Unilateral sanctions are a political tool operating through restrictive economic measures aimed to coerce a target to fall in line with sanctioning State’s foreign policy, imposed without the authorisation of an international organisation. While usually sanctions pertain to economic relations between the targeting and the targeted State (primary sanctions), to enforce those in recent years there has been a proliferation of so-called secondary sanctions, namely those involving economic relations between a targeted State and third-State actors. Secondary sanctions are applied when foreign companies or individuals engage in certain transactions, cooperating with targeted organisations: third-State entities could face blocking of property and assets, trade limitations, ban of access to financial markets or refusal to entry in relation to the sanctioning State.
From the point of view of international law, the extraterritoriality of those measures is problematic, because it may impair the general principles of non-intervention and of State sovereignty by having a quasi-regulatory effect over third States internal affairs; violations of obligations of international law may arise in particular for what concerns WTO Agreements and bilateral trade and investments agreements. In the eyes of the Special Rapporteur on unilateral coercive measures, secondary sanctions constitute a ‘de facto new form of reprisal’. The rationale behind secondary sanctions is to avoid the process of backfilling: if a third State remains allowed to maintain economic relations with a sanctioned State, the former will substitute the sanctioning State, nullifying the impact of primary sanctions. However, this may have dangerous effects: the fear of penalties, matched with frequent changes, complexity and lack of clarity about their enforcement, triggers overcompliance, with foreign entities curbing exchanges with targeted States because of the high costs of complying with sanctions regulations in due diligence. Interactions are inhibited also for third-State companies that face no trade restrictions or retorsion under their national legal framework, therefore the effect of secondary sanctions is to deter also exchanges that would be allowed. It notably happens also in relation to the delivery of essential goods and services that are covered by the humanitarian exemption as a principle of humanitarian law.
An example is provided by the case of Syria. In 2019, having already had in place an extensive sanction mechanism against the Syrian government, the US voted for the Caesar Syria Civilian Protection Act to enter into force, to compel Bashar al-Assad to step out and support a transition towards democracy: this law was specifically aimed at institutionalising secondary sanctions within the US legal framework. Among other activities, the text sanctions any foreign person who ‘knowingly, directly or indirectly, provides significant construction or engineering services to the Government of Syria’. With the long-lasting war having damaged vital infrastructures, unilateral sanctions keep impairing Syrian efforts to economic recovery and rebuilding by affecting key sectors like oil and gas, trade, engineering and construction. The goal was to stop investments in shady luxury real estate enterprises, but the vague formulation of this provision broadens its effects leading to overcompliance. Does a relatively small quantity of imported gas qualify to be significant? And, what if a company enters into contact with Syrian government to provide public electricity, would it be sanctioned? When in doubt, companies usually just decide to lift the delivery of services undermining cooperative efforts toward recovery.
During pandemic times, also the right to health of Syrian population was hit by the effects of overcompliance to the US sanction regime: foreign companies producing lifesaving medical equipment decided to halt shipments out of fear for possible penalties for conducting transactions with a sanctioned country, although medical and other humanitarian goods are inherently exempted from sanctions. This is contrary to the corporate responsibility to respect human rights as endorsed in the Guiding Principles on Business and Human Rights, which states that companies have a duty to avoid impairing human rights while conducting their operations. Humanitarian actors, especially the local ones, face challenges in relation to the import of goods and donations from international sources: only the UN agencies and the largest international NGOs have been able to obtain the necessary exemptions to operate within the State. For all goods that are not food or basic medicines as listed, third-State actors willing to pursue trade relations with a sanctioned State must require a licence. High legal fee for applying to licences, very broad definition of dual use of goods, confusion arisen from overlapping sanction regimes, time-consuming application process create huge volume of backlogs and delays. The inability of national organisations to provide for basic services due to the need of a licence for almost everything undermined the society’s capacity building, making ordinary Syrians dependent on aid from humanitarian organisations: by rethinking the unilateral sanction regime this trend may be reversed and also the sanctioning States may benefit from an empowered and more resilient civil society.
In general terms, it is demonstrated that the current integrated global economy is curbing the effectiveness of sanctions. In an integrated international economy, enforcing secondary sanctions as a foreign policy tool may create an environment based on suspicion and potential retaliation, increasing economic protectionism and international isolation of targeted States. In Syria, the unilateral measures redirected most of the foreign financial transactions out of Syrian formal banking system, leaving the economy dependent on informal financial transactions (with little margin of appreciation left to the Syrian Central Bank) and nullifying the meaning of remittances of nationals abroad (an essential mean to help society to reconstruct), that lose more than half of their value before entering in the pockets of recipients because they are almost exclusively transferred through the black market. Syria was forced to rely on the hawala transfer system made by informal money traders able to move funds among bordering States, that is however used also as a criminal and terrorist financial channel.
By studying the evolution of sanctions throughout the years it is evident that the international community wants to pursue sanctions that are more and more calibrated, to deprive regimes of essential resources avoiding at the same time any harm to civil society. Sanctions could be a powerful mean of foreign policy, but when they are applied in a vague and broad manner may also exacerbate human rights and humanitarian crisis. If States like the US decide to opt for secondary sanctions as political mean, notwithstanding their debated legality under international law, they must ensure that the measures in place are specific enough. States should exercise due diligence in enforcing those and should engage in consultation with businesses to identify aspects that lead to overcompliance, examining the human rights impact of their compliance, otherwise secondary measures will run against sanctioning State’s aims undermining rather than strengthening global cooperation.
By The European Institute for International Law and International Relations.
