United Nations

A/50/361


General Assembly

Distr. GENERAL  

22 August 1995

ORIGINAL:
ENGLISH


Fiftieth session
Item 148 of the provisional agenda*


       REPORT OF THE SPECIAL COMMITTEE ON THE CHARTER OF THE
       UNITED NATIONS AND ON THE STRENGTHENING OF THE ROLE
                              OF THE ORGANIZATION

       Implementation of the provisions of the Charter of the
       United Nations related to assistance to third States
       affected by the application of sanctions under
Chapter VII of the Charter

Report of the Secretary-General


CONTENTS

  Paragraphs  Page

I.  INTRODUCTION .........................................1 - 33

II.  PROPOSALS AND SUGGESTIONS AIMED AT MINIMIZING THE
  EFFECT OF SANCTIONS ON THIRD STATES ..................4 - 383

  A.  Consultations with potentially affected States as
    regards the imposition of sanctions, and
    assessment of the potential impact of sanctions
    on them ..........................................  4 - 113

  B.  Monitoring the effect of sanctions ...............  12 - 175

  C.  Possibility of establishing a time-frame for the
    application of sanctions, based on their
    objectives .......................................  18 - 217

________________________

     *    A/50/150.


95-24605 (E)   060995
*9524605*/...

CONTENTS (continued)

  Paragraphs  Page

  D.  Improving the methods of work and ensuring the
    transparency of the procedures of the Security
    Council and the Sanctions Committees .............  22 - 298

  E.  Exemptions from sanctions regimes ................  30 - 389

III.  PROPOSALS AND SUGGESTIONS ON THE PROVISION OF
  ASSISTANCE TO THIRD STATES AFFECTED BY SANCTIONS .....39 - 8011

  A.  Establishment of guidelines for the consideration
    of applications for assistance, including the
    assessment of special economic problems faced by
    third States as a result of sanctions ............  39 - 4911

  B.  Establishment of a trust fund ....................  50 - 5615

  C.  Economic assistance by international financial
    institutions .....................................  57 - 6716

  D.  Bilateral economic assistance ....................  68 - 7219

  E.  Other forms of assistance ........................  73 - 7621

  F.  Secretariat arrangements .........................  77 - 8022
I.  INTRODUCTION


1.   The General Assembly,  by resolution 49/58  of 9  December 1994 invited
the  Secretary-General   to  submit  a  report   on  the   question  of  the
implementation  of the  provisions of  the  Charter  of the  United Nations,
including Article  50, related to  the special economic problems confronting
States  and  arising from  the  carrying  out  of  sanctions mandated  under
Chapter VII of the Charter, analysing  the proposals and suggestions on this
issue contained  in the report  of the Special  Committee on  the Charter of
the  United  Nations   and  on  the  Strengthening   of  the  Role  of   the
Organization, on  its 1994  session, giving  due attention  to the  possible
practical ways and means of carrying them out.

2.  At its 1995 session, 1/ the Special Committee:

  (a)  Recalled the above-mentioned invitation;

  (b)   Considered  that  the  Secretary-General might  usefully  take  into
account,  in preparing  the requested report, the  suggestions and proposals
contained in the report of the Special Committee on its 1995 session;

  (c)   Invited  the General  Assembly to consider  the establishment  of an
openended working group  within the framework of the Sixth Committee, at the
fiftieth session  of the General  Assembly, with  a view to  considering the
issue of the implementation  of the provisions of  the Charter of the United
Nations related  to assistance to third  States affected  by the application
of  sanctions  under  Chapter VII  of  the  Charter,  on  the  basis of  the
Secretary-General's report.

3.   Further  to the  invitation  contained  in the  above-mentioned General
Assembly  resolution  and  in  the  report  of  the  Special  Committee, the
Secretary-General  has  prepared  the  present  report  which  reviews   the
proposals  and suggestions made  or referred  to at  the two above-mentioned
sessions of the Special  Committee.  The  report also analyses, as the  case
may  be, the reaction that  those proposals and  suggestions elicited in the
Special Committee and  suggests, where appropriate, possible practical  ways
to carry them out, should States decide to adopt them.

             II.  PROPOSALS AND SUGGESTIONS AIMED AT MINIMIZING THE
                  EFFECT OF SANCTIONS ON THIRD STATES

               A.  Consultations with potentially affected States
                   as regards the imposition of sanctions, and
                   assessment of the potential impact of sanctions
                   on them

4.  At the  1994 session of the  Special Committee, the  following paragraph
was  suggested for  inclusion in  a  General  Assembly resolution  (see also
paras. 13, 39, 50 and 73 below):

     "The General Assembly,

    "...

  "8.  Also  requests the Security Council  to consider the establishment of
a permanent mechanism for consultation between  the Council and those Member
States  most likely to  be affected  as a result of  their implementation of
Security Council resolutions imposing sanctions;" 2/

5.   In favour of the proposal, the point was  made that, if adopted, States
called upon to bear  an inordinate burden of the sanctions would have  early
warning  and a chance  to be  consulted beforehand.  It  was also noted that
such a preventive approach would be preferable to ex  post facto action.  As
the  goal of  sanctions was  not  to harm  third States,  due  consideration
should be given to their situation before applying sanctions.

