Mr. Chair and members of the committee, thanks very much. It's a great privilege and honour to be appearing before you via Skype on this important issue of sanctions.
If you don't mind, Mr. Chair, what I will do is focus on whether sanctions work and what the United States has been doing. I will not...I don't feel it's my area of expertise or responsibility to focus on the legislation you have before you, but I'll talk a little more broadly about the U.S. experience with sanctions.
Quite honestly, if this hearing were held even a week ago today, I might offer a slightly different testimony, at least at the end of my remarks, but in light of the election of Donald Trump, I do think that sanctions will be re-examined and given another look, even though sanctions had been an important part of U.S. foreign policy over the years under both Republican and Democratic administrations. They have been important parts of the foreign policies of many other countries as well.
Before getting into the implications of the election in the United States, let me back off and look at the issue of whether sanctions are effective.
Some analysts argue that sanctions rarely work against intended targets. They harm average citizens and they even inadvertently help the targeted regime demobilize the international community by giving it the false sense that the international community is in fact responding to a crisis situation.
Some researchers such as Gary Hufbauer claim that sanctions have no more than a 34% success rate over the years. Sanctions have worked in places like South Africa with the apartheid regime, against the Polish government during the crackdown against Solidarity, and in the case of Iran, in bringing it to the table to negotiate over nuclear weapons. The Jackson-Vanik legislation that was passed in the 1970s involved the Soviet Union and its ban on emigration by Jews out of the Soviet Union. Most recently, there were sanctions in response to Russia's invasion of Ukraine. At the risk of stating the obvious, they have failed miserably—most notably, at least, the U.S. sanctions when it comes to the issue of Cuba.
The Secretary of the Treasury in the United States, Jack Lew, said in a speech on March 30, “While every situation will require a tailored approach, the underlying goal of all sanctions is an effort to change behaviour.”
Sanctions are indeed most effective when they can take advantage of other economic conditions. That has been the case, for example, with the drop in the price of oil, where sanctions have been accentuated in their impact due to the precipitous drop in the price of oil from Russia.
Similarly, countries more integrated into the international financial system will feel the impact of sanctions more than countries that are isolated. This would be true in the case of Iran and even in the case of Russia, of course, in contrast to the situation with North Korea. Sanctioned countries tend to see a drop in foreign investment out of fear that even if a certain project is not currently prohibited, it could be prohibited should sanctions be ramped up against the targeted nation.
That brings me to the importance of the psychology of sanctions. The target of sanctions needs to think that it is going to get hit with more sanctions if it doesn't change its behaviour. The mistake we've made, for example in the case of Russian sanctions for its invasion of Ukraine and illegal annexation of Crimea, is that the conversation, particularly in Europe, has been about the hope that the EU will maintain existing sanctions. There is virtually no conversation about ramping up or ratcheting up sanctions should Russia continue to violate the Minsk cease-fire agreement.
Similarly, it was a mistake for Europeans to raise expectations that Russia might be sanctioned over its military actions in Syria, particularly in Aleppo, that killed hundreds of innocent civilians. Nothing happened in the way of new sanctions against Russia for Syria, and they were wrong to have raised the hopes and possibility that such steps would be proposed.
Sanctions today, unlike most of those in the past, which were broad and sweeping in nature, tend to be more targeted and aimed, if you will, at the bad guys responsible for egregious behaviour. They are best done with other countries, but that said, the extraterritorial nature of U.S. sanctions should not be underestimated. Secretary Lew said in his March 30 speech, “The power of our”—meaning western—“sanctions is inextricably linked to our leadership role in the world.”
Sanctions were forged in the context of our position as the world's largest economy and the dominant role the U.S. financial system plays in global commerce.
It's also important that we not confuse means with ends. Unity on sanctions, meaning trans-Atlantic unity, a global unity in which Canada, the United States, Europeans, and others come together, is an important issue, but it's a means to accomplishing what should be the goal with sanctions. Take, for example, getting Russia out of Ukraine and respecting Ukraine's sovereignty and territorial integrity. Sometimes the search for unity on sanctions leads us to the lowest common denominator on sanctions. It's simply easier. It's not easy, but easier for the U.S. to pursue sanctions on its own.
