Alexei Ivanov is Director of the HSE-Skolkovo Institute for Law and Development. He holds an LLM degree (Harvard).
Kirill Molodyko is a leading researcher at the HSE-Skolkovo Institute for Law and Development. He holds an MPA degree (Harvard) and a Doctorate in Law.
Resume: Liberal Leviathan uses large-scale economic sanctions to demarcate its space. Sanctions are not a reaction – punishment or an attempt to respond to some threats to national security – but rather the first step in a rational strategy of managing the anarchic international society by the new rules.
Unlike other national and international mechanisms regulating social relations, law rests on formal logic because it grew out of the ancient rational tradition and was strengthened with the Protestant spirit of the modern era. If the word ‘sanctions’ belongs to the legal sphere, it must comply with its laws, including formal/logical ones.
The theory of law traditionally singles out three elements in a norm: a hypothesis (definition of circumstances to which a norm is applied), disposition (a rule or ban proper), and sanctions (punishment). Punishment can be applied only to a person who was aware of (who wished or who admitted the possibility of) the ensuing negative consequences which the legislator (in the broadest sense of the word) wanted to avoid by establishing certain rules.
The system of sanctions, created within the framework of the United Nations, was believed to fit into this logic, although the UN Charter does not use the term ‘sanctions’ or its synonyms to designate liability, preferring instead to speak of measures to maintain international peace and security. But in general, Chapter VII of the Charter, which makes provisions for possible action with respect to threats to peace, breaches of peace and acts of aggression, proceeds from the legal logic of applying punishment for wrongful acts and from the cause/effect relationship between them. In particular, this chapter authorizes the UN Security Council to “determine the existence of any threat to the peace, breaches of the peace, or acts of aggression,” that is, the objective factors of an offense, socially dangerous consequences and possible liable parties, and, secondly, to decide what should be done to maintain or restore international peace and security, that is, to determine the extent of liability, which may include various economic coercive measures used against liable parties and states.
A working group of the Security Council was established to develop “general recommendations on how to improve the effectiveness of UN sanctions.” The group said in its report that “pre-assessment or early assessment and standard language and terminology are essential ingredients for effective sanctions design, including accurate targeting.” This means maximum juridization of the process, including appropriate procedures (assessment) and the use of predictable (standard) liability. The Security Council, inter alia, was recommended to “give due consideration to the feasibility of targeted sanctions and their implications. Pre-assessment or early assessment reports “should be clear regarding the behavior the Security Council is seeking to change; the identity of the responsible actors/entities; the means available to the target to take evasive action; and the possible humanitarian, political, and economic impacts.”
LAW OR POLITICS?
This analysis summarizes the statistics of economic sanctions for 1987-2006, published in the latest edition of Economic Sanctions Reconsidered, which provides perhaps the most comprehensive overview of economic sanctions employed in the 20th century. The analysis shows that during the twenty years the United States used economic sanctions against other countries 49 times (including eight times under respective UN Security Council resolutions), and the EU used sanctions 20 times (including twice under Security Council resolutions).
Since 2006, the United States has used economic sanctions against eight countries under UN Security Council resolutions (Iran, North Korea, Libya, Guinea-Bissau, the Central African Republic, Yemen, South Sudan, and Zimbabwe) and against another three countries without such resolutions (Venezuela, Russia, and Syria).
So, since 1987 the United States has used economic sanctions against individual countries 60 times, including 16 times with the UN Security Council’s approval and 44 times without it. This is a conservative assessment which in all probability underestimates the number of sanctions imposed with the UN Security Council’s approval, because sanctions are not viewed as unilateral if the Security Council approved at least some economic actions against a given country, or did so post factum. It would be useful in future research to compare the actual scope of each sanction and the limits set by UN Security Council resolutions. Apparently, in some cases, actual sanctions were broader than planned by the Security Council and/or they were imposed before the corresponding resolution was adopted.
Since 2006, the European Union has used economic sanctions seven times under UN Security Council resolutions (against the same countries as the U.S.) and five times without Security Council resolutions (against Egypt, Libya, Russia, Syria, and Tunisia). So one can say that since 1987 the EU has used economic sanctions against individual states 32 times, including nine times with the UN Security Council’s approval and 23 times without it.
