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Designing Sanctions After Brexit: Recommendations on the Future of UK Sanctions PolicyIsabella Chase, Emil Dall and Tom Keatinge
Occasional Papers, 19 September 2019
Centre for Financial Crime and Security Studies, UK Counter-terrorism, AML/CTF, Brexit Briefings, European Union, Global Strategy and Commitments, Security Policy, Sanctions, UK, Law and Ethics, Organised Crime
Brexit presents many challenges and opportunities for the UK government. One challenge the government quickly identified as being an urgent priority was the UK’s ability to continue to implement sanctions, a foreign policy tool currently designed and agreed to within the EU. This potential gap has been addressed in the form of the Sanctions and Anti-Money Laundering Act (SAMLA) 2018. In addition, civil servants have devoted significant resources to rolling over existing EU sanctions into UK law by creating the necessary statutory instruments and replicating the vast majority of EU sanctions designations under this new legal regime. Together, these measures will ensure that under any Brexit scenario – whether it be with a deal and a resulting implementation period, or without a deal – the UK can continue to implement and enforce sanctions without interruption.
While the technical and legal work has been completed, an open question remains: what will the UK’s post-Brexit sanctions policy be? For the past 40 years, financial and economic sanctions implemented by the UK have been designed either at the UN (which will continue to be the case) or in Brussels via the consensus of all EU member states, a process in which the UK is widely viewed as being highly influential by both other member states and outsiders, such as US policymakers. Once no longer subject to the EU’s consensus decision-making process, it might be argued that the UK will have the freedom to design and implement a creative and more independent sanctions policy. Or, the UK might feel the need to remain aligned with the EU and/or the US to ensure that it follows the actions of these much bigger economic players.
Answering the question as to what the UK’s post-Brexit sanctions strategy should be is therefore urgent and – thus far – unaddressed. As the House of Commons Foreign Affairs Committee (FAC) noted in a June 2019 report (the FAC Report): ‘Little high-level thought appears to have been given to UK priorities for post-Brexit sanctions’.
With the technical work required to prepare the UK’s sanctions regimes for Brexit now complete, and to respond to the challenge posed by the FAC, RUSI has formed ‘The RUSI Task Force on the Future of UK Sanctions Policy’, composed of former officials, academic and policy experts and senior private sector executives, to inform RUSI’s work which seeks to provide recommendations on what UK sanctions policy could look like after Brexit. Over the coming months, the Task Force intends to consider a range of questions over several meetings in London, informed by research trips to other EU member states, to provide input to a debate that will shape UK sanctions policy for decades to come. The first meeting of the Task Force explored the possible scope of an independent post-Brexit sanctions policy, focusing on how the UK will design and implement unilateral sanctions in practice.
The Task Force will hold two further workshops to consider how the UK’s future sanctions regime will exist alongside those of other countries and multilateral bodies and how the government will overcome practical barriers to effective implementation of its new regime. As such, questions on potential coordination with European or US allies on sanctions, and the benefits or challenges this presents for UK sanctions, are not discussed in this paper, as later meetings will be devoted to this specific purpose.
This paper and its recommendations are adapted from discussions from the first London-based workshop.
The workshop discussion questions were as follows:
- What role should sanctions play in UK foreign policy after Brexit?
- How should the UK exercise the range of sanction use-cases offered to it under SAMLA?
- How should the British government work with the private sector to prepare them for independent UK sanctions?
Before elaborating on these recommendations, a note on terminology. This project focuses on economic and financial sanctions – that is to say: targeted assets freezes; restrictions on financial markets and services; and direction to cease certain types of business. Put simply, these are measures that reduce the ability of the sanctioned entity to conduct business and earn revenue. It is to economic and financial sanctions that most contemporary references to ‘sanctions’ by politicians or the media relate. Other forms of sanction such as travel bans or trade embargoes also exist but are outside the scope of this paper, but the recommendations contained in the paper may also apply equally to those measures.
As a result of the discussions framed by these questions, three primary recommendations emerged. The recommendations were developed by RUSI, and are not necessarily the consensus view of Task Force members, nor have individual Task Force members been involved in the drafting of this report.
Developing a Strategic Approach to Sanctions
- The UK government should clarify the strategic objectives and threshold for use that will underpin UK unilateral sanctions policy. This includes determining whether sanctions are best deployed as a reactive tool, in response to international disagreements, or as a proactive tool to steer wider foreign policy objectives and change behaviour of sanctions targets.
- Clear policy objectives behind the deployment of new sanctions initiatives should be properly communicated to the private sector to avoid over-compliance or criticisms of overuse often faced by other sanctions regimes.
- If the UK government seeks to change the behaviour of sanctioned targets, sanctions will effect change only if targets clearly understand under what circumstances they can be lifted; the objectives and process for lifting sanctions must be clear.
The Use of Sanctions to Protect National Security and Integrity
- The UK government should endeavour to use sanctions not only as a tool for advancing foreign policy objectives but also to respond to recognised national security threats, such as those presented by serious and organised crime and those which undermine the integrity of the UK’s financial system.
- The UK should also consider using sanctions to advance its international development priorities. For example, the government could use sanctions to strengthen global peace, security and governance by using sanctions to hasten conflict resolution.
- Sanctions pursued to tackle corruption or for humanitarian reasons should avoid the popular shorthand ‘Magnitsky’ and instead be entitled Human Rights and Corruption Sanctions. This will allow for a more clinical application of these sanctions against individuals in any country.
Engagement With the Private Sector
- The UK government, and the Office of Financial Sanctions Implementation (OFSI) in particular, must expand and improve its outreach and guidance to the private sector if UK-only sanctions are to be effective and implemented without unintended consequences. This includes providing clear guidance on licensing for NGOs and humanitarian actors.
- The government should review whether the current split of responsibilities between the Foreign and Commonwealth Office (FCO) and HM Treasury is optimal in a post-Brexit environment.
- To be effective, the staffing and investment in the UK sanctions capability must be reviewed and enhanced.
BANNER IMAGE: Chamber of the House of Commons, London, 2012. Courtesy of UK Parliament/Wikimedia/CC BY-SA 3.0