Examination of Witness (Questions 340
- 359)
TUESDAY 29 JUNE 1999
MR CLAUDE BRUDERLEIN
340. What does "not much has been done"
mean?
(Mr Bruderlein) It
means the Security Council has not considered it yet. It has not
been imposed by the Council and if the Council does not consider
it the Secretariat will not consider it. It is not considered
appropriate that the Secretariat develop tools that the Council
has not requested. 341. The point I am trying to get across is
that within the UN family, within the multi-national organisations
there is no one whose responsibility this has been for the development
of financial sanctions?
(Mr Bruderlein) At
this stage there is nobody. There is a growing interest but until
the Security Council decides to use such tools the system cannot
really engage into that. When I say "the system" I am
talking about the Secretariat. 342. And I take it you would see
that as a UN job centrally to develop the expertise to make effective
financial sanctions?
(Mr Bruderlein) It
is a good point. I am not sure about that. member states, especially
those who participated in the Interlaken process, were saying
basically that it is a member state job. Regulation and implementation
will be at the level of the member states so member states should
play a critical role in developing these tools rather than the
UN Secretariat to which the UN Secretariat agreed basically because
they do not have the resources and have not been requested to
do so by the Council. So it is really up to member states to get
together and develop such tools and one of the pilot examples
is the efforts to counter money laundering where you have a co-operation
mechanism and technique that has been developed to counter money
laundering which is in some ways similar to efforts to escape
financial sanctions and member states are considering ways to
replicate this experience into the world of financial sanctions. 343.
With money laundering I think you would be particularly thinking
of the case of drugs crime. That takes you into criminal offences
which have occurred and takes you into Interpol. Are we saying
really we could only make progress if we are creating some kind
of secret financial police on a multi-national basis because the
whole talk about committees and formal procedures seems to lack
a little credibility?
(Mr Bruderlein) There
is certainly a need for such mechanisms because, you are right,
it is about information, it is about privileged information where
these assets are located. This information is to some extent available
and we can see it when some member states are not really taking
action to freeze some assets that are under their control. But
at the multi-lateral level what is really missing is the co-operation
aspect and that is what we are looking into. We believe that if
we could have the kind of co-operation and the kind of institutional
mechanism to make the system work at the multi-national level
to use whatever information available on the whereabouts of these
assets. 344. I am finding it difficult to imagine how it can all
be done by the member states because the effect of stringent action
by one member states simply drives the assets into a less stringent
area, it drives it offshore or into another member state that
is not caring very much about this.
(Mr Bruderlein) But
if you have a resolution of the Council, all the member states
are accountable for its enforcement compared to unilateral sanctions
where if they are not done quickly enough the funds will escape
somewhere inevitably outside the realm of the sender state. If
it comes down from the Security Council assuming a strong co-operation
mechanism you have a lot of tools that you can use to ensure that
whatever state has received these funds will comply and freeze
them. You see, the transfer of funds we are talking about here
amounts to millions. We are not talking about small sums. We are
talking about important sums that are not necessarily easy to
move directly. So there are many ways to track the movement but
once these assets have been located it can be done quite quickly
for the Security Council through the Sanctions Committee to ensure
that these assets are frozen. You are right, it can be a game
of hunting and there is certainly room for specialised agencies
to do such tracking and to ensure compliance, but it is up to
member states to decide how they really want to go into it. But
you are saying that information is key. We are told by member
states that this information can be made available. Therefore,
what is key is co-operation and enforcement and that is what we
are really looking at. 345. Does that mean that there has to be
a new body created?
(Mr Bruderlein) I
have heard recently that some members of the Council are talking
about a sanctions unit with a secretariat as a subsidiary organ
of the Council. It is one of the points on which discussion should
focus. It could be one of the points, for example, for your Government
to look into as to what institutional arrangements should be developed
at least on a preliminary basis to implement and further elaborate
these tools. 346. Are you confident that if such a co-ordinating
co-operative body or mechanisms were created that it would be
possible for the enforcers to be ahead of the game? What I would
fear in this is the speed of transactions. The technical facility
is such that the people who were trying to defeat the UN would
be able to keep ahead of what we were doing. Is it worth it?