What is important is not only the number of independent decisions by states, called sanctions imposed without UN approval, but a different nature of these decisions. Traditionally, sanctions are viewed as punishment. As Barack Obama said in late February 2014, “there will be costs.” But many lawyers often say that there can be no punishment without a crime. A sanction without charges is not punishment but unjustified violence. In this sense, there is a significant difference between the sanctions against the non-Crimean part of Russia, whose authorities have faced charges, and much tougher sanctions against Crimea and Sevastopol, whose population has been held responsible for only God knows what. Remarkably, the results of the Crimean and Sevastopol referendums on incorporation into Russia have never been recognized. If the local population did not vote for incorporation into Russia, why were those restrictions imposed? But if it did, why are the sanctions against these territories much tougher than the sanctions against Russia? What is the real purpose behind this difference in punishment?
If one assumes that economic sanctions used in international relations are a form of legal liability, then many questions arise.
Firstly, it is problematic to identify the liable party. Guilt implies that responsibility should lie with the individuals or legal entities that committed the wrongful act. Meanwhile, most economic sanctions in recent years were used not against those who were directly charged with the given offenses. As a rule, punishment is directed against other actors. Take, for example, the U.S. president’s Executive Order 13685 of December 19, 2014, which established a full economic boycott of Crimea, including the prohibition for any entity under U.S. jurisdiction to engage in business in Crimea or with Crimean enterprises. The executive order cited “the Russian occupation of the Crimea region of Ukraine” as the reason for that. Proceeding from the logic of legal regulation, sanctions for “occupation” must be imposed on the state as an independent actor of international relations; imposition of sanctions on residents and businesses in the “occupied territory” or against business people from other countries who would like to do business with this territory, is illogical. Under this executive order U.S. IT companies (Apple, Microsoft, CISCO, IBM, etc.) stopped providing services to residents of Crimea, but continued to provide services to the alleged violator state, including services ordered by the Russian government.
Secondly, it is usually problematic to determine what rule or ban was violated, and to establish the cause/effect relationship between a violation, followed by punishment, and its negative consequences. For example, the first U.S. presidential executive order pertaining to the Crimean events, Executive Order 13660 of March 6, 2014, stated that the events in Crimea in February and March constituted “an unusual and extraordinary threat to the national security and foreign policy of the United States.” The phrase “threat to the national security” was also used in subsequent executive orders that introduced more sanctions against various commercial and government enterprises, individuals and sectors of the Russian economy. From the formal and legal point of view, if some action that represents a “threat to the national security and foreign policy of the United States” can serve as a reason for legal liability, there should be an international legal ban on such a threat. In addition, the developments in Crimea in February and March of last year should have directly led to the emergence of this threat. However, the aforementioned executive orders of the U.S. president gave no explanation regarding any international legal ban. Nor did they explain the cause/effect relationship between those events or the essence of the threat to the U.S. national security.
Broadly speaking, the U.S. administration has a habit of citing “national security” threats whenever other countries start conducting “undesirable” policies. Numerous references to “national security” in U.S. legal acts, made in unprecedented amounts compared with other countries, are nothing new: Professor Barry Carter of Georgetown University summarized extensive historical material on them in his book, International Economic Sanctions: Improving the Haphazard U.S. Legal Regime.
Characteristically, the UN General Assembly in its resolutions repeatedly emphasized the unlawful nature of economic sanctions used by states in violation of the procedure provided for in the UN Charter. For example, the General Assembly’s resolution of December 19, 2011 “urges all States to cease adopting or implementing any unilateral measures not in accordance with international law, international humanitarian law, the Charter of the United Nations and the norms and principles governing peaceful relations among States, in particular those of a coercive nature, with all their extraterritorial effects, which create obstacles to trade relations among States, thus impeding the full realization of the rights set forth in the Universal Declaration of Human Rights and other international human rights instruments, in particular the right of individuals and peoples to development.”
