Ottawa can’t keep up with the fallout from explosion of international sanctions

Always about delivery and implementation…

They never thought that a dental chair would constitute military hardware.

But Canadian manufacturers of medical supplies have found themselves fighting to win exemptions from a federal sanction that bans selling Russia anything used in the “manufacture of weapons.”

The measure covers not just tank parts and drones but an array of health-care products, veterinary equipment and even barber chairs — items “not traditionally referred to as weapons,” notes William Pellerin, the lawyer representing the companies.

His clients’ appeal is just one battle being waged behind the scenes of the sweeping set of sanctions Canada has imposed on Russia and Belarus over Moscow’s unprovoked invasion of Ukraine a year ago.

Complaints have come from Canadians whose money transfers from Russia have been frozen, oligarchs insisting they were listed by mistake, companies unsure if they should deal with a Russia-linked partner and humanitarian groups barred from entering occupied Ukrainian territory.

The sanctions were imposed in response to a Russian military campaign that has laid waste to countless Ukrainian towns and cities, killed thousands of civilians and led to war-crimes charges against President Vladimir Putin himself.

But as the number of sanctions imposed by this country grows “exponentially,” lawyers say the government is ill-prepared to handle the complex fall-out, leading to a backlog at Global Affairs Canada of hundreds of official requests for exemptions and de-listing.

Unlike other countries, the government provides little direction on how to comply with the sanctions and has issued few general exclusions for those who might be needlessly caught in the cross-fire, they say.

“There is a very strong interest on the part of government to be moving quickly,” says Ottawa lawyer John Boscariol. “(But) when there’s not a lot of thought or consultation put into these measures, inevitably you’re going to side-swipe parties that should not really be targets … We haven’t been properly managing the collateral damage.”

The problems extend beyond the impact on those affected by sanctions, some critics charge.

Even as Canada wins kudos as a world leader in wielding the weapon, there’s no requirement to gauge how well sanctions work in changing behaviour, argues an academic expert in the area.

“At no time does Global Affairs have to go through and say ‘Hmm, these names have been on the book for a year, maybe we should look and see if they should still be there, if they’re having an effect,’ ” says Andrea Charron, a University of Manitoba international relations professor. “It’s fire and forget … We don’t measure effectiveness.”

But Global Affairs spokesman Grantly Franklin defended the sanctions regime as “hard-hitting,” yet judicious.

He said the government is already addressing the mounting workload, with Prime Minister Justin Trudeau announcing last October an extra $76 million to bolster the sanctions infrastructure. Part of that money will be used to expand the department’s team dealing with the issue, said Franklin.

He declined to answer questions about how many applications Global Affairs has received for exemption permits or for the de-listing of certain sanctions, but stressed the goal of the measures is to put pressure on foreign actors, not Canadians.

“Canadians or individuals in Canada whose money has been frozen … may apply for a permit,” said Franklin by email. “We have a rigorous due diligence process in place to evaluate permit applications, and each application is assessed on a case-by-case basis.”

Sanctions have always been a periodic weapon of Canada’s foreign policy, though often in conjunction with other members of the United Nations. But use of the tool began to proliferate under the previous Conservative government, when former prime minister Stephen Harper targeted Iran and North Korea, then Russia after its initial move into eastern Ukraine and occupation of Crimea.

The trend has picked up pace since then, with Russia the main focus but Canadian sanctions have also been placed on people or entities in China, Myanmar, Nicaragua, Syria, Venezuela, Zimbabwe, Libya, South Sudan, Haiti and Saudi Arabia.

“I’ve been practising in this area since I became a lawyer in the 1990s and … it’s just been growing exponentially,” says Boscariol.

“The use of sanctions by the government of Canada has exploded since the further invasion of Ukraine by Russia,” echoed Pellerin, a partner in the McMillan law firm.

Both lawyers said their clients challenging application of the sanctions declined to be interviewed or named for this story.

