Visit of the Special Rapporteur on the negative impact of unilateral coercive measures on the enjoyment of human rights to the Russian Federation, 24 to 28 April 2017

End of mission statement
Preliminary observations and recommendations

I would like to begin this briefing expressing my gratitude to the Government of the Russian Federation for the invitation to visit the country and for the openness and readiness to facilitate every meeting necessary for the pursuit of my mission. I was privileged with a very balanced and topic-specific agenda which allowed me to collect first hand quality information. I would also like to thank the members of the UN team who have facilitated my visit.

I have been entrusted by the Human Rights Council with monitoring, reporting and advising on the negative impact on the enjoyment of human rights of unilateral coercive measures. Those departing from clearly legal multilateral sanctions taken by the UN Security Council pursuant to Article 41 of the UN Charter.

I am completely independent in the performance of my official functions for the United Nations. I must however act in accordance with the UN Charter. I must also conform to relevant decisions of the General Assembly, and in particular to resolution 68/262 of 27 March 2014 on “Territorial integrity of Ukraine”. In this resolution the General Assembly affirmed its commitment “to the sovereignty, political independence, unity and territorial integrity of Ukraine within its internationally recognised borders”. This decision has been confirmed in resolution 71/205 of 19 December 2016 on the “Situation of human rights in the Autonomous Republic of Crimea and the city of Sevastopol (Ukraine)”.

During my visit, I had the honour of being received by the Deputy Minister of Foreign Affairs of the Russian Federation, the Deputy Minister of Labour and Social Protection, the Deputy Minister of Finance, the Deputy Minister of Energy, the Chairperson of the Council of the Federation Committee on Constitutional Legislation and State-Building, the High Commissioner for Human Rights in the Russian Federation, representatives of the Federal Service for State Statistics, of the Ministry of Economic Development and of the Civic Chamber of the Russian Federation. I am grateful to all these officials for sparing this precious time to address all my concerns.

Due to time limitations I have concentrated my visit to Moscow. I really appreciated the professional and cooperative assistance of the Department for Humanitarian Cooperation and Human Rights of the Ministry of Foreign Affairs. I have also received first-hand information from regional representatives. 

As announced at the beginning of my visit, I have also met with other relevant stakeholders including representatives of the Chamber of Commerce of the Russian Federation, the Russian Union of Industrialists and Entrepreneurs, the Bank for Development and Foreign Economic Affairs (Vnesheconombank) representatives of civil society, academics, independent experts and representative of UN agencies.

I would also like to indicate, as I did during my first meeting at the Ministry of Foreign Affairs that prior to my visit to the Russian Federation I have met with the Permanent Representative of Ukraine in Geneva to discuss issues pertaining to my mandate in the context of this visit.

The purpose of this mission was to examine, with first-hand information, whether and to what extent the adoption, maintenance or implementation of unilateral coercive measures targeting the Russian Federation impedes the full realization of the rights set forth in the Universal Declaration of Human Rights and other international human rights instruments and to report to the Human Rights Council in September 2017. I will elaborate my full report based on the analysis of information collected in preparation to and during the visit as well as additional information that I hope to receive soon from various interlocutors.

I have examined the situation of the Russian Federation as a target of unilateral coercive measures and as a source of retaliatory measures. I have examined relevant evidence and endeavoured to assess the actual socio-economic impact of sanctions on the Russian population. I have also considered the impact of the measures imposed by the Russian Federation on other countries and tried to draw some common sense remarks from the prevailing situation.

In 2014, the crisis in Crimea and eastern Ukraine prompted some three dozen countries to impose unilateral coercive measures on the Russian Federation. These measures include travel restrictions and the freezing of funds and economic resources of individuals, the blocking of property, sectoral sanctions against certain entities operating in sectors of the Russian economy, including an investment ban and a prohibition on the exportation or importation of certain goods and technology, and limitations on financial transactions.

Most of the cases that I know, and that I have considered since I took office as Special Rapporteur have been cases of unilateral coercive measures being imposed on developing countries. This is the first time that I witness unilateral coercive measures against such a powerful and strategically-important player of the international community. The high level of integration of the Russian Federation in the global economy and the capacity of this country’s economy to immediately react to a changing reality makes of this a truly unique case.