This resolution expresses “concern about the negative impact of unilateral coercive measures on international relations, trade, investment and cooperation” and reaffirms that “unilateral coercive measures are a major obstacle to the implementation of the Declaration on the Right to Development.” So, when discussing sanctions imposed by countries outside the legal restrictions established by the United Nations Charter, one speaks not of a form of liability or punishment for a violation but, rather, of an act of economic pressure which itself constitutes corpus delicti.
It is significant that, for example, Japan’s national legislation until 2004 ruled out the introduction by Japan of unilateral sanctions outside of the UN framework. In February 2004, the restriction was lifted, apparently in view of the general degradation of the UN regime regulating international relations.
SANCTIONS IN THE SYSTEM OF INTERNATIONAL POLITICAL ORDER
The right understanding of the nature of the phenomena under consideration is of great importance, because in the long run it determines behavior in international relations. Hedley Bull, a prominent theorist in this sphere, in his already classic book, The Anarchical Society: A Study of Order in World Politics, describes three views on the world order: (1) The Hobbesian, or realist tradition, which views international politics as a state of war; (2) the Kantian, or universalist tradition, which sees in international politics the potential for building community of mankind; and (3) the Grotian, or internationalist tradition, which views international politics as a realm for the existence of international society – a special community of nations.
According to Bull, the Hobbesian prescription for international conduct is that the state is free to pursue its goals, either maintaining (like Machiavelli) that it conducts its foreign policy in a kind of moral and legal vacuum, or presuming (like Hegel and his successors) that a state’s moral behavior in international relations lies in its own self-assertion. The only limiting considerations in that model of international behavior of states are prudence and expediency. Agreements between states are kept as long as it is expedient to keep them, but may be broken if it is not.
In the Kantian tradition, a state’s behavior is subordinated to the needs and interests of its citizens – the main actors of international relations who are believed to gradually form a panhuman space of interaction and regulation and to eventually “sweep the system of states into limbo.” In this logic, relations among states are viewed through the prism of universal human values and the interests of forming such a single global legal space.
The Grotian tradition is viewed by Bull as a compromise between the realist tradition and the universalist one. States, while continuing to be independent actors in international politics, enter into broader interaction with each other, forming an independent community which does not fully follow the logic of human interests, rights and freedoms, but nor does it act completely according to the laws of war between sovereigns. Bull describes such a community as anarchical since it does not have a common system of regulation and governance. At the same time, he says this community has some features that make it different from the Hobbesian state of war of all against all. First of all, according to Bull, “international society” is regulated and governed by rules and institutions, but only if there is a “feeling of common interest” and common values, which is transmitted into this system of rules and institutions. So, the political order in this model is determined by the frameworks of “common interest,” within which there are certain norms, rules, and institutions, and beyond them lies the Hobbesian world of sovereigns who are free to pursue their goals.
A SYSTEM OF MANAGED LIBERALISM
Unlike the United Nations project, which is Kantian in spirit and which is based on the Universal Declaration of Human Rights, the World Trade Organization (WTO) historically developed as a club of states which share a “feeling of common interest.” A violation of the rules by some member gives the aggrieved party a formal right to act unilaterally against the culprit. In the classical sense, this is not punishment but a right, given by the club, to hit back (if one can, of course).
Remarkable in this sense is the WTO’s attitude to trade sanctions, that is, to what the UN General Assembly calls “unilateral coercive measures” and what it views as a violation of the UN Charter and other norms and principles of international law.
Article XXI of the General Agreement on Tariffs and Trade (GATT) and a similar provision of Article XIV bis of the General Agreement on Trade in Services (GATS) allow restricting trade “in time of war or other emergency in international relations.”
In 1985, the United States imposed sanctions against Nicaragua, referring to this article of GATT. Nicaragua tried to dispute the validity of U.S. sanctions using GATT procedures that were effective at that time (before the WTO was established), but in 1986 it received a very vague and contradictory ruling, which was not even fully approved according to GATT procedures. It said that, although the sanctions were hardly compatible with the general principles of international trade and although the U.S. was recommended to lift them, GATT was not prepared to consider whether the introduction of the sanctions violated the provisions of Article XXI or not.