6.   It  was further  pointed out that  while military action  was urgent by
nature and did  not admit delays,  economic sanctions  took time  to put  in
place  and were  slow  to  produce results,  so  that the  holding of  prior
consultations would not adversely affect their effectiveness.

7.   On  the other  hand, the  point was also  made that  a decision  of the
Security Council to apply sanctions could  not be subjected to any condition
not provided for in the Charter.  In  the maintenance of international peace
and security, it was  stated, the Council  must be able to act  swiftly, and
urgency  might  make it  difficult or  impossible  for it  to conduct  prior
consultations.

8.  In this connection, the Secretary-General  notes that, under Article  41
of the Charter, the Security Council may decide to  employ various mandatory
measures, including economic sanctions, in order  to modify the behaviour of
a party  that  represents a  threat  to  international peace  and  security.
While all Members of the United Nations must  apply such measures, the  cost
for a  few States that happen to be neighbours or  major trading partners of
the target State may prove to be inordinately high.

9.  In "An Agenda for  Peace" (A/47/277-S/24111), the Secretary-General  had
proposed that States suffering collateral damage from the sanctions  regimes
should be entitled  not only to  consult the  Security Council  but also  to
have  a  realistic  possibility  of  having  their  difficulties  addressed.
Subsequently, in the "Supplement to An  Agenda for Peace" (A/50/60-S/1995/1,
para. 75), the Secretary-General suggested the establishment of a  mechanism
to carry out the following five main functions:

  "(a)   To  assess, at  the request  of  the  Security Council,  and before
sanctions  are imposed, their potential impact on the  target country and on
third countries;

  "(b)  To monitor application of the sanctions;

  "(c)  To measure  their effects in order to enable the Security Council to
fine-tune  them  with  a  view  to  maximizing  their  political  impact and
minimizing collateral damage;
    "(d)   To ensure the delivery  of humanitarian  assistance to vulnerable

groups;

  "(e)   To  explore ways  of assisting  Member  States  that are  suffering
collateral damage  and to  evaluate claims  submitted by  such States  under
Article 50."

10.  Further to the  above proposals, the Security Council, when considering
the imposition  of  a sanctions  regime,  may  undertake consultations  with
third States most likely  to be affected as  a result of  the implementation
of the mandatory measures.  Such consultations would be an essential  factor
in ensuring  the effectiveness of  the sanctions by taking  into account the
specific concerns of Member States.  The Council may  also wish to take into
consideration the  views  of relevant  intergovernmental organizations  with
regard to the scope and the modalities of the proposed sanctions regime.

11.   Experience gained from  the application of sanctions suggests that the
Security Council would benefit from an  assessment of prevailing  conditions
in the  target State and  its economic links,  including an  analysis of the
predictable effects  of  the intended  measures  on  third countries.    The
Secretariat would  undertake  such  an analysis  and assessment  drawing  on
expertise available  not only  in the Organization  itself but  also in  the
international financial  institutions and other  programmes and agencies  of
the  United Nations system.   If  such expertise were  not readily available
within the United Nations system, expert  advice from external sources would
have to be sought.  In this respect,  it may be recalled that the guidelines
of the  Sanctions  Committee  concerning  the  Libyan  Arab  Jamahiriya  had
envisaged the assistance of experts from  outside the United Nations system,
whenever necessary.   Such external expertise has  also been utilized by the
United Nations in relation to the Iraqi and Yugoslav sanctions regimes.


B.  Monitoring the effect of sanctions

12.   At the 1995 session of the Special Committee, the proposal was made to
establish  a permanent  mechanism  for consultations  between  the  Security
Council  and potentially  affected third  States,  which  might include:   a
preliminary  assessment  of sanctions  or a  pre-feasibility study  based on
objectivity and  cost-effectiveness in terms  of burden-sharing; regimes  of
exemption and  criteria for  suspension; and  effective ways  and means  for
addressing special economic problems arising  from sanctions implementation.
In this  connection, at the 1994  session of the  Special Committee, it  had
been  proposed  that the  Council  pay  special  attention  to the  problems
arising  from  the disruption  of  communication  and  transportation  lines
caused  by the  implementation  of sanctions,  as well  as  to the  need  to
preserve   existing  infrastructural   links,   taking   into  account   the
unnecessary  adverse effects  of sanctions  as  mentioned  in section  IV of
General Assembly resolution 47/120 B of 20 September 1993.

13.   Also  at the 1994  session and bearing in  mind the need  to avoid the
unnecessary  adverse  effects of  sanctions,  the  following  paragraph  was
suggested for inclusion in a  General Assembly resolution (see also paras. 4
above and 39, 50 and 73 below):
      "The General Assembly,

    "...