In response to the unilateral coercive measures, Russia has applied “countermeasures” including visa bans and economic restrictions including on food imports. Russia’s retaliatory counter-sanctions have entailed costs for both source and target countries. Sanctions are concerted among EU states and the United States and other source countries targeting the Russian Federation but as far as implementation is concerned, these measures vary in certain degree.

Impact of measures taken

The unilateral coercive measures started being applied from the beginning of 2014, at a time when the substantial fall in the price of oil occurred. Thus two shocks occurred simultaneously:  the oil shock and the « sanctions » shock.  In view of the complexity in the mix of these causes, it is difficult to determine the discrete impact of the sanctions shock. According to some off-the-cuff information provided to me in Moscow, they may have caused at most a reduction of 1% of Russian GDP. It remains that the main adverse impact of the reversal of economic fortunes was attributable to the drop in oil prices.
The following evolution of general living standards has been observed on the basis of the data provided by the Federal State Statistics Service. Part of the evolution can clearly be ascribed to the « sanctions » shock without it being possible to quantify to what proportion, to any precise extent:

• the trend of overall personal income of the population which had been increasing at a rate of 4.6% in 2012 and of 4% in 2013 was reversed thereafter, falling successively by 0.7, 3.2 and 5.9 for the following years up to and including 2016;

• as for people living below the poverty line (defined to be 10.000 rubles), the trend towards the reduction of their numbers ever since 1992 which had known very few exceptions, was reversed as from 2014 increasing progressively from 15.5 million  in 2013 to 19.8 million in 2016 or 13.5% of the total population;

• within the category of people living under the poverty line, those who suffered most have  been the 7-16 age group, the women of working age and the pensioners.  Those most affected are therefore some of the most vulnerable population groups;

In terms of macro-economic analysis, the combined impact of the two shocks reduced the physical rate of growth from 1.3 in 2013 to 0.7 in 2014 and to -2.8% in 2015.  As a result of adaptation to the post-shock situation, there was a turn-around of economic activity already in 2016 with a rate of – 02% despite the fact that oil prices remained low.  This improvement has moved again in positive territory in 2017. This is evidence of a successful adjustment.

While the unemployment rate overall remained low at around 5.5-5.6%, small and medium enterprises lost over 15% of their employees over that period and were incited to reduce investment by the climate of unpredictability resulting from the sanctions.

The reasons why the impact of economic sanctions on the enjoyment of human rights was not more severe in the country seem related to the following facts:

• the Government applied a counter-cyclical policy very effectively by letting the ruble float and by increasing the share of the State sector to substitute for the sanction-imposed ban on foreign funding for the corporate sector beyond 30 days, by reducing considerably the rate of inflation through conservative management of the economy and by ex-post compensation of inflation losses by pensioners ;

• the economy demonstrated great resilience and a capacity to adapt to new circumstances through Government-assisted restructuring to promote local funding of projects formerly funded by external sources ;

• diversification of the economy away from oil was given new impetus;

• emphasis on research was increased returning to an earlier stage when, in many sectors including space technology, Russia was in the forefront (it should be noted that, according to Russian officials, the cooperation with the US in advanced space technology was maintained including for the supply of engines for spaceships despite the ban on the export of advanced drilling technology by the US) ;  this had recently enabled Russia to enhance oil production in the Arctic by developing its own capacities for horizontal drilling and for the production of shale oil for which it relied previously on foreign partners ;

• effective import substitution technologies were put in place in particular in agriculture, to dispense with EU imports which were the subject of retaliatory measures ;

• a pivot policy towards other partners in Asia and towards other regions took place rapidly.

 As in many other countries targeted by sanctions there was a « rally round the flag » reaction which led the population to accept the inconveniences caused by the unilateral coercive measures.

Rationale of the unilateral coercive measures applied to Russia

The mandate is not competent to discuss the adequacy and proportionality of the unilateral coercive measures applied to Russia in terms of the political issues which have led to their imposition.  The present assessment is therefore limited to the consistency of the measures adopted.

The Russian case study offers an opportunity to review the effectiveness of unilateral coercive measures applied against an advanced economy.  The example of Russia demonstrates the expected versatility of a relatively well-off country with a variety of resources, a highly trained population and a multiplicity of trading partners.

The measures applied have been limited and are not all-encompassing as has been the case for some developing countries that this mandate had been reviewing.  Therefore the inconsistencies singled out for the present review were not exacerbated, fortunately for the international community.

In a context of globalisation, for a country like Russia which is fully integrated into the world economy, measures for trade diversion whether through protectionism or through unilateral coercive measures can be self-defeating if they lead to a beggar-thy-neighbour policy.  It is fortunate therefore that the retaliatory measures themselves were limited in scope.

Furthermore, in such a globalized context one must not lose sight of the possible backlash of unilateral measures, even without retaliation. Thus, for instance, one of the largest banks in Russia, Sperbank has a part of its capital in equities of which one third is owned by foreign investors from sanctioning countries. Thus when the bank cannot obtain foreign financing above 30 days for its clients, its profits are affected which in turn reduces the price of its shares and causes losses for their owners in source countries. The State also floats internationally 10 year euro-dollar bonds every year which are reserved for foreign purchasers.  These are heavily subscribed.  In addition, it auctions weekly other shorter term bonds in rubles which are subscribed also by foreign buyers. What in this context is the long-term meaning of rationing of foreign loans to the Russian economy?

Finally different data are provided by the media and the academic circles in source countries estimating the cost incurred through these measures by source countries, especially in the EU.

The most credible approximation is of 3.2 billion dollars a month according to a Working Paper by CEPII (Centre d'Etudes Prospectives et d'Informations Internationales).  These losses of over 100 billion dollars so far are borne essentially by the EU.

On the basis of an estimate of a maximum of 1% GDP adverse impact of the sanctions on Russia, the direct loss for the latter would be less and would amount to no more than 52-55 billion dollars so far. So the overall income loss is 155 billion dollars, three times the GDP of Ethiopia in 2015. Therefore, one can ask, although both parties to the dispute can internalize these losses, what sense does it make for both to forgo business opportunities of such an amount. One cannot explain furthermore why source countries have to suffer more from the sanctions than the country they target, while nevertheless leading in the process to a regrettable deterioration of the standard of living for the most vulnerable population groups in Russia?  

Conclusion

The wave of globalisation which has engulfed Russia has spread the value chain across the borders of Russia to Europe and to a lesser extent has stretched to the United States.  It is therefore becoming realistically impossible to disentangle the links of this value chain in a way that would introduce a clean cut of those links situated in Russia without weakening the rest of the chain through what has come to be known as “surgically accurate” measures.

These unilateral coercive measures are intended to serve as a deterrent to Russia in the context of the Ukraine crisis but, for they run the risk of being only a deterrent to the international business community while adversely affecting in Russia only those vulnerable groups which have nothing to do with the said crisis.

Targeted sanctions have been imposed on certain individuals so as to avoid unintended damage on innocent people.  The impact they have on due process and the rule of law has already been discussed in my previous reports to the Human Rights and the General Assembly of the UN.  Suffice it for me to assert here that priority attention should be given to ensuring immunity from unilateral measures for people elected to a parliamentary assembly, whose action have been sanctioned democratically by public suffrage and who are exercising their function exclusively on the basis of compliance with a national constitution.  Parliamentary immunity is recognised world-wide and that must be for good reason.

I have heard from official Ukrainian and Russian sources alike that the people of Crimea are those in the region who suffer most from the present crisis. They should not be made to pay collectively for what is a complex political crisis over which they have no control.  Nor can their sufferings serve as an argument to solve political differences. The Governments of Ukraine and Russia may wish Special Procedures, and I for one am ready to oblige, to visit and review the situation of human rights in Crimea as a result of unilateral coercive measures that prevail. A report would then be submitted to the Human Rights Council on the single issue as to how the population of Crimea in all its constituents groups can benefit from the legitimate enjoyment of their human rights.