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The UK’s middle-of-the-road sanctions policy

The UK’s middle-of-the-road sanctions policy

by host

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.”The United Kingdom’s interests, not its relationships, would guide its diplomacy.

More than 150 years later, once again in a time tumult, that same thinking is guiding Britain’s policy as it considers what kinds of sanctions to slap on Russia should the Kremlin decide to invade Ukraine. Should the U.K. follow its ally the United States’ lead in taking a combative approach to Moscow? Or should it keep its sanctions regime in lockstep with the European Union, or even chart its own course? 

On paper, Britain has thus far cleaved close to its allies when it comes to sanctions policy, even if with less enthusiasm. The U.K., the EU and the U.S. all imposed similar sanctions regimes on Belarus and Iran — albeit while the U.K. was still a member of the EU in the case of the latter.

When it comes to enforcement, however, London has been far less bullish than Washington. While the U.S. handed out $1.3 billion in fines for sanctions breaches across 26 enforcement cases in 2019 alone, a report earlier this month revealed that the U.K. has imposed just six fines for sanctions violations since the Office for Sanctions Implementation (OFSI) was established in 2016. In the words of one commentator, the £21 million worth of fines suggest that U.K. sanctions are “toothless.”

This criticism may not be totally fair, however. It takes time for new government bodies and agencies to get the right structures in place. What’s more notable is that, despite Brexit, the U.K.’s recent stance on sanctions has been less aligned with that of the U.S. than of the EU.

When it comes to taking action against Russia for its past actions on Ukraine, for example, both the U.K. and the EU have imposed substantial territorial sanctions on financing, trade in key sectors and investment in Crimea and Sevastopol, which could be expanded to cover the whole of Ukraine. Equally, companies that take any action in breach of sanctions, along with employees who are citizens of either, may face penalties under their respective regimes. 

The real question, however, is what British sanctions policy will look like in the future. As U.K. Prime Minister Boris Johnson noted— in characteristically colorful language — the West is hooked on the “hypodermic drip feed of Russian hydrocarbons” that need to be “yanked out.” In more elementary language, it certainly seems that Europe’s apparent immediate reliance on Russian energy, of which the Nord Stream 2 natural gas pipeline is perhaps totemic, could undermine the united Western front. After all, there was significant foot dragging from Berlin at the thought of banning the pipeline.

It could therefore be the case in the future that where the EU is hamstrung by the need for consensus, the U.K. could be more agile, moving its policy closer to Washington’s.

To be sure, for all the talk of the “mother of all sanctions,” it is improbable that the U.K. will fully match the U.S. in its enthusiasm. But it is likely to diverge from the softer stance we can expect from the EU. Johnson’s stated desire to prevent Russian firms from raising capital in London’s financial markets, for example, could indicate a drive to target the banking sector.

So, will the U.K.’s middle-of-the-road sanctions regime prove effective? It’s simply too early to say. But what is clear is that whether on Russia or other future challenges, the U.K. will be charting its own course from now on. 

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