  "3.   Requests the  Security Council  to  ensure that  its committees  and
other  bodies entrusted with  the task  of monitoring  the implementation of
sanctions take  into account,  in discharging  their mandates,  the need  to
avoid hardship  consequences for  other Member  States without prejudice  to
the effectiveness of such sanctions;" 2/

14.  Furthermore, at the 1995 session of  the Special Committee, support was
expressed for the Secretary-General's proposal contained in his  "Supplement
to an  Agenda for Peace" to  establish a mechanism,  already referred to  in
paragraph 9  above (particularly  subpara. (c)),  and paragraphs  15 and  77

below.

15.   It is  the view  of the  Secretary-General that  this mechanism  would
enable a comprehensive impact assessment to be undertaken at the request  of
the  Security Council, following the imposition of sanctions, with a view to
making necessary  adjustments to the sanctions,  in order  to maximize their
political  impact and  minimize  their  collateral effects.   Ideally,  such
monitoring of the effects  of the sanctions should take place on an  ongoing
basis, so  as to ensure  that necessary modifications  are made  in a timely
and regular  fashion.  Under  the relevant resolutions  of the Council,  the
general  task  of  monitoring  the  application  of the  mandatory  measures
imposed by the Council  is entrusted, as a  rule, to the  relevant sanctions
committees which  are serviced by the  Security Council  Affairs Division of
the  Department  of  Political  Affairs.    The  Council  could  entrust its
sanctions committees  with the  additional task  of assessing the  political
and  socio-economic impact of the  sanctions with a view to making necessary
recommendations  to  the  Council.    The   addition  of  this   substantive
functioning would, however, require a strengthening of the Security  Council
Affairs Division.

16.  Because  of the need for  specialized expertise, not readily  available
in the United Nations,  in the recent  cases of sanctions against Haiti  and
the   Federal  Republic   of  Yugoslavia   (Serbia  and   Montenegro),   the
Organization of American States (OAS) and  the European Union (EU),  jointly
with  the Organization for  Security and  Cooperation in  Europe (OSCE), the
latter  two of  which through  a  network  of sanctions  assistance missions
located in  States neighbouring the Federal  Republic of Yugoslavia  (Serbia
and   Montenegro),  have   played  an  important  role   in  monitoring  the
implementation  and impact  of sanctions.   In  order to  better support the
various  sanctions  committees,   the  Secretariat  should  draw  upon   all
available  expertise in the  United Nations  system and  seek outside expert
advice on matters relating to the implementation of sanctions.

17.  For the  most severely affected third  countries, the task of assessing
and verifying  actual losses and additional  costs incurred  by the affected
country, as well as identifying particular  areas of assistance, would  best
be served by special fact-finding missions being dispatched by or on  behalf
of  the Security Council or  its relevant sanctions committees.  The Council
could draw upon such mission reports at the  time it reviews the  sanctions.
In  the cases  of the  sanctions  against Southern  Rhodesia and  Iraq, such
missions visited Zambia,  Mozambique and Jordan, respectively (see  S/26705,
pp. 7-12, 27 and 28).
 
                C.  Possibility of establishing a time-frame for
                    the application of sanctions, based on their
                    objectives

18.   At the 1995 session of  the Special Committee, it was suggested that a
solution  to the  question of assistance  to affected third  States could be
found  by means  of improving  the  mechanisms  and criteria  concerning the
implementation  and lifting of sanctions.   In this  connection it was noted
that sanctions should have clearly defined  objectives and should be  lifted
once  those objectives  were met,  so as  not to  prolong  unnecessarily the
adverse effects on third States and on innocent civilians.

19.  The Secretary-General  has underlined in  the "Supplement to An  Agenda
for Peace" (A/50/60-S/1995/1, para. 68)  the importance of  clearly defining
the objectives  for  which specific  sanctions  regimes  are imposed.    The
SecretaryGeneral  noted  that such  objectives  are  sometimes  not  clearly
defined or  change over  time.   This makes  it difficult  for the  Security
Council to determine  when the objective  can be considered as  achieved and
sanctions lifted.   The President  of the  Security Council, in  a statement
made  on  behalf  of  the  Council  on  22  February  1995  (S/PRST/1995/9),
supported  the views expressed  by the  Secretary-General, and  stated:  (a)
that the  object of  economic sanctions  was to  modify the  behaviour of  a
country  or party  which represented  a  threat  to international  peace and

security;  (b) that the  steps demanded  of the country or  party subject to
sanctions  should  be clearly  defined  by  the  Council; and  (c)  that the
sanctions regime should be subject to periodic review,  and should be lifted
when  the objective of  the appropriate  provisions of  the relevant Council
resolutions were achieved.

20.  A number of Member States have proposed that  when the Security Council
decides to impose  sanctions it should, at  the same time,  define objective
criteria  for  determining that  their  purpose  has  been  achieved.   This
function  has to be seen in the light of the power of the Council, under the
Charter, to  address on a case-by-case  basis situations  falling within the
purview  of Article  39  of the  Charter,  and  to  lay out  objectives  and
conditions which have to be met by the target State or party.