I'm all for unity. I'm for the U.S. working with other countries on sanctions. As Secretary Lew said, “The more international support there is for sanctions, and for their underlying objective, the more effective they will be”, but not to the point of confusing unity with the objective of changing behaviour. Sanctions are best done as part of an overall approach to a problem, but sanctions are not the be-all and end-all in and of themselves. Imposed in a vacuum, they're less likely to work. They have to be accompanied by diplomatic and other means of coercive actions.
The question is not whether sanctions have worked or not, but whether they can be effective when used along with other elements. Sometimes they are the best option to have available, certainly as a step to ensure that we don't go straight to a military response. They can be part of the answer when we in the international community say something is unacceptable. In fact, they give meaning to the word “unacceptable” and make sure that we do not go back to business as usual after we have declared that a certain country's or a regime's actions are unacceptable.
To critics of sanctions I always ask, “If not sanctions, what then would you do?” Rarely do I get a satisfactory answer.
Secretary Lew, in his March 30 speech, said:
||Sanctions are not meant to dole out punishment for past actions. They are forward-looking, intended to keep illicit or dangerous conduct out of our system and create pressure to change future behavior. This foundational principle is very different from civil penalties and forfeiture, which are punitive and meant to address past behavior.
Quite frankly, and with all due respect to Secretary Lew, I don't agree. Sanctions are imposed reactively, after something bad has happened, after a country has been invaded or a regime is in place oppressing a population's rights or a country launches a campaign in pursuit of nuclear weapons. Sanctions are not imposed pre-emptively, in anticipation of something bad happening. They do not look forward. They always follow something bad.
That's important to bear in mind, because when they are being considered, countries are not looking at ideal options. In an ideal world, sanctions wouldn't be necessary, nor would our militaries, but we don't live in an ideal world. Sometimes we have to resort to measures that we'd rather not have to take, and those include sanctions.
Sometimes sanctions seek to block funding to the bad actors, whether those are individuals involved in gross human rights abuses, as was the case with the Sergei Magnitsky Rule of Law Accountability Act that the U.S. Congress passed in late 2012, or whether it is funding for terrorist organizations. Sometimes they're designed to change behaviour, such as in the case of Iran or in Russia's aggression and invasion of Ukraine.
It's important to demonstrate that sanctions also have an end when the target of sanctions changes its behaviour. Secretary Lew said, “since the goal of sanctions is to pressure bad actors to change their policy, we must be prepared to provide relief from sanctions when we succeed. If we fail to follow through, we undermine our own credibility and damage our ability to use sanctions to drive policy change.”
Let me explain the sanctions that we have in place against Russia. Two are currently in place and two have been talked about and considered, but no action has been taken.
The Magnitsky act that I mentioned earlier was done through legislation by the U.S. Congress, meaning it will be much harder for president-elect Trump to remove the Magnitsky legislation, though he would have the authority not to impose those sanctions under Magnitsky. I regret to say that no other country, including Canada, has passed any legislation comparable to the Sergei Magnitsky act.
There were Ukraine-related sanctions, and there were two different kinds of sanctions under the Ukraine-related sanctions. One was for Russia's illegal annexation of Crimea, and the other was for its military actions in Donbass.
These are sanctions that in fact president-elect Trump could lift. They are not codified by U.S. legislation. Though if president-elect Trump were to lift such sanctions, it would be likely to generate a very negative reaction from Congress.
The other two areas involve Syria and Iraq, and here there has only been conversation about imposing sanctions on Russia for its military actions in Syria, especially in Aleppo, and for its unprecedented hacking of email systems in the United States with the goal of trying to influence or affect U.S. elections.
I am very worried—and I will end with this, Mr. Chair—that Donald Trump will move to lift sanctions on Russia. I'm equally worried that even before he has the authority to do so he will cause the European Union, when it reviews sanctions next month, to decide not to renew sanctions and roll them over for another six months. I think this would be a very dangerous move. It would be a disaster for Ukraine, for the region, and for the concepts of sovereignty and territorial integrity that many sanctions were designed to uphold.
