Economic Sanctions: (EAC Report)

– in the House of Lords at 11:15 am on 12th October 2007.

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Photo of Lord Wakeham Lord Wakeham Conservative 11:15 am, 12th October 2007

rose to move, That this House takes note of the report of the Economic Affairs Committee, The Impact of Economic Sanctions (2nd Report, HL Paper 96).

Photo of Lord Wakeham Lord Wakeham Conservative

My Lords, although the committee's report on sanctions was published in the summer, the terrible situation in Burma today and the calls from various quarters for tougher sanctions, mean that our debate is very timely. First, I thank my colleagues on the Economic Affairs Committee for their painstaking work on our report. As usual, the report is evidence-based and entirely non-party political, and has been agreed by all members of the committee. I also thank our specialist adviser for this inquiry, Dr Eric Herring, as well as our Clerk and his small team.

I have to say at the outset that I find the Government's response to our report very disappointing. The Secretary of State concedes one important point on exit strategies, to which I shall revert in a moment. But elsewhere in the response, along with a few points where there is room for honest difference of interpretation and judgment, I find a mass of fudge, evasion, and bald assertion, without either substantiation or even any real attempt to engage with the criticism. A few examples of issues raised in the report—not least Burma—will show what I mean. The committee recognised that sanctions, when combined with the use of other foreign policy instruments can, on occasion, contribute to the achievement of objectives. However, we also heard a great deal of evidence that sanctions were often ineffective or, worse, counterproductive. Burma may well be an example of counterproductive sanctions.

We stressed the likely severe human cost of comprehensive sanctions, as in Iraq, and argued that the application of such sanctions is not compatible with the Government's own principle that sanctions should,

"hit the regime rather than the people".

The Government's response on this point is simply that severe suffering is not inevitable, that humanitarian exemptions can help to reduce the suffering in some degree, and that anyway it is the target Government who are to blame. None of those points seriously addresses the argument in the report, which demonstrates the very high likelihood that comprehensive sanctions on a ruthless Government will indeed lead to great suffering among the people, as in Iraq. The Government do not address the point that such sanctions are not compatible with their own principle of not hitting the people. It appears, unfortunately, that the Government are ready to discard that important principle when it is convenient to do so.

Moreover, the Government reject our recommendation that some public account should be given of the United Nations' assessments of the humanitarian impact of sanctions. No reason is given. Presumably one reason is to avoid embarrassing public criticism. I hope that the Government will think again on this. Without giving succour to target regimes, some public accountability in this area is essential.

The committee heard evidence that sanctions are,

"often imposed in an ad hoc fashion in a rush".

There is little sense of how the objectives are to be achieved or of how sanctions will help. The conditions that the targets of sanctions need to meet to have them lifted—the exit strategy—are often too poorly worked out. The Government's response is that since the 1999 Whitehall review, sanctions have had clearly stated objectives including an exit strategy. The progress in the development of clear objectives is welcome. However, our report stressed also the importance of having realistic objectives as well as a strategy for achieving them. On both counts, serious doubts remain.

On exit strategies, the Government concede that those for EU sanctions,

"have not always been as explicitly stated as we would like".

But we found little evidence that the exit strategies existed at all. In any case, some sanctions still in place originate from before the 1999 review. For example, sanctions have been in place against Burma for more than 10 years with no discernible impact in terms of progress towards democracy and respect for human rights. Indeed, in some ways, the situation has deteriorated. Meanwhile, little seems to be known about how hard the sanctions are hitting the Burmese people. The Government maintain that the sanctions are targeted against the military regime with little humanitarian impact. Important measures such as the strong discouragement of trade and tourism are said to be not formal sanctions. This entirely misses the point. The effect is the same—to hurt the Burmese people.

We were fortunate to be able to take evidence from the Minister of State in the Foreign Office. Dr Kim Howells said he felt "deeply uneasy" about the sanctions on Burma, which, he said, were "not working very well". These comments contrast sharply with the Government's complacent response now. They describe current policy towards Burma, including the sanctions, as "appropriate". Dr Howells also called for,

"a much more vigorous international debate", about how Burmese sanctions can be made more effective. Such a debate would almost certainly be served by a proper inquiry into the sanctions, as has been suggested by the committee. I very much regret that the Government have rejected the committee's proposal.

The Government argue that the sanctions on Burma are already subject to internal EU review each year. But these EU reviews are not made public and it is entirely unclear what, if anything, they are achieving. Perhaps the Minister will enlighten us later. Since the Government's response to the committee's report, the world has witnessed the brutal military crackdown against protesters across Burma. This has led the Prime Minister and others to call for renewed sanctions. The need for effective actions against an appalling regime and to help Burma move towards democracy is evident. But, as our report shows, sanctions against Burma have been an utter failure. Indeed, they may quite possibly have been worse than a failure. In attempting to put pressure on the regime, they may have made it even more recalcitrant.

Of course, there is an evident political dimension and, indeed, a moral one to the situation in Burma, as elsewhere. The regime is so repugnant, and the plight of the people so dreadful that every political and moral instinct calls for urgent and effective action that reflects our outrage. But there lies the dilemma. Sanctions may appear a strong response, but do they work? All the evidence on Burma says no. It is evident that a serious examination of the effectiveness of the sanctions, and of other possible measures, is needed before new sanctions are introduced, however politically attractive these may appear. However, I recognise the difficulties in finding a productive way forward. The last thing the long-suffering people of Burma need is measures that make an awful situation even worse.

The Minister stressed in the House earlier this week the recent change in the position of Asia, which had previously, "turned a blind eye", as he vividly put it. He saw this as significant. But I hope he will forgive me if I remain sceptical. The underlying geopolitical and economic realities behind the regional interest in Burma and the consequent "blind eye" remain unchanged.

Turning to North Korea and Iran, our report argued that reliance on sanctions as the main means of resolving the current disputes was a recipe for failure. The Government claim that sanctions on North Korea are a success. But the alternative view put forward in our report seems to me far more plausible: that the key factor in achieving the agreement in February this year was the change in the Bush Administration's position in recognising that a policy of reliance essentially on coercion would not work and that incentives were needed.

On Iran, our report argued that the key strength of the EU's proposed framework agreement was its emphasis on incentives rather than sanctions and its key weakness was the lack of US support. The Government say that US support is "implicit". But full support remains lacking and the situation clearly remains extremely difficult, not to say dangerous, as the French Foreign Minister was pointing out in the strongest terms only last month.

Finally, I am sorry that the Government are not ready to introduce regular parliamentary review of sanctions, as we proposed. However, I welcome the Government's commitment to expand their annual Written Ministerial Statement to Parliament to include the objectives for each sanctions regime. These Statements should also address the question of how far each sanctions regime is achieving its objectives, what changes in policy, if any, are required, and the exit strategy. I hope that the Minister will confirm that this ground will be covered in the annual Statements.

Photo of Lord Hamilton of Epsom Lord Hamilton of Epsom Conservative

My Lords, would my noble friend agree that one of the problems in Burma is the thriving drugs industry in the north of the country from which the military regime benefits? Therefore, it has no shortage of money, while everyone else in the country does.

Photo of Lord Wakeham Lord Wakeham Conservative

My Lords, my noble friend is probably right and many factors such as that support our complaint that the sanctions regime is not working. That is evident from any examination of the situation. I beg to move.

Moved, That this House takes note of the report of the Economic Affairs Committee, The Impact of Economic Sanctions (2nd Report, HL Paper 96).—(Lord Wakeham.)

Photo of Lord Hannay of Chiswick Lord Hannay of Chiswick Crossbench 11:27 am, 12th October 2007

My Lords, this report and debate are very welcome. The impact of economic sanctions is an important and highly topical subject. As the report points out, since the end of the Cold War, the international community as a whole, acting under the charter of the United Nations, has had increasing recourse to what was, until that time, a virtually unused instrument in the diplomatic tool box. Before and since then, unilateral sanctions lacking that legitimacy have been tried on a number of occasions. We have a considerable case history and plenty of lessons to be learnt, if only we are capable of learning them and willing to do so.

I thank the noble Lord, Lord Wakeham, and his colleagues on our Economic Affairs Committee for this valuable and perceptive piece of work. If I have a general complaint, it is that the report tends to underestimate—perhaps understandably, given that its terms of reference related to the economic impact of sanctions—the potential political effect of sanctions, however modest their economic impact is, and largely to overlook the important consideration that economic sanctions are almost the only rung in the ladder between mere diplomatic action and the use of force. Surely after the experience of recent years we must recognise that the use of force must remain a last resort—perhaps a later resort than it has been in recent years. Looked at in that light, it would be folly to abandon this tool or simply to accept as a given the imperfections and weaknesses revealed by its operation to date.