(Mr Bruderlein) If
our driving assumption is that the financial market is open-ended
in terms of speed and in terms of space or financial instruments,
we will never be ahead of the game because there will always be
a place or a tool that will be created to hide these funds. However,
we can question this assumption especially for major amounts,
major funds. We are not talking about pennies. We are talking
about millions of dollars worth of values to be concealed. In
these cases we believe that the financial market is a closed space
and the issue of speed is not so important. If we start seriously
to control and regulate and monitor activities in this space it
will drive some of these funds into marginal offshore centres
and so on. You can guess more or less that the funds are there
now and you can track even better what is going on in and out
of these centres. Some proposals have been made in these situations
to offer to the targeted entities, states or individuals, the
possibility of sheltering these funds in specific accounts so
that once financial sanctions are imposed, rather than escaping
continuously these sanctions that they really bring these funds
into escrow accounts to be frozen for the period of the sanctions
because we are not talking about seizing the funds, we are talking
about freezing them which does not incur much cost on the target.
However, if these measures are not followed, abided by, the Council
could then decide to seize rather than simply freeze assets that
are found outside the regime of escrow accounts. This decision
could go beyond the duration of the sanctions so increasing the
encouragement for compliance. Therefore there are different techniques
and ways of ensuring that assets are frozen but we assume here
that we are talking about the closed field. 347. Taking financial
sanctions is very attractive when it is put in terms of targeting
the elites that are causing the problem but, as we have learned
from other sanctions, always look for the unintended consequence.
Are there any humanitarian downsides at all that you have thought
about as far as financial sanctions are concerned? Could they
be used in any way to turn against the civilians?
(Mr Bruderlein)
In terms of financial sanctions with regard to the existing methods
we have, we are most likely to impose comprehensive financial
sanctions with additional targeted tools against specific individuals
and we have to be very careful here of the implications or the
impact these tools may have on individuals that we do not want
to be targeted. For example, financial sanctions against Serbia
may affect Serbian workers that used to work, let us say, in Germany
who cannot get their social security out of the German social
security system and so on. So there is a need to evaluate the
potential implications and then include the modalities to adapt
the regime and again to be able to evolve with the regime. If
we see that there is damage that was unexpected that we can respond
to without renegotiating again the whole resolution. 348. Could
I change the tack a little bit to looking at the Interlaken process,
what you see it as being about and what will be the follow through
from it.
(Mr Bruderlein) The
main objective of the Interlaken process was to bring experts
from governments and from the banking sector to discuss in a very
informal environment the feasibility of the targeting of financial
sanctions, the question that you just raised and your colleague
raised about the speed of money going into offshore centres and
so on. These experts came to the conclusion that indeed there
is no obstacle for feasible financial sanctions and the feasibility
of the targeting of financial sanctions. The process has concluded
since the primary question has been answered. There are discussions
now between some member states to see how we should follow up
on this proposal. I know that the Swiss Government is still interested
in supporting initiatives but is also looking to other member
states, especially members of the Security Council, to take up
these points and to further develop either the tools or, more
importantly, the institutional process that will be able to use
these tools. We have several of the basic tools to impose targeted
financial sanctions, for example we have a proposal of resolution
text, we have a proposal of model laws. These tools really can
hardly be put into use under the present processes within the
Security Council, therefore there is a critical need for discussions
by Security Council members, particularly by Permanent Members
of the Security Council, to see how technically these inputs can
be integrated into the elaboration of sanctions and then the implementation. 349.
That is very helpful. One of the things that is striking about
the Interlaken process is that this is a developed world initiative,
it is the major banking countries who are involved and it is not
involving the developing countries at all, is it?
(Mr Bruderlein) It
did. I would say maybe a third of the government representatives
were from the developing world. I would not like to qualify China
as a developing country but China was for the first time represented,
Egypt was represented for the second year, and there were others
that I do not have the name now but there were representatives.
The concern was to get representatives from the major financial
centres but also it included having some representatives of the
centres that are less important but are located at the regional
level and could therefore play a role in the imposition of sanctions. 350.
How should the Interlaken process be strengthened now in terms
of representation, inputs and so on?
