14
MIMUN 2016 EXPERT REPORT ECONOMIC AND SOCIAL COUNCIL ELIMINATION OF UNILATERAL EXTRATERRITORIAL COERCIVE ECONOMIC MEASURES AS A MEANS OF POLITICAL AND ECONOMIC COMPULSION
MIMUN 2016
EXPERT REPORT
ECONOMIC AND SOCIALCOUNCIL
ELIMINATION OF UNILATERAL
EXTRATERRITORIAL COERCIVE ECONOMIC
MEASURES AS A MEANS OF POLITICAL AND
ECONOMIC COMPULSION
MIMUN 2016 Report of the eCosoC expert
Contents
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
1
MIMUN 2016 Report of the eCosoC expert2
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,
19191
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 change2.
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
1Woodrow Wilson, Address in 1919
2Peter Wallenstein, "A Century of Economic Sanctions: A Field
Revisited." Uppsala Peace Research Paper No. 1. Department of
Peace and Conflict Research, Uppsala University, Sweden. 2000.
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.
MIMUN 2016 Report of the eCosoC expert3
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-
1990’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
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 states-
man in Athens in the 5th century B.C. ordered
all trade to be banned between the Athenian
Empire and Megra. These sanctions ulti-
MIMUN 2016 Report of the eCosoC expert4
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.
MIMUN 2016 Report of the eCosoC expert5
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 1936. 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
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.
MIMUN 2016 Report of the eCosoC expert6
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
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
MIMUN 2016 Report of the eCosoC expert7
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).
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. non-
participation 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
MIMUN 2016 Report of the eCosoC expert8
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.
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,
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.
MIMUN 2016 Report of the eCosoC expert9
iv. sanCtions undeR
inteRnational law
Economic coercion is in principle not
prohibited under international customary law,
but the limits posed by the principle of non-
intervention 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.
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.
MIMUN 2016 Report of the eCosoC expert10
Several discussions, resolutions and reports
presented3 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.
So the examination continues. The Advisory
Committee of the UN Human Rights Council
met in Geneva in 2015. 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,
3See the Report of the Secretary General on the Situation of
human rights in the Islamic Republic of Iran (A/67/327 para-
graphs 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 eco-
nomic, 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.2/2000/33.
MIMUN 2016 Report of the eCosoC expert11
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.
By reading the report in detail, one can imagine
the impact on the sanctioned countries and
what they mean for the population living there.
MIMUN 2016 Report of the eCosoC expert12
v. aPPendix
useful links
a) UN key documents on sanctions
Security Council resolutions on issuesconcerning Sanctions:
• Resolution 1699 (2006) Adopted bythe Security Council at its 5507thmeeting, on 8 August 2006. Requeststhe Secretary-general to increase thecooperation between the UN andINTERPOL;
• Resolution 1732 (2006) Adopted bythe Security Council at its 5605thmeeting, on 21 December 2006.Decides to make the Working Groupdevelop general recommendations onhow to improve UN sanctions;
• Resolution 1730 (2006) Adopted bythe Security Council at its 5599thmeeting, on 19 December 2006. Adoptsthe de-listing procedure as a focal point. There are dozens of General Assemblyresolutions concerning unilateralcoercive measures. Here are the mostrelevant ones:
• Resolution adopted by theGeneral Assembly on 18 December2014 [on the report of the ThirdCommittee (A/69/488/Add.2 andCorr.1)] 69/180. Human rights andunilateral coercive measures.Reaffirms the importance of theenhancement of internationalcooperation for the promotion andprotection of human rights;
• Resolution adopted by theGeneral Assembly on 18 December2013 [on the report of the Third
Committee (A/68/456/Add.2)]68/162. Human rights and unilateralcoercive measures. Urges all Statesto cease adopting or implementingany unilateral measures not inaccordance with international law;
• Resolution adopted by theGeneral Assembly on 20 December2012 [on the report of the ThirdCommittee (A/67/457/Add.2 andCorr.1)] 67/170. Human rights andunilateral coercive measures.Reaffirms the request of the HumanRights Council that the Office of theUnited Nations High Commissionerfor Human Rights prepare athematic study on the impact ofunilateral coercive measures on theenjoyment of human rights.
Other documents:
• Report of the Secretary-General onelimination of coercive economic measuresas a means of political and economiccompulsion (A/55/300/Add.2)
b) Other links
• UN web-site http://www.un.org/
• ECOSOC web-site
http://www.un.org/en/ecosoc
• ECOSOC documentation
http://www.un.org/en/ecosoc/docs/do
cs.shtml
• General Assembly web-site
http://www.un.org/en/ga/
• Security Council web-site
http://www.un.org/en/sc/
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