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The Targeted Financial Sanctions Project at the Watson Institute
Since 1998, a team of researchers at the Watson Institute has investigated
the development and implementation of United Nations targeted financial
sanctions. Research has focused on the practical elements necessary to
improve the effectiveness of sanctions at the UN and national levels.
As the international community implements resolution 1373 and pursues
future measures against the financing of terrorist activities and other
targeted persons, it is the team’s hope that the research activities
described below will assist in limiting the capacity of targeted persons
to threaten international peace and security.
The September 11 tragedy has galvanized international efforts to combat
terrorism as a fundamental threat to international peace and security.
Critical to this effort are measures to deny terrorists access to financial
resources. Security Council resolution 1373, passed on September 28, 2001,
requires all Member States to deny support and safe harbor to terrorists,
including preventing the financing of terrorist acts.
What is a “targeted financial sanction”?
Targeted financial sanctions (TFS) involve the use of financial instruments
and institutions to apply coercive pressure on governmental officials
or the elites who support them as a means of influencing or constraining
their behavior.
These instruments are “targeted” in that they are applied only
to a subset of the population; they are “financial” in that
they involve the freezing or blocking of funds and other financial resources;
and they are sanctions in that they are coercive measures applied to effect
change.
In this way, targeted financial sanctions represent a potential alternative
to general trade or comprehensive sanctions. They are generally used in
conjunction with other coercive measures (such as diplomatic initiatives,
travel bans, or the threat or use of military force) as part of a multilateral
strategy toward a target country.
For an introductory discussion, see “Targeted Financial Sanctions:
A Primer” prepared by the TFS team for at its July 2001 Workshop
on the development and implementation of targeted financial sanctions.
Click here to download in Microsoft Word.
Targeted Financial Sanctions: A Manual for Design
and Implementation
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| United Nations Assistant Secretary-General for Political Affairs,
Mr. Ibrahima Fall, addresses the Security Council on sanctions issues.
At this session, begun on 22nd October and continued on 25th October,
the work of Watson Institute researchers was presented to the Council.
UN/DPI Photo. |
Now available on line! Click here to download the
Manual in PDF.
In cooperation with the Swiss Mission to the United Nations, New York (http://www.un.int/switzerland)
and the United Nations Secretariat (http://www.un.org),
the team completed (in October 2001) a manual on the design and implementation
of United Nations targeted financial sanctions.
The Manual is a practical guide to assist in the tracking and blocking
of targeted individuals’ or groups’ financial assets. It is intended
to serve as a resource for two specific audiences involved in designing
and implementing multilateral financial sanctions: 1) those associated with
the United Nations or other multilateral organizations (officials in Missions
to the UN, as well as the Secretariat) called upon to draft, implement,
and monitor financial sanctions; and 2) officials in the national governments
of Members States responsible for implementing the measures after the Security
Council has acted.
The Manual is the culmination of a more than three-year effort by
the Swiss Government to examine the feasibility of targeted financial sanctions.
Known as the “Interlaken Process” (see http://www.smartsanctions.ch),
the series of experts seminars, workshops, and conferences concluded that
targeted financial sanctions are technically feasible, but that specific
steps within the UN and by Member States are necessary for the instrument
to be developed more fully and made effective. In particular, the fact that
many countries lack adequate legal authority or administrative mechanisms
to implement financial sanctions fully has undermined their effectiveness.
The Manual, developed by the Watson Institute for International Studies
at Brown University, is the next step in this process and provides specific
guidance and recommendations regarding the design and implementation of
financial sanctions.
Although the Manual was written prior to the recent terrorist events,
it nonetheless provides the basis for much of the guidance the UN must provide
at this time. The team hopes it will serve as a resource for the international
community in implementing the financial elements of the campaign against
terrorism and future multilateral efforts to constrain abhorrent behavior
of targeted parties.