Thank you very much.
Thanks so much, Mr. Chair and members of the committee. I'm pleased to be able to testify before the standing committee in your comprehensive review of the Special Economic Measures Act and the Freezing Assets of Corrupt Foreign Officials Act. I'll discuss my perspective on each of those laws in turn.
First, as you know, FACFOA was enacted in 2011, in the midst of the Arab Spring, as a tool for supporting states in political turmoil that were trying to transition toward democratic rule. FACFOA allows Canada to temporarily freeze the property of corrupt current or former foreign officials, as well as that of their families or associates, when the foreign state formally requests that Canada do so, all with a view toward ultimately recovering those assets for the foreign state. Given this relatively narrow scope, however, FACFOA has been utilized only a handful of times to sanction corrupt foreign officials, in the cases of Tunisia, Egypt, and Ukraine. I note that the Ukrainian sanctions were jointly authorized under SEMA.
In my view, the major problem with FACFOA as enacted is that it relies on a foreign state claiming that a politically exposed person from that state has stolen funds and then formally requesting that Canada act. The expectation that governments will be eager to call out corruption within their own ranks is not consistent with the reality that many of the world's countries are not free. Indeed, the organization that Mr. Kramer formerly ran, Freedom House, in its “Freedom in the World 2016” report, concluded that only 86 countries can currently be considered free, while 109 countries are either partly free or not free at all.
The effect of this reality is to limit FACFOA's usefulness to penalizing corrupt former officials when corrupted governments have changed, rather than productively sanctioning corrupt current officials, as foreign heads of state, in many cases, are often themselves complicit in or benefiting from corruption. Indeed, authoritarian governments that run on endemic corruption are thus totally outside the reach of FACFOA.
Let me illustrate the problem.
I serve as pro bono counsel to Mohamed Nasheed, the first democratically elected president of the Maldives, the small island nation in the Indian Ocean. He was overthrown in a coup, and in February and March of 2015 was abruptly arrested, tried, convicted, and sentenced to 13 years in prison on terrorism-related charges. The UN found that his detention was arbitrary and in violation of international law. With immense pressure brought against the Maldives by the international community, he was released in January 2016 and permitted to travel to the United Kingdom for medical treatment.
In September 2016, just a few months ago, the largest corruption scandal in the history of the country was uncovered. Nearly $80 million from the state-owned tourism firm was reported stolen, with President Abdulla Yameen at the centre of the scandal. Documents found on the electronic devices of the now disgraced and imprisoned former vice-president, Ahmed Adeeb, revealed a clandestine system whereby top Maldivian officials, including Yameen, senior ministers and aides, and members of the judiciary, received bribes and stolen money. Senior judges were reported to have received money and luxury flats and to have met regularly with the president and his deputy, who then fixed the outcomes in prominent court cases, including that of Nasheed. Yameen himself allegedly received bags of cash filled with up to $1 million.
Additionally, the documents uncovered a plan for the president's ministers and aides to launder up to $1.5 billion with the help of the country's central bank and a few foreigners. Other leaked documents accuse Yameen of corruption and fraud in state-owned entities, with a value of $150 million. This involved the selling of oil to the then military dictatorship of Burma in the early 2000s, when it was under Canadian and international sanctions. Yameen has publicly apologized for the scandal, but has refused to admit his responsibility.
Yet under FACFOA, Yameen and his ministers get a free pass and have total assurance that not only will Canada not sanction them for this corruption, but even worse, as long as their political party remains in power—I note that he and his half-brother, Maumoon Gayoom, have ruled the country for 33 of the last 38 years—Canada may actually be a safe haven where he can transfer and maintain his stolen assets for safekeeping in Canadian banks.
