Rethinking International Law After Gaza Symposium: Trade, Resistance and International Law – Responding to Atrocities

[M Beheşti Aydoğan holds a PhD from the University of Warwick’s School of Law and is a member of the Istanbul Bar Association.

Ömer Erkut Bulut is an Assistant Professor at Boğaziçi University Faculty of Law in Istanbul, Türkiye.]

It is common to hear claims about trade’s value in preventing conflicts. It is a central notion of liberal theories of international relations: from Kant’s commercial republics to Friedman’s McDonald’s hypothesis, trade and commerce are represented as a requisite for peace. The least bold account of this claim  is that the world becomes a ‘better’ place with international trade (IMF). 

Yet, there appears to be a disturbing contrast when atrocities are committed. In those instances, international trade is reduced to either a neutral element run through private contracts, or a liberal restriction applied to arms deals between buyer third world states and manufacturer first world states. In the former, trade appears redundant in the prevention of conflicts. In the latter, trade reinforces a value hierarchy in the international system. This hierarchy runs on a familiar narrative: while ‘villainous’ and ‘backward’ third world states violate human rights, rule-of-law-abiding weapons manufacturers in the first world respond to the conscience of humanity by adhering to their extraterritorial human rights obligations (see, EU Criterion Two). However, when benevolent and civilised states commit atrocities, these actions are often dismissed as the unfortunate consequences of war. The suspension of arms trade is not even considered until the scale of the atrocities becomes too significant to ignore. When it’s raining bombs, trade becomes a passive factor against carnages and barbarisms of weapon-yielding entities, states or non-state entities or institutions. Suspension of arms trade is either not considered, or considered too late and at an insufficient scale. The larger question of international trade remains off-topic.

Deploying a contrario reasoning, resistance movements regard trade as a potential intervention against states constantly exerting violent control and routinely killing people. Israeli violence in Palestine has also provoked the pursuit  of trade as a resistance strategy in the form of a boycott (which has been running at different levels and degrees). For instance, many people avoid using products and companies  supportive of the Israeli occupation in Palestine. 

Boycott can also take the form of a government policy as a cut-off in trade relations. Today, many states have sought to disrupt trade with Israeland many are under pressure to do more. The Arab League issued its first formal boycott of zionist commerce in 1945 and reiterated this in 1948. In the recent war on Gaza, Malaysia has completely cut off trade with Israel, citing trade’s role in contributing violence in Gaza. In a similar fashion, despite retaining a considerable surplus in the bilateral trade, the Turkish Government also heeded the public calls for cutting off trade with Israel. Hence, there is a communal belief in the utility and power of trade against violent repressive actors. 

However, this communal belief is distinct from claims about the inherent value of trade in promoting peace and safety of people. Boycotts are run on a presumption that applying economic pressure might constrict the abilities of a violent regime. A trading nation, on the other hand, is expected to be peaceful. Yet, as colonial history reveals, trade can be a violent practice in itself, as exemplified by the Spanish trade in gold from the Americas or the British opium trade in China. US neocolonial practices in the petrodollar economy showcased similar degrees of violence in Iraq in the postmodern period.

The contrast between trade’s role in peaceful relations and its subsequent use as a preventative measure in conflicts and atrocities indicates a paradox. The contrast appears in the inherent capacity of trade to streamline peace and its subsequent use to curb states’ capacity to commit atrocities. Hence we are left to  ask whether the law has anything to offer or if it is complicit in furthering violence and depravation. Does international economic law govern this paradoxical relationship between trade and peace in cases of atrocities? 

At first glance, one can casually conclude that the law does not seem to enable or oblige the subject of international law to explicitly denounce violent repressive regimes that commit genocidal actions. The Israeli violence in Gaza continues and has spilled over to other territories recently, especially Lebanon but also Yemen. But from a trade law point of view, another important element is the role played by peripheral states to circumvent even the limited legal restrictions that economic law has to offer. An example is the use of Southern Cyprus as a transition point for weapon deliveries to Israel from western states. But international trade extends beyond arms and international trade law could enable states and companies to disassociate themselves from atrocities. The ideal disassociation takes place not by being neutral about an ongoing genocide, but proactively invalidating sales and shipping contracts, preventing third party sales to genocidal entities. All these require a legal assurance of these private and public entities. 

