Impact of Economic Sanctions: Report of an Inquiry by the Select Committee on Economic Affairs

Economic sanctions used in isolation from other policy instruments are extremely unlikely to force a target to make major policy changes. Even when combined effectively with other foreign policy instruments, sanctions usually play a subordinate role. They may even be counterproductive when a target regime responds by increasing its internal control over resources. Often, greater emphasis on economic, diplomatic and security incentives will be more effective. Nevertheless, economic sanctions can, on occasion, contribute substantially to achieving objectives when combined appropriately with other instruments of foreign policy. Comprehensive sanctions are likely to result in severe suffering among the general population. Their application would not be compatible with the Government’s principle that sanctions should “hit the regime rather than the people”. In the case of Iraq, comprehensive sanctions helped secure major concessions but did so at great human cost. In the case of Burma, sanctions are said to be targeted but are nevertheless wide enough in their impact to hurt the general population. Yet they have secured no progress towards democratisation or increased respect for human rights. The Government should review current sanctions policy on Burma, to decide whether it is worth continuing. “Targeted” financial sanctions have been relatively ineffective. They have often been imposed on people and entities selected on non-transparent or dubious grounds. The Government should look for ways to incorporate a proper degree of transparency and due legal process into targeting procedures. We endorse the condemnation by the EU of the extra-territorial application of US sanctions legislation as a violation of international law. The existing measures available under EU and UK law appear to provide a sufficient legal basis for an effective response to US extra-territoriality. What is required is the political will to address this issue. On targeted commodity sanctions, including diamonds, the Government should continue to work for improvements in UN monitoring and enforcement capabilities. The Government should ensure that the UN’s humanitarian assessment procedures are applied to any sanctions with which it is involved. It should also provide a public account of the application of the UN guidelines. Sanctions are often adopted with little sense of how, if at all, the objectives are to be achieved. The Government should ensure that the objectives are always clear and realistic and that an exit strategy is developed before sanctions are imposed. The Government should be more active in promoting systematic monitoring and independent expert review of sanctions policy. There should also be provision for regular Parliamentary review, so that Parliament can consider how far sanctions are achieving their intended goals. The costs to British business arising from compliance with UK sanctions policy are relatively minor. They are acceptable to the extent that the sanctions policies themselves are well founded; this is open to question in some cases. Reliance on sanctions as the main means of resolving the current disputes with North Korea and Iran appears a recipe for failure. We endorse the Government’s support for the recent agreement with North Korea and the phased lifting of sanctions as part of that Agreement. On Iran, we urge the Government to make every effort, bilaterally and through the EU, to persuade the US to commit fully to involvement with the EU’s proposed Framework Agreement.