Why does this matter? In short, corrupt governments often stand against against the values and priorities of Canada and other western countries. In the case of the Maldives, President Yameen returned his country to autocracy, has strongly aligned his country with China, and has allowed it to become a hotspot for Islamic State recruitment, with more than 200 fighters estimated to have travelled to Syria and Iraq. That would be the equivalent on a per capita basis of Canada sending 21,000 fighters to ISIS. In my view, all of these are developments that are contrary to Canada's interests.
I understand and appreciate that in adopting the law initially Canada considered it easier to act when a foreign government had explicitly assessed evidence of corruption and requested assistance. Nevertheless, I believe that for the most egregious of examples of the kind that I have described, it would benefit Canada to consider amending FACFOA so that it could have the flexibility to act without the request of a foreign government and could stand publicly against grand corruption when it occurs on this kind of scale.
Second, with regard to the Special Economic Measures Act, while the law provides for a much more robust sanctioning capability than FACFOA, it too has room for improvement. Currently, the Canadian government can take unilateral action under SEMA only when “a grave breach of international peace and security has occurred that has resulted or is likely to result in a serious international crisis”. However, this threshold is significantly higher than that given by the UN charter, which empowers the UN Security Council to impose economic sanctions when there is merely “the existence of any threat to the peace, breach of the peace, or act of aggression”.
As Canada readily employs the United Nations Act to join on to the UN's sanctioning of regimes, there is no reason that Canada should require a separate and higher threshold to trigger economic sanctions absent a UN regime, especially given that vetoes of China and Russia have arbitrarily blocked the imposition of UN sanctions, especially in the case of mass atrocity crimes.
To remedy this inconsistency, I would respectfully request that Parliament consider amending subsection 4(1) of SEMA to include a third justification for economic measures, in addition to the “international organization” and “grave breach of international peace and security” justifications that are already present, by adding this language, “or to prevent or respond to actual or imminent mass atrocity crimes including genocide, war crimes, ethnic cleansing, and crimes against humanity”. An expansion of the language in this manner would give teeth to Canada's principled international leadership on human rights.
Lastly, I should note that as Canada reviews its sanctioning capabilities I very much hope that Parliament will consider amending SEMA and the Immigration and Refugee Protection Act to authorize your government to impose entry and property sanctions against any foreign person or entity that's responsible for extrajudicial killings, torture, or other gross violations of international human rights.
In March 2015, a resolution advanced by Irwin Cotler was adopted by Parliament, unanimously supporting the creation of such human rights sanctions, but efforts to enact these amendments analogous to the U.S. global Magnitsky act have languished. In my view, having such authorities at the government's disposal would provide it with maximum flexibility to sanction the most egregious human rights violators around the world.
Thank you very much for the opportunity to appear before the standing committee today, and of course I'm also happy to answer any questions you might have.
Thank you very much for the question.
Again, I'm here in Washington, so perhaps I will give how we do it here in the United States. My answer is also based on having served in the U.S. Department of State for eight years during the Bush administration.
There are two departments that take the lead on sanctions. On the financial side, when it comes to assets, it is, as you said, sir, the treasury department's office of foreign assets control, OFAC. In my experience in government, and even out of government, I find OFAC to be one of the most effective agencies or offices within the treasury department. There are also sanctions that could involve visas, and visas are handled under the State Department, so there is the breakdown of responsibility, depending on the kinds of sanctions are imposed.
Most of the conversation, not only here today, but in general, is about financial sanctions, which our treasury department would take a lead on. With regard to denying people, say, Russian officials on the Magnitsky list—it's a privilege not a right to come to the United States, either themselves or their families—denying people I think is an effective tool. It's targeted. It's against individuals. It's not sweeping.
That involves the State Department. Visas are discretionary by nature, which means they cannot be challenged in a court of law. Financial sanctions could be challenged in a court of law. Therefore, they are subject to a higher evidentiary threshold. The treasury department has to make sure it could prevail should someone challenge those sanctions.
There's a substantial gap between the commitments of the international community and their implementation and practice. I previously published a book, The Responsibility to Protect
, on the obligation of all states to prevent mass atrocity crimes, so I didn't choose those four sets of crimes that I mentioned in my proposed language by accident. These are the four sets of crimes captured in the “responsibility to protect” adopted unanimously by the UN World Summit in 2005.
