The unrolling of a recent UK sanctions programme targeting human rights abusers in North Korea, Russia, Saudi Arabia and Myanmar, is an early signal from the British Foreign Office that criminal activity around the world will no longer go unnoticed.
Crucially, the move comes at a time when the Chinese government’s oppression of both Uighur Muslims in Xinjiang and pro-democracy protesters in Hong Kong is becoming an unavoidable reality for Western democracies. MPs from different parties are pushing for action against various Chinese Communist Party officials, and sanctions are likely to be the weapon of choice.
What are sanctions?
Sanctions are legal mechanisms designed to financially restrict the actions of a country, company or individual person. Over the past ten years, they have become the primary tool for US diplomacy and foreign policy, yet are used by governments around the world.
American sanctions are the most devastating for they can prevent companies or governments dealing in US dollars. The US dollar is the majority currency for trading oil around the world which is hugely problematic for net importers of gasoline who face US sanctions.
For those who violate sanctions, the result is criminal prosecution. A recent case involved a Turkish banker who was caught trying to evade US sanctions towards Iran by laundering billions of dollars of oil money. When found out, he was sentenced to 32 months in jail. Aside from the obvious criminal risk, individuals or companies found to be dealing with sanctioned entities risk losing themselves access to the global market.
US Sanctions Programmes
The US more than any other country engages in sanction programmes. President Obama issued $4.1bn in fines to those dealing with black-listed companies, and the trend for issuing sanctions is only increasing under the Trump administration.
Crucially, sanctions can be issued by Executive Order. This means that the President can issue them without the consultation of congress. In a polarised political arena, presidential power alone can dictate the next five years of a sanctioned country’s economy.
The US has a history of sanctioning against Russia, Cuba, North Korea and Iran among others. Iranian sanctions for example, were intensified after the US withdrawal from Obama’s 2015 Iran nuclear deal, which massively limited Iranian oil exports. Tensions between Iran and the West that resulted from these sanctions culminated in the Iranian seizure of a British oil tanker in the Strait of Hormuz last year, which led to a brief, but highly tense, stand-off. More recently, US sanctions designed to limit the supply of superconductors to Huawei could lead to the Chinese company’s collapse unless it manages to diversify its supply chains away from US companies.
UK Sanctions Programmes
On the backbenches, MP Dominic Raab has spent the last eight years campaigning for the UK to start implementing “Magnitsky sanctions”. These are sanctions which target individuals rather than companies or governments. The Magnitsky Act was signed into law by Barack Obama in 2012, and was named after Russian tax lawyer Sergei Magnitsky who was beaten to death by officials in a Russian prison after having been arrested for investigating a $230M fraud involving Russian tax officials. The Act has since been used to persecute individuals from around the world who are actively involved in promoting corruption as well as breaching human rights.
Since joining the UK government as Foreign Secretary, Raab has finally been able to unveil a Magnitsky style sanctions programme targeting individuals from Myanmar for alleged violence against the Rohingya people as well as twenty Saudis involved in the murder of the dissident journalist Jamal Khashoggi. Further targets also include individuals from North Korea and Russia.
As Raab stated in Parliament, by freezing the assets of wealth obsessed “thugs of despots and henchmen of dictators” and denying their ability to buy property in Knightsbridge or apply for British residence, the Magnitsky sanctions programme takes a selective approach to targeting those in power. Raab already faces further pressure to deliver a second wave of sanctions on individuals such as Carrie Lam, who has been instrumental in the oppression of pro-democracy protestors in Hong Kong.
Do Sanctions Work?
For large and robust economies, they can be used in a targeted way to tackle human rights abuses or corruption. For smaller struggling countries excessive use of sanctions can destroy entire sectors, as well as eliminating any will for cooperation.
The oil shipments in May from Iran to Venezuela defied a whole host of US sanctions targeting the two countries. Traditionally, such a move would result in further sanctions but given that both countries are already severely sanctioned and that no further sanctions would make any noticeable difference to their economies, the only resort left for the US would be military intervention. The risk of such intervention is simply not worthwhile, and so it seems that with Venezuela and Iran the US sanction programme has reached its limits.
As if to further spite the US, an Iranian supermarket chain has just opened its first store in Venezuela, yet realistically there remains little chance that an economic relationship between Venezuela and Iran can save the former from economic collapse. The only way that Venezuela can recover from its current situation is if it can regain credibility from loan markets in the international community. Such credibility, however, is unlikely to be granted under intense US sanctions.
As for the recently designated UK sanctions, their effect can only be determined with time. For human rights activists, it is a positive step forward, but perhaps too small a move to make a serious impact. Sanctions will likely play a substantial part in what is becoming an increasingly difficult relationship with China, and it is important that we have a basic understanding of the way in which they work.
Why should I care about sanction programmes?
Sanction programmes are only likely to increase as the world becomes more turbulent, and will play a crucial part in continuing to put pressure on reform and transparency in crumbling regimes. They must, however, be used with care: used excessively, and sanctioned countries such as Venezuela and Iran risk being trapped for years to come. Not used at all, and human rights abuses in North Korea, Saudi Arabia, Myanmar and China will only get worse.
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