EU SANCTIONS AND THE VOICE OF BUSINESS

Sanctions have emerged as a favoured foreign policy tool of many international actors, including the European Union (EU), for coercing states to change problematic behaviour. Sometimes the lack of plausible alternatives makes sanctions an attractive option for policymakers. But sanctions are a policy instrument in themselves, with numerous advantages and disadvantages that must be considered before resorting to their use. The EU has used sanctions 33 times to-date to address a variety of issues. The increase in employing sanctions is a recent phenomenon, with a 32 per cent increase in decisions from 2010 to 2011 and sanctions have become an important tool.

The fast-moving dynamic that is characteristic of sanctions decisions hampers the EU business community efforts to mitigate the damage. In the case of Russia, policymakers were preoccupied with other matters and there was little time for consultation with business, if consultation was even sought

The business community did not have an opportunity to argue for a cost-benefit approach and the consideration of alternative policy options, including diplomatic actions. The business community did not document the economic costs of the sanctions on specific sectors or companies and the damage to EU competitiveness. These messages should have been delivered to high levels of the EU and to the public before the sanctions were decided.

From now on, a mechanism for last-minute consultation with business should be set up. During sanctions episodes the business community should encourage better public understanding of the costs and actual effects of specific actions. One way to organize a continuous effort of this kind would be to have a standing committee of an existing organization focused on this issue. Business Europe or the EU Roundtable of Industrialists which command high-level business participation, might be suitable organizations. A small staff would collect data, prepare position papers, and act as a watchdog; the Chairman and members of the committee composed of Chief Executive Officers would make regular presentations. Committee membership would be rotated in accordance with common practice. In this way business would continually communicate its position to the highest level, and a single group would act as the business spokesman addressing the generic problem between sanctions decisions. In future sanctions, CEOs could use this platform to make their case to the Council on short notice.

The costs and benefits of this approach cannot be accurately projected. One thing is virtually certain: once established, a foreign policy sanctions committee would not lack work because the hierarchy of values and policy dynamics will continue to bring pressures for foreign policy economic sanctions. Presumably, those pressures will also limit the positive results of such efforts. The cost of such a programme would be low in comparison with the stakes involved for the business community.