I'm actually in the process right now of finishing a law review article that will be the first assessment of the way in which the Security Council has embraced the concept of the responsibility to protect and has engaged on it.
Interestingly, since the adoption of the responsibility to protect in 2005, and a lot of concern that countries went along, like China or Russia or others, despite their lack of interest in these kinds of concepts.... What my review has found, looking at the council's engagement in the last 11 years, is that there have been well over 150 to some 200 mentions of the responsibility to protect or the failure to protect in Security Council resolutions and presidential statements. In fact, it's become very much a norm that has been embraced by the Security Council as a major motivator of action, plus, of course, in the most substantial of ways in which the council can engage under its chapter 7 authority, which would include potentially economic sanctions or even the use of force.
Obviously, the endemic realities of the UN charter, going back to the founding of the United Nations and the P5 veto, has thwarted action in those areas on the most complex and divisive of political disputes among the P5. We've seen that the council previously was able to engage on Libya, for example, where specific sanctions were put in place by consensus within the council, or by a lack of no votes against such actions. On Syria, there's been an inability to obtain a consensus.
I think my overall point is that just because the council is not capable of reaching a consensus, in my view that shouldn't be Canada's measure. Again, I'm an outsider, so you'll forgive me for just looking at the subject of the hearing you're having, which was what I think about these laws based on my read of them.
With that very humble caveat, I would say that Canada shouldn't launch to tie itself to imposing economic sanctions to only situations in which the council can reach a consensus, or where there's this very strong language—dramatically higher than I think the council would require—that relates to imminent threats and major international crises, which may not actually encompass a mass atrocity situation, which would be primarily internal by orientation.
Hello everybody, and good afternoon. It's quite late here in Warsaw.
I presume that you want to hear about the effectiveness of the policy of sanctions on individuals responsible for the violation of international law as well as domestic law. I can tell you that from my experience, this policy is very effective when implemented. Why is that so? In a country like Belarus where there is a dictatorial regime, especially the regime that has been in place for so many years, and there is no judiciary, the main factor that supports repression against—and I'm not talking political opposition—mass media and human rights defenders is impunity.
Since we don't have the benefit of the judiciary...and this is not just my words. It's the conclusion that was made by UN special rapporteur on the independence of the judiciary as far back as 2000, when he came and studied the situation in Belarus. He presented this report with a very negative assessment of the judiciary system, and it has only become worse since then.
The only hope we can have to support very legitimate demands for upholding democratic principles, which again are not theoretical but have been subscribed to and signed by the authorities of Belarus on many occasions, including the OSCE documents, the Paris charter, and others, is the international assessment of the situation in such countries as Belarus, and international solidarity on the basis of the principle of respect for human rights and support for the legitimate demands of the people in Belarus. Again, I must stress, it's not only the politicians but also the ordinary people, because the repressive system affects all layers, all the professions, and all walks of life within such a situation as Belarus.
I will be more than happy to answer specific questions. I do understand that you might need some specific views of the situation in my country, but not only in my country.
The only thing I must stress is that we need some kind of international instrument. The most effective, in my view, would be the global Magnitsky law, which is the law of a new era. That could address the challenges that we all face in the democratic community, both in democratic countries and within pro-democracy activities in countries like Belarus.
Thank you for the question.
I would say that both general sanctions and targeted sanctions are effective. With general sanctions, there are an assessment and the attitude of the international community toward the situation of the abuse of human rights, both in Russian and Belarus, and in other places in the former Soviet Union. I am the living proof of the effectiveness of both general and targeted sanctions, because I was released only due to the fact that for the first time the European Union introduced economic sanctions against the businessmen that were close to Lukashenko and close to and supportive of the regime. Only this made them release me.
When these sanctions started to be contemplated—again, it was done for the first time in Belarus—we had what I call the “visa ban tourist sanctions”, which were not sanctions but a very mild instrument. After the crackdown in 2010, when many of us were in jail, me included, the attitude in jail was very difficult.... There was a horrendous attitude on the part of the authorities.