Also, the U.S. was a defendant in a WTO dispute over U.S. unilateral economic sanctions against Cuba, which also affected the interests of European businesses. The European Union sought WTO support to protect the interests of Pernod Ricard, a European liquor maker which purchased from the Cuban government the rights for the use of the Havana Club rum trademark. However, Washington denied registration for the trademark purchased by the European company, referring to a U.S. law that imposed economic embargo on Cuban goods. In 2002, the WTO Appellate Body ruled that all nationals of a WTO member country, in particular Cuba, could not be provided less favorable treatment than nationals of another WTO member country, namely the United States. Actually, the U.S. lost the case as Washington made all Cuban nationals, including those who do not even live in Cuba and who have no relation to the Fidel Castro regime, collectively responsible for actions imputed to Castro.
But even in the part of the dispute where the WTO did support the United States (by not recognizing intellectual property rights to U.S. assets previously confiscated in Cuba), the U.S. actually settled this issue not on an equal basis for all (even if it were a prohibitive one), but by granting an individual exception to the rule. This is why, in order to prevent the EU from insisting on the execution of the WTO’s ruling in the part that was in the EU’s favor and to avoid making essential amendments to U.S. laws to meet the WTO ruling, Washington settled the dispute by issuing an individual license for the import of Havana Club rum to a Luxembourg-French-Cuban joint venture. In fact, instead of complying with the WTO’s decision and harmonizing its laws with WTO norms and rules, the United States kept everything as it was, thus complying only with one specific property claim of its partner, the European Union, with which it shares a “feeling of common interest.” All the other WTO members, including Cuba, received no compensation for violation by the U.S. of the WTO rules.
However, even if a small country wins a dispute against the United States in the WTO, chances that its trade interests will be really protected are small, as was the case with Antigua and Barbuda. In 2003, Antigua won a lawsuit against the United States in the WTO but never received compensation. Last year, the Caribbean nation made a desperate official statement which described the WTO dispute settlement system as “a vehicle by which the strong economies could extract concessions from the weak while at the same time effectively stone-walling – no, in fairness, denying – the ability of small economies to obtain any meaningful recourse when wronged by others.”
Obviously, if the WTO rules cannot be observed beyond the framework of the club of “common interest,” such a system of world trade regulation cannot be called normative because it ensures the observance of the rules and accords only among friendly countries within the organization, leaving the others with broken hopes in the face of unfair competition from the “club.” Mutual trade according to predictable and stable rules among states with different political regimes and with neutral or even bad relations among them is impossible within the WTO. Nevertheless, the authors are far from thinking that the WTO is just an effective simulacrum luring weak countries into playing by the rules dictated by strong countries. Yet in terms of the Grotian tradition, the WTO plays the role of an informal organizer of relations within an archaic international community, although the rules in this system work only where there are shared values ??and interests which set the boundaries for the operation of this institution.
Interestingly, Cuba could have given an impetus to the formation of an entirely different world trade regime. In late 1947, a UN conference in Havana prepared a draft agreement on the establishment of an International Trade Organization. This agreement, which was in the spirit of the Kantian tradition of a universal world order, provided for detailed regulation of relations in the world economy, including issues of unfair competition and other forms of anti-competitive behavior on the global market. Such mechanisms could have significantly changed the model of world economy regulation – from club accords to an integral normative and enforcement system. Analysts believe that the International Trade Organization would have become an international regulator of restrictive business practices in the same way GATT was to become an international regulator of industry protection.” (See: John Braithwaite and Peter Drahos. Global Business Regulation. Cambridge University Press, 2000). The 1947 Havana agreement was never ratified by the signatory countries as the idealistic sentiment of the first postwar years quickly gave way to the reality of new confrontation.
The 1990s saw another attempt to adopt antitrust and fair competition rules within the WTO framework, but in 2004 negotiations on this issue were suspended. The regulation of the world economy went along a different path, which differs from the Kantian model of a single global legal space.
Importantly, the liberalization of world trade per se is not a consequence of the existence of a universal world order, as argued by proponents of a stronger WTO and other global legal regimes. For example, Columbia University professor Ronald Findlay and Oxford University professor Kevin O’Rourke in their book, Power and Plenty: Trade, War, and the World Economy in the Second Millennium (Princeton University Press, 2007) write that the level of market globalization and real freedom of movement of goods, services and capital across a range of indicators was higher at the beginning of the 20th century in the period of a truly Hobbesian confrontation between major powers than in 2000, at the peak of the popularity of the neo-liberal Washington Consensus.
