International
Pyrrhic Sanctions
By German Foreign Policy, 10 May2023
May 12, 2023 - 9:23:04 AM

EU plans to introduce US-style extraterritorial sanctions in violation of international law and to target companies of third countries for their exports to Russia. Non-Western alliances (BRICS, SCO) expand.

The EU is preparing to take initial steps toward adopting methods of US sanctions and impose extraterritorial punitive measures on enterprises of third countries including those in the United Arab Emirates and possibly in Turkey, as EU Commission President Ursula von der Leyen confirmed yesterday. They will first focus on the resale of sanctioned EU goods to Russia. Thus, in the future, enterprises will be punished even if they are not based within the EU and, therefore, are not subject to EU norms. The extraterritorial implementation of one’s own system of norms is in violation of international law, as the EU itself had officially confirmed a few years ago. Countermeasures can be expected at least from more powerful nations, such as Turkey. The planned sanctions regime – which EU ambassadors will begin discussing today – is likely to push those countries affected even further into opposition to the West. The United Arab Emirates, for example, is already a “dialogue partner” in the Shanghai Cooperation Organization (SCO) and is seeking membership in the BRICS alliance.
Via Third Countries to Russia
The EU Commission is preparing a new sanctions regime that, for the first time, will include the transition to the so-called extraterritorial, or secondary sanctions, such as those that, so far, have only been imposed by the United States. This will be within the framework of the eleventh (!) sanctions package against Russa that the EU deems necessary, because the previous ten (!) sanctions packages have still not had the success desired – the Russian economy’s ruin.[1] The EU seeks to initiate this new regime of sanctions based on the assumption that Russia can still procure sanctioned goods via third countries, which it can no longer purchase directly from the EU. This assumption is supported by the fact that last year EU exports to certain countries have increased to unprecedented levels, particularly to countries in the South Caucasus (Armenia, Azerbaijan) and in Central Asia (Kazakhstan, Uzbekistan, Kyrgyzstan) which always maintained close trade relations with Russia. According to an analysis by the European Bank for Reconstruction and Development (EBRD), a substantial portion of this increase is due to the importation of goods that are prescribed from export to Russia.[2] Turkey is also accused of reselling sanctioned goods.

Explicitly Unlawful
The new sanctions regime, which the EU Commission presented solely to EU members last Friday, would provide for the possibility of imposing penalties for such resale – not only on enterprises within the EU, but even on those in third countries. Thus, for the first time, the EU is deviating from its previous practice of imposing penalties only within member countries – in accordance with international law – and is beginning to impose its legal norms also on foreign territories. This contravenes international law, which does not accord any state jurisdiction over foreign sovereign territory. Brussels had accepted this, until now,. Referring to relevant US sanctions practices, the EU’s Foreign Policy Representative; Josep Borrell declared in late 2020, “we consider such extraterritorial sanctions unlawful.”[3] And yet, the EU itself is now beginning to introduce such measures. Thus, in the future, any action would be punishable that “has the objective or the consequence” of “thwarting” EU sanctions. This would first affect enterprises, which purchase sanctioned goods from the EU to resell them to Russia. It is not yet clear, whether the sanctions would already be applicable, if the goods resold to Russia merely contained components produced withing the EU.

Countermeasures
It is, however, clear that by introducing initial extraterritorial sanctions, the EU will be igniting new conflicts with those countries concerned. The draft for the 11th package of anti-Russian sanctions, already lists enterprises from various third countries, against which the EU will impose punitive measures. These include companies in Armenia and Uzbekistan, according to reports. In these cases, the EU Commission is hoping that the economically and politically weaker countries in the South Caucasus or Central Asia, will already be intimidated enough by the threat of punishment that they, themselves, will cause their companies to halt the resale of EU products to Russia.[4] However, there are seven, according to some reports – by others, 8 – Chinese enterprises on the new list of sanctions. China’s Foreign Minister Qin Gang reiterated yesterday in Berlin, that his country would “react strongly to EU sanctions, to defend the legitimate interests of our country and our enterprises.”[5] Counter-sanctions could be expected. Two enterprises from the United Arab Emirates (UAE) are on the list, and listing Turkish companies is also in discussion. Whether Abu Dhabi and Ankara will impose countersanctions remains at least open.

Counter-Alliances
This is not only a question of what consequences Ankara or Abu Dhabi’s possible counter-sanctions could have. The UAE was among the countries the German government turned to last year in a desperate bid to find liquefied gas supplies. Turkey, on the other hand could simply permit the transiting refugees through to the EU, to plunge the Union into turmoil. Besides, it is becoming apparent that the imposition of punitive measures could induce Turkey, the Emirates and possibly other countries to mount long-term opposition to the West. This is already happening to a growing degree. For example, recently the Emirates have pushed for the Arab World’s normalization of relations with Syria and Iran – against the West’s wishes.[6] They are also working increasingly closer with China.[7] Last week, the Emirates were officially accepted as a “Dialogue Partner” to the Shanghai Cooperation Organization (SCO), an Asian security alliance centered around China, Russia and India. Since some time, the SCO has been growing. In the meantime, Turkey, Saudi Arabia, and Egypt are also among its “Dialogue Partners.”[8]

Turning Away from the US-Dominated Financial System
According to reports, the United Arab Emirates is one of the 19 countries that has formally – or informally – posed their candidatures to join the BRICS alliance.[9] The BRICS countries (Brazil, Russia, India, China, South Africa) are emerging countries that have joined together to push through their global rise against the resistance of the dominating Western powers. Thus, they position themselves as an influential alternative to the West. At the next BRICS summit meeting, scheduled for August in Durban South Africa, there will not only be a decision taken on the possible expansion of the union. Also planned is the continuation of the debate on alternatives to the US dollar, which has been going on already for a long time. However, that will now include the concrete question of BRICS being a suitable framework for such alternatives. In April, for example, Brazil’s President Luiz Inácio Lula da Silva spoke in favor of promoting dollar-free options for trade between BRICS member countries. This debate has now been expedited by the US extraterritorial sanctions, which would not be so easily applicable, were there an alternative currency.[10] Extraterritorial EU sanctions will probably further accelerate the withdrawal from the Western-dominated global financial system.

 [1] See also „Russland ruinieren”.

[2]. [3] Thomas Gutschker: Auf dem Weg zu Sekundärsanktionen. Frankfurter Allgemeine Zeitung 09.05.2023.

[4] Barbara Moens, Leonie Kijewski, Suzanne Lynch: EU targets Central Asia in drive to stop sanctioned goods reaching Russia. politico.eu 08.05.2023.

[5] Chinas Außenminister warnt EU vor geplanten Strafmaßnahmen gegen Unternehmen. de.nachrichten.yahoo.com 09.05.2023. See also In die Sanktionsspirale.

[6] See also The Failure of the Regime Change Policy.

[7] See also The End of US Domination at the Persian Gulf.

[8] Salim A. Essaid: In boost to China, UAE and Kuwait become ‘dialogue partners’ in Shanghai Cooperation Organization. al-monitor.com 08.05.2023.

[9] Sidhant Sibal: South Africa’s Foreign Minister Naledi Pandor sees India’s G20 leadership as opportunity for Global South. wionews.com 05.03.2023.

[10] Simone Iglesias: Lula Backs BRICS Currency to Replace Dollar in Foreign Trade. finance.yahoo.com 13.04.2023.

Source: Ocnus.net 2022