21.  It is recognized that there is a need for  monitoring and review of the
situation  which resulted  in the  imposition  of  the sanctions.   Periodic
reviews should be  made an integral component of  a sanctions regime.   Such
reviews have  been provided  in  the  case of  sanctions against  Iraq,  the
Libyan   Arab  Jamahiriya  and,  most  recently,  the  Federal  Republic  of
Yugoslavia (Serbia  and  Montenegro). Resolutions  imposing sanctions  could
explicitly  make  provision for  periodic  reviews,  rather than  having the
reviews on  an ad  hoc or  "continuous" basis.  Reviews by  the Council  are
normally conducted in the  course of informal consultations,  with a view to
assessing the level  of compliance of  the target  State or  party with  the
obligations and  conditions stipulated  in  the relevant  resolutions.   The
work of the Council  would benefit from reports submitted by the  Secretary-
General, at the request of the  Council, containing an impartial  assessment
of the effectiveness  of the sanctions and  their impact.  The strengthening
of  the capacity  of the  Secretariat for  monitoring and  assessment of the
sanctions would make possible such timely and reliable reports.
 
      D.  Improving the methods of work and ensuring the transparency
          of the procedures of the Security Council and the sanctions
          committees

22.  At the 1994  session of the Special Committee,  it was argued  that the
current method  of work  of the Security  Council, which  relies heavily  on
closed informal  consultations, prevents  potentially  affected States  from
exercising their rights  under Article 50  of the Charter at  a sufficiently
early  stage.  It was suggested  that those States  should be invited by the
Council  to take part  in the consultations  relating to  the institution or
review of sanctions.

23.   The above-mentioned  suggestions, however,  gave  rise to  objections.
Thus,  it  was  said  that  the   sensitive  issues  within  the   sanctions
committees' mandate  were more  appropriately discussed  in closed  meetings
and that  suggestions of a lack of  transparency in the work of the Security
Council largely ignored  the realities of the  situation.  There was  really
no lack  of knowledge or  information on the  part of any  delegation as  to
what the Council  was contemplating before it  took action and Member States
were not denied the opportunity to make their views  known to the Council at
any time.

24.   At the  1995 Special Committee's  session, 1/  the following  specific
proposals  were also  made:   that a press  release be issued,  as a general
rule,  after  each meeting  of  each  sanctions  committee;  that a  monthly
edition of the status of  communications under the  "no-objection" procedure
be prepared  by the  Secretariat in  respect of  the Committees  established
under  Security Council  resolutions 661  (1990) of  6 August  1990 and  724
(1991)  of 15  December 1991;  that the Secretariat  also prepare  a monthly
list of  favourable decisions by each  sanctions committee;  that the report
of the Council to the General Assembly contain more information on the  work
of  such committees; that  consideration be given  to the  publication of an
annual  report  by each  committee;  and that  the  summary  records  of the
committees be issued in a more timely fashion.

25.   The Secretary-General  notes that,  before imposing  sanctions on  the
target  State,  the  Security  Council  may  decide to  invite  neighbouring
States, as well as major trade partners of  the target State, to participate
collectively or  individually in its informal  consultations, so  as to give
them  the possibility  to apprise the  Council of their  concerns and submit
specific proposals.

26.  In the course of the discussions in the  Special Committee, a number of
States raised objections to any arrangements  which might conflict with  the
need  of  the  Council  to  act  swiftly  in  urgent situations.    In  this
connection,  it may  be  noted that  in cases  in  which the  imposition  of
sanctions represents  an immediate  reaction to  a sudden  event, as in  the
case of  Iraq's invasion  of Kuwait,  the suggested  consultations with  the
affected States could take place immediately  after the sanctions have  been
imposed.

27.   The  monthly  circulation of  the tentative  forecast of  the Security
Council's programme of work, including  a list of forthcoming reports of the
SecretaryGeneral  and reviews  of  existing sanctions  regimes,  would  help
affected  States to  plan  in advance  the submission  of  relevant  data or
communications to the Council.
  28.   The  Security Council  could  also  mandate the  relevant  sanctions
committees  and their working  groups concerning  Article 50  to monitor and
report  on  the response  of  the  international  community  to the  appeals
addressed  by the Secretary-General  for assistance  to the applicant States
(see also, in this connection, para. 43 below).

29.   With a  view to  further streamlining  the working  procedures of  the
sanctions committees and  promoting greater  transparency in the conduct  of
their work, the President of the Security Council  on 29 March 1995 outlined
significant  measures   to  be   implemented  by   the  various   committees
(S/1995/234).   In  this regard,  it  should be  noted that  the  respective
committees, drawing  on their own experience  as well as from the experience
of  other sanctions  committees,  have  also initiated  certain measures  to
simplify their  procedures of work and  promote more  transparency.  Without
prejudice to the effectiveness of the sanctions imposed  by the Council, the
committees  have attempted  to minimize  the hardship consequences  on other
Member States  by taking steps to  facilitate the  expeditious processing of
applications for  shipments of allowable  goods, particularly from  affected
States.     The   sanctions   committees  have,   when   appropriate,   made
recommendations to the Security Council to amend existing sanctions  regimes
in order to respond to certain, mostly humanitarian, emergencies.