The international community needs to have more effective sanctions—not none or ineffective ones—at its disposal if the world is to move closer to being rid of the scourge of war. Nor would the Herculean efforts that countries make to avoid being put under any economic sanctions at all, let alone draconian ones, seem to bear out entirely the view that the noble Lord, Lord Wakeham, has just expressed that light sanctions packages are as ineffective as their critics would make out. Burma is a case in point, with the regime appearing to do all that it can to persuade Aung San Suu Kyi to give up her support for sanctions. Why on Earth should General Than Shwe do that if he thinks that they are totally irrelevant?

In my view, the report deals fairly with the issue of comprehensive economic sanctions, of which Iraq and Serbia remain so far the sole examples. It identifies the paradox that totalitarian or authoritarian regimes are best able to spare their elites from the impact of such sanctions, to ensure the maximum humanitarian collateral damage and to manipulate domestic and international public opinion to their advantage, and yet it is against totalitarian or authoritarian regimes that they are most likely to have to be used. That paradox cannot be ducked, nor can the fact that attempts to palliate the humanitarian effects of comprehensive economic sanctions will never be fully successful.

It is tempting, therefore, to conclude, as some witnesses to this inquiry did, that the instrument of comprehensive economic sanctions should never be used again—tempting but, I suggest, wrong. I sympathise with the Government's caution over discarding completely even such a blunt weapon as this. Can we envisage no situations in which comprehensive economic sanctions would be justified and might quite simply have to be used? I am thinking, for example, of the invasion and conquest of one country by another in defiance of Security Council resolutions or the threat of the use of nuclear weapons against a non-nuclear state. I could go on. I am sure that comprehensive economic sanctions should be used, if at all, more sparingly than in the past and with greater emphasis on the humanitarian side effects. To abandon totally their potential deterrent effect would be, I argue, unwise.

The future clearly lies with more effectively targeted and better implemented limited sanctions. It was a pity that the report did not give a fuller analysis of one of the early cases of such targeted sanctions which actually worked—those imposed on Libya's civil aviation and oil industries as a result of the Pan Am and UTA outrages. The sectors were clearly chosen with care and the action was proportionate; it impacted more on the elites than on the general population and it did bring about, or helped to bring about, policy change. Other cases of targeted sanctions have worked less well, as, one has to admit, have arms embargoes, which have proved notably porous. What is surely essential now is to focus hard on steps to improve the operation of such targeted sanctions. I look forward to hearing from the Minister, when he replies to this debate, just what the Government are doing to achieve that.

One area of implementation that clearly requires urgent attention is the strengthening of the UN Secretariat's capacity to analyse, identify and help to implement targeted sanctions. Each target country is different and requires in-depth analysis of its weak points. Each target country presents different problems of implementation. But currently there is virtually no capacity to provide an objective analysis of such matters before action is taken and when it is being implemented. Things are left to a tug of war between those on the Security Council who want tougher sanctions and those who want weaker ones. That is no way to get results. In 2004, the high-level panel on which I served made the following recommendation:

"The Secretary-General should appoint a senior official with sufficient supporting resources to enable the Secretary-General to supply the Security Council with analysis of the best way to target sanctions and to assist in coordinating their implementation. This official would also assist compliance efforts; identify technical assistance needs and coordinate such assistance; and make recommendations on any adjustments necessary to enhance the effectiveness of sanctions".

Kofi Annan endorsed that proposal. What has become of it? Do the Government support it? If they do, what are they doing to prevent it from being chucked in the dustbin?

The report also raises the point of the basic ineffectiveness of unilateral sanctions imposed by one country and the capacity of such sanctions to lead to trade disputes following attempts to extend their impact through extraterritorial jurisdiction. US sanctions against Cuba are a classic case in point. Those sanctions have brought about neither policy change nor regime change in Cuba. They have embroiled the US with its allies and they have weakened the US hand at the UN, with successive humiliatingly massive votes against them each year. It is a great pity that Congress does not seem to have learnt the lesson about the counterproductiveness of such unilateral sanctions.

At the other end of the spectrum, it is clear that economic sanctions imposed by a unanimous decision of the Security Council have by far the greatest political impact. Of course there may be—there often is—a price to be paid in the lower economic impact of such measures, given the compromises needed to achieve unanimity. But that trade-off can be worth making. It is a matter of judgment in each individual case.

Somewhere in the middle of the effectiveness spectrum are multilateral economic sanctions that do not have the Security Council's endorsement and therefore do not have worldwide mandatory force. Such sanctions would be, for example, those imposed by the EU and US in concert, acting in circumstances in which the Security Council was deadlocked. I do not agree with the view put to the committee by Mr Jeremy Carver that such sanctions should in all cases be avoided. Such sanctions are certainly more effective and less counterproductive than unilateral sanctions imposed by one country. The most important consideration in this case is to achieve the greatest possible unity between the EU and the US and other like-minded countries and thus to maximise the impact and to avoid damaging trade disputes.

Probably the most important conclusion of the report is one of the simplest and the most political. Economic sanctions are no silver bullet. They seldom on their own bring about the policy changes sought. They need to be operated in tandem with a whole range of diplomatic instruments, including incentives for compliance by the targeted country, a clear statement from the outset of what action is required to get sanctions lifted and a willingness to discuss directly with the targeted country the security concerns that may have led it to take the objectionable action that is being sanctioned. Every one of those considerations is relevant as we contemplate the case for strengthening sanctions against Burma. I agree with some of the remarks made by the noble Lord, Lord Wakeham, on that, although it might be worth pausing for a moment, in criticising the existing sanctions, to think of the message that would be sent out if the international community now lifted sanctions immediately after the scenes in the streets of Rangoon that we saw on television.

In the light of those compelling considerations, I found the Government's response to the report's recommendations on how to handle Iran's nuclear transgressions pretty unconvincing and limp. The hard fact is that the US is applying this template and these criteria in the case of North Korea and that there are some—admittedly so far incomplete—signs that it is getting somewhere as a result. But in the case of Iran, it is not applying them. US-Iran contacts are so far confined to the problems of Iraq. It is no good saying, as the Government did:

"The need for explicit text on security assurances ... had been overtaken by the clear and repeated public statements by the United States that, while not ruling out the possibility of taking military action, it was not considering military action and was committed to a diplomatic solution".

What is needed is not repeated and, I fear, highly ambiguous public statements but direct diplomatic communication. I hope that we will hear from the Government that they will urge this course on the United States as an integral part of any move to strengthen sanctions against Iran. It is absolutely vital that the United States should become a direct participant in a dialogue with the Iranian Government on these issues.

I conclude with a reiteration of my thanks to the noble Lord, Lord Wakeham, and his colleagues for providing the occasion and such a sound basis for this debate. The subject of economic sanctions will not fade in importance any time soon. It is important that we understand it better, get to grips with its complexities and fashion a more effective instrument for the international community to use when needed.

Photo of Lord Lawson of Blaby Lord Lawson of Blaby Conservative 11:39 am, 12th October 2007

My Lords, we are very fortunate in our committee in having in my noble friend Lord Wakeham and Robert Graham-Harrison a chairman and a Clerk who could not be bettered. I thank them both for their help to the committee as a whole in what has proved to be a very timely report and, now, this debate. Incidentally, I agree wholeheartedly with the—admittedly, rather restrained—way in which my noble friend referred to the Government's lamentable reply. I listened with great attention to the noble Lord, Lord Hannay, who seemed to exemplify in the most high-minded way all the major misconceptions about this issue.

Fundamentally, when we are formulating policy, whether it is foreign or economic policy or anything else, we have to do so in the context of the world as it is and not as we would wish it to be. It would be very nice if there were a rung on the ladder between, on the one hand, doing nothing or taking nothing more than diplomatic action and, on the other, military action. Although there is a whole spectrum of military action, following Iraq, we think that it must mean invasion and occupation. However, it does not; there is a whole range of military action that comes well short of war.

Nevertheless, the noble Lord is right that there is still a big gap in the ladder between doing nothing and taking military action. It would be very nice if there were something which filled that gap and worked. The trouble is that there is not, and wishing that there were does not make it so. All experience shows that economic sanctions, however well intentioned, do not work. They are invariably harmful to the countries that are sanctioned and are frequently counterproductive.