The regime of world economy regulation, which formed in the second half of the 20th century, draws mixed assessments, ranging from enthusiastic advocacy in the Kantian spirit and talk of the coming “flat” world governed globally by a universal system of norms and values (with the exception of some territories that have accidentally and temporarily fallen out of the global process) to the proclamation of new Middle Ages and the revival of class and caste divisions. As is usual in such cases, the truth must be somewhere in between.
Princeton University professor John Ikenberry in his recent book Liberal Leviathan offers an attractive and realistic description of the political system of the present-day world. He writes that after World War II America made an attempt to create a regime of world economy regulation that would combine elements of universal legal regulation and diktat. After the war, Washington believed that “the United States could only survive and prosper as a global power if it had access to the resources and markets of other regions of the world.” According to Ikenberry, “the resulting order was hierarchical – the United States was most powerful and led the order,” but “the rules and institutions that it promulgated gave the order its liberal character.” He describes this order as “American liberal hegemony” following the Grotian logic: on the one hand, it is an order “that is open and loosely rule-based,” but on the other hand, the boundaries of this legal space are limited to states that recognize the United States’ leading role – not by virtue of coercion but because they share a feeling of common interest. Ikenberry calls the U.S. in such a configuration a “liberal Leviathan,” whose power is based not so much on direct violence as on the establishment of a club of prosperous states and on control over entry to it.
It is not surprising that the WTO, viewed by the public as a club of prosperous countries with common norms and rules guarded by liberal Leviathan, seemed so attractive to many states which hurried to join it. However, as was mentioned above, it became clear very soon that the key to this liberal world trade regime lies not in formal membership but in informal relations among those members of the club that share significant common interests with Leviathan. Needless to say that, given the nature of the architecture of managed liberalism, the WTO system is not intended to limit abuses by Leviathan itself.
A POST-WTO WORLD
This system of managed liberalism explains the logic of economic sanctions used by the United States and its allies today. Sanctions have become an instrument for managing the liberal economic world order within its club (Grotian) format of functioning. Whereas the 1990s saw an expansion of the WTO and other global systems for organizing the global economy, which was aimed at broadening the boundaries of “managed liberalism,” now the world is witnessing a U.S.-led process of reformatting the single regime of world trade regulation within the WTO frameworks through the proposed establishment of Trans-Atlantic (but without Russia) and Trans-Pacific (but without China) trade alliances.
Liberal Leviathan uses large-scale economic sanctions to demarcate its space and also as an indicator of “the feeling of common interest,” which, as Bull wrote, is required for establishing rules in the anarchic international society. Therefore, sanctions are not a reaction – punishment or an attempt to respond to some threats to national security – but rather a prologue, the first step in a rational strategy of managing the anarchic international society by the new rules. However, as David Baldwin, a renowned American scholar in international relations, wrote back in 1985, sanctions should not be underestimated as a tool of a purely economic policy (without any linkage to national security).
If this understanding is correct, then the middle of the 21st century may be marked by economic sanctions as a new norm in the governance of the international community for the sake of its greater segmentation and for building confidence within the boundaries of new clubs – in the same way as the end of the 20th century was marked by attempts to include a large number of states in the space of the liberal, albeit managed, regime of world economy regulation. In these conditions, the right strategy for Russia would be a rational and pragmatic attitude to the provisions of agreements concluded within the WTO frameworks. Under the regime of “managed liberalism” these agreements are club rules rather than legal norms. Russia should soberly assess what club it belongs to and with whom it shares “the feeling of common interest,” instead of trying to meet the requirements of the club to which it actually (but not formally) does not belong, and whose members do not share that “feeling” with it. Russia already pays a heavy price for the lack of such understanding as exemplified by the persistence to reproduce intellectual property protection standards and approaches envisioned by the WTO rules (TRIPS Agreement) in a way which meets primarily the interests of the United States and other major Western economies, and which, at the same time, holds back Russia’s economic development. But this issue requires a separate discussion.