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The future clearly lies with more effectively targeted and better implemented limited sanctions. It was a pity that the report did not give a fuller analysis of one of the early cases of such targeted sanctions which actually worked—those imposed on Libya’s civil aviation and oil industries as a result of the Pan Am and UTA outrages. The sectors were clearly chosen with care and the action was proportionate; it impacted more on the elites than on the general population and it did bring about, or helped to bring about, policy change. Other cases of targeted sanctions have worked less well, as, one has to admit, have arms embargoes, which have proved notably porous. What is surely essential now is to focus hard on steps to improve the operation of such targeted sanctions. I look forward to hearing from the Minister, when he replies to this debate, just what the Government are doing to achieve that.

One area of implementation that clearly requires urgent attention is the strengthening of the UN Secretariat’s capacity to analyse, identify and help to implement targeted sanctions. Each target country is different and requires in-depth analysis of its weak points. Each target country presents different problems of implementation. But currently there is virtually no capacity to provide an objective analysis of such matters before action is taken and when it is being implemented. Things are left to a tug of war between those on the Security Council who want tougher sanctions and those who want weaker ones. That is no way to get results. In 2004, the high-level panel on which I served made the following recommendation:

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Kofi Annan endorsed that proposal. What has become of it? Do the Government support it? If they do, what are they doing to prevent it from being chucked in the dustbin?

The report also raises the point of the basic ineffectiveness of unilateral sanctions imposed by one country and the capacity of such sanctions to lead to trade disputes following attempts to extend their impact through extraterritorial jurisdiction. US sanctions against Cuba are a classic case in point. Those sanctions have brought about neither policy change nor regime change in Cuba. They have embroiled the US with its allies and they have weakened the US hand at the UN, with successive humiliatingly massive votes against them each year. It is a great pity that Congress does not seem to have learnt the lesson about the counterproductiveness of such unilateral sanctions.

At the other end of the spectrum, it is clear that economic sanctions imposed by a unanimous decision of the Security Council have by far the greatest political impact. Of course there may be—there often is—a price to be paid in the lower economic impact of such measures, given the compromises needed to achieve unanimity. But that trade-off can be worth making. It is a matter of judgment in each individual case.

Somewhere in the middle of the effectiveness spectrum are multilateral economic sanctions that do not have the Security Council’s endorsement and therefore do not have worldwide mandatory force. Such sanctions would be, for example, those imposed by the EU and US in concert, acting in circumstances in which the Security Council was deadlocked. I do not agree with the view put to the committee by Mr Jeremy Carver that such sanctions should in all cases be avoided. Such sanctions are certainly more effective and less counterproductive than unilateral sanctions imposed by one country. The most important consideration in this case is to achieve the greatest possible unity between the EU and the US and other like-minded countries and thus to maximise the impact and to avoid damaging trade disputes.

Probably the most important conclusion of the report is one of the simplest and the most political. Economic sanctions are no silver bullet. They seldom on their own bring about the policy changes sought. They need to be operated in tandem with a whole range of diplomatic instruments, including incentives for compliance by the targeted country, a clear statement from the outset of what action is required to get sanctions lifted and a willingness to discuss directly with the targeted country the security concerns that may have led it to take the objectionable action that is being sanctioned. Every one of those considerations is relevant as we contemplate the case for strengthening sanctions against Burma. I agree with some of the remarks made by the noble Lord,

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Lord Wakeham, on that, although it might be worth pausing for a moment, in criticising the existing sanctions, to think of the message that would be sent out if the international community now lifted sanctions immediately after the scenes in the streets of Rangoon that we saw on television.

In the light of those compelling considerations, I found the Government’s response to the report’s recommendations on how to handle Iran’s nuclear transgressions pretty unconvincing and limp. The hard fact is that the US is applying this template and these criteria in the case of North Korea and that there are some—admittedly so far incomplete—signs that it is getting somewhere as a result. But in the case of Iran, it is not applying them. US-Iran contacts are so far confined to the problems of Iraq. It is no good saying, as the Government did:

What is needed is not repeated and, I fear, highly ambiguous public statements but direct diplomatic communication. I hope that we will hear from the Government that they will urge this course on the United States as an integral part of any move to strengthen sanctions against Iran. It is absolutely vital that the United States should become a direct participant in a dialogue with the Iranian Government on these issues.

