Unilateral and Extraterritorial Sanctions Symposium: Here We Go Again, Russian Aggression and Western Sanctions

[Alexandra Hofer (a.s.hofer@uu.nl) is an assistant professor in public international law at Utrecht University and affiliated researcher at the Ghent Rolin-Jaequemyns International Law Institute (GRILI).]

Note to reader: most of this piece was written on Friday, 25 February. Given the speed at which the situation is evolving it may not be up-to-date at the time of publication, though it tried to take into account some of the additional measures announced as of 26 February.

It would be unoriginal to start this introduction to the Symposium on Charlotte Beaucillon (ed), Research Handbook on Unilateral and Extraterritorial Sanctions (Edward Elgar, 2021) with a claim that sanctions are ubiquitous in international practice. Yet, no matter how cliché, “sanctions are here to stay” (Zachary Goldman and Alina Lindbloom, chapter 8). The contributors to the edited volume provide an up-to-date tour d’horizon on the latest trends and what they reveal to us on the state of the law. In many ways, the volume points to legal lacunae as well as differing views over the legitimately and desirability of sanctions, thereby raising more questions than answers. The EU, the US and their like-minded partners’ reliance on unilateral sanctions (on terminology see Charlotte Beaucillon, Introduction; see also Jean-Marc Thouvenin, chapter 9) in response to Russia violation of Ukraine’s territorial integrity and sovereignty illustrate the timeliness and relevance of the Handbook.

In the closing remarks of Unilateral and extraterritorial sanctions policy: the Russian dimension, Ivan Timofeev (chapter 6) noted that “sanctions are most likely to remain a feature of Russian-Western relations for decades” and how “[a]ny new crisis may provoke further exchanges of restrictions.” This is, unfortunately, what has come to pass over the last weeks. On 24 February, three days after declaring the recognition of the independent states of Donetsk and Luhansk republics in Eastern Ukraine (which was also the eighth-year anniversary of the Maiden Revolution), Russian President Putin announced that he “made a decision to carry out a special military operation” and launched a ground and aerial attack on Ukraine.

After President Putin’s announcement, the president of the European Commission Ursula von der Leyen vowed to “present a package of massive and targeted sanctions” in response to the Russian invasion in Ukraine. She explained the sanctions will be “designed to take a heavy toll on the Kremlin’s interests and their ability to finance war”. As promised, a package of measures was announced on 25 February, which is designed to cause:

maximum impact on the Russian economy and the political elite. It is built on five pillars: The first is the financial sector; second, the energy sector; the third is the transport sector; fourth are export controls and the ban of export financing; and finally, visa policy…

This rationale of imposing costs on Russia was echoed by the US and UK, when they announced the adoption of their own unilateral sanctions (see also here and here). Like the EU’s measures, they have especially targeted Russia’s energy sector, its financial institutions, aiming to exclude its banks from the American and British financial system, and sought to curtail its access to certain technologies.

In Kyiv’s view the initial measures announced by the sanctioning states were insufficient, notably because the EU and US withheld from excluding Russia from SWIFT. Reportedly, there was reluctance to do so because of the potential impact on the sanctioners themselves or on innocent third-parties. That said, on 26 February, after Russian forces further advanced in Ukraine, including into its capital, a new package of sanctions was announced, this time removing certain Russian banks from SWIFT. In a rare move, it was decided to impose an asset freeze on the Russian Head of State, Vladimir Putin, and the Russian Foreign Minister, Sergei Lavrov.

Based on the justifications provided, the sanctions’ purpose is to impose costs on the wrongdoer in an effort to make it cease its wrongful behaviour and induce compliance with international law (on the objectives of sanctions see Erika Moret, chapter 2). In order to impose costs in the most effective manner, the sanctioners need to coordinate their efforts. This has not always been the case in the context of restrictions imposed on Russia (Ivan N. Timofeev, chapter 6), but for the time-being the sanctioners are showing a united front. The EU and the US are the most dominant sanctions senders, although their practice tends to differ. Under the Treaty of the European Union, the EU’s restrictive measures are “value-driven and rel[y] on the EU’s interpretation of commonly considered universal values” (Charlotte Beaucillon, chapter 7: 111). On the other hand, the US is much more willing to go it alone and adopts sanctions to defend its national security interests (Zachary Goldman and Alina Lindbloom, chapter 8). Although the EU is staunchly opposed to extraterritorial sanctions, its own condemnation of this practice has been rather timid (Yann Kerbat, chapter 10; see also Daniel Ventura, chapter 13). Furthermore, the EU’s measures do have extraterritorial features, leading Charlotte Beaucillon to qualify its practice as “strong unilateralism with soft extraterritoriality” (see chapter 7).

