UK Parliament Testimony of Richard Nephew And David Mortlock on Brexit Sanctions Policy

UK Parliament Testimony of Richard Nephew And David Mortlock on Brexit Sanctions Policy

David Mortlock, Willkie Farr & Gallagher LLP and Richard Nephew, Adjunct Professor and Senior Research Scholar, Center on Global Energy Policy, School of International and Public Affairs, Columbia University – Written Evidence (BSP0002)

 

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We thank the EU External Affairs Sub-Committee and Baroness Verma for the opportunity to present our thoughts on sanctions policy between the UK and the EU after Brexit. 

 

From the U.S. perspective, cooperation with both the United Kingdom and European Union on economic sanctions is critical to achieving our joint foreign policy and national security goals.  As former directors for the White House National Security Council, we have had the opportunity to work hand-in-hand with UK and EU officials to develop sanctions programs to protect international norms and our collective security, including sanctions programs targeting Iran’s nuclear program, Russia’s violation of Ukraine’s territorial sovereignty, violations of human rights, and international terrorism.  We believe that the United Kingdom, the UK, and the EU should ensure that cooperation continues following Brexit, and avoid the risks Brexit poses to our ability to undertake collective action. 

 

Though a niche subject, the evolution of UK and EU sanctions policy is no petty matter. As EU sanctions researcher Clara Portela noted, “while the EU’s Common Security and Defense Policy (CSDP) was launched with fanfare in 1999, and was intended to break new ground in European foreign policy by allowing the Union to carry out joint military operations, it is sanctions that have taken centre stage.”[1] The European Union has pursued sanctions as a means of projecting power and influencing foreign behavior in several regions and in response to a variety of provocations over the past twenty years; prior to Brexit, sanctions were figured to remain a core element of the CSDP.  Just as other trade and foreign policy matters were intertwined by the United Kingdom and European Union until Brexit, sanctions policies were joined together and they had an impact both in the selection and the execution of sanctions decisions by both the United Kingdom and the European Union.  Even beyond matters of policy, the United Kingdom was (and, for the time being, is) a major contributor of information and capability to the EU sanctions machine. 

 

The question now is – at a time when sanctions have become a central tool of national security – whether sanctions will remain a focus of EU (and British) foreign policy. Some have speculated, with respect to Russia, that with one of the main advocates of sanctions pressure leaving the European Union, Brexit will usher in an era of reduced sanctions use.[2] We disagree.  Common interests and threats will continue to drive EU and UK sanctions policies even after Brexit, at least in the near- to mid-terms. However, there is a serious risk that British and EU respective interests will diminish their willingness to reach commondecisions.  This diversion of interests could weaken the effectiveness of the sanctions deployed by the UK, EU, and United States.

 

  1. Impact of Brexit on Sanctions Policy

 

The European Union and United Kingdom have stronger incentives to maintain a consistent sanctions posture than to split, certainly in the near to mid-term.  Historical cooperation on Iran, Russia, and terrorism sanctions regimes demonstrate that European and British sentiments on key foreign policy matters in which sanctions are employed are largely the same and not likely to change simply because the United Kingdom is no longer in the EU Council. To suggest otherwise is to argue that the only consideration that kept the European Union focused on Iran’s nuclear program or terrorism was British insistence, or that the British only went along with sanctions against Russia because of EU pressure.

 

Moreover, the European Union and United Kingdom are likely to maintain common economic and trade interests. Norway and Switzerland are not part of the European Union. However, both implement EU sanctions, in some cases in a manner that is word-for-word what is in EU regulation. This is both because of shared values and interests, but also because there is economic value in having harmonized trade and financial policies, including on sanctions. The United Kingdom may face similar pressures and choices if it remains part of the single market or maintains some other form of trade relationship with the European Union.

 

Howeverthere is a risk of a UK and EU divergence on their perspectives on sanctions, and the two entities may prioritize their respective economic self-interests, to the detriment of their common ability to effectively deploy sanctions measuresIt is entirely plausible that, even if the United Kingdom and the European Union maintain some formal relationship after Brexit, the United Kingdom and the European Union will look more to their economic self-interests when making decisions on the scope and nature of sanctions decisions. Assuming the United Kingdom is able to maintain the role of the City of London as a financial powerhouse, it is plausible that the United Kingdom will find a substantial portion of its economic activity is reliant on providing banking services, including to unsavory individuals and entities.  Without the balancing force of political pressures from Brussels, it is possible that a future British government will find its perception of interests more aligned with avoiding sanctions policies that could punish those individuals and entities (and, more important, the financial sectors to which they belong abroad).

 

Likewise, the consensus-building requirements of the European Union have led to a curious balancing posture when it comes to sanctions: distributed pain, even if it is of a different character, when sanctions decisions are taken. Take, for example, sanctions on RussiaThe European sanctions on Russia balanced restrictions on finance, trade, and energy, spreading the burden across the various member states.  While the United Kingdom is not the sole center of financial activity for the European Union, with the absence of the United Kingdom from the European Union and the limited ability of the remaining members to imposeimpactful financial sanctions, the European Union will find it more difficult to create balance among members in order to reduce the burden of sanctions among those states remaining.

This, in turn, may make it harder for outside actors—like the United States—to convince the European Union to adopt sanctions or obtain anything beyond toothless action.

 

A related issue will be the lost competency that the British government brought to EU deliberations. EU member states are well practiced at sanctions design and

implementation, and there are many governments in the EU that can play an enhanced role in this work going forward (such as France, Germany and the Netherlands).  It may also be that the EU bureaucracy in Brussels, which has led the charge in the past decade on sanctions despite being chronically undermanned for years, will take on a greater role. But, there is no mistaking the amount of time, effort, and energy that the UK applied in the sanctions field for the EU. In the design of sanctions, their defense, and their implementation, the UK brought knowledge and ideas that helped to create the system as it stands. That risks beinglost as a result of the separation with the EU.

 

  1. Recommendations for Policymakers

 

From a policymaking perspective, these observations lead to two recommendations.  The first is for the European Union and the United Kingdom to build into whatever succeeds the UK’s formal involvement in the EU the capacity for coordination of sanctions actions. Even if both the United Kingdom and European Union retain separate decision-making apparatus for sanctions enforcement,establishing a body to coordinate the creation of sanctions rules and propose them to the separate political leaders would help to preserve at least some of the benefits that existed prior to Brexit, particularly balance and harmonization.

 

Second, the UK should work with the United States to formalize various efforts at sanctions coordination through the creation of “likeminded” coalitions on particular issues. Likeminded collectives existed to deal with Iran, Russia, and North Korea, and a scaled up approach could involve annual gatherings of European, British, East Asian, and other interested governments to discuss a range of sanctions topics. The United Kingdom should ensure that it and the EU remain on the same page as the United States. These gatherings would not replace the need for EU-UK interaction, but they would help create a floor for this interaction while at the same time reducing some of the tensions that arise from time to time between sanctions partners. Taken in combination with other mechanisms for EU-UK sanctions coordination, such a likeminded coalition would at a minimum help to smooth the transition as Brexit takes place.

 

A detailed version of these observations and recommendations can be found in our October 2016 article, Brexit’s Implications for UK and European Sanctions Policy, published by the Columbia Center on Global Energy Policy, attached hereto and available at https://academiccommons.columbia.edu/download/fedora_content/download/ac:206467/CONTENT/Brexit_s_Implications_for_UK_and_European_Sanctions_Policy.pdf