I conclude with a reiteration of my thanks to the noble Lord, Lord Wakeham, and his colleagues for providing the occasion and such a sound basis for this debate. The subject of economic sanctions will not fade in importance any time soon. It is important that we understand it better, get to grips with its complexities and fashion a more effective instrument for the international community to use when needed.

11.39 am

Lord Lawson of Blaby: My Lords, we are very fortunate in our committee in having in my noble friend Lord Wakeham and Robert Graham-Harrison a chairman and a Clerk who could not be bettered. I thank them both for their help to the committee as a whole in what has proved to be a very timely report and, now, this debate. Incidentally, I agree wholeheartedly with the—admittedly, rather restrained—way in which my noble friend referred to the Government’s lamentable reply. I listened with great attention to the noble Lord, Lord Hannay, who seemed to exemplify in the most high-minded way all the major misconceptions about this issue.

Fundamentally, when we are formulating policy, whether it is foreign or economic policy or anything else, we have to do so in the context of the world as it is and not as we would wish it to be. It would be very nice if there were a rung on the ladder between, on the one hand, doing nothing or taking nothing more than diplomatic action and, on the other, military action. Although there is a whole spectrum of military action, following Iraq, we think that it must

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mean invasion and occupation. However, it does not; there is a whole range of military action that comes well short of war.

Nevertheless, the noble Lord is right that there is still a big gap in the ladder between doing nothing and taking military action. It would be very nice if there were something which filled that gap and worked. The trouble is that there is not, and wishing that there were does not make it so. All experience shows that economic sanctions, however well intentioned, do not work. They are invariably harmful to the countries that are sanctioned and are frequently counterproductive.

Let us take the example of Cuba, mentioned by the noble Lord, Lord Hannay. He admitted that sanctions in Cuba have been counterproductive and seemed to imply that it was because they were unilateral, but that is not the reason. They are counterproductive because they have given President Castro an excuse for the lamentable failures of the Cuban economy and the appallingly low living standards of the Cuban people. Before Castro, living standards in Cuba were among the highest in the whole of Latin America. They are now among the lowest because of the communist economic policies followed by President Castro, which have not been a great success anywhere in the world where they have been tried. But he is able to say, “Look at what America and the world have been doing to us with economic sanctions”. That is a large part of the problem. As the purpose of economic sanctions is to damage the economy, it is very difficult to say that they have had no impact at all. It is as certain as anything can be that Castro would not have lasted these past 40-plus years had it not been for the Americans’ economic sanctions. The Americans know that too, and that brings us to another point which is characteristic of economic sanctions.

The Americans know that such sanctions are completely useless and counterproductive, so why do they maintain them? They do so because of the Cuban émigré population in Florida—an important domestic constituency, which would be outraged if the sanctions were lifted. Generally, economic sanctions tend to be imposed not because of an objective view that, in the light of experience, they are likely to achieve their objective—they are not; experience shows the complete reverse—but because there is pressure from either a part or a large sector of the electorate in the sanctioning country that something must be done. Sanctions are applied in response to that. Understandably, there is reluctance to take military action, so the “something” tends to be economic sanctions—not because they are thought to be effective but as a response to domestic political pressure. In my judgment, that is not a good reason for imposing them.

There is also a point concerning exit strategy, referred to by my noble friend Lord Wakeham, in the context of a regime complying sufficiently to enable sanctions to be lifted. However, in my judgment, there is a rather more serious problem relating to exit strategy about which we need to think long and hard. The noble Lord, Lord Hannay, asked how we could now possibly lift sanctions against Burma, even if

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they are not doing any good, in the light of what we have seen recently on the streets of Rangoon and elsewhere. That is precisely the point: you are stuck. Once you impose them, you cannot exit because it is seen as a great triumph for the despotic regime which has been ineffectually sanctioned. You are stuck with continuing with the sanctions, even though they are not merely having no effect at all but harming the population. I have no complaint against inflicting some economic hardship on the populations of the countries that have been sanctioned. Economic sanctions must do that; there is no way that they can avoid it.