E.  Exemptions from sanctions regimes

30.  In  the course of the 1994 and 1995 sessions of  the Special Committee,
it was suggested that, when appropriate,  the Security Council might  decide
to  allow some  exceptions from  the application of  sanctions in  favour of
States  most likely to  be affected  by their  implementation, provided that
those  exceptions did not run counter to the object  of the sanctions.  When
necessary, a  mechanism for  international control  could be  introduced for
this purpose.

31.  It  was noted in this connection  that the question of sanctions should
not be  looked  at  in isolation.    Due  account  should be  taken  of  the
enforcement and implementation costs for  the United Nations.  Consideration
should be  given in  any  study  related to  Article 50  of the  Charter  to
introducing in  the administration of sanctions  regimes an  element of cost
recovery from those making applications to a sanctions committee.

32.   The suggestion  was also  made that  the sections  of the  Secretariat
dealing directly with sanctions, including the consideration of  submissions
of  affected  third  States,  should  be  reinforced  as  envisaged  by  the
President  of the  Security Council  in his  statement of  22 February  1995
(S/PRST/1995/9) (see, in this connection, para. 78 below).

33.  As regards  this group of  proposals, the Secretary-General notes  that
the  practice, so  far, has  been for  the Security  Council itself  or  the
relevant sanctions committees to grant  partial or limited  exemptions under
exceptional circumstances,  on a case-by-case  basis, and under  appropriate
forms of monitoring or control.

 34.   Indeed,  the Security  Council  has  consistently made  provision for
limited exemptions permitting certain transactions with  the target State in
order to meet the essential humanitarian  needs of its civilian  population.
Furthermore, in  the case  of the sanctions  against Haiti,  in addition  to
humanitarian supplies,  "trade in informational  materials" was exempted  by
Security Council resolution  917 (1994) of  6 May  1994 in  the interest  of
ensuring  the free flow of information.   In its resolution 967 (1994) of 14
December   1994,   the    Council   also   authorized,   for    humanitarian
considerations,  the export of  diphtheria anti-serum  for 30  days from the
Federal Republic  of Yugoslavia (Serbia and  Montenegro) as  an exemption to
the mandatory sanctions against that country.   Notwithstanding the existing
arms embargo, the  Council in its  resolution 1005  (1995) of  17 July  1995
authorized  the  supply  to  Rwanda of  appropriate  amounts  of  explosives
intended  exclusively   for  use   in  established  humanitarian   de-mining
programmes.

35.     Furthermore,  the   Security  Council   has  authorized   designated
transactions or  services for  specific commodities  or products of  crucial
importance   to  neighbouring   States  or   the  maintenance   of   certain
transportation or communication links.  For  example, by its resolution  883
(1993) of  11  November 1993  concerning  the  Libyan Arab  Jamahiriya,  the
Council exempted from  the freeze  specific funds derived  from the sale  or
supply  of any petroleum  or petroleum  products, including  natural gas and
natural gas products,  or agricultural products or commodities,  originating
in the Libyan  Arab Jamahiriya and exported therefrom.   In the case of  the
Iraqi  sanctions,  the  relevant committee,  in  view  of  Jordan's  special
economic problems,  took note in May 1991 of Jordan's request for resumption
of imports of oil  and oil derivatives  from Iraq, pending any  arrangements
that could be made to obtain  supplies of oil from other  sources and on the
understanding that such Iraqi oil exports were subject  to the provisions of
Council  resolution 692 (1991)  of 20  May 1991.  With  a view to preserving
the  safety of international navigation on the River Danube, the Council has
exceptionally allowed vessels of the  Federal Republic of Yugoslavia (Serbia
and Montenegro) to  use the locks  of the Iron  Gates I system  on the  left
hand bank  of the  Danube while those  on the right  hand bank of  the river
underwent urgent repairs (Security Council resolution  992 (1995) of 11  May
1995).  In addition, the sanctions  committee concerning Yugoslavia has,  on
several occasions,  authorized, as an  exemption, the supply of  fuel to the
Federal Republic of  Yugoslavia (Serbia and Montenegro) for ice-breakers  in
connection with navigation on the Danube  and the transit of electric energy
through that country to Albania.

36.   The authority  to determine  the circumstances  under which exemptions
from the measures  decided by  the Security Council  can be granted  without
compromising  the  objective  of  the  sanctions  resides  solely  with  the
Council.   As  to the form in  which exemptions may be  granted, the Council
could decide  on such  an exemption in  the resolution by  which it  imposes
sanctions, or by a  subsequent resolution.  The Council could also  delegate
to the  relevant  sanctions committee  the authority  to grant  or renew  an
exemption, especially  if the conditions have  been stated  in a resolution.
The Council may adopt a flexible  approach, initially granting the exemption
for a  short period of  time, and  renewing or extending it  if the intended
results were being achieved.  On the other hand, the Council could  withdraw
an earlier exemption or tighten the  monitoring arrangements to ensure  that
the effectiveness of the sanctions is not undermined.