Then, after the condemnation statements from different states, including Canada—for which I am very grateful because without that solidarity and support it would not have been possible to survive in there—they started to contemplate targeted economic sanctions on businessmen. Even when they had just started to do this in Brussels, already I felt the attitude changing inside the prison where I was. They were becoming not so aggressive and not so arrogant, because they were afraid of being included. Even some of the wardens who I saw told me openly—confidentially, of course—that they were afraid that they or their families would be included in the blacklist. Then the targeted sanctions followed, and two businessmen close to the dictator were targeted by the sanctions. Immediately, they started the procedure for my release and the release of my friend, the manager of my presidential campaign.
I would say that it's the combination, because we need first of all to feel the attitude of the international democratic community towards the atrocities in a country, and then, of course, there are the targeted sanctions. What I want also to stress and is sometimes underestimated is that all the oppression and all the abuse of human rights and basic freedoms that we see now in Russia were tested in Belarus. Lukashenko's model existed long before Putin came into power, and believe me, they do watch each other, these dictators. They also watch the attitude of the west towards their policies. When the west becomes soft on Lukashenko, it first of all gives Putin a lesson and the false idea that he can go ahead in Ukraine and elsewhere in Russia.
I've always supported sanctions, even in prison when it was difficult for me to publicly state that I was in favour of sanctions because it immediately brought repercussions for me and my life in prison. I've always supported that. Unfortunately, they're the only instrument that is effective, and that is soft power.
Sir, I'd like to address another question that we're grappling with.
Canada is a big believer in multilateralism, especially with countries that we consider part of the western liberal democracy club of countries. We're tremendous supporters of the UN, but we see that the UN Security Council has not been able to act on sanctions because of a flawed structure. Russia or China, both grave human rights abusers, tend to veto any of those attempts.
Of course, we love to do things in tandem with our European Union allies, but they have a system that requires 28 countries to agree, which is problematic, especially with a situation where you have countries, currently, for instance, Bulgaria and Romania, that are not in favour of sanctions. We may perhaps be seeing a new era of isolationism with our North American colleagues.
Someone said previously on a panel that looking for unity among all of these countries may be searching for the lowest common denominator. In fact, it almost seems as if trying to do things multilaterally may be problematically difficult.
What are your thoughts with regard to a country taking a principled position, a leadership position, and saying we believe that a country should respect human rights? With regard to those who grossly abuse them, especially those officials directly involved in abusing them, we will stand firm and say that they will be sanctioned. We don't want their money or these individuals coming to our country.
What are your thoughts on those points?
That's a very good question. I think you do recognize the problem, and you targeted it very well.
I would say that it's expanding, because Russia is operating very effectively in this regard. However, this is combined not only with politicians but with the think tanks in the west that are being bought over and with the mass media in the west that are being bought over or just being paid to present not even the views of Russia but very aggressive propaganda instead of information.
This worries me a lot. I see it, I know about this fact, and I don't see any effective preventive measures, let's say, or any measures to stop it. I still feel that there is a lack of recognition of the dangers. When Ukraine was attacked, when they annexed Crimea and started the aggression in the Donbass region, my first reaction was that this was the beginning of the attack on Europe and on the west in general.
Again, I think it was unexpected for many, but it was expected by us. We knew that it was coming. We didn't expect, of course, the kind of war that was unleashed by Russia, but the aggressiveness of the Kremlin had become more and more apparent for us. We knew that they would be looking for some kind of outlet for this aggressiveness.
We all know of the phrase “Russian World” and how it is promoted by the Kremlin in Belarus but also very effectively in the west. Believe me, there is no such notion of the western or democratic world in Russia or in Belarus. That is not being promoted. The values of the west and liberal democracy are not being promoted in our countries. That is the difference in the approaches, and I am afraid—I hate to say it—they are acting much more effectively. I'm sure that I'm not being too optimistic when I say that the west will put its act together eventually, but so far the dangers are apparent and they are growing, unfortunately.