II. Exploring Innovative and Practical Measures of International Assistance that Could Be Provided to Third States Affected by the Application of Sanctions
30. In considering this issue, the expert group discussed a broad range of ideas and proposals aimed at minimizing the collateral damage of sanctions and providing practical assistance to third States, in particular developing countries, to enable them to better cope with the special economic problems arising from the application of sanctions. To this end, it reviewed the recent practice of international responses to the appeals for assistance on behalf of the affected third states, as summarized in the previous reports of the Secretary-General on the subject. Attention was paid to both financial and non-financial measures of assistance that could be undertaken on bilateral and multilateral levels to insulate those affected countries.
General Considerations
31. The expert group stressed the concept of burden-sharing and equitable distribution of costs, as reflected in Articles 49 and 50 of the Charter of the United Nations. It was agreed that this concept is relevant to both minimizing collateral damage and encouraging full cooperation in implementation of sanctions. recent experience has shown that in practical terms donor motivation is largely a product of concern for the strict implementation of sanctions. On the other hand, assistance to third States affected by the application of sanctions would further contribute to an effective and comprehensive approach by the international community to sanctions imposed by the Security Council. Thus, measure of assistance which incorporate elements of improved capacity for enforcement of sanctions are more likely to commend themselves to external donors providing assistance to the affected third States.
32. The group felt that the cost of implementing sanctions should be viewed as the opportunity cost of possible alternative to an international military action or a peace-keeping operation. The costs of such military or peace-keeping operations are internationally share, either by voluntary or assessed contributions. Similarly, the cost of carrying out preventive or enforcement measures such as sanctions, particularly the consequences for affected developing countries, should be borne by the international community on a more equitable basis. It was expected that the major industrial countries would recognize and accept their special responsibility in this regard.
Action to Minimize Collateral Damage (Secondary Effects)
33. In the first instance, the expert group considered possible measure that could be taken prior or shortly after the imposition of sanctions, with a view to enhancing their political impact and minimizing their collateral damage, particularly the secondary adverse effects on third States. Proposals on such non-financial and largely administrative measures include: (a) prior study, including assessment of possible adverse effects on third States; (b) consultations with potentially affected non-target States; (c) consideration of possible exemptions for most seriously affected countries; (d) design of "targeted measures" aimed at the offender (e.g. ruling elites) rather than civil society as a whole; (e) further improvement of procedures and methods of work of the Security Council and its sanctions committees.
34. Prior Studies and Consultations. The group felt that it was essential that the Security Council should give a very careful consideration to the potential effects of sanctions both on the target State and the third countries before adopting a resolution under Chapter VII of the Charter of the United Nations. The Council would benefit from a prior study of the potential effects of intended enforcement or preventive measures, as well as prior consultations with the countries that are most likely to be affected by such measures. As a result, serious collateral damage to the neighbouring and other third States could be avoided, without undermining the effectiveness of the sanctions regime. Further provision could be also made for monitoring the sanctions effects and introducing adjustments, as appropriate.
35. Exemptions. The group recalled that it has been the practice of the Security Council or its sanctions committees to grant partial or limited exemptions under exceptional circumstances, on a case-by-case basis, and under appropriate forms of monitoring and control. For example, in the case of the Iraqi sanctions, the relevant committee authorized, on an exceptional basis, Jordan's request for resumption of imports of oil and oil derivatives from Iraq. In the case of the Yugoslav sanctions regime, such examples include, inter alia, specific requests from Albania (transit of electric energy), Hungary (supply of fuel for ice-breakers on the Danube), Romania (oil deliveries for the Iron Gates I system on the Danube) and the former Yugoslav Republic of Macedonia (transit traffic). Thus, in certain cases, appropriate and timely exemptions would obviate the need for further offsetting or adjustment measures.
36. Targeted sanctions, such as personal assets freezes, visa-based travel restrictions and exclusion from international forums, seek to deprive ruling elites from important values and bring about the required policy changes, without hurting the civilian population in the target country or affecting the economies of third States. Such measures commend themselves on grounds of equity and efficacy; and their merits deserve, therefore, priority consideration in designing a sanctions regime.
Measures of Assistance 37. Further, the expert group discussed practical measures of longer-term assistance that could be provided by the relevant organizations both within and outside the United Nations system to third States affected by the application of sanctions. It was understood that such measures should be related to the nature of the special economic problems confronting the affected third States in a particular sanctions episode, as well as the specific mandates, existing facilities and available resources of the organizations concerned. Comprehensive sanctions, such as those imposed on Iraq or former Yugoslavia, would require a broad-based international response involving the international financial and trade institutions, United Nations development programmes and agencies and other relevant international and regional organizations.