37.   In case  an  exemption is  granted, the  State or  States in  question
should report at specific intervals to the Security Council  or the relevant
committee on the implementation of the  exemption, providing details such as
quantities  of  goods  traded,  revenues  involved,  the  volume  of traffic

through authorized transportation  and communication links, the progress  in
solving  the  situation   which  determined  the  initial  granting  of  the
exemption, violations detected and measures taken to prevent them.

38.    The granting  of exemptions  and  their monitoring  would require  an
enhanced capacity  on the  part of  the Secretariat,  particularly when  the
Security Council or the  relevant sanctions committee request the Secretary-
General to  carry out ad hoc  missions to verify  the implementation of  the
exemptions and submit  periodic reports.   In addition, the  Council or  the
sanctions  committees  could  seek  the assistance  of  regional  and  other
intergovernmental organizations.


                III.  PROPOSALS AND SUGGESTIONS ON THE PROVISION
                      OF ASSISTANCE TO THIRD STATES AFFECTED
                      BY SANCTIONS

            A.  Establishment of guidelines for the consideration of
                applications for assistance, including the assessment
                of special economic problems faced by third States as
                a result of sanctions

39.  At the  1994 session of the Special Committee, the following  paragraph
was  suggested for  inclusion in  a  General  Assembly resolution  (see also
paras. 4 and 13 above, and 50 and 73 below):

    "The General Assembly,

    "...

  "7.   Requests  the  Security Council  to  consider  preparing  a  set  of
guidelines and/or  procedure  to be  applied  in  the consideration  of  the
applications  by the affected  countries for  assistance, in  the context of
Article 50.  The guidelines may include, inter alia:

  "(a)  The right to approach the Security Council for assistance;

  "(b)    Consideration,   without  exception   and  undue  delay,  of   all
applications for assistance under Article 50;

  "(c)  Rendering non-preferential and fair treatment to all applications;

  "(d)   Inviting the  affected Member  States to  its meetings  and to  the
meetings of its subsidiary bodies;

   "(e)  Procedure and methodology for  determining and evaluating losses as
a result of the imposition of sanctions;" 2/

40.   At the same session,  it was suggested that  the practical problem  of
the assessment of the  actual damage suffered by third States as a result of
the  imposition of  sanctions should  be  addressed  and that  a methodology
should  be developed to that end.  Such a methodology could not be developed
in the abstract and  would have to be  based on  a technical study aimed  at
determining  the criteria  to be  applied, which  should be  carried out  by
international financial  institutions, the  opinion of  Member States  being
also  solicited.  It  was also  proposed that the  Secretary-General, in his
capacity  as  Chairman of  the  Administrative  Committee  on  Coordination,
should be requested to  undertake an in-depth study of the methodology to be
used in  assessing damage  caused to third  States and that  the role  which
could be played by the Economic and Social Council should also be explored.

41.  As regards these  proposals, the Secretary-General notes that, in order
to permit the more effective and  prompt consideration of applications under
Article  50 by the respective  sanctions committees, a set  of guidelines or
procedures  would be useful.   Such  guidelines or  procedures should cover,
inter alia, the following:

  (a)  The right to approach the Security Council;

  (b)   Expeditious consideration of  all applications  for assistance under
Article 50;

  (c)  Rendering non-preferential and fair treatment to all applications;

  (d)   Inviting  the affected  Member States  to its  meetings and  to  the
meetings of its subsidiary bodies;

  (e)  The methodology for determining and evaluating losses as a result  of
the imposition of sanctions.

42.   The guidelines should also include provision  for the Security Council
to  undertake   periodic  reviews  of  the  response  of  the  international
community to the appeals  addressed by the  Secretary-General for assistance
to  the applicant  States.    To that  end  the Council  could  request  the
Secretary-General, or  the sanctions committees,  to monitor the  assistance
provided  to affected  States. The  guidelines  may  also contain  a general
statement to  the effect  that the  resolutions imposing  sanctions, or  the
recommendations issued  in response to  applications under  Article 50, will
include a  request to  States and  international agencies to  report to  the
Secretary-General  on  the  assistance provided.    Such  reports  would  be
consolidated for review and consideration by the Security Council.

43.   In  this connection,  the  Secretary-General,  in his  previous report
(A/48/573-S/26705, para. 159), observed that it  was essential that both the
General Assembly and  the Economic and  Social Council join and  support the
appeal  by the  Security  Council,  in the  context  of Article  50  of  the
Charter,  and its  follow-up  by  the  Secretary-General for  assistance  to
States  confronted with special economic problems arising  from the carrying
out of preventive or enforcement measures  imposed by the Security  Council.
He also  observed that  that would emphasize  and enhance the  commitment of
the international community to  respond positively and  expeditiously to the
requests  for  assistance  in  such  circumstances.    Moreover,  given  the
functions  and  powers vested  in  the  Economic  and  Social Council  under
Articles  63  and  64  of  the  Charter,  it  might  play,  within  its  new
structures, a useful  coordination role  in relation to relevant  activities
of  the specialized  agencies and  other  components  of the  United Nations
system.   In  the Secretary-General's  view,  that would  give a  timely and
practical  meaning to  cooperation  between  the Security  Council  and  the
Economic and Social Council, as provided under Article 65 of the Charter.