Let us take the example of Cuba, mentioned by the noble Lord, Lord Hannay. He admitted that sanctions in Cuba have been counterproductive and seemed to imply that it was because they were unilateral, but that is not the reason. They are counterproductive because they have given President Castro an excuse for the lamentable failures of the Cuban economy and the appallingly low living standards of the Cuban people. Before Castro, living standards in Cuba were among the highest in the whole of Latin America. They are now among the lowest because of the communist economic policies followed by President Castro, which have not been a great success anywhere in the world where they have been tried. But he is able to say, "Look at what America and the world have been doing to us with economic sanctions". That is a large part of the problem. As the purpose of economic sanctions is to damage the economy, it is very difficult to say that they have had no impact at all. It is as certain as anything can be that Castro would not have lasted these past 40-plus years had it not been for the Americans' economic sanctions. The Americans know that too, and that brings us to another point which is characteristic of economic sanctions.

The Americans know that such sanctions are completely useless and counterproductive, so why do they maintain them? They do so because of the Cuban émigré population in Florida—an important domestic constituency, which would be outraged if the sanctions were lifted. Generally, economic sanctions tend to be imposed not because of an objective view that, in the light of experience, they are likely to achieve their objective—they are not; experience shows the complete reverse—but because there is pressure from either a part or a large sector of the electorate in the sanctioning country that something must be done. Sanctions are applied in response to that. Understandably, there is reluctance to take military action, so the "something" tends to be economic sanctions—not because they are thought to be effective but as a response to domestic political pressure. In my judgment, that is not a good reason for imposing them.

There is also a point concerning exit strategy, referred to by my noble friend Lord Wakeham, in the context of a regime complying sufficiently to enable sanctions to be lifted. However, in my judgment, there is a rather more serious problem relating to exit strategy about which we need to think long and hard. The noble Lord, Lord Hannay, asked how we could now possibly lift sanctions against Burma, even if they are not doing any good, in the light of what we have seen recently on the streets of Rangoon and elsewhere. That is precisely the point: you are stuck. Once you impose them, you cannot exit because it is seen as a great triumph for the despotic regime which has been ineffectually sanctioned. You are stuck with continuing with the sanctions, even though they are not merely having no effect at all but harming the population. I have no complaint against inflicting some economic hardship on the populations of the countries that have been sanctioned. Economic sanctions must do that; there is no way that they can avoid it.

There is a curious piece in the Government's response to the report. In the case of Iraq, they say rather plaintively that,

"it was the Iraqi regime ... who remain squarely to blame for the misuse of resources which was instrumental in causing humanitarian suffering among the general population".

Did the British Government seriously think that, when sanctions were imposed against Iraq, Saddam Hussein would say, "Well, we've got to tighten our belts. In order to build all the hospitals that are required, I am going to disband the security services, the secret police and the Republican Guard"? No; clearly, when there are economic sanctions, the regime will maintain its spending on whatever is necessary to prop up and support that regime, and the ordinary people will suffer. You cannot seriously embark on sanctions without understanding that that is the inevitable result.

I return to the question of the exit regime. If causing hardship among the population for a time would ultimately result in the toppling of a despotic regime and far better political and economic conditions for the people, that would be all well and good. However, if it does not result in that, there is no justification whatever for imposing such hardship on the people. You have to be pretty sure that you will have a successful result—which, in my judgment, you cannot be sure of—before you inflict that harm on the people. That harm will go on and on because, as the noble Lord, Lord Hannay, said, once you have imposed sanctions, you cannot lift them. It is that simple and it is another reason why sanctions do not work.

Let us take another case—Zimbabwe—where there have been no sanctions, but it illustrates the nature of the nonsensical position we are in. We do not need to impose sanctions on Zimbabwe to damage its economy. Mr Mugabe has done that all on his own. Yet the equation is very similar. If he were to give up, it is clear that there would be an international rescue operation to rescue the Zimbabwean economy, so there is huge economic gain from him stepping down and his ghastly regime going away. Do we think that that will happen as a result of the weakness, to say the least, of the Zimbabwean economy? Of course not. If popular disaffection with regimes and economic hardship caused political change, these changes would have happened already in Zimbabwe, Cuba or wherever. But it does not happen. To add to that, and to acquire culpability in the eyes of many in the world through doing it, does not seem a sensible policy, nor does it in the case of Burma, where one of the principal effects of the sanctions has been not merely to harm the Burmese people but to throw the Burmese Government more and more into the arms of China. That is not a great foreign policy triumph either.

We must live in the real world. It would be lovely if we lived in a world where there was not this missing rung of the ladder. It would be lovely if economic sanctions worked, but experience shows that they do not. They are damaging and counterproductive. The sooner we accept that and persuade our fellow members of the European Union to accept that as a common European position, the better.

Photo of Lord Hannay of Chiswick Lord Hannay of Chiswick Crossbench

My Lords, will the noble Lord address the successful case of targeted sanctions against Libya, which he did not mention in all the cases to which he referred where things had not worked?

Photo of Lord Lawson of Blaby Lord Lawson of Blaby Conservative

My Lords, I am glad the noble Lord reminded me of that because I wished to make that point. It is interesting that the only case that we found unequivocally where sanctions had worked were the sanctions against Libya to cause it to release the suspects for the Lockerbie air bombing. As an aside, it is likely that they were not guilty—at least the proof of their guilt is a little dodgy. Nevertheless, that exemplifies the only case in which sanctions can work—using a sledgehammer to crack a nut. They work only when what you want from the sanctioned Government is so puny or so small that they can surrender it without any great loss of face or power. If you want tiny objectives, you can use this great sledgehammer to achieve them, but for anything bigger than that, you will not do so.

Photo of Lord Skidelsky Lord Skidelsky Crossbench 11:52 am, 12th October 2007

My Lords, I, too, express my appreciation to the noble Lord, Lord Wakeham, for the invariably good-tempered way in which he conducted the inquiry, and to the Clerk of the Committee, Robert Graham-Harrison for his expert support. I concur with what previous speakers have said about the Government's limp response.

A key issue with which we as Members of the Committee wrestled was the aims of economic sanctions. Some of us started with the view that the main aim was to get the sanctioned regime to change its behaviour or, at the limit, to overthrow it, but that was far too simple-minded. As the report states in paragraph 7:

"Sanctions can be applied for a variety of reasons, including to punish or weaken a target, to signal disapproval"— which is a key point—

"to induce a change in policy".

That comes right at the end of the list. In other words, changing behaviour is only one of several possible objectives which include "signalling disapproval". Another thing we learnt as we went on with our inquiry was that the emphasis in sanctions policy has changed from comprehensive to targeted or "smart" sanctions, as they are called, which are sanctions targeted on the regime and not on the people of the country. It is said that that is to minimise humanitarian damage. Thus in Burma, we have the classic array of smart sanctions, which are part of EU sanctions, including an arms embargo, suspension of high level bilateral visits, and visa restrictions and some financial restrictions on the regime. Roughly the same package applies to Zimbabwe.

Having received all that evidence, we tried to formulate our report, a process which proved quite long-winded and difficult in view of the natural disagreements that emerged among different members of the Committee. We got together a report that is very coherent and good. Two conclusions seem warranted. The first is that the test of success or failure of sanctions has become extremely fuzzy. As one of our witnesses, Dr. Alexander of Cambridge University, pointed out,

"it depends what objective you are trying to measure your success by".

He said that if sanctions are intended to modify regime behaviour they quite often fail, but if their goal is simply to signal moral disapproval, the effectiveness of sanctions might be viewed in a different light. Exactly.

As I put it in one of my questions to this witness: if the object of sanctions is to signal disapproval, the test of effectiveness is simply the number of states expressing disapproval. On that test, failure almost never happens. States often express disapproval; the success of sanctions is virtually guaranteed, even though nothing else changes. That is an unsatisfactory position.

The second conclusion dovetails with the first. The shift from comprehensive to smart sanctions is connected with the shift in objective from modifying behaviour to expressing disapproval. The noble Lord, Lord Hannay, called for more effective sanctions. But how do you get more effective sanctions if the aim is to minimise collateral damage to the population? Effective sanctions involve harming the population. The more they are harmed the more effective the sanctions. That was the old doctrine and policy-makers have never admitted in public that there is a trade-off between getting effective regime change and minimising humanitarian damage. In practice, as the noble Lord, Lord Wakeham, pointed out, Governments wobble between the two and find it hard to get a consistent policy.

Travel restrictions and other pinpricks on leaders of unsavoury regimes do little or nothing to change the way they treat their people, but they do make us feel good, which is extremely important. Symbolic sanctions, in other words, are nicely symbolic of a foreign policy which has replaced resolution by resolutions.

Like the noble Lord, Lord Lawson, I naturally welcome those parts of the report which are sceptical about symbolic sanctions, and which argue for,

"greater emphasis on economic, diplomatic and security incentives", as a way to modify unacceptable state behaviour. For example, I draw your Lordships' attention to paragraph 20, in which it is stated that,

"the EU could achieve as much, or more, by a simple declaration of disapproval", without any symbolic sanctions at all. People have a right to disapprove; they have a right to state their disapproval; states have a right to state their disapproval. Why accompany that with a panoply of pinpricks which do not do any good?