An earlier draft of the Manual was the subject of a workshop convened
at the United Nations in July 2001 attended by some 40 states and sanctions
experts from around the world. The final version of the Manual was
presented to the Security Council on 22 October 2001 along with a manual
prepared by the Bonn International Center for Conversion (www.bicc.de/www.smartsanctions.de)
on arms embargoes, travel, and aviation related sanctions. The manuals were
the main item for discussion in the session, which was dedicated to sanctions
issues. Also on that day, the two manuals were discussed at an International
Peace Academy Policy Forum titled “Targeted Sanctions: New Initiatives.”
The Security Council reconvened the special session on sanctions issues
on 25 October to conclude the discussion. The transcripts of both meetings
are available here in Microsoft Word (22 October;
25 October).
The Newport Simulation
In May 2000, the TFS team collaborated with the U.S. Naval War College
(NWC) on a simulation-gaming exercise to test the effectiveness of different
approaches to targeting sanctions.
The NWC’s Decision Strategies Department in Newport, Rhode Island,
provided the setting for the two-day simulation. The NWC facility permitted
the team to record and observe electronically the potential challenges
to creating an effective targeted financial sanctions regime internationally.
Officials from the United Nations Secretariat, national sanctions-administering
agencies, permanent UN missions, bankers, practitioners in the international
financial services industry, and scholars, offered their expertise in
analyzing different financial targeting scenarios.
The discussions resulted in several suggestions for improving the targeted
sanctions tool. First, there are some situations for which a comprehensive
financial sanction, followed by its immediate release on the vast majority
of the untargeted population, could be effective. Second, the purpose
of the targeted sanction—either to prevent the movement of funds
or to prevent their subsequent use—needs to be determined at the
outset. And third, “retrospective reporting” on transfers prior
to the adoption of a resolution imposing targeted financial sanctions
should be considered in the writing of future UN Security Council resolutions.
A report of the simulation is now available. Please write
to the TFS Project to request a copy.
Interlaken II
In early 1999, the TFS team, represented by team member Sue Eckert, participated
in the Working Group on Model Law, and prepared a background paper for
the Second Interlaken Seminar on Targeting United Nations Financial Sanctions
(Interlaken II). This Working Group, which included experts on international
law and national sanctions policy, worked towards model legislation for
the national implementation of UN multilateral sanctions.
In March 1999, Professor Biersteker attended Interlaken II, and participated
in the day-long discussions in the Working Group on Model Law. He was
subsequently asked by the UN Secretariat to prepare comments on the Chairman's
Report from the seminar. These comments, which stressed the importance
of examining administrative implementation of targeted sanctions, were
provided to the Sanctions Unit in June 1999, and considered by the Security
Council at a retreat that month.
In the fall of 1999, the TFS team continued research on the implementation
of targeted financial sanctions, conducting interviews with central bank
and foreign ministry officials in Germany, France, England, and at the
European Commission. The results of this field research have been incorporated
in a revised draft of the paper on legislative regulations, to be published
in a collection of essays edited by David Cortright and George Lopez (Rowman
and Littlefield, forthcoming). A summary of the results are available
online.
Comparing major currency countries: The Origins of the TFS Project
In the fall of 1998, as a result of the roundtables and information gathered,
the Watson Institute initiated the Targeted Financial Sanctions Research
Project to refine our understanding of targeted financial sanctions as
a tool for policymakers.
The first stage of the Project surveyed the legislative and regulatory
practices of six major currency countries—the U.S., U.K., Germany,
Switzerland, France, and Japan—in the implementation of multilateral
sanctions. It was supported by a grant from the Carnegie Corporation of
New York.
In November 1998, the TFS team traveled to Washington, D.C., for a briefing
by the Office of Foreign Assets Control (OFAC) of the U.S. Department
of the Treasury. OFAC is responsible for the administration of all financial
sanctions regimes implemented by the United States. The team was accompanied
by Joseph Stephanides of the Sanctions Unit in the United Nations Secretariat,
and met with senior staff, discussing U.S practices of sanctions implementation.