44.    As  regards  the  methodology   for  impact  assessment,  namely  for
evaluating losses and special  economic problems faced by  third States as a
result of sanctions, it  should be noted  that, in practice, the essence  of
the  consultation  process  between  the Security  Council  and  an affected
State, under  the provisions  of Article  50 of  the Charter,  has been  the
examination  by the  Council or its  subsidiary body of  the State's request
for assistance, based on  the State's own estimates of the losses and  costs
incurred by it as a result of carrying out of the sanctions mandated by  the
Council.  Despite numerous cases of past  and current application of Article
50,  in connection with  sanctions against  Southern Rhodesia,  Iraq and the
Federal Republic of Yugoslavia (Serbia and  Montenegro), there is no uniform
and internationally  recognized  methodology for  identifying and  assessing
the  special  economic   problems  of  non-target  States  affected  by  the
implementation of  mandatory economic sanctions.   Thus, affected  countries
as  well   as  the  funding   agencies  have   performed  separately   their
quantitative assessments, often applying  different standards and  criteria.
As  a  result,  the available  evaluations differ  substantially  in timing,
coverage and scope. Moreover, the range  of remedial measures formulated  in
the  process of such examination  and the level  of the follow-up assistance
activities, have also been viewed differently  by the affected countries and
the donor community.

45.   Naturally, the actual magnitude of the sanctions collateral damage may

vary  substantially from case  to case.   Among  various affected countries,
those   nations   that   are   most   contiguous   -geographically    and/or
economically - to the  sanctioned State tend to  experience the most  severe
hardships  as a result of  the sanctions.   In such  instances, the tasks of
undertaking,  in  cooperation with  the  Government  concerned,  a  reliable
assessment  of  the affected  country's  needs  and  suggesting  appropriate
remedies  can be  best  served  by  an ad  hoc  United Nations  inter-agency
mission  being  dispatched on  the  spot.    For example,  in  the  case  of
sanctions  against  Southern Rhodesia,  such  missions  visited  Zambia  and
Mozambique; and in the  case of sanctions  against Iraq, such a mission  was
sent to  Jordan.   The missions' reports  submitted to the  Security Council
(and/or the Economic and Social Council)  provided detailed analyses of  the
specific country situations and served as  an important basis for  action on
behalf of those affected countries.

46.  However, as  sanctions have become a  more commonly used instrument for
peace and  security, a  larger number of  States have been  affected by  the
implementation  of the  United Nations-imposed  sanctions and  have  invoked
Article 50 of  the Charter.  For this reason, it is essential  to identify a
set of general  principles or criteria  for the purpose  of impact  analysis
and  collateral damage  assessment on  a  more standardized,  comparable and
mutually acceptable  basis.   In  turn,  an  accurate impact  assessment  is
necessary  both to design  the appropriate  domestic policy  response and to
seek the adequate external assistance.   As regards the latter,  the primary
task should be, therefore, to develop a truly  common methodology which will
be used  by the affected  States in preparing  the explanatory material  for
their  requests  for assistance  as well  as by  the United  Nations system,
including  the  international financial  institutions,  in  considering  the
provision of assistance.

47.   Most  recently, methodological  issues  and  data problems  of  impact
analysis were addressed in several United Nations publications 3/  prepared,
in  particular, by the  Department for  Economic and  Social Information and
Policy Analysis of the  Secretariat, as well as  special studies carried out
by the International Monetary Fund (IMF)  and the United Nations Development
Programme (UNDP).   Yet,  no substantive  intergovernmental or  inter-agency
discussion  on methodology of  impact assessment  has thus  far taken place.
Nevertheless,  there appears to  be an  emerging consensus  on several basic
principles or guidelines for identifying  and assessing the special economic
problems of  States arising  from the  implementation by  them of  sanctions
imposed under Chapter VII of the Charter.

48.  In order  to ensure its  system-wide origin and application, a  general
methodology  could be  elaborated, as  previously suggested  (see  A/48/573-
S/26705,  para. 155),  by an  ad hoc  expert body  to be  convened under the
auspices  of  the   Administrative  Committee  on  Coordination,  with   the
participation of the  United Nations, including  the Department for Economic
and Social Information  and Policy Analysis, IMF,  the World Bank, UNDP  and
other   competent  organizations  of  the  United  Nations   system.    Upon
completion, the  proposed methodology should be  submitted to Member  States
whose political  support both at the United Nations intergovernmental bodies
(e.g.,  the General  Assembly, the  Security  Council  and the  Economic and
Social Council) and in the governing bodies of the  agencies concerned would
be  necessary for  its universal  acceptability and  effective  application.
Subsequently, UNDP could  provide, through its resident coordinator  system,
technical assistance to  interested States with  regard to the dissemination
and utilization  of the methodology.   When needed, the  services of special
consultants or  small expert missions  could also be  made available  to the
most severely affected countries to assist  them in quantifying their losses
and costs resulting from the implementation  of sanctions, according to  the
established methodology.