I draw attention to the argument of the noble Lord, Lord Renwick, that the,

"'slap on the wrist' sanctions do more harm than good", because they symbolise weakness and the lack of any alternative instrument. Unlike the noble Lord, Lord Hannay, I endorse Jeremy Carver's view expressed in paragraph 24 that sanctions should be used,

"only where the circumstances fall within Chapter VII of the UN Charter".

Of course Burma has been strongly in our minds in this debate. I turn to that in the last part of my remarks. In paragraph 135, we urged the Government to,

"undertake an urgent enquiry into sanctions policy on Burma, with a view to deciding whether it is worth continuing it".

I do not think that the recent events in Burma have rendered our view obsolete, though as the noble Lord, Lord Lawson, rightly said, it is very hard to lift ineffective sanctions because it then seems to be a retreat from a position that was useless in the first place but now has to be stuck to because of loss of face in withdrawing it.

One of the oldest debates in international relations is whether you get better government by isolating or engaging a state. There is no general rule which will cover all cases, but the presumption should be in favour of engagement. We should be chary of forcing more isolation on societies whose leaders and populations invariably start off as appallingly ignorant about what goes on in the rest of the world. The more open a society is, the more open it is to change; the more closed, the more it is subject to delusion and paranoia and the easier it is for the leaders of that country to whip up anti-foreign hysteria against the sanctioning power.

One of the paradoxes of the present situation is that the societies of the West, traditionally champions of openness, are the keenest to enforce pariah status on unsavoury regimes, whereas the previously closed societies of Asia are keenest to trade and engage with such regimes, whether in Asia, Africa or Latin America, China being the main example but of course also India and Russia. They have taken the view that what goes on in Burma is really an internal matter for the Burmese authorities, whereas the international community—that is, us—has called for even stronger sanctions, mandated by the United Nations.

No-one is suggesting a military attack on Burma. This means that there are only two ways in which other countries can help bring about regime change: first, by cutting off Burma's links with the outside world; secondly, by trying to engage it in some way. The trouble with the first is that the price is usually paid by the people, not the leaders. Also, as long as sanctions are not universally applied, they can be evaded; they will not be universally applied in this situation. The alternative is engagement through commerce and quiet diplomacy. That is the policy of Burma's Asian neighbours.

Burma is a member of ASEAN. Despite the economic policies of the regime, and in contrast to those of Cuba, Burma is a rapidly growing country. Its growth rate has been about 8 per cent a year for the past several years, and there is a growing middle class. None of these things will make it a democracy in the Western sense, but they will, over time, bring it closer to the norm in much of south-east Asia, in which the military, while still powerful, shares power with elected politicians. In conclusion, the West will continue to voice its moral disapproval, while Asia will silently carry on with the work of change.

Photo of Viscount Eccles Viscount Eccles Conservative 12:03 pm, 12th October 2007

My Lords, I, too, welcome this report. Sometimes, when one opts to speak on a committee's report, it feels a bit like intruding on a family party. I shall make a double intrusion because I shall follow the re-engagement, as I would call it, of the noble Lord, Lord Skidelsky, with Burma. It is clear from the committee's report that there was considerable discomfort with the European Community's common position. Strong evidence was put to the committee for an alternative point of view from at least two written submissions. The committee had discussions; it is not too clear from how the committee's proceedings are reported exactly how they went, but at least the committee came to four conclusions and got four replies. The noble Lord, Lord Wakeham, has commented on the replies, and I need say no more on those.

Events, of course, have moved on: the suppression of the Buddhist monks and their supporters. We must remember that the first serious riots against the military regime were in 1988, almost 20 years ago. Today, there are the first signs of the re-engagement of the international community: the visit of the United Nations envoy. It has always been supposed that it was not possible to get any kind of resolution through the Security Council because of China's position. Yesterday, however, a resolution was passed, supported not only by China but also Russia.

As far as we here are concerned, Burma is a very emotive subject. The British were in Burma for 120 years. Independence came shortly after the end of the Japanese war. We all remember the stories of the people who got out of Burma at the beginning of that war, and the way that it was conducted and finished. Many of us were also brought up on George Orwell and his book Burmese Days. He was no great supporter of the colonial system, but his book is a fascinating description of the relationship between the British and the Burmese.

When the Government replied to the committee in July, before the recent disaster and initiatives, what was the position? The United States had always imposed sanctions on Burma with, I think, advice from the British. Much related to the fact that Burma was the number two producer of opium in the world. Europe, with some differences of opinion, could not really see that its vital interests were greatly engaged with Burma, and so we were into the game of disapproval, as self-fulfilling as the noble Lord, Lord Skidelsky, indicated. The World Bank has not had a lending programme to Burma since 1987. The IMF, when you look at its website, really has nothing to say. Interestingly, one of them calls it Burma, the other Myanmar.

In essence, the West had opted out of Burma. The sanctions are, in my view, irrelevant. What we are watching reminds me of an ancient Greek tragedy. There is a degree of inevitability. The events will unfold. Nobody can do anything about them. The awful generals are the villains of the piece, but also the victims. Nobody knows what to do, so we retreat into disapproval. This in no way measures up to the needs of the Burmese or the interests of the western world. No statistic coming out of Burma can be replied upon, but there are about 50 million people in Burma. It is one of the poorest and most highly indebted countries in the world. It has no significant geopolitical importance to most of the rest of the world. It is not as if it has large oil reserves; it has gas, but not much. You can leave Burma alone and it will not significantly affect the global economy. The annual income per head at official exchange rates on the latest figures—it is difficult to get any figures beyond about 2005—is £100. If you take into account deflators and add in the informal economy, of which opium is of course a large part, you can multiply it by eight: £800 a year. That is the state of play of 50 million people, and averages are averages.

Burma has 3,500 miles of border with Bangladesh, India, China, Laos and Thailand. Even Bangladesh has refugee camps for Muslims from Burma. India has Nagas who go in and out of Nagaland and Assam. They are irredentist, looking for some sort of independent status within India, and the border is completely porous. Thailand has borders and that it is the number two opium producer in the world is entirely relevant. There are large refugee camps and a major industry in people trafficking. China is acquiring assets—at a heavy discount on the sort of prices that it might pay somewhere else—and raw materials, and it is hardly credible that democracy will come to Burma from China.

Burma has no independent judiciary, no rule of law and negligible revenues. What options are open to these awful generals? Poverty led to the monks in the streets because the people were not feeding them. The Buddhist monks are fed twice a day by people who give them food, mainly rice. There is, in effect, an opium war, and US pressure is brought to bear on the generals all the time in relation to that opium war. The people of upper Burma do not accept the authority of the Burmese Government—I have no reason to suppose that it would be sensible for them to do so—and the generals have no popular support. Only China is a quasi-friend, and Burma has no international leverage. If it were not for the fact that two-thirds of the population is Buddhist, Burma would already have slid into civil war. The generals have no room to manoeuvre and no way forward to offer. They are simply waiting upon events. Perhaps China, with India, or perhaps Russia will produce some sort of solution.

Can our policy towards Burma really be just to wait upon events and realistically expect a civil war? We need to do three things after re-engaging the international community—including the West, not just leaving it to Asian countries—as the noble Lord, Lord Skidelsky, said. There are two preconditions: first, there should be carrots as well as sticks; and, secondly, we should set aside our moral disapproval—we can retain it, but we should stop expressing it. The first thing to do is greatly to increase the humanitarian aid programme to Burma. At the moment it is hard to find a figure, but it looks as though it is about $144 million in the latest annual statistics, which is less than $3 per head. Secondly, we should then reopen the dialogue between Burma and the international institutions—not least the UN, but also the IMF and the World Bank—in order to look towards economic development that is supported by Western nations as well as Asian nations. Thirdly, we should organise as early an exit as possible for the awful generals. We know that exits are much more difficult to organise than entrances, as we have already heard today. Sometimes you have to swallow your pride and think of something that has a bit of carrot as well as stick.

The generals, awful as they are, are Buddhists, and they get older. They must know that they have no solution or way forward and that their tenure is bound to be pretty short. If it is said that this is too much interference in the internal affairs of Burma, the pass has already been sold to the Chinese, who are interfering and, judging from recent United Nations developments, it is right for us to take an interest in what happens to the 50 million Burmese. We need an assurance that we will build upon the United Nation's initiative and that we will put aside our doubts of the past 20 years and get on with helping the people of Burma. It is undoubtedly in our interest to do so.

