Examination of Witnesses (Questions 251
- 259)
TUESDAY 17 OCTOBER 2006
MR KAREL
KOVANDA AND
MR ALBERT
STRAVER
Q251 Chairman:
Good afternoon. You are very welcome to our Select Committee and
we are grateful to you for coming over to help us with our inquiry
into economic sanctions. I am bidden to say to everybody who gives
evidence, and to us as well, please speak up clearly and speak
rather slowly, so we make sure we get as accurate a picture as
possible. As you know, we have got a number of questions to ask
you. Is there anything you wanted to say, by way of a preliminary
statement, at the beginning?
Mr Kovanda: Perhaps just a few words, My Lord
Chairman.
Q252 Chairman:
As part of it, if you were to introduce yourselves, so that is
in the record as well?
Mr Kovanda: Thank you very much, My Lord Chairman.
My name is Karel Kovanda and I am Deputy Director-General of the
External Relations Directorate of the European Commission. If
I may say, I would like to thank the members of the Economic Affairs
Committee for the opportunity to give evidence in your inquiry
into the impact of economic sanctions. Since 1993, the United
Kingdom and the other Members of the European Union have worked
together with the High Representative, Dr Solana, and the Commission
to conduct a Common Foreign and Security Policy and the imposition
of economic sanctions is an integral part of this Policy. An inquiry
into the impact of sanctions therefore, very appropriately, would
include those imposed by the European Union. The European Commission
is fully associated with the work carried out in Common Foreign
and Security Policy. In that field, initiatives can be taken by
any of the Member States or by the High Representative, as well
as by the European Commission. My Lord Chairman, may I assume
that the written submission that the Commission provided last
month would have been distributed to the members? If this is the
case, my colleague, Albert Straver, and I will be happy to answer
questions.
Q253 Chairman:
I am very grateful to you. Then we can begin with the questions,
and if I may start. The EU list of targets for asset freezes runs
to some 20,000 persons and groups. I wonder, what is the magnitude
of the assets that have been frozen by means of EU sanctions?
How should one assess the effectiveness of these financial sanctions,
and has the EU undertaken any assessment of the associated compliance
costs incurred by businesses, particularly banks and other financial
institutions?
Mr Kovanda: Thank you, My Lord Chairman. First,
the size of the list that you quoted, 20,000 persons and groups;
we have not quite managed to identify where that number would
have come from. To our knowledge, a calculation based on EU and
United Nations lists suggests that the number of individuals amounts
to something like 1,050, roughly, and the number of entities,
groups or companies, to some 430. Roughly half of the total are
found on the United Nations lists which are implemented by the
European Union. As for the volume of resources which is affected
by financial sanctions, which you were asking about, this is something,
My Lord Chairman, which even as we speak we have Member States
reviewing that number. The reporting is based on data provided
by the private sector and so I am afraid I cannot give you a good
enough number today, but as soon as we have a number that we feel
is as close to the reality as possible we will be happy to furnish
it. I think the third part of your question had to do with effectiveness
of sanctions. This is a very complex issue, to state the obvious.
There are two important aspects which I would consider here. Number
one, sanctions vary from situation to situation and, as you will
have noted in our submission, about nine, with North Korea probably
ten, sanction regimes are imposed by the United Nations Security
Council and 12 regimes are imposed autonomously by the European
Union, so there will be diversity among the individual sanction
regimes. The second point is that sanction regimes usually are
just a part of the overall balance of policy instruments which
are implemented with respect to this or that country, this or
that group or regime, and so the overall effectiveness is hard
to characterise globally, if I may say so, My Lord Chairman. Nevertheless,
the important point, I think, is that we have had historically
a certain number of sanction regimes which, in the end, in co-operation
with other foreign policy instruments, have proven effective;
we all recall South Africa, we all recall Libya and we all recall
the former Yugoslavia as some instances.
Q254 Chairman:
The number, the 20,000, I have got the breakdown of how we arrived
at that, but I do not think actually it is going to be useful
for us to debate the numbers now. We will let you know why we
think the figure is 20,000 and perhaps we could look at it afterwards.
Do you want to say anything about any study you have done of any
compliance costs to the businesses that undertake it?
Mr Kovanda: Thank you for reminding me of that
component of your query, My Lord Chairman. Actually we do not
have, I think, an estimate of the costs to the entities in our
countries which are imposing sanctions. A list of targets was
set up by the European credit sector federations and the Commission
and the credit sector federations occasionally complain about
the high cost of verifying the large number of hits resulting
from incomplete entries on the list of targets that we have, but,
to the best of our knowledge, they do not complain about the cost
of compliance, as such. I would note, in this regard, that compliance
efforts of the banks, with respect to financial sanctions, are
part of their statutory obligations, which include compliance
with anti-money-laundering legislation and other applicable legislation
as well.
Q255 Lord Lawson of Blaby:
Can you perhaps give us an idea of in what circumstances, if any,
you think it would be appropriate for the European Union to adopt
what I believe you call autonomous sanctions, that is to say European
sanctions which do not have the approval of the Security Council
of the United Nations?
Mr Kovanda: My Lord Chairman, as Lord Lawson
points out, the European Union does adopt, from time to time,
autonomous sanctions. I think I mentioned that we have 12 on the
books as we speak. Decisions to impose such sanctions are made
by the Council of the European Union, which proceeds on the basis
of a proposal, and proposals come from a Member State, from the
High Representative, Dr Solana, or from the Commission. Needless
to say, the UK Government is an active participant in this framework.
Two years ago, the Council made a general statement on the use
of sanctions. This general statement, which I believe may have
been referred to in our written submission, says the following,
and with your permission, My Lord Chairman, I would quote now
a little. The general statement says: "If necessary, the
Council will impose autonomous EU sanctions in support of efforts
to fight terrorism and the proliferation of weapons of mass destruction-"
I think really it should be all- "and, as a restrictive measure,
to uphold respect for human rights, democracy, the rule of law
and good governance. We will do this in accordance with our Common
Foreign and Security Policy, as set out in Article 11 of the Treaty,
and in full conformity with our obligations under international
law." This is a general statement. It does not exclude autonomous
sanctions to promote or preserve the European Union or international
security, for example, in instances where the UN Security Council,
for political reasons which are well known to all of us, might
not be able to reach a decision.
Q256 Lord Lawson of Blaby:
Thank you. You are aware, presumably, of the paper by Professor
Joakim Kreutz, of the Bonn International Centre for Conversion,
who has done a magisterial 42-page paper on the Sanctions Policy
of the European Union. I would like just to read out his conclusion,
the very last sentence of his paper, and ask you whether you agree
with it. I will leave out a few words but they do not alter the
sense: the EU sanctions policy is less part of economic warfare
and more an important symbol signalling EU punishment for or approval
of certain policies. I am not quite sure how sanctions can be
approval of certain policies. In any event, assuming that what
he means is that they are essentially a symbol of disagreement,
which seems to me the sense of what he is saying, in what way,
in your opinion, is that more useful than a statement, say, from
the European Council expressing disapproval of a particular policy
that it was plainly symbolic? Why not a formal statement by the
European Council expressing disapproval? What is gained by using
the sanctions in a purely symbolic way, if that is what these
sanctions are? According to Dr Kreutz, that is what they are.
Mr Kovanda: My Lord Chairman, I must confess
my ignorance. I am not familiar with the article to which Lord
Lawson was referring. I will fix that deficiency, or gap in my
education.
Q257 Chairman:
The point is a clear one, I think?
Mr Kovanda: The point is a clear one; definitely.
My argument would be this, My Lord Chairman. The effectiveness
of sanctions varies from case to case. The fact that a regime
against which sanctions are invoked has not changed its policy
over time does not mean, in and of itself, that the sanctions
are symbolic only. There is no question in my mind that sanctions
do have, among others, a symbolic function, and here I would certainly
not disagree with Dr Kreutz. The international community has precious
few sticks at its disposal and, short of military action, actually
sanctions are one of the very, very few sticks that are at the
international community's disposal. Well-measured sanctions, I
think, end up having more than just a symbolic value, although
I would be the first to argue that they do not achieve the objective
terribly fast in just about any case.
Q258 Lord Lawson of Blaby:
When you say they do not achieve it terribly fast, they do not
achieve it at all, do they?
Mr Kovanda: My Lord Chairman, I have mentioned,
just earlier, a couple of instances where I think sanctions have
achieved their objective, together with other instruments of international
policy, without any question. I think that the instances of South
Africa, Libya and the former Yugoslavia are cases of sanctions,
in the last analysis, in some cases after many years, actually
working out.
Q259 Lord Skidelsky:
If I may follow up this question of effectiveness. I was slightly
surprised when you said then the international community has very
few sticks. One would have thought, in a globalising economy,
the sticks would be increasing, actually, because obviously if
all states were autarkic there would be no sticks of that kind,
but in a more interdependent world there are. Is it not that the
lack of sticks is connected partly with concerns about negative
humanitarian impact of sanctions on civilian populations, which
explains the move to much more targeted sanctions, and that if
one was prepared for more harm to the civilian population the
stick would be bigger? Therefore, is it not the case that there
is a trade-off between effectiveness and humanitarianism?
Mr Kovanda: My Lord Chairman, I think the point
that Lord Skidelsky is making is a very noteworthy point. If I
may make a personal remark, in the mid nineties I served on the
UN Security Council and in that capacity I was also Chairman of
the UN Sanction Committee on Libya. It was at that time, in the
mid nineties, when the impact of broader-based sanctions on the
population at large became a great worry of the international
community, and it was just about at that time when the concept
of targeted sanctions, smart sanctions, was being developed, and
I think, over the last ten, 12 years, this concept is now pretty
much universally applied. I think, seldom do we have blanket sanctions
against this or that country, precisely because of the concern
over the humanitarian situation of the people there. Whether there
is a correlation between how narrowly cast sanctions are and how
effective or non-effective they are, I would need to reflect upon
more, and off the top of my head I think I would be doubtful about
that correlation.
Chairman: We are going to move on: Lord
Powell.
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