EU Law, International Law and Economic Sanctions against Terrorism: The Judiciary in Distress? Research Papers in Law, 3/2008

From the Introduction. This article seeks to examine the relationship between European Union law, international law, and the protection of fundamental rights in the light of recent case law of the European Court of Justice (ECJ) and the Court of First Instance (CFI) relating to economic sanctions against individuals. On 3 September 2008, the ECJ delivered its long-awaited judgment in Kadi and Al Barakaat on appeal from the CFI.3 In its judgment under appeal,4 the CFI had held that the European Community (EC) is competent to adopt regulations imposing economic sanctions against private organisations in pursuance of UN Security Council (UNSC) Resolutions seeking to combat terrorism; that although the EC is not bound directly by the UN Charter, it is bound pursuant to the EC Treaty to respect international law and give effect to UNSC; and that the CFI has jurisdiction to examine the compatibility of EC regulations implementing UNSC resolutions with fundamental rights not as protected by the EC but as protected by jus cogens. On appeal, following the Opinion of Maduro AG, the ECJ rejected the CFI’s approach. It held that UNSC resolutions are binding only in international law. It subjected the contested regulations to full review under EC human rights standards and found them in breach of the right to a hearing, the right to judicial protection and the right to property. Kadi and Al Barakaat is the most important judgment ever delivered by the ECJ on the relationship between EC and international law and one of its most important judgments on fundamental rights. It is imbued by constitutional confidence, commitment to the rule of law but also some scepticism towards international law. In the meantime, the CFI has delivered a number of other judgments on anti-terrorist sanctions assessing the limits of the “emergency constitution” at European level. The purpose of this paper is to examine the above case law and explore the dilemmas and tensions facing the EU judiciary in seeking to define and protect the EU’s distinct constitutional space. It is divided as follows. It first looks at the judgment in Kadi. After a short presentation of the factual and legal background, it explores the question whether the EU has competence to adopt smart sanctions. It then examines whether the EU is bound by resolutions of the Security Council, whether the ECJ has jurisdiction to review Community measures implementing such resolutions and the applicable standard of judicial scrutiny. It analyses the contrasting views of the CFI, the Advocate General, and the ECJ taking account also of the case law of the European Court of Human Rights (ECtHR). Further, it explores the consequences of annulling the contested regulation. It then turns to discussing CFI case law in relation to sanctions lists drawn up not by the UN Security Council but by the EC. The paper concludes by welcoming the judgment of the ECJ. Whilst its reasoning on the issue of Community competence is questionable, once such competence is established, it is difficult to support the abrogation of Community standards for the protection of fundamental rights. Such standards should ensure procedural due process whilst recognising the importance of public security.

The EU's Use of 'Targeted' Sanctions: Evaluating effectiveness. CEPS Working Document No. 391, March 2014

This study analyses the use by the European Union of the novel concept of ‘targeted sanctions’ in the framework of its Common Foreign and Security Policy. It examines two sets of sanctions regimes featuring different degrees of efficacy: in Myanmar and Zimbabwe, the EU wielded measures in support of human rights and democracy objectives in the absence of a United Nations mandate, while it supplemented UN sanctions to stop nuclear proliferation in Iran and North Korea. The study highlights a number of facilitators of, or hindrances to, the efficacy of sanctions, such as the degree of support by regional powers or the presence of UN legitimation. It concludes that the EU sanctions regimes could be optimised by using more robust measures, designing them on the basis of ex ante assessments, enabling faster upgrades, monitoring their impact and adjusting them regularly and improving outreach efforts.

A European sanctions compensation fund? CEPS Commentary, 12 August 2014

Daniel Gros explores in a new CEPS Commentary the feasibility of creating a common fund to provide compensation for the economic costs of sanctions as an integral part of the EU’s foreign-policy stance that is now emerging towards Russia, albeit slowly and painfully.

The EU-Ukraine-Russia Sanctions Triangle. CEPS Commentary, 13 October 2014

The EU and the US have been stepping up sanctions against Russia because the Kremlin has broken every basic rule of the pan-European security order enshrined in the Helsinki Treaty of 1975. The effective closure of financial markets for Russia’s big businesses now has serious bite. The Kremlin’s counter-sanctions are marginal. Russia’s actual and threatened trade sanctions against Ukraine, alongside its aggression over Crimea and east Ukraine, mean that it has cast itself in the image of an enemy for most Ukrainians. Europe’s trust of the Kremlin has sunk to its lowest level since pre-Gorbachev times. If Russia were to switch to a sincerely cooperative, long-term peace mode with Ukraine, the EU and the US would no doubt be happy to scrap the sanctions. In the absence of this, however, the logic would be for the EU and the US to sustain the most significant economic sanctions for as long as it takes, with preparedness to intensify them.

EU's sanctions against Russia - The need for clear goals (Comments on the 20-21 March Council). EPC Commentary, 21 March 2014

Over the last two decades, the European Union (EU) has increasingly relied on the use of restrictive measures in its external action. The EU has shown itself to be more open to the possibility of resorting to sanctions outside the United Nations, as well as in cooperation with other international actors, such as the United States. As a permanent member of the UN Security Council, Russia has blocked and is expected to block any efforts of using this international body to address the crisis in Ukraine so the EU cannot hope for a global sanctions regime and is forced to use a unilateral sanctions regime, in cooperation with some other like-minded players (US, Canada, Australia, Japan).