Photo of Lord Ramsbotham Lord Ramsbotham Crossbench 12:15 pm, 12th October 2007

My Lords, I have to admit that my only qualification for contributing to this debate is that at the beginning of this year I was a tourist in Burma. I am extremely glad that I was because without having been there—and I acknowledge all the limitations of being tourist who does not see everything by any means—I could not agree more with the noble Viscount, Lord Eccles, in his summing up of what is happening there and with the plea made by him and the noble Lord, Lord Skidelsky, for active consideration of re-engagement with that troubled country.

If you have had the experience of seeing something that you reflect upon, you begin to look deeper into the things that you did not see. For instance, I was particularly taken by a visit to the house of Aung San, Aung San Suu Kyi's father. He had a remarkable career that included raising the national liberation army and leading it with the Japanese against us, changing sides and leading it with us against the Japanese and then negotiating the terms of independence with the Prime Minister, Lord Attlee, before being murdered at the age of 34. Reading his description of what he saw for Burma and what Burma needed on the walls of that house made me feel what a terrible tragedy it was for that country that someone with such foresight and vigour had been cut off at that stage.

I am sorry that his daughter is calling for people not to go and see the country. I believe that the opposite is needed. On my return, I was introduced to and read a book that I commend to noble Lords who have not read it. It is called The River of Lost Footsteps and is written by Thant Myint-U, whose grandfather was the Secretary-General of the United Nations. I later had the pleasure of hearing him lecture at the International Institute for Strategic Studies. I shall read two short extracts that put the case against sanctions for Burma better than I can—after all, he is a Burmese who often visits the country.

"In 2004 a new sanctions law was enacted by Washington, restricting Burmese imports into the United States and prohibiting almost any payments into the country. The already struggling textile industry was crippled ... In the inner meeting rooms of Rangoon's War Office, the hard-liners saw their paranoias justified and their intransigence easier to defend".

His book concludes:

"So what of the future? There are no easy options, no quick fixes, no grand strategies that will create democracy in Burma overnight or even over several years. If Burma were less isolated, if there were more trade, more engagement—more tourism in particular—and if this were coupled with a desire by the government for greater economic reform, a rebuilding of state institutions, and a slow opening up of space for civil society, then perhaps the conditions for political change would emerge over the next decade or two ... There is a second and much worse possible scenario—that Burma's international isolation will only deepen through an unholy alliance between those outside who favor sanctions and inside hard-liners who advocate a retreat from the global community, that this isolation will further undermine institutions of government, that a new generation will grow up less educated and in worse health, and that a decade or two from now, the world will be staring at another failed state, without any prospect of democratic change".

I do not think that it could be put more starkly or clearly that that. Like the noble Lord, Lord Lawson, I was interested to see evidence of the emergence of China everywhere I went in Burma. Its influence is growing—and clearly that is something that we need to take note of.

Soon after that a remarkable book fell into my hands, which I am currently reviewing. I bet that this is not on the bookshelf of many people in this House. It is called the US Army & Marine CorpsCounterinsurgency Field Manual. It is one of the most remarkable books I have ever read because it amounts to a total rejection of the way that America has been conducting military operations, particularly since the end of the Cold War. Perhaps I may read two passages from that. First:

"The most important contribution of this manual is likely to be its role as a catalyst in the process of making the Army and Marine Corps more effective learning organisations that are better able to adapt to the rapidly changing nature of modern campaigns".

Secondly:

"This Counterinsurgency Field Manual challenges much of what is holy about the American way of war. Essentially it is rejecting the doctrine of overwhelming force and encouraging people to realise that what is going on is not the typical military confrontation but it is war amongst the people, and, whatever you are doing with any action you take involving another country, it is the interests of the people of that country who must come first".

What I feel is so disappointing about the Government's response to the admirable report of the noble Lord, Lord Wakeham, which I could not commend more, is that there does not seem to be the same spirit of being willing to learn from changing conditions and listen to evidence of what is going on; rather, they repeated the same old thing about trying to tackle the leaders and so on. Sanctions do not tackle leaders; we all know that. In the spirit of what America is now doing, which could not be more of a revolution, and listening to the words that have been said by many people—I mention in particular the noble Viscount, Lord Eccles—I hope that the Government may consider again their very disappointing response to a very interesting and forward-looking report.

Photo of Lord Brennan Lord Brennan Labour 12:22 pm, 12th October 2007

My Lords, I, too, thank the committee for this excellent report. I regret that, probably due to their other commitments, only three members of the committee felt able to contribute to this debate, because the topic deserves broad review. The essential feature of sanctions and international politics these days, following the UN charter and to which our country must significantly contribute, is the use of sanctions to reduce or resolve threats to international peace and security. In exercising a sensible critique of sanctions policy and its implementation, that objective must not be forgotten. Article 41 of the United Nations charter states:

"The Security Council may decide what measures not involving the use of armed force are to be employed"— and I emphasise this—

"to give effect to its decisions".

It is more than a question of moral disapproval and more than a reaction in international law and politics: it is the desire to achieve a more peaceful world. Therefore, sanctions as an alternative to armed force are a very considerable part of the plan to preserve international peace.

It is therefore important to emphasise that sanctions should never be treated as a self-contained and sufficient method of pressure for change. The success of sanctions will depend on how they are related to, and wherever possible incorporated with, a policy of offering economic incentives to a country that you want to change, but only if they change: a policy of diplomatic pressure, public or private, spasmodic or continuous; and, in particular, the willingness always to engage in political negotiation. This package of international action will give sanctions a better chance of success.

If we are to employ sanctions, then I endorse the Government's simple analysis that they must have objectives and a clear scope and there must be an effective exit strategy. It is important, is it not, in view of history, not to confuse sanctions with a concept of comprehensive sanctions such as will damage a country and its peoples in a serious way? Such a sanctions regime has historically been rare. It is therefore conceptually wrong and intellectually unhelpful to look at sanctions from that standpoint only.

Rather, if we want to impose a means of reducing threats to international peace and security and we do not want to cause humanitarian damage to peoples, we should examine what else we can do. The current jargon is "targeted sanctions". I welcome and endorse them. Efficiently and properly applied, they have an effect—perhaps not a dramatic effect—with less collateral damage. What are they? They include arms embargoes on a country such as Burma, even if other countries will sell arms to it; travel restrictions on the elites and key personnel of the countries in question when they want to travel abroad; diplomatic restrictions; and, above all, financial attack.

The rapidity with which people at the UN, in Europe and in our country have to consider the introduction of sanctions before they are tabled for general debate requires that there should be a system to make them particularly effective. At the United Nations, as I understand it, our Government are seeking a more coherent and better organised monitoring system. They want continued improvement in the United Nations sanctions committee. They want Europe, through the Union, to have its effect in sanctions—but what about us nationally? That is what I want to concentrate on.

As the noble Lord, Lord Hannay, says, although sanctions are essentially a UN weapon these days, there may be circumstances in which we require a clear, independent thinking about sanctions. In paragraphs 98 and 99 of this excellent report, that was the request of the committee: let there be a competent system. I have two suggestions.

The first is to form a sanctions group in this country which is not measured and shaped by ministerial obligations but rather is a collection of efficient and intelligent people with the following objectives. It should establish, first, what is our national sanctions policy; secondly, how do we best identify targets of people and things to chase; and, thirdly, how do we best monitor and control for the future. It should, fourthly, introduce and use experts in economy, finance and international financial transactions and, lastly, seek to ensure that what is produced is going to operate as a fair system in matters such as listing and delisting.

I make the suggestion from practical experience, which I shall mention in two regards. There is a case in which I am involved but can comment on because it has been publicly reported as to its facts but not the merits. Last year, I was arguing about the impact of Iranian sanctions on a legal process in this country. It transpired that the policy came from the Foreign Office, the restrictions came from a combination of Treasury and the then trade department's civil servants, and, other than the published regulations with their criminal penalties, there was no available statement on how to understand and apply those sanctions policies to Iran. I thought that that was inadequate. It was really saying, "We have decided on it. There is the policy. We have created the criminal offences and that is it". That simply did not represent to me a sufficient ongoing analysis of what was involved.

The second suggestion is a more determined approach in the financial sector, which is what I am concentrating on. If we look at the Security Council resolutions involving Iran and nuclear development, we find that the controls on finance relate to listed people and state or non-state entities,

"engaged in, directly associated with or providing support for" the purposes, or involving others who are acting on their directions or under their control. That is an extremely broad basis for imposing an order for the freezing of assets. It affects not only the individuals and those mostly connected with them; if you freeze the assets, that affects banks, which have to participate to obey the sanctions order. That is determined stuff and the Government's response states that it produced $94 million from anti-terrorist operations in that field. Much more could be achieved in the quality, if not the quantity of sanctions by targeting the elites of foreign countries or non-state entities as to their assets and finances.