Returning to the sanctions discussed here, as long as they do not cause the sanctioners to breach obligations owed to Russia they constitute acts of retorsion, lawful albeit unfriendly acts. The legality of the measures needs to be assessed on a case-by-case basis. For instance, in halting the certification process of the Nord Stream 2 gas pipeline (Ivan Timofeev, chapter 6: 101-2), Germany is arguably breaching an agreement it had with Russia, meaning that Germany’s responsibility could be invoked. Yet, Germany could justify the suspension as a ‘third-party countermeasure’ – a controversial circumstance precluding wrongfulness whereby non-directly injured states or international organizations adopt countermeasures in response to a violation of obligations erga omnes. However it is not certain that third-party countermeasures have been generally recognized under customary international law (Alexandra Hofer, chapter 11). To the extent that Russia finds the sanctions breach agreements under the World Trade Organization, notably the General Agreement on Tariffs and Trade, it could initiate a complaint before the WTO Dispute Settlement Body (Lena Chercheneff, chapter 14). The question would be whether the sanctioners could successfully invoke the security exception found under Article XXI of the GATT. As the Organization of Economic Cooperation and Development terminated Russia’s accession (which has been postponed since 2014), it will not be able to have recourse its dispute settlement mechanism (also discussed in chapter 14). Furthermore, targeted sanctions against individuals, such as asset freezes and travel bans, are by nature punitive. They are imposed by a political authority without prior criminal proceedings. Questions generally arise under the right to due process, and the degree of protection afforded varies from one state to another (Anton Moiseienko, chapter 23; see also Alexandra Hofer, chapter 11, for a discussion on targeted sanctions and the law of state responsibility). Finally, it should be noted that even if the unilateral sanctions against Russia are not extraterritorial, jurisdictional questions still arise as states apply prescriptive jurisdiction to a situation that is far removed from their territory and where the personal nexus is weak (Yann Kerbat, chapter 10).

In response to the Western sanctions, Russia appears unimpressed. Its Foreign Minister retorted that: “Russia […] is able to minimize the damage. […] sanctions pressure is not able to affect our determination to firmly defend our interests”. It would seem that it is prepared to weather the storm of additional sanctions, which it has been under since 2014, and has promised to adopt counter-sanctions. As the past years have shown, Russia implements these measures defensively – by decreasing the impact of sanctions on the Russian economy – and offensively – imposing counter-costs on the West (Ivan N. Timofeev, chapter 6). Russia can also build ties with other countries that aspire to avoid the restrictions from US (secondary) sanctions. The US is able to place pressure on other countries thanks to the ‘weaponization of its dollar’, yet the global context is changing in such a way that sanctioned actors are shifting towards alternatives (Zachary Goldman and Alina Lindbloom, chapter 8). One of the main actors in this context is China, but the BRICS states are equally relevant (see chapter 3 and chapter 4 on South African and Indian approaches respectively). Russia has already started to pivot towards China, an outspoken critique of unilateral sanctions (Congyan Cai, chapter 5). It has lifted imports on Russian wheat and could allow Russian banks to substitute SWIFT with its Cross-Border International Payments System (CPIS). In response to the West’s reaction to Russia, the spokesperson for the Chinese Foreign Ministry remarked that:

Sanctions are never effective means to solve any problem. We hope relevant sides will strive to resolve the issue through dialogue and consultation. I must also stress that we consistently oppose all illegal unilateral sanctions.

In addition, the sanctioning actors have coordinated their response to Russian aggression in order to apply pressure in the most effective, meaning potent, manner possible. Notwithstanding the issue of whether the sanctions will actually cause a behavioural change, questions arise as to how third parties, notably the civilian population of both the sanctioned and the sanctioning states as well as economic operators, will be impacted.