There is a curious piece in the Government’s response to the report. In the case of Iraq, they say rather plaintively that,

Did the British Government seriously think that, when sanctions were imposed against Iraq, Saddam Hussein would say, “Well, we’ve got to tighten our belts. In order to build all the hospitals that are required, I am going to disband the security services, the secret police and the Republican Guard”? No; clearly, when there are economic sanctions, the regime will maintain its spending on whatever is necessary to prop up and support that regime, and the ordinary people will suffer. You cannot seriously embark on sanctions without understanding that that is the inevitable result.

I return to the question of the exit regime. If causing hardship among the population for a time would ultimately result in the toppling of a despotic regime and far better political and economic conditions for the people, that would be all well and good. However, if it does not result in that, there is no justification whatever for imposing such hardship on the people. You have to be pretty sure that you will have a successful result—which, in my judgment, you cannot be sure of—before you inflict that harm on the people. That harm will go on and on because, as the noble Lord, Lord Hannay, said, once you have imposed sanctions, you cannot lift them. It is that simple and it is another reason why sanctions do not work.

Let us take another case—Zimbabwe—where there have been no sanctions, but it illustrates the nature of the nonsensical position we are in. We do not need to impose sanctions on Zimbabwe to damage its economy. Mr Mugabe has done that all on his own. Yet the equation is very similar. If he were to give up, it is clear that there would be an international rescue operation to rescue the Zimbabwean economy, so there is huge economic gain from him stepping down and his ghastly regime going away. Do we think that that will happen as a result of the weakness, to say the least, of the Zimbabwean economy? Of course not. If popular disaffection with regimes and economic hardship caused political change, these changes would have happened already in Zimbabwe, Cuba or wherever. But it does not happen. To add to that, and to acquire culpability in the eyes of many in the world through doing it, does not seem a sensible policy, nor does it in the case of Burma, where one of the principal effects of the sanctions has been not merely to harm the Burmese

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people but to throw the Burmese Government more and more into the arms of China. That is not a great foreign policy triumph either.

We must live in the real world. It would be lovely if we lived in a world where there was not this missing rung of the ladder. It would be lovely if economic sanctions worked, but experience shows that they do not. They are damaging and counterproductive. The sooner we accept that and persuade our fellow members of the European Union to accept that as a common European position, the better.

Lord Hannay of Chiswick: My Lords, will the noble Lord address the successful case of targeted sanctions against Libya, which he did not mention in all the cases to which he referred where things had not worked?

Lord Lawson of Blaby: My Lords, I am glad the noble Lord reminded me of that because I wished to make that point. It is interesting that the only case that we found unequivocally where sanctions had worked were the sanctions against Libya to cause it to release the suspects for the Lockerbie air bombing. As an aside, it is likely that they were not guilty—at least the proof of their guilt is a little dodgy. Nevertheless, that exemplifies the only case in which sanctions can work—using a sledgehammer to crack a nut. They work only when what you want from the sanctioned Government is so puny or so small that they can surrender it without any great loss of face or power. If you want tiny objectives, you can use this great sledgehammer to achieve them, but for anything bigger than that, you will not do so.

11.52 am

Lord Skidelsky: My Lords, I, too, express my appreciation to the noble Lord, Lord Wakeham, for the invariably good-tempered way in which he conducted the inquiry, and to the Clerk of the Committee, Robert Graham-Harrison, for his expert support. I concur with what previous speakers have said about the Government’s limp response.

A key issue with which we as Members of the Committee wrestled was the aims of economic sanctions. Some of us started with the view that the main aim was to get the sanctioned regime to change its behaviour or, at the limit, to overthrow it, but that was far too simple-minded. As the report states in paragraph 7:

which is a key point—

That comes right at the end of the list. In other words, changing behaviour is only one of several possible objectives which include “signalling disapproval”. Another thing we learnt as we went on with our inquiry was that the emphasis in sanctions policy has changed from comprehensive to targeted or “smart” sanctions, as they are called, which are sanctions targeted on the regime and not on the people of the country. It is said that that is to minimise humanitarian damage. Thus in

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Burma, we have the classic array of smart sanctions, which are part of EU sanctions, including an arms embargo, suspension of high-level bilateral visits, and visa restrictions and some financial restrictions on the regime. Roughly the same package applies to Zimbabwe.