(Mr Bruderlein) The
Interlaken process has come to an end and now it is much more
at the formal level that inputs could be made. I wonder the extent
to which many developing countries have the expertise to relate
to the developed ones with regard to technical implications, however
they certainly do have their opinions with regard to the processes
such as sanctions, the processes under which such sanctions could
be elaborated and implemented and that could be a point for their
participation.
Mr Worthington: Thank you very much.
Ms Oona King
351. This follows on directly from what you have
just been talking about. The Second Interlaken Seminar on Targeting
UN Financial Sanctions concluded that there needed to be greater
consistency in national policies if financial sanctions were to
be effective and also that that consistency therefore had to be
an urgent policy initiative. In your view, what are the obstacles
to financial sanctions being applied consistently by all the UN
member states? You were talking about this just now. In what ways
can donors help developing countries to build their capacity to
implement and monitor targeted sanctions because you have just
been mentioning that is where developing countries are not able
not so much keep their side of the bargain but implement what
the UN is proposing?
(Mr Bruderlein) It
is a great fear of the developed countries that once they have
financial sanctions being imposed and they have the regulation
to implement them, that they will simply see the funds disappear
and go into developing countries' banking systems and then they
will simply lose the benefit of the banking activities attached
to it. Therefore, they are asking for consistency in this sense:
that targeted sanctions—and that could apply with arms embargoes,
oil trade, any targeted trade embargo—imply a new level
of co-operation and consistency, meaning that the Security Council
has to become serious, member states have to become serious and
everybody has to find a way of implementing the regime without
creating loopholes. It has implications in terms of regulation,
in terms of enforcement, and in terms of capacity building. The
more developing countries are given technical advice on how to
develop the enabling law, how to develop the regulatory and administrative
capacity to track money and freeze these assets, the less possible
it will be to escape major financial centres once targeted for
those who want to evade a sanction. 352. Are you saying that there
is a lack of political will on the part of the Security Council
to enable developing countries to do that?
(Mr Bruderlein) I
am not saying there is a lack of political will but there is now
a need for additional will if everyone wants to be serious about
it. Targeted sanctions are, by essence, a multi-lateral tool compared
to the use of force, therefore, it is really about collective
security and the Security Council certainly needs more clout or
needs to mobilise more political support from all member states
to ensure that financial sanctions will be imposed by all compared
to other tools like the use of force. Therefore the legitimacy
and the transparency of the work of the Council will need to be
enhanced so that all the member states see themselves represented.
It will require a lot of work to implement these sanctions. Targeted
financial sanctions, arms embargoes, oil embargoes and so on require
new ways of thinking and working from the Council. 353. Again this
is something you have touched on previously. Do you think that
the UN actually has the capacity to gather information on the
assets held by a given country to adequately assess its vulnerabilities?
You did touch on this at the beginning but I wonder if you could
elaborate.
(Mr Bruderlein) I
said that although the assessment of the vulnerabilities of the
targeted country is indispensable to enhance the effectiveness
of sanctions, at the same time at this stage I do not think the
UN has the capacity to do so. The UN Secretariat is serving the
Council according to the requests of the Council and since the
Council has not yet requested the Secretariat to address assessing
the vulnerabilities of targeted states, it would have serious
political implications for the Secretariat to take initiative
on this point. The capacity really does not exist within the Secretariat
to assess the humanitarian impact of the sanctions, economic embargoes
and flight bans, which are seen as quite an objective, moral cause.
The Secretariat has been reluctant to institutionalise this capacity.
It exists within the Office for the Co-ordination of Humanitarian
Affairs but it was not really seen as a priority within the Secretariat
to develop this capacity.
Chairman
354. Yes, but would you have considered that the
United Nations has got the ability to do this in view of their
really dismal record as an administrative organisation? Would
it not be better to out-source such activity and have it done
professionally and not by the UN Secretariat?