Regular Routes: Arms Trade Restrictions 

Common human rights law and humanitarian law approaches present a soft narrative that generates prolonged debates and procedures when compared to the speed and vigour of  atrocities such as genocide and ethnic cleansing. 

Yet, the present state of the law produces comical irregularities. For instance, Germany is allegedly slowing the approval of new arms exports to Israel. However, the government spokesperson emphasises: ‘There is no German arms export boycott against Israel’. Combined with Germany’s reluctance to acknowledge the ongoing genocide, this generates potential for double standards. More importantly, it indicates that the present law, as it is applied in the European domestic context (as weapon exporters), does not enable a prompt response to atrocities via trade. 

Likewise, the 2013 Arms Trade Treaty has also proven to be unfruitful despite its 113 parties, including European weapon exporters. The gap between legal risk assessment procedures on human rights and humanitarian law and the reality of an ongoing genocide is vast. Compare, for instance, the dire situation in Gaza and the German argument on ‘the risk prognoses required by international law’ before the ICJ which did not authorise provisional measures in Alleged Breaches of Certain International Obligations in respect of the Occupied Palestinian Territory (Nicaragua v. Germany) (emphasis added):

39. Our four-tiered legal and political control régime of exports of arms and military goods is robust. It is democratic, as transparent as possible given the sensitivity of the material involved, and it is subject to parliamentary and, to some extent, judicial oversight.

40. Nicaragua has provided no evidence whatsoever that the German licensing policy is not appropriate for conducting the risk prognoses required by international law. By contrast, the German legal framework provides for constant reassessment in the light of highly dynamic situations on the ground.

The potential of arms trade routes is limited to a risk-based analysis that fails to correspond to ongoing urgent situations in practice. The larger system of international trade seems to follow suit as we discuss below.  

Economic Institutions, Free Trade and Countering Atrocities

The  post-WWII international economic order is also rooted in the Bretton Woods Agreements in 1944. Reasoning that the barriers to free trade and investment exacerbated the economic problems, fueling extremist and fascist movements in Europe and eventually leading to a destructive war, the victors of WWII created mechanisms to facilitate free trade and investment. They also established the IMF and World Bank Group to provide the necessary funding to nations for development projects. A form of liberal institutionalism took the lead in the design of the economic order. The mentality set out in the Bretton Woods Agreement has remained  dominant in international economic relations which narrated that fewer barriers to trade and investment would always be  positive, prompting prosperity, creating jobs, transferring knowledge, and even preventing wars by deepening the economic connections between nations. Theories of economic interdependence tell a similar story about the value of trade for peace. 

While the mentality is subject to criticism in different aspects, international economic law focuses almost exclusively on facilitating trade and investment more and more. This ethos is reflected in its institutions and principles. International trade, investment, financial agreements and monetary organisations adhere to the opinion that:

‘[p]rivate international capital flows, particularly foreign direct investment, along with international financial stability, are vital complements to national and international development efforts. Foreign direct investment contributes toward financing sustained economic growth over the long term. It is especially important for its potential to transfer knowledge and technology, create jobs, boost overall productivity, enhance competitiveness and entrepreneurship, and ultimately eradicate poverty through economic growth and development.’ 

Therefore, international economic law is mainly focused on eliminating barriers to investment and trade no matter what. But what about when those barriers are justified? Or when do we set up barriers to trade that exacerbates  atrocities?