Having received all that evidence, we tried to formulate our report, a process which proved quite long-winded and difficult in view of the natural disagreements that emerged among different members of the Committee. We got together a report that is very coherent and good. Two conclusions seem warranted. The first is that the test of success or failure of sanctions has become extremely fuzzy. As one of our witnesses, Dr. Alexander of Cambridge University, pointed out,

He said that if sanctions are intended to modify regime behaviour they quite often fail, but if their goal is simply to signal moral disapproval, the effectiveness of sanctions might be viewed in a different light. Exactly.

As I put it in one of my questions to this witness: if the object of sanctions is to signal disapproval, the test of effectiveness is simply the number of states expressing disapproval. On that test, failure almost never happens. States often express disapproval; the success of sanctions is virtually guaranteed, even though nothing else changes. That is an unsatisfactory position.

The second conclusion dovetails with the first. The shift from comprehensive to smart sanctions is connected with the shift in objective from modifying behaviour to expressing disapproval. The noble Lord, Lord Hannay, called for more effective sanctions. But how do you get more effective sanctions if the aim is to minimise collateral damage to the population? Effective sanctions involve harming the population. The more they are harmed the more effective the sanctions. That was the old doctrine and policy-makers have never admitted in public that there is a trade-off between getting effective regime change and minimising humanitarian damage. In practice, as the noble Lord, Lord Wakeham, pointed out, Governments wobble between the two and find it hard to get a consistent policy.

Travel restrictions and other pinpricks on leaders of unsavoury regimes do little or nothing to change the way they treat their people, but they do make us feel good, which is extremely important. Symbolic sanctions, in other words, are nicely symbolic of a foreign policy which has replaced resolution by resolutions.

Like the noble Lord, Lord Lawson, I naturally welcome those parts of the report which are sceptical about symbolic sanctions, and which argue for,

as a way to modify unacceptable state behaviour. For example, I draw your Lordships’ attention to paragraph 20, in which it is stated that,

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without any symbolic sanctions at all. People have a right to disapprove; they have a right to state their disapproval; states have a right to state their disapproval. Why accompany that with a panoply of pinpricks which do not do any good?

I draw attention to the argument of the noble Lord, Lord Renwick, that the,

because they symbolise weakness and the lack of any alternative instrument. Unlike the noble Lord, Lord Hannay, I endorse Jeremy Carver’s view expressed in paragraph 24 that sanctions should be used,

Of course Burma has been strongly in our minds in this debate. I turn to that in the last part of my remarks. In paragraph 135, we urged the Government to,

I do not think that the recent events in Burma have rendered our view obsolete, though as the noble Lord, Lord Lawson, rightly said, it is very hard to lift ineffective sanctions because it then seems to be a retreat from a position that was useless in the first place but now has to be stuck to because of loss of face in withdrawing it.

One of the oldest debates in international relations is whether you get better government by isolating or engaging a state. There is no general rule which will cover all cases, but the presumption should be in favour of engagement. We should be chary of forcing more isolation on societies whose leaders and populations invariably start off as appallingly ignorant about what goes on in the rest of the world. The more open a society is, the more open it is to change; the more closed, the more it is subject to delusion and paranoia and the easier it is for the leaders of that country to whip up anti-foreign hysteria against the sanctioning power.

One of the paradoxes of the present situation is that the societies of the West, traditionally champions of openness, are the keenest to enforce pariah status on unsavoury regimes, whereas the previously closed societies of Asia are keenest to trade and engage with such regimes, whether in Asia, Africa or Latin America, China being the main example but of course also India and Russia. They have taken the view that what goes on in Burma is really an internal matter for the Burmese authorities, whereas the international community—that is, us—has called for even stronger sanctions, mandated by the United Nations.

No one is suggesting a military attack on Burma. This means that there are only two ways in which other countries can help bring about regime change: first, by cutting off Burma's links with the outside world; secondly, by trying to engage it in some way. The trouble with the first is that the price is usually paid by the people, not the leaders. Also, as long as sanctions are not universally applied, they can be evaded; they will not be universally applied in this

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situation. The alternative is engagement through commerce and quiet diplomacy. That is the policy of Burma’s Asian neighbours.

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