Within this context, Von der Leyen’s above-quoted statement on adopting “massive and targeted sanctions” against Russia reads as an oxymoron. Targeted sanctions are designed to impose costs on the actors directly responsible for the unwanted behaviour (Erika Moret, chapter 2, see also Clara Portela, chapter 25). They came into being in order to remedy comprehensive sanctions’ unwanted negative impact on the civilian population. They can be in the form of asset freezes or travel bans against individuals, but they can also be directed against a sector of a country’s economy. On 7 February 2022, the UN Security Council held a meeting on sanctions. It was confidently asserted that policy tools have transitioned from being “blunt” to “vital”. In Under-Secretary General Rosemary DiCarlo’s own words: “UN sanctions are no longer the blunt instrument they once were. Since the 1990s, they have undergone considerable changes to minimize their possible adverse consequences on civilian populations and third States”. While at the same time she acknowledged: “More can be done to reduce the possible adverse consequences of sanctions”.

Though sanctions are clearly an important political instrument, one may reasonably wonder whether it is true that they are no longer blunt. This is a question that applies not only to any form ofsanction, whether they are multilateral or unilateral. Targeted sectoral sanctions are employed in such as way that their effects on the civilian population resemble those of a comprehensive sanctions regime (Erika Moret, chapter 2), raising questions about the sanctioners’ accountability for negatively impacting human rights (Ioannis Prezas, chapter 22). One of the difficulties sanctioners face is that they aspire to apply maximum pressure on the wrongdoing state, which is not always compatible with the rationale of targeted sanctions. Paradoxically, whereas sanctions are adopted in response to an act of aggression, which is bound to cause massive human rights and international humanitarian law violations, responding by the same token with massive sanctions may only multiply human suffering instead of providing a definitive solution to a conflict. As the UN Special Rapporteur on the negative impact of unilateral coercive measures has noted: “unilateral sanctions prevent the populations of targeted countries from fully enjoying their human rights; and that the impact is especially severe for vulnerable groups” (see Pierre-Emmanuel Dupont, Chapter 21 for a discussion on the debate surrounding unilateral coercive measures). These issues are only further aggravated by extraterritorial sanctions, which have more far-reaching effects. At present, however, the sanctions against Russia are not extraterritorial in nature. In the context of the latest round of Western measures against Russia, sanctions will undoubtedly not only have an impact on Russia but also on the West itself (see here), especially as it is dependent on Russia for 40% of its natural gas and western firms have business relations with and/or assets in Russia. The financial sanctions raise multiple challenges for national economic operators, who risk stringent fines if they are found to be in breach of sanctions if they are involved in business in sanctioned states (as illustrated by the Latvian bank ABLV, Ilze Znotijna and Paulis Iljenkos, chapter 17) and thereby tend to adopt the strategy of overcompliance (Emmanuel Breen, chapter 15; see also Grégoire Mallard and Anna Hanson, chapter 16). Just as targeted individuals may seek redress for their listing, economic operators that are affected by unilateral sanctions may also seek legal remedies – especially when they are caught in the cross-fire of competing jurisdictions –, leading to questions on the venues available to them (explored in Marjorie Eeckhoudt, chapter 18; Jin Sun, chapter 19; and Eric De Brabandere and David Holloway, chapter 20).

In many ways, the question of whether sanctions are no longer a ‘blunt instrument’ is a matter of the rules that regulate their behaviour. Against this backdrop, Charlotte Beaucillon’s Research Handbook on Unilateral and Extraterritorial Sanctions (2021) is a welcome, and much needed, addition to the literature. Its timeliness and relevance are evidenced by the multiple references to it throughout this commentary on the latest Western measures against Russia for its act of aggression against Ukraine. As has been noted multiple times, in spite of the frequent recourse to unilateral sanctions, there is a lack of legal clarity on the rules that apply to these tools. Challenges arise not only in the context of human rights (Part IV) but also on their impact on economic operators (Part III) as well as more general areas of international law (Part II). Over the coming days, the contributors to this symposium bring their own insights to each of these themes and provide further food for thought.

It remains to be seen what the latest crisis in Russia-Western relations will bring, and how it will contribute to the development of international law on sanctions. Since 2014, Western sanctions and Russian countersanctions have caused economic damage and allowed both parties to send political signals. Nevertheless, neither “Western sanctions nor Russian countersanctions have changed the political course and behaviour of the two sides, though sanctions themselves have caused harm to both” (Ivan N. Timofeev, chapter 6: 90).