There are areas where international economic law permits action to limit trade, investment and finance from and/or to other state(s). Under the General Agreement on Tariffs and Trade (GATT) Article XXI, member states may impose trade restrictions or other measures necessary for protecting their essential security interests. On the other hand, the security exceptions cover scenarios where the contracting party is involved in the conflict, rather than providing a treaty exception on humanitarian grounds. In addition, GATT provides general exceptions allowing members to take measures that would otherwise violate WTO obligations if they are necessary to protect public morals (Article XX(a)) or human life and health (Article XX(b)). Yet, the scope of application of the protection of public morals and human life exception is unclear. Consequently, international trade law mostly allows for the restriction of trade in a case of self-interest. This self-interest could be extended to the collective interest. Apart from formal participation in a conflict, states could respond to oppressive violent activities through economic action. An exception could be extended as a countermeasure against states committing atrocities. 

The recent practice in trade agreements also increasingly adopts human rights clauses which recognise exceptions to treaty obligations, including those of the EU and the US. The exceptions or carve-outs in international investment agreements (IIAs) are also adopted more and more by contracting states. The carve-outs which emphasise a state’s right to regulate or police powers are specifically invoked on the grounds of national security, environmental protection, and public health. Public order, public morals, taxation, and labour rights are other valid grounds in IIAs. International monetary organisations, primarily the IMF and World Bank Group, also have the so-called safeguarding policies and guidelines in order to prevent funding entities and projects which cause harm to people and environment, such as the World Bank’s Environmental and Social Framework (ESF). 

Institutions and principles of international economic law seem to care about upholding human rights and dignity when striving for increased economic cooperation and development. While there is no direct reference to armed conflict and atrocities (except when the host state is part of it), the measures can be justified by interpretation when the violations of the peremptory norms of international law are concerned, as we are witnessing in Gaza. Yet, carve-outs and safeguarding policies become redundant given the political alignment of western states and western–oriented institutions especially in the Gazan context where they actively support Israel. This is also exemplified in the context of arms trade as discussed above about Germany. The political positionality of the actors taking action in cases of atrocities are also important for the practice of law. 

The question one might ask is why international economic and financial institutions are indifferent to Israel’s ongoing atrocities ? Immediate memory shows that those institutions can act. When Russia launched its invasion of Ukraine in February 2022, western led international community was swift to exclude Russia from many international economic institutions. Within a week, the World Bank announced that it had halted all cooperation programs with Russia (and also Belarus for its support to Russia in its special military operation). Draconian economic sanctions were brought against the Russian Federation and few in the circles of international economic law protested. There were reports indicating “U.S. and the European allies examining ways to suspend Russia’s ‘most favored nation’ trade status in WTO”. The IMF promptly convened a meeting within a week to provide 1.4 billion USD emergency financing to Ukraine,] while Canada advocated expelling “arsonist Russia” from the IMF even though the Articles of Agreement of IMF did not have any provision on the impact of the armed conflict and aggression by a member state. While the omission of the outcome of the violations of the peremptory norms of international law by a member state is admittedly a shortcoming of IMF’s structure, it is also striking that, a year later, we have not had  a simple debate regarding the repercussions of Israel’s atrocities.  

Trade, Peace and Genocide – What Next?

Atrocities such as the ongoing genocide in Gaza are true tests of the value of trade for peace and security of people. The same is true of the international law on trade and economic relations. The current role of IEL in responding to atrocities is barely positive. Its privileged use in certain cases such as Russia also adds another dimension to the questions around the international and universal character of international law. IEL is both insufficient and selective. The selectiveness indicates double standards while insufficiency works in favour of those carrying out atrocities. This effectively falsifies the premises of international free trade on peace. 

Reinvigorating the law in favour of those who are suffering and want to proactively disassociate themselves from atrocities requires a broader understanding of the role of trade to develop prompt and adequate responses to atrocities. States, general public, private entities should be empowered to use trade in cases of atrocities and International law should protect those taking action against the oppressor actor from economic consequences of their actions. Currently, IEL does not have sufficient mechanisms and principles regarding how to counter atrocities. The disregard of responding to atrocities in the regulation of international trade and economic relations is one of the significant shortcomings of the current international economic order.