Smart Sanctions
Rebuilding Consensus or Maintaining Conflict?

Marc Lynch

June 28, 2001

(Marc Lynch teaches political science at Williams College.)

Heated debate in the UN Security Council on June 26 previewed the coming showdown over the US-British "smart sanctions" initiative, designed to "re-energize" the international consensus on sanctions against Iraq. Faced with declining international support for and compliance with the current sanctions, the United States and the United Kingdom are pushing a major package of sanctions "reforms." The US-UK proposal would allow some civilian goods into Iraq, while tightening embargoes on others and retaining the UN's financial control over the Iraqi economy. Security Council Resolution 1352, passed on June 1, requires a decision on sanctions reform by July 3. But it now seems unlikely that this target will be met. Russian Foreign Minister Igor Ivanov warned on June 25 that his country "cannot allow [this measure] to pass." France and China are working to reshape the proposal rather than rejecting it outright. Iraq, for its part, has emphatically denounced the proposal from the start. Most of the frontline states which would be charged with implementing the new sanctions regime -- particularly Jordan -- have expressed strong opposition.

It is important to be clear about what is, and what is not, at stake. The Security Council debate foreshadows the end of the current sanctions regime. Should it succeed, "smart sanctions" would revitalize the sanctions on Iraq -- against prevailing international opinion. The plan would rebuild a narrow Security Council consensus, and blunt the force of rising opposition to the sanctions. But the reform would emphatically not end the sanctions on Iraq, and probably would not significantly improve the lives of Iraqi civilians. Continued "dual-use" restrictions and the escrow account would keep the Iraqi economy highly centralized and cash-poor. What is more, the current emphasis on making the sanctions more efficient comes at the expense of moves toward lifting the sanctions outright. Should "smart sanctions" fail, the status quo -- a deeply unpopular formal sanctions regime which is increasingly ignored -- will remain in place. But given US dissatisfaction with the status quo, the failure of sanctions reform might well lead the US to adopt a more aggressive and unilateral approach to the persistent problem of Iraq.

WHY "SMART SANCTIONS"?

"Smart sanctions" are not motivated by humanitarian concern. The US and UK advanced the "smart sanctions" proposal because the existing sanctions are unpopular and full of holes. After the Desert Fox bombings of December 1998, the US and UK stood almost alone in support of sanctions. Media reports and public debate increasingly focused on Iraq's humanitarian disaster rather than on Iraqi non-compliance with weapons inspections. US and British arguments placing blame for the humanitarian crisis solely on the Iraqi regime's shoulders were clear losers in the international public sphere. On the ground, the volume of oil smuggling has grown exponentially, as the price of oil increased, sympathy for the Iraqi people mounted and the moral stigma of violating UN sanctions eroded. Painstaking negotiations over Resolution 1284 in December 1999 failed to achieve either Security Council consensus (Russia, China and France abstained) or Iraqi compliance with the new inspections agency UNMOVIC. The US and UK needed to shift the terms of the debate if they hoped to keep the sanctions in place.

United against the status quo, the Bush administration divided internally over what to do. Conservatives -- led by Defense Secretary Donald Rumsfeld -- called for increased military pressure and support for the Iraqi opposition. Even this proposal only temporarily appeased Republican hawks in Congress. But two years of unpublicized, stepped-up bombing of Iraq around the no-fly zones -- with little tangible gain and the specter of US losses -- has worn down the morale of US forces. The Iraqi opposition in exile remains in disarray. Iraq's neighbors, focused on the escalating Israeli-Palestinian conflict, were unwilling to endorse such an aggressive policy. Russian, Chinese and French opposition made it clear that there would be no Security Council authorization forthcoming. "Smart sanctions" emerged as a strategy to save the sanctions by addressing the major points of international critics, while also fending off pressure from domestic hawks. As Secretary of State Colin Powell remarked on March 8, "smart sanctions are meant to rescue the sanctions, not to abandon them." Should Powell's initiative fail, the hawks will be well-positioned to push their alternatives.

TOWARD PERMANENT SANCTIONS?

The "smart sanctions" proposal would open up trade in civilian goods, allowing such contracts to be approved directly by the UN Secretariat instead of being reviewed by the controversial UN Sanctions Committee. Not only anti-sanctions campaigners, but also UN Secretary-General Kofi Annan and other UN officials, have sharply criticized the US and British "holds" on contracts submitted to the Committee. As of May 31, $3.7 billion in contracts were in limbo due to US or UK objections. But "smart sanctions" retains a list of "dual-use" items -- items that could have military applications -- that would still be reviewed by the Sanctions Committee, allowing further US and UK "holds" or vetoes. The contents of this list have been the object of intense and so far fruitless negotiations, with the US defending an expansive definition of "dual-use." If the US definition is adopted in a final resolution, then little will change besides the transparency of the contract review process.