In December 1998, an initial survey of the legislation,
regulations, and basic practices of sanctions implementation in the
six major currency countries was completed. The Watson Institute co-sponsored
a one-day conference, the Symposium on Targeted Sanctions, at which a
working draft of a paper outlining the results of this research was circulated.
Further, the TFS team chaired the panel discussion on financial sanctions.
The symposium featured high-level UN participation, including senior diplomats
of several key missions, the head of the UN sanctions unit, and other
high-ranking Secretariat officials.
Roundtables
Following the publication of Watson Institute research on the humanitarian
impact of comprehensive sanctions (for example, Political Gain and
Civilian Pain: The Humanitarian Impact of Economic Sanctions, edited
by Thomas G. Weiss, David Cortright, George Lopez, and Larry Minear [Rowman
& Littlefield, 1997]), the March 1998 meeting of the New York members
of the Watson Institute Board of Overseers discussed the topic of economic
sanctions. The meeting explored the idea of targeting sanctions on elites
and individuals within governments in order to strengthen effectiveness
and reduce civilian suffering. Following this discussion, the Watson Institute
and the Council for Foreign Relations cosponsored two roundtable sessions,
with the aim of evaluating research on targeted financial sanctions.
In May 1998, the first of the two roundtables was convened in New York.
“Banking, Crime, and Economic Sanctions” brought together key
academics, government officials, UN practitioners, and banking officials
for an initial discussion of the feasibility of targeted financial sanctions.
In June 1998, Professor Biersteker opened the second roundtable, also
held in New York, with a summary of the current status of our knowledge
about targeted financial sanctions.
The Stockholm Process on the Implementation of Targeted
Sanctions (SPITS)
Members of the Watson Institute’s Targeted Financial Sanctions
(TFS) Project have played a central role in the peak multilateral effort
to improve the effectiveness of United Nations sanctions—the Stockholm
Process on the Implementation of Targeted Sanctions (SPITS).
Sponsored by the Swedish Government and coordinated by the Department
of Peace and Conflict Research at Uppsala University, Sweden, the Stockholm
Process aimed to develop practical proposals to improve the implementation
of targeted sanctions at the UN and Member State levels. The Process builds
upon detailed work on UN sanctions undertaken in recent years. The Swiss-sponsored
“Interlaken Process” focused on targeted financial sanctions.
The Watson Institute’s Manual on the Design
and Implementation of Targeted Financial Sanctions, presented
to the Security Council in October 2001, was published as part of that
Process. Also launched at that meeting of the Council were the results
of the “Bonn-Berlin Process,” a German-sponsored study on travel
and aviation bans and arms embargoes.
The Watson Institute’s TFS team was involved in the planning,
research, and consultation phases of SPITS. Professor Biersteker assumed
the role of rapporteur for one of the three SPITS working groups, with
a substantive focus on “Measures to Strengthen the Capacity of Member
States to Implement Targeted Sanctions.” He and fellow team members,
Watson Senior Fellow Sue E. Eckert and Graduate Assistant Peter Romaniuk,
represented the Institute in meetings in New York, Uppsala, Gimo, and
Stockholm and contributed two papers for consideration by the working
group.
The Stockholm Process results were presented to the UN Security Council
on February 25, 2003. The TFS team, with the anticipated support of the
governments of Germany, Sweden, and Switzerland, is currently preparing
a series of training seminars for current UN Security Council members.
The seminars will present the findings of the three processes and include
exercises for the diplomats responsible for the drafting and implementation
of future multilateral targeted sanctions.
Contact details:
Targeted Financial Sanctions Research Project
Watson Institute for International Studies
Brown University, Box 1970
Providence RI 02912 USA
Email: TFS@brown.edu
Ph: 401-863 9197
Fax: 401-863 7440
Web: http://www.WatsonInstitute.org/TFS/
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