Improving the Effectiveness of Sanctions: A Checklist for the EU. CEPS Special Report No. 95, 6 November 2014

The increasingly frequent imposition of sanctions by the EU over the past decade has not been accompanied by a thorough pre-assessment and contingency planning stage, which, argue the authors, has led to the formulation of suboptimal sanctions regimes. This paper proposes a practical pre-assessment and contingency planning of sanctions – a checklist, which departs from the ‘ad hoc-ism’ of current decision-making on sanctions. The checklist includes the identification of resources linked to the objectionable policies; the leverage of the EU; the costs to the EU; the legality of the measures; their unintended effects; the expected contribution towards EU goals; their coherence with overall EU external relations; and the communication of these policies.

Russian sanctions against Moldova. Minor effects, major potential. OSW COMMENTARY No. 152, 2014-11-06

Russia has been Moldova’s main trade partner and Russian capital has accounted for a large part of its foreign investments, dominating in the energy and the banking sectors. Moreover, Russia has been a key job market for Moldovan expatriate workers. In the economic sphere, this is making Moldova unilaterally dependent on Russia. Moscow has been attempting to exploit this situation to put pressure on the authorities in Chișinău for quite some time. In recent months Russia has increasingly used instruments for exerting economic pressure on Moldova, as a means of responding to the current authorities’ pro-Western policy. A key element of this policy was Moldova’s signing on 27 June 2014 of the Association Agreement with the EU (which came into force on 1 September 2014). Over the last year, Russia has implemented a number of import restrictions on Moldovan goods. The aim of the Russian actions is to fuel social disappointment, and ultimately – to prevent the pro-European coalition currently in power from winning the parliamentary elections scheduled for 30 November 2014. Another aim might be to convince the Moldovan authorities to suspend the implementation of the Association Agreement – a plan openly put forward by Vladimir Putin during the CIS summit in Minsk on 10 October 2014. So far, however, the Russian economic sanctions have failed to produce the expected results. Support for the pro-European parties has been high, and there is little chance that the pro-Russian groups might achieve a parliamentary majority. It is not inconceivable, then, that in the upcoming months Moscow might decide to resort to other, more potent instruments of economic pressure such as speculation on the financial market, carried out as part of its de facto control over the banking sector. Another possibility is further tightening of trade restrictions, issuing expatriate workers from Russia or using Moldova’s dependence on Russian energy.

Big business in Belarus - its genesis, conditions and prospects. OSW Commentary No. 113, 2013-09-09

Over the past ten to twenty years, Belarus has seen a steep rise in the number of local dollar millionaires. This has somewhat undermined the myth of an egalitarian model of society promoted through the Belarusian state propaganda. There is a small group of businessmen among the top earners who, in exchange for their political loyalty and their consent to share profits with those in power, have enjoyed a number of privileges that allow them to safely conduct business in an environment typically hostile to private enterprise. The favourable conditions under which they are operating have enabled them not only to accumulate substantial capital, but also to invest it abroad. However, since such businesses are seen as providing a financial safety net for the regime, in 2011 and 2012 some of their directors received an EU travel ban, while their companies were subjected to economic sanctions by Brussels. At the same time, fearing that Belarus’s big business could become powerful enough to influence the country’s political scene (as has been the case in Russia and Ukraine), Alexander Lukashenka has actively prevented such players from becoming too independent. Consequently, Belarus has so far not developed its own elite class of oligarchs who would be able to actively influence government policy. The current informal agreement between the government in Minsk and big business has proved stable and is unlikely to change in the near future. Nonetheless, a reordering of state power giving Belarus’s big business significant political influence would be possible should Mr Lukashenka lose power in the next presidential election.

Social Capital and Individual Happiness in Europe. Bruges European Economic Research (BEER) Papers 25/December 2012

This paper explores the relationship between social capital and happiness both in Europe as a whole, as well as in its four main geographical macro-regions – North, South, East and West – separately. We test the hypothesis of whether social capital, in its three-fold definition established by Coleman (1988) – trust, social interaction, and norms and sanctions – influences individual happiness across European countries and regions. The concept of social capital is further enriched by incorporating Putnam- (1993) and Olson- (1982) type variables on associational activity. Using ordinal logistic regression analysis on data for 48,583 individuals from 25 European countries, we reach three main findings. First, social capital matters for happiness across the three dimensions considered. Second, the main drivers of the effects of social capital on happiness appear to be informal social interaction and general social, as well as institutional trust. And third, there are significant differences in how social capital interacts with happiness across different areas of Europe, with the connection being at is weakest in the Nordic countries.

EU Sanctions: A Relevant Foreign Policy Tool? EU Diplomacy Paper No. 3, May 2014

This paper examines an instrument which establishes an explicit link between economic power and foreign policy of the European Union (EU): restrictive measures or sanctions. As the EU is increasingly confronted with situations requiring a firm response, sanctions – arguably the EU’s ‘hardest’ tool – have become somewhat of a standard reaction. To what extent are sanctions a relevant tool for EU external action? By looking at several case studies from a set of 47 autonomous EU sanction cases, this paper acknowledges the many internal and external difficulties the EU faces when using the sanctions tool. However, it also shows that despite those challenges, the ‘hard’ and coercive nature of the sanction instrument nevertheless make it a relevant foreign policy tool which allows the EU to react to external crises.