Photo of Lord Lawson of Blaby Lord Lawson of Blaby Conservative

My Lords, if the noble Lord will forgive me, there is clearly a good case for grabbing the deposits of leaders of despotic regimes, but does he not appreciate that that is not likely to get us very far, because leaders of despotic regimes will in future—to the extent that they do not do so now—avoid depositing in British or American banks and deposit instead in Chinese or Russian banks, or whatever?

Photo of Lord Brennan Lord Brennan Labour

My Lords, I note what is said, but I do not agree. The ability of not just individuals but non-state or even state entities from a target country to operate internationally depends on the capacity to engage in international financial transactions. The case I mentioned—before I turn to my second point—involved sanctions being applied against several of the main banks of Iran worldwide. That is a very potent weapon in its effect on the country in question. The banks in question in the case were the banks acting for the ministry of defence and armed forces of Iran. That is very effective in affecting their capacity to buy and sell abroad, if there are effective sanctions. So my point is not restricted to the fancy car or house in a particular place but the way in which a target country is operating financially in the international arena.

It can be done. We have a Proceeds of Crime Act in this country which Parliament has passed, as a result of which there is a system internationally whereby crooks, fraudsters and institutions engaged in such activity can be chased worldwide. In the case in which I was involved, by savage irony, our Serious Fraud Office was dealing with a request from the Government of Iran concerning an alleged fraud to freeze the assets of someone in this country, which then led to the question whether that could be done if they were subject to sanctions. It was an ironic state of affairs, but the main point is that the process for chasing the money is now worldwide.

I have concentrated on finance because I am simply not prepared to accept that targeted sanctions can have no effect. They may not have total effect, the effect may be modest, but it is significant.

I turn to my conclusion. If we are to approach the preservation of international peace and security on the basis of principle rather than the primitive, then principle requires a system. A system that operates well should include something more than force. If it is to be sanctions, along with the other things that I mentioned, let them be efficient and let us in this country lead. The committee's report has given us a good basis for reassessing our policy. I hope that the Government will proceed positively in future.

Photo of Lord Newby Lord Newby Spokesperson in the Lords, Treasury 12:36 pm, 12th October 2007

My Lords, like other noble Lords, I begin by congratulating the noble Lord, Lord Wakeham, and his colleagues on producing a fascinating report and one which has been most timely, given recent events in Burma. I begin by joining his criticism of the quality of the government response. This is what happens every time the noble Lord's committee produces a report: a tremendous amount of work is done, a desultory response comes from the Government and life goes on. Normally the response comes from the Treasury, from which this House expects very little. I am sorry that this malaise, if that is the right word, appears to be spreading to the Foreign Office and I hope that, in his new position, the noble Lord, Lord Malloch-Brown, will make sure that as far as he is concerned, the House will be treated with a bit more seriousness, especially when reports of this importance are produced.

The report should be required reading for anyone trying to understand the complexities of the kind of action that can most appropriately be taken against a nation whose policies and practices we find abhorrent and against whom we feel that action is required short of war. For me, as someone who is not at present a member of the committee, and so did not attend the hearings, reading the transcript of the session with the noble Lord, Lord Renwick, was particularly illuminating. He was explaining that sanctions were often seen as the only alternative to doing nothing or taking military action when he was interrupted by the noble Lord, Lord Lawson, who said that there was indeed a fourth option, namely subversion. There was then a lively short discussion about the extent to which subversion could play a role in dealing with an unsavoury regime before the discussion got back to its main track.

The conclusion of the noble Lord, Lord Renwick, born out of his experience in South Africa and elsewhere, that sanctions policy in the case of any country, whatever the starting point, must be intensified or relaxed according to the country's behaviour, seemed to me to be a good basic point. In a way, his evidence underlined the conclusions of the report that economic sanctions are not a straightforward all or nothing policy. They can be counterproductive if they are not carefully applied and they are unlikely, even in the best and most successful circumstances, in isolation to engender major policy changes in the target country.

Given that sanctions at best have a patchy success rate, the obvious first question, which was answered most eloquently by the noble Lord, Lord Lawson, is why bother with them at all? The answer is that in some cases the alternative is to do nothing, and that is something that we find morally or politically unacceptable, and not only those of us in the UK. An interesting point made by the Foreign Office Minister in his evidence was that the number of cases of economic sanctions being adopted by the international community in recent years has increased significantly. We feel that we must do something. Moreover, as several noble Lords have pointed out, despite all the imperfections, economic sanctions are not inevitably bound to fail in all circumstances. Therefore, if we are to impose sanctions, it is important that we take a realistic view of what they can achieve and consider other supportive measures to bolster them.

In that respect, a valid point was made by the noble Lord, Lord Renwick—that economic sanctions are more likely to work in countries with more sophisticated economies. The best example is South Africa, where sanctions played a major part in persuading representatives of the business community that the apartheid regime was a major block to their continuing success and interest. It is no surprise, therefore, that it was the business community that took the lead in initiating discussions with the ANC and played a major part in pressurising the apartheid regime to change its policies. They did not do it because they were bleeding-heart liberals, but for hard-headed economic reasons. South Africa is at one end of the scale but, at the other, economic sanctions against a poor, unsophisticated economy with a small international trading sector are less likely to have a significant effect on the regime. In such countries it may well be that the humanitarian cost will outweigh any benefits unless the sanctions are carefully applied.

Today's debate has understandably spent considerable time examining the current situation in Burma. Apart from its topicality, Burma demonstrates both why sanctions are often adopted and why they are often ineffectual, at least in the short term. For many of us, Burma falls squarely into the "something must be done" category. Recent TV pictures with the whispered reports of Fergal Keane and shots of a frail-looking Aung San Suu Kyi impel us to do something, however symbolic that may be. We know, however, that sanctions in this case are unlikely to bring about policy or regime change in the short term, for at least three reasons. First, many in the military do not care. They are used to isolation and they are doing very well on it. Secondly, the sanctions are not universal. The regime can and does, as has been pointed out, trade with China and other of its neighbours and will continue to do so. Thirdly, even if you could get comprehensive sanctions in the sense of every country taking action against Burma, the army, given its current position, is, in the words of the noble Viscount, Lord Eccles, like actors in a Greek tragedy who cannot change and will not change even if it brings everything down with them.

What is the alternative to sanctions in Burma? As the noble Lord, Lord Ramsbotham—whom we must commend for the eclectic nature of his current reading list—pointed out, Thant Myint-U, the Burmese academic who has worked for the UN, has argued that we must swap sanctions for a combination of foreign aid and what he calls serious diplomacy involving the Burmese Government and their neighbours. One of the most encouraging—arguably the only encouraging—news items this week is that Lee Kuan Yew has for the first time expressed his disapproval of the activities of the regime in Burma, and one only hopes that that call for a change of policy is adopted by some of the other senior statesman in the region.

I do not doubt that in the long term that sort of pressure may be more effective, but at present it would be very difficult for us not to adopt a policy of continuing sanctions, the principal aim of which is to demonstrate our repudiation of what the Burmese Government are doing. It is also interesting to note that the junta, in offering to speak to Aung San Suu Kyi, has made it a condition that she drops her support for sanctions. That could be just a cynical ploy to put up a barrier that it knows she will not cross, but it may be that the junta is feeling the pinch and that sanctions are a substantive consideration.

In respect of Burma, will the Minister elaborate on the Answer he gave to an oral Question on Tuesday when he said:

"All bets are off in terms of the right set of sanctions that may be required to put pressure on Burma".—[Hansard, 9/10/07; col. 127.]

Will he place some bets to the extent of telling us the Government's current view on going forward with sanctions against Burma?

We are faced with a whole raft of countries at the moment against which sanctions have been adopted. I read in the newspapers this morning about the very dramatic effect of sanctions currently imposed by the Israeli Government in Gaza where sanctions have led to a collapse this year in industrial production of 90 per cent and in agricultural production of some 50 per cent. That seems a classic case of where sanctions are likely to be counterproductive. Does the Minister share that view?

Burma and Gaza are particularly hard cases for the reasons we have discussed. However, if we look at some of the other countries—Libya was mentioned as an historical example—where sanctions have or might be imposed, there is scope for introducing an element of targeted sanctions with the prospect of at least some limited positive effect. The report makes a number of sensible suggestions in this area. It talks, for example, about conflict diamonds, which have not been discussed so far in the debate today, and points out that if one is to be successful in imposing sanctions, there needs to be an effective monitoring and enforcement procedure. I am sure that the committee is right to suggest that a permanent UN team should be established to assess trade in conflict commodities and the value of sanctions more generally. It is surely a source of real regret that the negative approach of the US to the UN means that, in the short term at least, it is unlikely to have the resources to enable it to set up such a much-needed team.