As the number of sanctions has grown, so too has their complexity. Many of those aimed at Moscow don’t single out specific companies or individuals, for instance, but bar Canadians — even those living abroad — from providing supplies and services to particular industries, such as the oil and gas and technology sectors.

And though the sanctions may sound straightforward when announced, implementing them in the real world can be messy, the lawyers say.

Part of their work involves applying for those “permits” that exempt individuals or companies from one of the measures. Many of the applications are from Canadian residents who were expecting money to be transferred from relatives or others in Russia, only for the funds to be frozen because the originating bank was sanctioned.

There are Canadians who worked for multinational companies and were laid off because Ottawa’s sanctions won’t let them service Russian clients, and Canadian corporations struggling to figure out whether to do business with a certain firm, the lawyers say.

“A big part of the problem is that there are Russian oligarchs hiding under every rock,” said Pellerin. “It’s rare that a week goes by that we don’t encounter a Russian oligarch behind a company (clients) we’re dealing with.”

The challenge is determining if the sanctioned person’s stake in a particular firm that is based, say, in Dubai, makes that firm a no-go zone, he said.

Other countries have concrete guidelines, with the U.S. specifying that the sanctioned individual must own at least 50 per cent of an asset for the sanctions to apply to it. Canada has no such definition, leaving it up to companies to decide or apply for a permit, said Pellerin.

The U.S. actually has a Treasury Department unit — the Office of Financial Asset Control — that proactively embeds itself in banks and other firms to coach them on how to identify links they might have with sanctioned entities, says Charron. The U.K. and the European Union provide detailed instruction on how the measures apply. Not so Canada, she said, either under Harper or the current Liberal government..

“It’s not Global Affairs that enforces sanctions,” said Charron. “It’s basically you and I and real estate agents and banks. And they get no guidance.”

There are challenges, too, for humanitarian organizations. Those without a formal link to the Red Cross/Red Crescent, the U.N. or the federal government are barred by sanctions from working in places like Russian-occupied Ukraine or Syria. The U.S. and other nations, by comparison, have issued “general licences” to such groups to let them provide aid in those areas, said Boscariol, of the firm McCarthy Tétrault.

Perhaps more contentious are those individuals and entities who claim they have been sanctioned wrongly, based on faulty information or even a misspelled name. Boscariol said he’s been successful in the past getting clients de-listed.

Most of the Russians sanctioned by Canada probably don’t have assets here, but what Ottawa does still matters to them, he said. Different countries sometimes replicate Canada’s measures, while some international banks will not deal with potential clients that have been listed here, even if no other country sanctioned them, said Boscariol.

Pellerin said his firm has decided not to work for sanctioned Russian people or Russian companies, choosing to take a “public stance” against the Putin regime. Even so, he said he frequently is approached by oligarchs seeking his services.

The lawyers helping clients navigate the sanctions acknowledge that it made sense for Canada to act swiftly to impose penalties on Russia. But they say Global Affairs has invested far too few resources into managing the measures, even as its lack of guidance leads to more applications for exemptions and de-listing.

The new funding announced last fall has yet to have any apparent impact, they say.

Pellerin said he’s applied for an exemption permit for his medical-supplies clients, but has yet to receive a decision. (He acknowledges that the sanction may be aimed at goods that could be used by Russian armed forces, not just to make weapons.) The lawyer said he’s had answers quickly in some cases, and waited a year in others.

“The sanctions team at Global Affairs Canada work incredibly hard … in a very stressful and demanding environment,” said Pellerin. But “they’ve not been able to keep up with the large demands that have resulted from the government’s decision to massively increase the use of sanctions.”

Source: Ottawa can’t keep up with the fallout from explosion of international sanctions

About Andrew
Andrew blogs and tweets public policy issues, particularly the relationship between the political and bureaucratic levels, citizenship and multiculturalism. His latest book, Policy Arrogance or Innocent Bias, recounts his experience as a senior public servant in this area.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: