A 2015 letter sent by the Permanent UN Representatives of Australia and
Singapore to the President of the Security Council reflects the broad commercial
impact of these UN sanctions on the shipping industry.
72 This letter, which was
subsequently circulated as a document of the Security Council, summarizes findings
of an academic conference held in Singapore entitled, ‘Managing Sanctions Risk in
the Maritime and Transportation Sector’. The letter highlights the impact of the UN
sanctions on the shipping industry and identifies the ways in which the sanctions
cause compliance challenges not only to importers and exporters, but also to
ancillary maritime transport services, such as freight forwarders, port operators,
insurers, and other financial service providers.
5 Conclusion
Recent UN sanctions demonstrate the contemporary maritime flavour of promoting
international peace and security. Given the apparent success of sanctions in engaging
diplomatic talks with both Iran and North Korea, these methods are likely to serve as
a model in the future. While economic sanctions have perhaps become an entrenched
part of the regulatory landscape, they do place commercial entities in the uncomfortable position of being involuntary tools of international policy. It is challenging
and expensive for shipping interests to track evolving regulations and to comply with
them by heavily scrutinizing each transaction they undertake. Frustrations arising
out of these efforts are understandable, but it must also be recognized that these
sanctions are a comparably benign alternative to a major military conflict, which, at
least in the short term, would be much more commercially disruptive.
At the time of this writing in early 2019, the sanctions landscape towards Iran is
particularly complex. When the JCPOA was agreed, many in the shipping industry
eagerly awaited ‘implementation day’ in which trade activities with Iran would
normalize. But this normalization has been slow. The Iran sanctions reportedly left
a ‘legacy’ in which commercial actors were hesitant to engage in business with Iran
even after the JCPOA was agreed due to fears of sanctions snap-back.
73 In 2018, this
was complicated further by the decision of the United States to withdrew from the
JCPOA. Although the move was unilateral, many companies involved in maritime
transport have ceased operations involving Iran over concerns that they would be
heavily penalized or banned from access to the US market if they failed to comply
with US law.
The approach towards North Korea appears to be more universally aligned.
During the past five years, the Security Council has imposed round after round of
sanctions designed to convince North Korea to abandon its nuclear weapons
72 Letter dated 15 January 2015 from the Permanent Representatives of Australia and Singapore to
the United Nations Addressed to the President of the Security Council, S/2015/28.
73 Salthouse (2017).
172
R. L. Kilpatrick
Singapore to the President of the Security Council reflects the broad commercial
impact of these UN sanctions on the shipping industry.
72 This letter, which was
subsequently circulated as a document of the Security Council, summarizes findings
of an academic conference held in Singapore entitled, ‘Managing Sanctions Risk in
the Maritime and Transportation Sector’. The letter highlights the impact of the UN
sanctions on the shipping industry and identifies the ways in which the sanctions
cause compliance challenges not only to importers and exporters, but also to
ancillary maritime transport services, such as freight forwarders, port operators,
insurers, and other financial service providers.
5 Conclusion
Recent UN sanctions demonstrate the contemporary maritime flavour of promoting
international peace and security. Given the apparent success of sanctions in engaging
diplomatic talks with both Iran and North Korea, these methods are likely to serve as
a model in the future. While economic sanctions have perhaps become an entrenched
part of the regulatory landscape, they do place commercial entities in the uncomfortable position of being involuntary tools of international policy. It is challenging
and expensive for shipping interests to track evolving regulations and to comply with
them by heavily scrutinizing each transaction they undertake. Frustrations arising
out of these efforts are understandable, but it must also be recognized that these
sanctions are a comparably benign alternative to a major military conflict, which, at
least in the short term, would be much more commercially disruptive.
At the time of this writing in early 2019, the sanctions landscape towards Iran is
particularly complex. When the JCPOA was agreed, many in the shipping industry
eagerly awaited ‘implementation day’ in which trade activities with Iran would
normalize. But this normalization has been slow. The Iran sanctions reportedly left
a ‘legacy’ in which commercial actors were hesitant to engage in business with Iran
even after the JCPOA was agreed due to fears of sanctions snap-back.
73 In 2018, this
was complicated further by the decision of the United States to withdrew from the
JCPOA. Although the move was unilateral, many companies involved in maritime
transport have ceased operations involving Iran over concerns that they would be
heavily penalized or banned from access to the US market if they failed to comply
with US law.
The approach towards North Korea appears to be more universally aligned.
During the past five years, the Security Council has imposed round after round of
sanctions designed to convince North Korea to abandon its nuclear weapons
72 Letter dated 15 January 2015 from the Permanent Representatives of Australia and Singapore to
the United Nations Addressed to the President of the Security Council, S/2015/28.
73 Salthouse (2017).
172
R. L. Kilpatrick