38. International Financial and Trade Institutions. The expert group observed that the international financial institutions, both at the global and regional levels, possess, in principle, the required expertise, existing instruments and financial resources to assist member States in coping with such external economic shocks as the imposition of sanctions. While the International Monetary Fund (IMF) is well placed to provide financial assistance under its existing facilities to any member experiencing balance of payments difficulties, the World Bank and the regional development banks are well equipped to address, within the priorities of the investment programmes in the countries concerned, various sectoral and other development problems. In emergency situations, those institutions are in a position to take prompt action to adapt and expand their facilities and policies to provide financial support to most seriously affected countries. For example, in response to the Gulf crisis, the IMF took a number of practical measures, including the introduction of a temporary "oil element" into the compensatory and contingency financing facility to compensate member countries for sharp, unexpected rises in the cost of their imports of crude petroleum, petroleum products and natural gas; the World Bank and the regional development banks undertook, inter alia, to accelerate disbursements from existing loans and credits, increase their cost-sharing limits in the ongoing and new projects and expand concessionary lending to the affected countries. The Fund and the Bank have the experience in mobilizing and coordinating (e.g. in the context of consultative group meetings) of financial support from a variety of international and bilateral donors, including Governments and private financial institutions, as well as the expertise to provide technical assistance.
39. The group agreed that the international financial institutions should play the lead role in both assessing the economic consequences actually incurred by third States as a result of the United Nations imposed sanctions and providing financial assistance to those affected countries in order to enable them to overcome their economic, financial and trade difficulties resulting from the implementation of sanctions. In order to address more specifically and directly the special economic problems of third States affected by the application of sanctions, the IMF and the World Bank may wish to consider establishing a special mechanism, to be approved by their respective governing bodies, which would allow these institutions to mobilize new and additional financial resources from all potential funding sources, in order to provide emergency financial support to those affected third States on an exceptionally concessionary terms. This mechanism would be essential for ensuring the success of sanctions adjustment efforts, without diverting resources from regular assistance programmes for development. Financial assistance may need to be supplemented by non-financial measures of trade promotion, including granting of special trade preferences, adjustment of tariffs, allocation of quotas, special commodity purchase agreements and finding new markets. The World Trade Organization (WTO) and UNCTAD can provide the necessary technical assistance in this regard.
40. United Nations Development Programmes and Agencies. The expert group felt that the United Nations development programmes and specialized agencies concerned, such as UNDP, UNICEF, UNHCR, WFPI ILO, FAO, WHO ' ICRC, should focus on providing emergency relief as well as longer term assistance to the affected third States to enable them to better cope with social and humanitarian effects of sanctions. Accordingly, these bodies should have the primary responsibility for identifying and assessing the affected countries' particular problems and needs in those areas of concern and designing appropriate assistance measures. Such special assistance programmes should also indicate the respective roles of different agencies and the funding requirements. To the extent possible, these funding requirements should be met by the existing (e.g. special programme) resources of the bodies concerned and raised through resource mobilization efforts such as donor conferences.
41. However, past experience shows that the appeals of the Secretary-General on behalf of third States affected by sanctions imposed on Iraq and Yugoslavia have not evoked responses commensurate fully with the magnitude of the problems confronting those third States. Therefore, it was suggested that serious consideration be given to applying for this purpose in the future the funding procedures similar to those adopted for peace-keeping operations.
42. Regional Cooperation. The expert group stressed the importance of regional cooperation in alleviating the hardship incurred by the neighbouring States, in particular that associated with the enforcement of sanctions (secondary effects). Experience in the cases of South Africa and Yugoslavia suggests that encouragement of regional cooperation and help with the costs of enforcement can be important strategies in mitigating collateral damage. Regional initiatives not only pool information and encourage mutually beneficial cooperative arrangements, but also bring prospective bilateral and multilateral donors together with affected countries and facilitate developing an integrated approach.
43. Thus, an innovative feature in the Yugoslav case was the dispatch of Sanctions Assistance Missions (SAMS) to seven countries in the region (Albania, Bulgaria, Croatia, the former Yugoslav Republic of Macedonia, Hungary, Romania and Ukraine), at their consent. As a joint OSCE/EU operation, the SAM system involved professional customs officers giving on-the-ground advice on enforcement and at the same time helping facilitate legitimate trade at border-crossing points, thus serving the dual purpose of strengthening enforcement and mitigating some of the hardship experienced by States in the region. In another example of the same case, the CSCE initiative to convene, in early 1994 at Vienna, a special meeting to help affected States in the region to better cope with the effects of the sanctions resulted in identifying eight short-term projects to alleviate bottlenecks in traffic flow around Yugoslavia. EU allocated 100 million ECUs for a longer term programme of transport and infrastructure development in the region. In follow-up, two customs corridors were established to accelerate the transit of goods through selected border-crossing points.