(Mr Bruderlein) That
is a difficult question to answer. I would say as a matter of
consistency I think it is important that the Secretariat is given
the resources to undertake some of those tasks especially when
it has to do with the Sanctions Committee. The Sanctions Committee
holds a session every week, two weeks or three weeks and they
should have access on a permanent basis to the resources they
need and that is what the Secretariat is there for, let us say,
to better address the humanitarian impact of sanctions. If there
are specific cases where it requires expert advice it may be indicated
in these cases, the out source, the request, but then we have
to be careful regarding the need for transparency, it may be seen
as a problem of objectivity and so on. It has to be done in a
transparent and objective way. The experts that are called in
to, let us say, assess the humanitarian impact of sanctions in
Iraq need to have objective expertise and be acknowledged as experts
by the community of experts on the topic. 355. That is not the
tradition of the United Nations. United Nations' traditions are
that if it is Turkistan's turn or they have not got a balance
of Turkinstanis in the UN organisation they put a Turkistani in
charge whether it has the capacity or not, so you are asking the
United Nations to revolutionise itself, are you not? You are asking
it to do what it has never done before?
(Mr Bruderlein) It
is up to the Council to decide how they want to proceed. In the
case of the Sudan the Secretariat asked the Council to send an
expert. They did not request specifically the Secretary-General
to undertake the assessment of the humanitarian impact of sanctions.
Rather, the Secretary-General requested an independent expert
to be sent so it gave the flexibility to them to proceed. In the
case of Sierra Leone, the Security Council requested the Secretary-General
to ask the Inter-Agency Standing Committee, which is composed
of all the major UN humanitarian agencies, to send a technical
mission to assess the humanitarian situation in Sierra Leone.
There are many ways we can strengthen the Secretariat. Still the
Security Council should as a matter of consistency and legitimacy
rely on the Secretary-General's advice on how to proceed. If it
shows weaknesses then it is up to the Council to adjust its request.
To simply skip over the Secretariat is certainly not the way to
go, especially if you want to raise support from developing countries
for the implementation of sanctions. Developing countries are
fully aware of some of the weaknesses of the Secretariat or their
own weaknesses in providing information to the Council for that
matter. However, they need to be mobilised in this process if
we want to ensure compliance.
Chairman: I see you are an idealist, Mr Bruderlein.
I think we should go on to humanitarian exemptions.
Tess Kingham
356. Could you outline for us in some detail, please,
the process by which humanitarian exemptions are currently processed?
(Mr Bruderlein) I
do not think we have general guidelines on how humanitarian exemptions
are currently processed. That is the first thing. 357. That is
what I suspected.
(Mr Bruderlein) I
would say there are various trends. One of the first trends is
to identify goods that should be exempted. So we decide in the
case of a series of goods that they are considered to be humanitarian
and therefore should be exempted from the sanctions and the import
of those goods should be authorised. 358. Who does that? Can you
tell us at each stage who explicitly does that?
(Mr Bruderlein) The
authority to exempt goods lies with the Sanctions Committee. The
Sanctions Committee is composed of the 15 Members of the Security
Council. Basically it is the same composition as the Security
Council. However, the rules and procedures of the Committee differ
from the Council in that it is much more a consensual body than
the Security Council. I would not say there is no veto power,
everybody has a de facto veto power in the Sanctions Committee
with the no objection rule. This procedure makes it quite difficult
to expedite decisions on exemptions meaning that any member of
the Committee can simply sit on the request for quite a while
before giving its answer. It has had serious humanitarian implications
in the case of Iraq and in the case of the former Yugoslavia. 359.
Could you give some concrete examples of where it has held up
humanitarian exemptions?
(Mr Bruderlein) From
1992-95 the UN operations in Yugoslavia suffered considerably
from this process of exemptions and because it was so slow that
they had to plan months in advance for the importation of blankets,
of food, of medicines and so on. Each time it would get to the
Sanctions Committee it became a political argument: do we consider
blankets humanitarian, especially with diplomats? On the Sanctions
Committee you do not have experts either on Yugoslavia or on humanitarian
operations. At the same time in the cases of sanctions that are
highly relevant in terms of national security interests of Member
states the decision is not taken in New York but has to be referred
to the capitals and then starts another bureaucratic process of
consultation to decide if any given good is truly humanitarian.
To respond to this trend there are now efforts to establish what
is called a generic list of goods that should be considered in
all cases humanitarian and that we should stop arguing about it.
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