Re-establishing UN control over Iraqi finances by channeling all oil revenue through the UN escrow account lies at the core of "smart sanctions." The US and UK have been deeply troubled by the dramatic increase in the flow of revenues into Iraqi government coffers from smuggling and a surtax on oil. Because they fear that Iraq will use unmonitored revenues to rearm itself, the US and UK insist on maintaining control over all Iraqi financial transactions. "Smart sanctions" attempts to cut off these independent revenue sources. The UK draft of June 20 offers "states sharing land borders" the right to purchase 150,000 barrels of oil per day in exchange for eliminating smuggling.

Powell's "smart sanctions" plan allows limited foreign investment in services but not, as the French in particular want, in the oil sector. As for the controversial compensation fund that skims 25 percent off the top of Iraq's oil sales to pay reparations to Kuwait and others, the UK draft of June 8 suggested pushing the percentage up to 30. The US-UK proposal makes almost no reference to inspections, which had been a primary bone of contention in the arduous 1284 negotiations. Where those talks revolved around the "trigger" for the lifting of sanctions, the US and UK now seem inclined to present "smart sanctions" as a more or less permanent system, quietly removing the option of lifting (rather than suspending) the sanctions from the table.

UNLIKELY CONSENSUS

Iraq immediately rejected "smart sanctions," and halted oil sales on June 4 to protest Resolution 1352. The regime has every reason to expect the continued de facto erosion of existing sanctions without its concessions on weapons inspections. With smuggling revenue exploding, and borders increasingly porous, the Iraqi regime -- if not the Iraqi people -- is doing better economically. Despite US insistence on a policy which does not depend upon Iraqi cooperation, the reality is that the UN's Office of the Iraq Program, with its elaborate system of contracts and administration of the Iraqi economy, can not operate without Iraqi oil sales. Iraqi Vice President Taha Yasin Ramadan has warned that the adoption of "smart sanctions" would be the end of the Oil for Food program. Iraq has denounced France in scathing language for trying to achieve Security Council consensus, and repeatedly threatened to punish any neighboring state which cooperates with a new sanctions plan. The regime's furious response reflects its recognition that -- however unlikely it is -- the rebuilding of Security Council consensus could derail its strategy for escaping sanctions.

Within the Security Council, strong support for alleviating the humanitarian crisis in Iraq mingles with hesitations about the "smart sanctions" reforms. Russia has taken the lead in opposing the proposal. After forcing the postponement of the decision until July 3, on June 25 Russia leaked a letter stating that it would not support the proposed resolution. In an open Security Council debate that it called for June 26, Russia complained that "smart sanctions" would perpetuate the sanctions rather than move towards lifting them through the disarmament process. France has attempted to minimize the extent of international control over the Iraqi economy, pushing for a restrictive definition of "dual-use" items, a minimal UN bureaucratic presence in the administration of the Iraqi economy and permission for investment in the Iraqi oil sector. The French want to further loosen trade restrictions for Iraq's neighbors, and further cut the percentage of revenue channeled to the compensation fund. Their approach, which holds out the potential for creating a new consensus among the Western powers, has come under the most ferocious attack from the Iraqi regime. China has been more vocal than during previous deliberations over Iraq, probably reflecting the deteriorating US-Chinese relationship.

Most of the frontline states which would carry the burden of enforcing the new sanctions regime have outspokenly opposed it. Only Turkey has offered conditional support. Jordan has taken an unusually direct position of opposition to "smart sanctions." While Iraqi threats of retaliation played some role, the Jordanian position more reflects the overwhelming Arab public consensus against the sanctions and the enormous economic stakes. Arab League Secretary-General Amr Moussa reflected widespread Arab opinion by attacking the proposal as simply repackaging the sanctions rather than addressing the real problems.

With considerable justification, the anti-sanctions movement has criticized "smart sanctions" as an attempt to salvage a morally bankrupt policy. The Bush administration's alternative plans may be worse. The US will block Russia's counter-proposal to simply lift sanctions. Failure in the Security Council may well push the US to a more unilateral approach, including the revival of escalated military options, while keeping the existing sanctions in place.