What is the state of Canada’s sanctions’ practice since 1990?
Canada’s rate of application of sanctions has been high since the 1990s as a result of a very active UN Security Council and Canada’s obligation to give effect to those measures.[1] Of late, however, Canada’s sanctions have been imposed by choice rather than obligation – applied to demonstrate it is a “good ally” to the European Union (EU) and to the US rather than by requirement of international law.
Andrea Charron, Director of the Centre for Security Intelligence and Defence Studies at Carleton University provided testimony to the House of Commons’ Standing Committee on Foreign Affairs and International Development on Wednesday, October 19, 2016, at 3:30 on the Legislative Review of the Special Economic Measures Act and the Freezing Assets of Corrupt Foreign Officials Act.
The Committee’s focus on just the Special Economic Measures Act (SEMA) and Freezing Assets of Corrupt Foreign Officials Act (FACFOA) is very perplexing and I suspect largely driven by events in the news. There have been forty cases of Canadian sanctions applied since 1990 but the overwhelming majority of cases (34 cases or 85% in fact) involve application of the United Nations Act (UNA) and not the SEMA or the FACFOA. Indeed, there have been only 10 cases involving the SEMA of which 4 also involve the UNA, 1 the Area Control List and 1 the FACFOA. There are only 4 cases that involve the SEMA alone – against Haiti, Russia, Syria and Zimbabwe and only 3 cases involving the FACFOA against Tunisia, Egypt and Ukraine of which the latter also included the SEMA. Let’s consider this list. Haiti was one of the poorest countries in the world when comprehensive sanctions were mandated by the UN making the lives of Haitians worse, not better. The US military intervention is what compelled the military junta to relinquish control. In the cases of the current measures against Russia, Syria and Zimbabwe, Canada’s sanctions do not enter into the policy calculations of the leaders of these states nor would more stringent Canadian sanctions; the unintended consequences of more punishing measures would only harm innocent civilians. Likewise, if we consider Tunisia, Egypt and Ukraine subject to the FACFOA, there are very few foreign assets in Canada to seize. As Canada does not have extra-territorial reach, all assets to be seized must have a Canadian connection. The problem, therefore, is not with the Acts individually but when multiple standing Acts of legislation are applied concurrently. Layering measures does not make the sanctions more “effective” or more compelling but rather shifts more of the burden on Canadian banks and businesses to ensure that Canada’s sanctions measures are given effect.
Twenty-two of Canada’s forty cases are still active today including sanctions against Somalia first applied in 1992. 11 of the 22 are UN only sanctions. The other 11 are a combination of UN and ally-led or ally only measures. All sanctions until 2006 were UN-led. Belarus, subject to the Area Control List in 2006 started a trend of sanctioning in support of allies – Burma and Zimbabwe quickly followed. Today, 4 cases require the UNA and SEMA in support of the US and EU against North Korea, Iran , Libya and South Sudan, 3 use the SEMA to support US and EU sanctions against Russia, Syria and Ukraine (which is also subject to the FACFOA) and 1 supports EU sanctions against Tunisia using the FACFOA.
This means that Canada is picking and choosing, not only which cases but with which allies to partner. Surprisingly, Canada has never sanctioned with just the US since 1990; it prefers to sanctions with, it seems, a minimum of 28 other states. This does not mean, however, that Canada has matched all EU sanctions automatically. For example, the EU has sanctions in place against Guinea (Conakry)[2] and it had measures against individuals from Moldova[3] but Canada did not follow suit. Nor does Canada necessarily lift sanctions at the same time as its allies. All sanctions against Liberia and Côte d’Ivoire were dropped in the Spring of 2016 and yet Canada hasn’t created new regulations to lift its measures.
This tendency to layer sanctions complicates compliance with the sanctions considerably. Seven Canadian cases require 2 or more of Canada’s five standing Acts to deal with sanctions[4] (and of course this doesn’t include the 28 cases that have or have had a travel ban which requires invocation of the Immigration and Refugee Protection Act). The Acts have different penalties for noncompliance and different definitions for the measures applied such as seizure of “property” and “assets”. For businesses, it is a constant battle to understand what measures are in effect. This resulted in a company in Red Deer paying a $90,000 fine in 2014 for $15 worth of O-rings to Iran.
Given the tendency toward layering sanctions making compliance even more complicated, Canadian companies and banks have three choices:
- spend an enormous amount of money to ensure compliance which means that the sanctions become a penalty for the company/bank; or
- factor in paying fines for inadvertent sanctions busting to be a cost of business which means costs for goods and services increase for consumers; or
- stop doing business all together with the state in question which means sanctions become more coercive than originally intended.
The Canadian Government has potentially carte-blanche in terms of the measures it can enact and the stances it can take. Of course, taking executive action is the prerogative of elected governments, but I would like to highlight 6 concerns with Canada’s sanctioning practices:
- the unintended consequences of sanctions – especially when layered – can ensnare innocent civilians like Mr. Abdelrazik;
- the cost downloaded onto banks and businesses to comply with the number of rules and regulations;
- the difficulty tracking Canada’s current sanctions?[5] One must drill down to access many different regulations on many different sites. Canada’s reference to all sanctions as “economic” is also misleading;
- the inconsistency of penalties and definitions (such as “property” and “assets”) across the various sanctions legislation;
- the considerable time lag between the decision to apply or lift sanctions and the necessary Canadian regulations coming into effect; and
- the tendency of Canada to treat sanctions like a tool of compellence and apply more measures. Canada’s measures are at best, a signal of Canada’s desire to support collective security and its allies.
This concludes my opening statement. I look forward to your questions.
[1] The UN authorized two mandatory sanctions regimes during the Cold War (against Southern Rhodesia and South Africa) which Canada respected. Canada also subscribed to a number of voluntary sanctions regimes as well as sanctions against Iran in the 1980s for the hostage crisis and against Pakistan, Indian, the European Economic Community, South Korea and Japan for failing to respect proper nuclear safeguards. See Andrea Charron, “Canada’s Domestic Implementation of Canadian Sanctions: Keeping Pace?”, Canadian Foreign Policy Journal, 14 (2) (2008):1-18. and Gary Clyde Hufbauer, Jeffrey J. Schott and Kimberly Ann Elliott, Economic Sanctions Reconsidered: Supplemental Case Histories: 2nd Edition, (Washington DC: Institute for International Economics: 1990): 373-385
[2] The EU had an arms embargo in place from 2009 to 2014 after a violent crackdown on demonstrators by Government forces. Financial and travel sanctions continue to apply against certain individuals. See 2009/788/CFSP
[3] The EU imposed travel sanctions against the leadership of the Transnistrian region of Moldova for preventing progress in arriving at a political settlement in the region and against those people responsible for a campaign against Latin-script schools in the region. The ban was imposed on February 27th 2008 pursuant to 2008/160/CFSP until 22 February 2010.
[4] North Korea (UNA/SEMA); FRY (UNA/ACL), Iran (UNA/SEMA); Burma (SEMA and ACL); Libya II (UNA/SEMA); Ukraine (FACOA/SEMA); South Sudan (SEMA/UNA)
[5] For example, the US Office of Foreign Assets Control’s (OFAC) Specially Designated Nationals and Blocked Persons list is available for all to consult. While it is a very, very long list, it is up to date and searchable to ensure companies are not inadvertently doing business with individuals and entities on sanctions lists.