Britain Learns to Apply Sanctions

One of the notable events in July was the imposition by Britain of restrictions on a number of Russian and foreign officials in the area of human rights. This was London’s first independent programme of sanctions after Brexit. The Russian Foreign Ministry justifiably perceived these sanctions as an unfriendly act and interference in domestic affairs. Russia has reserved the right to respond. At the same time, the media uproar around this event seems excessive compared to the content of these sanctions. Needless to say, they are a hostile political gesture but they do not change Russian-British relations in principle. They won’t affect bilateral economic ties much at all. The global effect of British sanctions will be most likely limited. However, it makes little sense to underestimate Britain as a participant in sanctions coalitions against Russia and other countries.

One of the notable events in July was the imposition by Britain of restrictions on a number of Russian and foreign officials in the area of human rights. This was London’s first independent programme of sanctions after Brexit. The Russian Foreign Ministry justifiably perceived these sanctions as an unfriendly act and interference in domestic affairs. Russia has reserved the right to respond. At the same time, the media uproar around this event seems excessive compared to the content of these sanctions. Needless to say, they are a hostile political gesture but they do not change Russian-British relations in principle. They won’t affect bilateral economic ties much at all. The global effect of British sanctions will be most likely limited. However, it makes little sense to underestimate Britain as a participant in sanctions coalitions against Russia and other countries.

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Brexit allowed Britain to review the issue of changing its legislation on economic sanctions. Before Brexit London was part of the EU’s sanctions programmes and the actions of the British authorities were based on EU law. At the same time, a question came up on the legislative foundation for applying UN Security Council sanctions. London plays an influential role in this respect. Britain is a permanent member of the UN Security Council with the right to veto any resolution. Brexit strengthened Britain’s ability to apply restrictive measures. Now the UK can introduce them at its own discretion without consulting its EU partners. But applying them will be restricted now by the British jurisdiction only. It will be more difficult for London to rely on EU economic might but this will not be a big headache for either side. The positions of Britain and the EU coincide on many issues. If it wants, London can join Brussels’ sanctions (this is a fairly widespread practice for non-EU members), while preserving its freedom of action in the process.

Without the EU, Britain’s sanctions are based on the Sanctions and Anti-Money Laundering Act 2018. This act describes the goals and mechanism of this policy. The goals include the implementation of UN Security Council sanctions and restrictions aimed at countering terrorism, protecting national security and settling conflicts, to name a few. The act has separate items on the need “to promote respect for democracy, the rule of law and good governance” and to “provide accountability for or be a deterrent to gross violations of human rights, or otherwise promote:

(i) compliance with international human rights law, or

(ii) respect for human rights.”

The act describes in detail a list of possible sanctions. They include financial restrictions (asset-freezing, denial and blocking of financial services); immigration restrictions; trade sanctions and sanctions against aircraft and sea vessels. A major action of the sanctions is the designation of individuals and companies on related lists that ban any contact with them under the British jurisdiction.

The 2018 Act is a framework law and gives “an appropriate minister” the authority to issue delegated legislation in the form of “regulations” that are focused on a specific subject or a program of sanctions. This right was used by Secretary of State for Foreign Affairs Dominic Raab when he published a resolution on Global Human Rights Sanctions Regulations 2020 on July 6. Indicatively, the new resolution differs from routine measures on adapting the EU sanctions rules to the British legislation. On June 25, for instance Britain adopted a resolution on sanctions against Somalia, and on June 18 on sanctions against Lebanon, Bosnia and Herzegovina, as well as Nicaragua. A document of a like nature on sanctions against Russia was drafted back on April 10, 2019. And in June 2020, the British Treasury upgraded it.

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The document on human rights signed by Dominic Raab is different from the above because it introduces new sanctions that were not part of the EU restrictions before. According to document, based on the available information, the UK Secretary for Foreign Affairs can designate sanctions for people that are involved in human rights violations (including the right to life, the right not to be subjected to torture and the right to be free from slavery). People guilty of these violations are subjected to financial and immigration restrictions. The document provides for the 50 percent rule that is well known from American law. Restrictions are imposed on a company in which an individual under sanction owns more than 50 percent of the shares.

The authority to implement financial sanctions is given to the Treasury and its Office of Financial Sanctions Implementation (OFSI). The parameters are described in a separate document. The OFSI compiled a list of individuals on whom sanctions are imposed under Global Human Rights Sanctions Regulations 2020. There are 25 Russian citizens on this list. In Britain’s opinion, they are all linked with the Sergei Magnitsky case. The document also mentions two generals from Myanmar, two organizations from North Korea and 20 Saudi citizens that are suspected of being involved in the murder of journalist Jamal Khashoggi.

However, this list does not contain many new names. It is largely consonant with the US lists under the Sergei Magnitsky Rule of Law Accountability Act of 2012 (Magnitsky Act) and the Global Magnitsky Human Rights Accountability Act (so-called Global Magnitsky. American lists are longer than British lists. In total, sanctions have been imposed on 255 individuals and companies. Britain partially incorporated US restrictions in its law. The US Department of State supported its actions.

Differences between Russia and the West on the Magnitsky case have long been established. For this reason, London’s sanctions can hardly be called a revolutionary event. Their impact on trade and economic relations is close to zero because the individuals under sanction are for the most part employees of government agencies rather than business people. Russian-British relations are at a rock bottom level anyway; it is hard to push them lower with this latest effort. Obviously, Russia will respond. It is a cliché of international relations. Apparently, it will also be symbolic with similar restrictions on British individuals. The Russian Government has had a relevant mechanism since 2014, which it updated in 2018. Moscow is unlikely to radically aggravate bilateral relations.

There are questions about the global role of Britain’s sanctions. Compared to the scale of the US restrictions, the UK sanctions will play a much more modest role. At the same time, it is important to bear in mind that London remains a major global financial center. For this reason, the application of financial sanctions may have more serious consequences relative to the size of the British economy. It is also important not to ignore London’s role as a participant in the international “sanctions coalitions”. Most likely, Britain will support US sanctions more enthusiastically than the European Union.

First published in the Valdai Discussion Club.