A final area of targeted sanctions that has been discussed is that of financial sanctions. The report rightly points out that this area has not had great success in the past and, as an example of the best that it can do, quotes the case of three individuals from Côte d'Ivoire who bucked up their behaviour for six months as the result of financial sanctions. The noble Lord, Lord Brennan, got it right. The world financial structure is changing to make it much more of an interconnected global structure, as we discussed earlier this week in respect of Northern Rock. Therefore, the area of financial sanctions, although its track record is pretty limited and weak, offers more productive scope in the future. I hope very much that further work, as he suggested, will be done in that area.

I have no doubt that there will be demands for economic sanctions as long as governments behave in a manner that the international community finds abhorrent, and that for all their imperfections, sanctions will be imposed in the future. The report is an invaluable guide on how such sanctions might have the best effect.

Photo of Lord Howell of Guildford Lord Howell of Guildford Shadow Minister, Foreign Affairs, Deputy Shadow Leader, Parliament, Shadow Minister (Foreign and Commonwealth Affairs), Shadow Deputy Leader of the House of Lords 12:50 pm, 12th October 2007

My Lords, this has been a super-topical debate. I know that we always say these things are timely, but this one is right on the nail, given the horrific events developing in Burma, which we have not seen the end of yet. We must all be extremely grateful to my noble friend Lord Wakeham, his team and his committee for producing this report and for promoting the debate. My only comment on the Government response, which is also available to us, is the same as everyone else's; namely, that it is a rather limp affair, consisting of a long list of paragraphs all of which begin with the point that the Government do not share the view of the committee on this, that or anything else. That does not take us very far. It is one of those reports that has obviously been written by a word processor.

The obvious conclusion from this debate, and from any rumination on the whole sanctions scene, has to be that sanctions are a very mixed success. The noble Lord, Lord Brennan, and other noble Lords made a point that is made in the centre of the report. Sanctions, if they work, do not work in isolation from the whole menu of policies and pressures, from the diplomatic—as the noble Lord, Lord Hannay, said—to the openly forceful, and from the soft-power range of activities, right up to the range of hard-power activities which can be deployed in either a fully military or a semi-military form.

Those conclusions emerge from this debate and, probably, any debate on sanctions. Whether they are good or bad, the UK is involved in a whole range of sanction regimes—our own, the EU range and UN sanctions activities. Right across this range there have been obvious failures where nothing has happened. There have been successes, in some sense, although the noble Lord, Lord Skidelsky, is right to remind us that it is extremely hard to measure what success really means. There have been weaknesses and strengths. Certainly, if the aim is merely to register disapproval, these are quite strong registers and messages.

The key issue is whether sanctions hit regimes or people, or do they inevitably hit both, as my noble friend Lord Lawson argued? If the aim is to change behaviour or to make policy changes at governmental level, do they make the situation better or worse? The report strongly suggests that they make things worse. I shall turn to Burma in more detail in a moment. One cannot get answers to any of these things except by looking at examples, which the report does in a very interesting way. It looks at what went on in Iraq. One has to conclude that economic UN sanctions had an impact, but not of course in helping democracy or bringing benefit to the people in any way; however, there is evidence which the committee has that the then rulers of Iraq—Saddam Hussein and others—were influenced by the impact of and wanted to use the fact of the sanctions. That probably led to the scrapping of the programme of weapons of mass destruction in the early 1990s, which of course was missed spectacularly by our intelligence services and those of America and many others.

Burma is in all our minds. We are reminded that a whole range of economic sanctions has been in place for years, including the UK's range of sanctions, which are more extensive than many others in Europe; namely, trade and investment sanctions, and heavy warnings and discouragements from the Government about getting involved in Burma at all. Have sanctions helped? The report is blunt and says that they have not. They have hurt ordinary people and made zero impact on progress to democratisation, which is very much the view so eloquently put by the noble Lord, Lord Ramsbotham, and I sympathise. It is evident that all the cries of disassociation and disengagement stay away. Sanctions are much argued about, particularly on the so-called "compassionate left" of politics, but have had the opposite results and merely caused enormous suffering among a people who are longing for more contact, not less.

Whether the sanctions work or not, at the centre of this is the truth—the inconvenient truth, if we can use that rather dreary phrase—that nothing in this region will work without China, India and Japan, and probably without Russia, on board and several other cutting-edge Asian countries. There are signs that China is being a little more helpful at the UN, which is welcome. But the reality is that economic sanctions cannot work on a partial western-only basis. For more than a decade some of us have tried to bring home to policy-makers in the Foreign and Commonwealth Office, think-tanks and elsewhere, which can think only in terms of Brussels and Washington, that the foreign policy community now must embrace the rising Asian powers. Perhaps that should be the "risen" Asian powers because they have already arrived. The Atlantic community is no longer the centre of the globe. We get bogged down in the regional politics of Europe at our peril.

The report looks at Iran where sanctions have not had the slightest effect in limiting Iranian ambitions in the nuclear direction. I know that this raises the much broader question of what is to be done about Iran and how it is to be contained. We have to reconcile ourselves to the fact that it is obviously the future regional power in the area and has already caused an enormous amount of trouble and further destabilisation rather than further settlement of the Middle East.

The report analyses other forms of sanctions in a very interesting way, which is very useful; namely, targeted sanctions, the famous travel sanctions, and financial and commodity sanctions. The conclusion is that targeted sanctions must hit their targets. Obviously, when we see dignitaries from Zimbabwe—or, indeed, Burma—travelling around, we have to ask whether these sanctions in any way are hitting their targets.

Financial sanctions are very interesting and one is torn between views. With totally globalised and integrated financial systems and banking systems, does this make the operation of very precise sanctions against particular areas of an economy of a rogue nation more or less easy to put in place? My instinct is that with modern technology there are new and refined ways of making precision impact through financial and banking sanctions. But again we have to return to the bigger point made by my noble friend Lord Lawson. None of this will be of the slightest use unless the Asians take the lead, not merely that they co-operate. The western banking system, just like the western political system, or the Washington theory of hegemony, is no longer valid. It is the full co-operation of the rising Asian powers that is needed.

As the noble Lord, Lord Newby, has just remarked, commodity sanctions work if there is a controlled and tightly policed and monitored system. We have had difficulties with conflict diamonds in that respect. One could argue for another form of sanction—I am not sure that it is mentioned in the report; namely, the suspension or withdrawal of aid programmes, which Japan is now considering. It is rather curious that Japan is now one of the major aid donor countries in the world. Its original post-war aid programme began in Burma as it sought to make reparations there, but it is now reviewing these programmes in order to put pressure on the regime. I do not know whether it will work, but it is thinking about that.

Missing, surprisingly, from this otherwise excellent report is any reference to cyber-sanctions, which may be the most important part of the future of the sanctions system. Anyone who has studied Russian cyber-attacks on Estonia recently will have seen how immensely powerful these can be. This seems to be an important new area in Iran, which some people are looking at, but it does not seem to have reached policy-making at all. This may also be true for Burma. One of the first things that the junta did as the situation got rough the other day was to cut off internet links—or try to do so—but they may well find that it has cut off lifelines to its own regime as well. The reality, which is not widely discussed but is there, is that all Governments rely increasingly on network computer technologies and on mobile telephone networks and are therefore increasingly vulnerable to cyber-attacks. I hope that that has not escaped the minds of policy-makers, even of this Government.

Those who say that there is no area between sanctions or military force are out of date. There is an area opening up now between conventional economic sanctions and the use of force, which could have devastating effect, paralyse Governments, cause suffering inevitably to populations but, above all, disable or undermine the efforts of governments to continue imposing strict and centralise regimes. Those are the thoughts that I have to add to the report and debate and I hope that they can be taken into account when the Minister replies.

The conclusion of all of us generally is that sanctions are never the complete answer. They work differently in different circumstances and have to be supported by a whole range of other activities, which is the approach that we have to take. This debate and the report have helped us to focus on those issues more clearly.

Photo of Lord Malloch-Brown Lord Malloch-Brown Minister of State (Africa, Asia and the UN), Foreign & Commonwealth Office, Minister of State (Africa, Asia and the UN) 1:01 pm, 12th October 2007

My Lords, I start by thanking the noble Lord, Lord Wakeham, and his committee for this report. If he feels that there has been any lack of enthusiasm from the Foreign Office in its response, let me try to correct that this afternoon, at least.

