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CRIME? PUNISHMENT!

Law and Justice-03-06

Former UK Ambassador Charles Crawford questions the method and success of imposing sanctions

Back in the day when I was paid to do diplomacy, it was a refreshing if not a bracing bucketful of icy water to hear Russian diplomats talking about their professional discipline. I remember one telling me about a mistake a colleague had made:

“Yes, he got that wrong. He has been punished accordingly”

Wait … punished? Literally no-one in the modern UK Foreign Office has any idea of what that word means. Even (especially) if you do something horribly wrong, your line manager will be studiously solicitous and bend over frontwards to avoid giving any impression of bullying. Plus, in today’s post-modern diplomacy who’s to say what’s right anyway? Isn’t the very idea of ‘right’ and ‘wrong’ problematic? And maybe even judgmental?

Outside in the real world, everyone dislikes being punished for misbehaving. Everyone really dislikes being punished in front of other people for misbehaving. That adds public humiliation to the chastisement. There’s the pain of punishment itself. And there’s the perception of how far the punishment is fair. Welcome to the world of economic sanctions.

Sanctions are as old as diplomacy itself. You do something that hurts me? I hurt you! Thus, in 432BC in response to sundry affronts the Athenians cracked down on the trading municipality of Megara, banning Megarian merchants from Athenian harbours and causing Megara much hardship.

Fast forward 2,500 years. Qatar is grappling with the abrupt imposition of a range of economic measures by Saudi Arabia and other Gulf states over what they see as Qatar’s support for Islamist terrorism. These measures are having results: as of summer 2017 Qatar’s imports are down 30 per cent compared to 2016.

Disaster? Not (yet) so much. Qatar is a small but sophisticated country utterly depending on trade, and so (one might surmise) unusually vulnerable to strict measures imposed by its neighbours. But Qatar is also amazingly rich: if the Saudis and others won’t trade with Qatar, other states will jostle to move into those markets. Qatar is busy opening new container routes including to Turkey, and its overall trade surplus is holding up.

Or take Western economic sanctions against Russia over its Ukraine/Crimea policies. Qatar’s territory is a pert 11,500km2. That’s a rounding error for Russia with its 17.1 million km2. But because Russia is the planet’s heavyweight champ in territory terms, it takes a heavy blow to catch sanctions to catch Russia’s attention. And this has been delivered.

Russia’s GDP in 2006 was at some $1.3 trillion. After the global crisis in 2007/08 it climbed strongly to $2.2 trillion, by far Russia’s best result since the end of communism. But then (giddy with success?) the Kremlin launched its Ukraine Crimea-grab and many other violent destabilisations.

Wide-ranging Western sanctions were imposed. Russia’s economy has slumped backwards towards its 2005/06 level. Since Russia escalated its Ukraine machinations in 2012, the US piled on a further $3 trillion in GDP, while Russia lost $1 trillion. The opportunity cost of this massive wealth lost to Russia – in good part due to sanctions – compounds up over the years and decades. That’s a lot of clever new military kit and social investment afforded. Or not.

Let’s look at all this from first principles.

The whole point of economic sanctions imposed by a group of states on state X is to change state X’s approach by increasing the cost to state X of continuing with what it’s currently doing. An ostensibly simple message:

“You carry on doing all this bad stuff? You’ll get poorer. Maybe a lot poorer!”

But it’s not so simple. Sanctions make the sanctions-imposing states themselves poorer too, by closing off normal trading options. Hence squabbling within the EU over renewing economic sanctions against Russia: some EU member states lose out more than others.

And the threat of making state X poorer works only if state X takes a hard look at its options and decides (a) that, yes, it will indeed be poorer, and (b) that any gain from sticking with current policies is not worth that pain.

What if state X concludes (correctly) that it can tighten its belt, and use the imposition of sanctions to develop wily new home-grown industries to replace what it can no longer import? Some pain today – new strength tomorrow. Or state X might work out clever schemes to carry on exporting by badging its exports under the flag of a friendly state that does not support sanctions:

“You say we’ll get poorer. Are you sure about that?”

Thus, experts disagree: did wide-ranging sustained ‘classic’ sanctions against South Africa’s apartheid regime make the change to democracy come about earlier than it otherwise might have done? Or did they perversely strengthen the confidence of the then South African leadership by encouraging import-substitution and ingenious sanctions-busting by the business community?

Then there is sheer stubbornness, with its exotic Balkan sub-species called inat (a word for which there is no English equivalent):

“You say we’ll be poorer. And you’ll be right! But the heroic masses of state X don’t care! They’ll never submit to your banal bullying! Why eat caviar when there is yummy nutritious grass instead?”

See Serbia under Milošević. And North Korea now.

The North Korea case is especially interesting. Russia is furious about new US sanctions against Russia emanating from President Trump’s Washington. However, Moscow and Washington (and Beijing) also agree that ‘something must be done’ about North Korea’s bombastic missile launches, and so have imposed new measures to hit what passes for North Korea’s economy.

Yet the dilemma remains. ‘Something’ is ‘being done’. But is it making the difference required? What’s the point of punishing the hapless North Korean (or Serbian) masses when the real problem is their leaders? Is the idea that the masses get so vexed at this situation that they rise in fury and topple their own leaders whose bad policies have created their misery?

What if in fact this doesn’t happen? What if the leaders of state X just don’t care if the masses of state X gets poorer as long as they stay in power? What if the leaders of state x and their closest cronies in fact get richer through manipulating sanctions rules, even as the state X masses are impoverished? What if sanctions make those awful leaders stronger by reducing their incentives to cooperate and allowing them to froth up domestic patriotic defiance? Is Cuba a successful example of using strict economic embargos over some 60 years to promote democratic change? No.

Thus the idea has emerged of ‘targeted’ sanctions aimed at key members of an errant regime and their ill-gotten wealth. Some 250 senior Syrians are the subject of an EU travel ban and asset freezes. EU sanctions list in almost comic detail supposedly luxury items that can’t be exported to Syria to satisfy greedy local elite appetites:

  • Pure-bred horses
  • Caviar and caviar substitutes
  • Truffles
  • Wines (including sparkling wines) exceeding EUR 50 per litre
  • Cigars and cigarillos exceeding EUR 10 each cigar or cigarillo
  • Leather, saddlery and travel goods similar articles exceeding EUR 200 each

Do these greedy elites care if they can’t travel to swanky EU watering-holes to do their luxury shopping? Not much. Their family members travel instead. Human rights!

There is one big tactical advantage in such highly personalised sanctions: they help drive wedges and potentially create mistrust among the targeted elite themselves. Why is A on the list but not B? Is it true that C has been in the Gulf seeing shifty Westerners to try to get off the list? Cunning Western intelligence agencies can play with such things to spread mischief and encourage inner regime figures to lie low as and when regime-change looks to be imminent. Every little helps.

One last genre of sanctions is ‘conditionality’. Yes, we’ll give you development assistance, but on conditions. One of which is that if you use our assistance to promote extremism we’ll stop supporting you. This issue comes up periodically eg with Palestinian schools that promote vile anti-Semitism: why should UK or EU taxpayers support that? Conditionality sounds tough but never gets very far: aid budgets must be spent.

Conclusion?

Politicians proclaiming sanctions against state X like to imply that they are on track to achieve short-term, positive, expected changes in state X’s behaviour. The record shows that what we all get instead are long-term, negative and unexpected changes, with the people most deserving of severe punishment strolling away from the scene of their misdeeds.

 

Gervase@aumitpartners.co.uk

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