suffer Economic Losses-

Multilateral sanctions have generally been viewed as more effective than unilateral sanctions because of the very basic premise, that the unilateral sanctions can succeed only when the USA is a virtual monopoly supplier of a particular good or service to the target nation, which is practically not the case anywhere in the world. In the absence of a monopoly, U.S. unilateral sanctions simply transfer business from American companies to foreign competitor in thesame market. To avoid becoming entangled by new U.S. sanctions against energy investments by any company in Iran and Libya, many European oil companies and suppliers are likely to redesign their procurement policies to exclude American equipment makers. That will put at risk $600 million in U.S. exports and 12,000export-related jobs, according to the Petroleum Equipment Suppliers Association. American Companies are now being viewed as unreliable suppliers. One estimate has predicted that these programs cost $15-19 billion per year in lost export revenues, and that this has resulted in the loss of between 200,000 and 250,000 jobs. Other estimates have placed the one-year export losses in excess of $30 billion. Commentators have also pointed out that while the loss of the initial sale in a sanctioned country can be a major loss to an American company, the residual losses of subsequent maintenance, service and replacement contracts is even more damaging in the long run [9] .

USA’s Sanctions on CUBA-

It has been argued that the 35-year economic embargo of Cuba, a country which is militarily, economically and politically vastly inferior to the USA, is a monument to the ineffectiveness of unilateral economic sanctions as a foreign policy tool [10] . A 1988 study from the Johns Hopkins University estimates that over a 25-year period the embargo against Cuba cost American companies $30 billion in lost exports, while the diplomatic benefits gained by the United States were difficult to pinpoint.

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USA’s Sanctions of IRAN-

The United States first instituted sanctions against Iran in November of 1979, when Iranian militants seized the American embassy in Tehran and took 66 hostages. President Jimmy Carter responded by halting all Iranian crude oil imports. Subsequently pressure was increased on the Khomeni regime by implementing two executive orders and expanding the blocking regulations into a trade embargo. Four years later, when it determined that Iran had been involved in the 1983 bombing of the United States Marines barracks in Beirut, the Reagan Administration placed Iran on a list of state sponsors of terrorism.17 The Iranian Transactions Regulations,18 issued in 1987 by the Commerce Department, further prohibited the importation of goods and services of Iranian origin. Subsequently President Clinton passed a proclamation banning the United States companiesfrom purchasing oil from Iranian corporations. A senior Central Intelligence. Agency (” CIA”) official, John C. Gannon,has argued that the sanctionswould only have a minimal impact on Iran because it had “alternativesuppliers,” allowing development projects, maintenance, andrepairs to proceed once foreign companies took the place of Americanbusinesses. Furthermore, without the full force of the internationalcommunity behind the measures, the United States sanctionswould not compel Iran to change its behaviour.

The Legality Of Unilateral Sanctions

The nation-states that raise objections and allege that the actions of the USA in imposing sanctions do not have any issues with the objectives that are sought to be achieved, they merely have reservations with the means employed . After the Second World war the United States, was virtually the only super power, conducting its affairs with foreign policies, which, in the words of European Union trade commissioner SirLeon Brittan, “established the unwelcome principle that one country can dictate the foreign policy of others.”

Nation-states are objecting particularly to the extraterritorial authority the U.S. government assumedover citizens of foreign countries.Indeed, American trading partners argue that the United States is destroying the integrity of international organizations and agreements to which it is a party.

In a recent instance, America’s trading partners and economic allies-particularly the European Union-have refused to support ILSA (the Iran and Libya Sanctions Act of 1966), and accused the United States of unilaterally imposing its policy on the rest of the world in violation of its international obligations [11] . While American allies are declining to enact sanctions of their own against Iran and Libya, foreign companies are openly pursuing investment ventures in defiance of ILSA.

Does The Usa Violate Its Gatt And Wto Obligations?

Some states have argued that the basic principles of trade on whichthe GATT operates are violated by the usa-

(1)Parties should conduct trade on the basis of non-discrimination; (2)Parties should maintain government restraints on the movement of goods at a minimum, and if changed, the restraints should be reduced, not increased; and (3) parties should discuss and agree on the conditions of trade, including the level of tariffs and other restrictions, within a multilateral framework.

However, there exist exceptions to these general rules. Perhaps the most significant exception contained in GAIT is thenational security exception of Article XXI. The Agreement doesnot prevent any contracting party-and today, in the tenus of WTO,any member state-from “taking any action which it considers necessaryfor the protection of its essential security interests … taken intime of war or other emergency in international relations.” Arguably,a state could justify any act inconsistent with GAIT as one takenin furtherance of its national security [12] . It is the author’s submission thatIf the United States were to defend ILSA in front of a WTOpanel, an Article XXI defense would be one of the primary rationalesbehind the American arguments. The drafters of ILSA put nationalsecurity concerns at the forefront of their findings, stating thatIran’s and Libya’s support of terrorism and pursuit of weapons ofmass destruction “endanger[s] the national security and foreign policyinterests of the United States.” The statutory language resolvesany question of ambiguity regarding intent.The dispute settlement mechanism in the WTO will not necessarily

serve to restrict United States policy either. Under the previousGATT structure, a contracting party could prevent the establishmentof a panel to resolve disputes, thereby protecting its prerogative tofollow its own policy.Practically speaking,though, this new development does not pose a threat to any member’slaws. If a panel were to make a finding contrary to the UnitedStates, for example, the decision is not self-executing-it does notautomatically become part of American law. Although ILSA may have a negative impact on a WTOmember by nullifying or impairing its benefits, it does not necessarilyfollow that the United States is violating its WTO obligations. A nullification or impairment does not equal a violation.That seemingly ran counter to universally accepted principles of freetrade.

Conclusion-

It is vainglory to believe that by adopting unilateral sanctions America is ‘leading by example,’ since nations throughout the world not only have refused to support recent U.S. sanctions but have actively opposed them. Leaders in France, Italy, Britain, Germany, and much of the rest of the world view economic sanctions as counterproductive and generally favour them only in extraordinary circumstances, such as war [13] . Allies and trading partners view ILSA as the latest incident in the alarming trend of the United States to act unilaterally in imposing its policies on other countries. The author firmly believes that although the acts of the USA in imposing unilateral sanctions are not violative of the international law, per se, they are best avoided, and should be replaced by diplomacy and collective actions of the UN which are the best options available in the status quo situations. The USA should move away from its belief that it is the primary law-enforcer and let the UN regulate the activities of errant nations. If nothing else, the fact the US industries are being adversely affected should prove to be a stimulus to the US for the same.