How the EU sanctions regime can be better than the Magnitsky Act
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How the EU sanctions regime can be better than the Magnitsky Act

Wednesday, 18 November 2020
This is an opinion article by an external contributor. The views belong to the writer.
In October, the European Commission proposed the creation of an EU Global Human Rights Sanctions Regime that would standardize sanctions such as asset-freezing and travel ban procedures across the bloc. Credit: Belga

Amid America’s struggle to transition from the Trump administration to the Biden presidency, European policy-makers are hoping for better transatlantic relations in the years to come.

However, while German chancellor Angela Merkel spoke for all of Europe when she emphasized that prospects for improved EU-US relations are looking up, EU leaders at the same time made it clear that they will continue to observe the US with caution – even with Biden as president.

The EU’s continued scepticism towards the US is the direct consequence of being constantly berated by president Trump on topics ranging from defence to trade. But what’s exacerbating the transatlantic rift is Washington’s loss of moral authority, a state of affairs without easy fixes. Nowhere else is this more evident than with the US’s sanctions regime, and specifically the Global Magnitsky Act, because of the potential it has shown for weaponization for political gains, especially under Trump.

Targeted sanctions pitfalls

Named after the Russian accountant who in 2009 died in a Moscow prison after exposing a gain tax fraud scheme, it was signed into law in 2016 by then-president Barack Obama as a far-reaching tool to fight human rights abuses. Although Brussels welcomed the initiative at first, European officials have since criticized some new sanctions against Russia and some of its citizens in 2017 as overly unilateral, and expressed opposition to the secondary sanctions that could negatively affect European interests when dealing with sanctioned entities and persons.

These criticisms point to deeper issues gnawing on the Magnitsky Act’s credibility and effectiveness. Possibly the most problematic shortfall is the lack of clearly defined metrics that lead to inclusion on any of the US sanctions lists. For the 2017 sanctions list, the US Treasury Department supposedly spent half a year creating a list of Russian political figures and oligarchs, only for the list to be a copy-paste job from Forbes’ Russia billionaires list.

This implies that the most important criterium for inclusion was simply personal wealth, which means that most Russian oligarchs are by default worthy of investigation and punishment, even when there’s no proof to back up any allegations. The 2017 “Putin List” has seen controversial inclusions as a result, most notably Viktor Vekselberg – much to the surprise of international analysts, who regard him as “one of the old oligarchs from the 1990s and not so close to the Kremlin” because of his pro-US stance.

In doing so, Washington ignored the recommendations issued by the Atlantic Council that argued for individuals only to be listed if their close involvement with the Kremlin is proven, and personal wealth has been acquired through corrupt commercial operations with the regime. Proof for any of these criteria was never presented against Vekselberg, because the Treasury Department only requires “reasonable cause to believe” to justify inclusion – a far-cry “from the standard for criminal conviction of beyond a reasonable doubt.”

The right to a defence

It’s no surprise that the businessman has been pushing back at the sanctions for being “unlawful and unfair”, so far unsuccessfully. But the Russian is hardly the only one to be listed without sufficient evidence. Take the case of Israeli businessman Dan Gertler as an example, who found himself on the US targeted sanctions list that same year for alleged corruption in the Democratic Republic of the Congo’s (DRC) mining sector.

In his case too, no sufficient evidence was ever brought forward, and – just like Vekselberg –he has remained on the list despite a US court having thrown out a class-action lawsuit over the allegations in August this year. Most recently, a DRC court also declared documents submitted by two NGOs purporting to prove that Gertler sought to evade sanctions, as forgeries.

That Gertler and Vekselberg continue to be listed despite little evidence showcases another important point of criticism, namely that while it’s easy to be included on sanctions lists, it in turn becomes disproportionally difficult to be removed from them. Largely owing to the far-reaching effects of the sanctions – where doing business with sanctioned individuals and entities can lead to getting placed on the list as well – listees have little ability to access legal help to defend themselves against the punishment.

Such secondary sanctions make it practically impossible to find legal counsel and representation to make a case in the courts, as the rule of law would dictate. As such, the sweeping effects of the sanctions regime as applied by the US has contributed to an erosion of the presumption of innocence principle inherent to the American legal system.

Lessons for the EU

All of these points are gaining particular relevance at a time when the EU is in the process of creating a Magnitsky-type sanctions regime of its own. In October, the European Commission (EC) proposed the creation of an EU Global Human Rights Sanctions Regime that would standardize sanctions such as asset-freezing and travel ban procedures across the bloc. Brussels now has the opportunity to make its own sanctions act credible and effective by recognising the risk of politicised decision-making and transparently enforcing its own criteria.

Much would already be improved over the Magnitsky Act if the EU ensures to uphold the right to defence. To that end it should heed the stipulations of a 2008 European Court of Justice ruling, in which the court charged that “the rights of the defence, in particular the right to be heard, and the right to effective judicial review of those rights” were not respected in the cases of Kadi and al Barakaat, who were under UN targeted sanctions at the time.

A precedent therefore exists in this case, which the EU must take into consideration going forward, yet the point also helps to think about minimizing unintended consequences for a sanctioned individual beyond the affected person itself. For example, implementing travel bans can constitute a human rights violation when they inflict genuine hardship on someone else, such as the affected parties family.

Getting it right

If the American experience holds any lessons, then it’s that Brussel can hardly allow such lapses for itself, lest it undermine its own credibility and its reputation as a normative power in international politics. With the new sanctions regime scheduled for member state approval in December, there is still some time left for the EU to make necessary changes – and get it right.