In listening to this very interesting discussion, I have the sense that the divisions between us are not that wide, as so often happens in this House. Every noble Lord who has spoken accepts that sanctions are an imperfect tool and that we are continuously trying to improve them. While some may conclude that the imperfections rise to such a level that one must question their utility at all, the sense of the House as a whole seemed to be that the way to go is to exercise prudence, control and continuous review to ensure that, when we employ sanctions, we employ them effectively while constantly evaluating results and making corrections if we find that those results are not in line with our policy objectives.

Noble Lords have mentioned some of the great wins that have come from sanctions, such as South Africa and Rhodesia in the past and Libya more recently, as well as even less noted successes, such as the willingness of the Iranian regime to at least sit down and negotiate its nuclear programme, or of the regime in Khartoum finally to move, if only slowly and grudgingly, on Darfur. All those indicate the usefulness of sanctions as one arrow in the quiver. That will be the main theme of my response today: that between the two extremes of hard and soft power, the last being just the blandishments of diplomatic persuasion, there lies an area—as the noble Lord, Lord Howell, said—which should be defined not as sanctions alone but as sanctions plus, as a set of both economic disincentives and economic incentives, which can add a robustness and forcefulness to our diplomacy but falls short of employing military action against those whose policies we seek to change.

The main issues that have arisen in addition to the case of Burma are more broadly about the humanitarian impact of sanctions. Can we target them so as not to do greater harm to the innocent, broader and often very poor population? Secondly, there is the critique that we all agree we need to make of UK sanctions policy.

The report claims that the Government,

"repeatedly adopts sanctions with little sense of whether the objectives can be achieved or of how sanctions can contribute to the achievement of those objectives".

The Government do not accept that that is correct. In recent examples—Iran and the DPRK—we followed what we think has emerged as the correct UK policy. We imposed smart and targeted sanctions and played a role in designing sanctions that targeted the nuclear and missile programmes of those two countries, which were the areas in which we wanted to bring about a change of behaviour.

The point has been made about the difficulty of exiting any set of sanctions, but we felt that in these cases the criteria for suspending and terminating the sanctions were carefully crafted, including benchmarks that focused on the development of a nuclear weapons programme and avoiding areas of other legitimate activity. In the case of the DPRK, we are already seeing positive results, with the remarkable progress that is now being achieved in the six-party talks. Similarly, on Iran, we believe that sanctions have sparked internal debate that has resulted in a decision to engage with the International Atomic Energy Agency on a work plan to address these outstanding issues. Similarly, targeted measures on Sudan, Liberia, the Democratic Republic of the Congo, the Ivory Coast and others have, we felt in each case, been appropriate and proportionate in terms of applying pressure for change, contributing to bringing the warring parties to the table to resolve those conflicts while minimising the broader impact on civilians.

The case of Burma has given topicality to today's discussion. The committee was correct to highlight that case and correct, too, in its judgment that the EU autonomous sanctions have not delivered the change that we all hoped for. Equally, we should acknowledge, as several noble Lords have said this morning, that the prospect of additional sanctions proposed by the Prime Minister and other European leaders has helped to sustain international pressure on the regime in recent weeks. The further sanctions being considered in the EU over the coming weeks are intended to put further pressure on the Burmese authorities by targeting the particularly profitable parts of Burma's economy to initiate an inclusive process of reconciliation.

Having said that, I concur with the remarks of the noble Lord, Lord Howell, in that without the Asian dimension there—without ASEAN, China, India and Japan being part of an international sanctions regime imposed through the UN Security Council—the effect will be limited. The noble Lord, Lord Newby, and other noble Lords have made similar points. We have moved past an era in which western sanctions alone can have the effect that we intend. Indeed, in a situation where there are western sanctions and other economic trading partners simply take advantage of that to increase their own involvement in a rogue state's economy, our influence becomes net lessened, so it is enormously important to bring the world with us in terms of sanctions regimes.

Let me answer the query on how far I expect us to be able to go in the case of Burma. I bring to the attention of noble Lords an article by the Singaporean Foreign Minister in the media this morning in which he affirms ASEAN's strong condemnation of developments inside Burma and calls with equal force for reconciliation and for the UN envoy, Mr Gambari, to take the lead in securing a dialogue between the two sides. He feels that pressure needs to be applied, but is clearly cautious about moving swiftly to sanctions and, I suspect, at least in the first phase considering incentives rather than sanctions as the way forward. But that is the process that a UN Security Council discussion will steadily allow us to move on. The special envoy will return to Burma. He will come back to report on progress or the lack of it. As the process continues, if no further progress is made, there will be an opportunity to make the case for the world to join in on firmer action against the regime in Burma.

I echo the noble Lord, Lord Hannay, and others who pointed out in their contributions that clearly not just the regime, but Aung San Suu Kyi herself, believe that this call for sanctions is having a real impact. That is why the regime has raised it as the first issue it wants her to drop as a demand if talks are to begin between the two sides. So when last week the Prime Minister said that he was committed to securing tougher EU sanctions, including a ban on foreign investment on top of the sanctions against individuals and their assets as well as measures aimed at specific commodities, we should look at that as just the first step in a process which needs to broaden this to include the Asian economic partners of Burma as well.

I turn to the humanitarian impact of sanctions. The Government's policy is based on a 1998 Whitehall review which recommended that sanctions should be targeted on specific individuals or groups, and be "smart", with clear objectives and criteria for exit. Since then we have sought to ensure that what we do meets those cases. Rightly, attention has been focused on Iraq and the early, very damaging impact of comprehensive sanctions on the ordinary people of that country. But we have to acknowledge that once that impact was recognised, the Oil for Food programme, despite its other major failings, was enormously successful in improving the living standards of poor Iraqis within a sanctions framework. In fact, the Volcker commission, which investigated the Oil for Food programme and did not find much to applaud in it, nevertheless noted that the feeding programme and humanitarian purchasing programme,

"reversed a serious and deteriorating food crisis, preventing widespread hunger and probably reducing deaths due to malnutrition. Undoubtedly, many lives were saved".

So it is possible to protect ordinary people within a sanctions regime. Indeed, looking at the success of sanctions, I note the observation of the noble Lord, Lord Howell, that sanctions may have been the cause of the end of the WMD programme in Iraq. That is no small achievement if it is the case.

A further point to note is that since the comprehensive sanctions measures against Iraq were lifted in 2003, there is at the moment no proposal anywhere to apply such comprehensive sanctions against any country. Indeed, the UN has imposed such measures only four times, in Rhodesia, Haiti, the former Republic of Yugoslavia and Iraq. While we do not rule them out—all noble Lords could think of a few heinous candidates for sanctions—the fact is that they are not regularly used now precisely because of the kind of limitations to which the committee so properly drew our attention. We have to focus on targeted measures which avoid the major failings that were described.

I want to say a word about the financial issues. First, financial sanctions are getting more sophisticated, reflecting the sophistication of global banking systems where moneys are moved easily between countries. The experience of the United States in being able to disrupt banking systems in the cases of the DPRK and Iran demonstrates the potent power of these new smart financial sanctions to achieve diplomatic objectives.

I shall respond to the specific request of the noble Lord, Lord Hannay, about the recommendation of the panel of which he was a part to smarten up the UN's own sanctions arrangements in the Security Council. I am afraid to say that despite strong support from the UK both for its work in general and for the proposal of the panel to which he referred, the Working Group on General Issues on Sanctions of the Security Council has been discontinued because others did not share our commitment to its activities. Nevertheless, through other means the Security Council is similarly reviewing the effectiveness of sanctions and improving one important exit issue, which is how to delist individuals once they have proved that they do not belong on a list of those who should be subject to sanctions.

Perhaps I may say a word in favour of what was said by my noble friend Lord Brennan: do not underestimate the effect of financial sanctions. In the case of al-Qaeda and the Taliban, more than $85 million-worth of assets have been frozen in 36 countries. In our own case in terms of our sanctions against Iran, more than £500 million-worth have been held. These are numbers which can have a striking effect on a country's willingness to change its policy line and comply with UN Security Council resolutions or other policy objectives of the UK Government.

I close by repeating the observation of a former colleague—indeed, my former chief—Kofi Annan, the former Secretary-General of the United Nations: between war and diplomacy, we need a middle way, and often that is sanctions.

Photo of Lord Wakeham Lord Wakeham Conservative 1:18 pm, 12th October 2007

My Lords, I thank all noble Lords who have contributed to what has been a very interesting debate. I have listened to many debates over the years, and it is not often that I am able to say at the end that every single speech was itself well worth listening to. I am extremely grateful to all noble Lords who have spoken.

On Question, Motion agreed to.