Leigh Hansson is a sanctions expert and partner at international law firm Reed Smith.
Speaking in 1848, at a time of upheaval across Europe, British Foreign Secretary and “gunboat diplomat” Lord Palmerston declared that Britain had “no eternal allies” and ” no perpetual enemies”. diplomacy.
More than 150 years later, once again in a tumult of time, that same thought guides British policy as it considers what kinds of sanctions to impose on Russia should the Kremlin decide to invade Ukraine. Should the UK follow the lead of its ally the US in adopting a combative approach in Moscow? Or should it keep its sanctions regime in step with the European Union, or even chart its own course?
On paper, Britain has so far moved closer to its allies on sanctions policy, albeit with less enthusiasm. The UK, EU and US have all imposed similar sanctions regimes on Belarus and Iran, even though the UK was still an EU member in the case of the latter.
When it comes to law enforcement, however, London has been far less optimistic than Washington. While the US levied $1.3 billion in fines for breaching sanctions in 26 enforcement cases in 2019 alone, a report released earlier this month found the UK had no imposed only six fines for breaching sanctions since the Office for Sanctions Implementation (OFSI) was set up in 2016. According to one commentator, the £21million in fines suggests UK sanctions are “powerless”.
However, this review may not be entirely fair. It takes time for new organizations and government agencies to put the right structures in place. What is more remarkable is that, despite Brexit, the UK’s recent stance on sanctions has been less aligned with that of the US than with that of the EU.
When it comes to taking action against Russia for its past actions against Ukraine, for example, the UK and EU have imposed substantial territorial sanctions on finance, trade in key sectors and investments in Crimea and Sevastopol, which could be extended to cover the whole of Ukraine. Likewise, companies that take action in violation of the sanctions, as well as employees who are citizens of either, may face sanctions under their respective regimes.
The real question, however, is what Britain’s sanctions policy will look like in the future. As British Prime Minister Boris Johnson has noted – in characteristically colorful language – the West is addicted to the “hypodermic drip of Russian hydrocarbons” that needs to be “ripped out”. In more basic language, it does seem that Europe’s apparent immediate reliance on Russian energy, of which the Nord Stream 2 gas pipeline is perhaps totemic, could undermine the Western united front. After all, Berlin dragged its feet a lot about banning the pipeline.
So it could be that in the future, where the EU is paralyzed by the need for consensus, the UK will be more nimble, bringing its policy closer to that of Washington.
Certainly, despite all the rhetoric about the “mother of all sanctions”, the UK is unlikely to fully match the enthusiasm of the US. But he is likely to deviate from the softer stance we can expect from the EU. Johnson’s stated desire to prevent Russian companies from raising capital in London’s financial markets, for example, could indicate a desire to target the banking sector.
So, will the UK’s interim sanctions regime prove effective? It is simply too early to tell. But what is clear is that whether it is Russia or other future challenges, the UK will now chart its own course.