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Economic Sanctions: (EAC Report)

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””.—[Official Report, 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.