49.  The credibility of the process is  predicated upon the availability  of
reliable   and  up-to-date   macroeconomic  data   concerning  the  affected
countries. As this has not always been the case, data problems have  imposed
considerable limitations  on the evaluation  of claims  submitted by several

countries in question.   For this reason,  the proposed course of action  in
developing a common  methodology of impact assessment should be supplemented
and supported  by furthering cooperation on  a system-wide  basis and beyond
in the area of  statistics.  As a  result, this  would not only improve  the
collection and processing  of statistical information, but also upgrade  the
quality of impact assessment by the affected countries.

 B.  Establishment of a Trust Fund

50.  At the  1994 session of the Special Committee, the following paragraphs
were suggested  for inclusion  in a  General Assembly  resolution (see  also
paras. 4, 13 and 39 above and 73 below):

    "The General Assembly,

    "...

  "1.    Decides  to  establish  a  trust  fund,  consistent  with  relevant
resolutions  of  the Security  Council, to  assist financially  third States
affected by the imposition of sanctions  under Chapter VII; contributions to
the fund shall consist of:

  "(a)  A percentage of assessed contributions;

  "(b)  Voluntary contributions from Member  States and from funds available
to international organizations  both inside and  outside the  United Nations
system,  in particular  the  international financial  institutions  and  the
regional development  banks, as well  as non-governmental organizations  and
private institutions and individuals;

  "2.  Invites the Security Council:

  "(a)  To determine the  level of the Trust Fund  for each particular  case
of  the imposition  of  sanctions  under Chapter  VII of  the Charter  (on a
caseby-case basis), in accordance with the  submissions made by the affected
Member States;

  "(b)   To  manage     and operate  the  Trust  Fund where  appropriate  in
consultation  with   the  Secretary-General,  or   any  other  body   deemed
appropriate  by the  Security Council  for  this  purpose, and  the affected
Member  States should be  able to approach  this body  without any exception
for redressal of their problems;

    "...

  "4.   Invites the  Secretary-General to  prepare draft  guidelines on  the
operation of the Trust Fund and to present these guidelines to the  Security
Council for further consideration and adoption;

  "5.  Resources  from the Trust Fund should  be utilized to provide  direct
financial assistance, inter  alia, through bilateral or multilateral  credit
lines, as well as to finance technical  cooperation programmes in support of
the affected countries, in the context of Article 50;".

51.   In  favour  of the  proposal, the  view was  expressed in  the Special
Committee that the idea of a  fund was not new; it had found expression, for
instance, in the establishment in 1991  of the Global Environment  Facility,
which had been set  up to address  specific environmental problems.  It  was
noted that  a proposal  of this  nature provided  a better  response to  the
problems  of   countries  affected  by  the  imposition  of  sanctions  than
bilateral   assistance  or  existing  financial   institutions,  which  were
established for different purposes.  It was also pointed out, in support  of
the proposal, that the  right to consult  provided for in Article 50  of the
Charter was  not an end in  itself and was intended  by the  drafters of the
Charter to have tangible and concrete effects.

52.   On the  other hand, the  view was also  expressed that  the problem of
assistance to  third States  was very  complex  and of  such magnitude  that
requests for  assistance were bound  to exceed by  far the  resources of the
proposed  fund. It was important  to keep in  mind that  it was essential to
respect  the  basic  provisions  of  the  Charter  and  that  there  was  an
unqualified obligation  to apply  mandatory sanctions.   It  was also  noted
that the concept of compensation  for any economic damage  consequent on the
imposition of sanctions was not found in the Charter.

53.   The draft  resolution referred  to in  paragraph 50  above contains  a
proposal for the  General Assembly to establish a  trust fund that would  be
funded  by a percentage  of assessed  contributions as well  as by voluntary
contributions.  The draft resolution would  also invite the Security Council
to determine the  level of the  trust fund  for each particular case  of the
imposition of sanctions under Chapter VII of the  Charter, and to manage and
operate  the  trust  fund   where  appropriate  in   consultation  with  the
Secretary-General.

54.   The establishment  and management  of trust funds are  governed by the
Financial  Regulations  and   Rules  of  the   United  Nations  and  require
observance of  the Staff  Regulations and Rules  of the  United Nations  and
other   policies  or   procedures  promulgated   by  the  Secretary-General.
Contributions to trust  funds are made on a  voluntary basis to finance  the
activities for which  the fund was  established.   It is therefore  stressed
that  if a  trust  fund  is to  be established,  the principles  of assessed
contributions,  as  proposed in  operative  paragraph  1  (a)  of the  draft
resolution, do not apply.

55.   The administration of  trust funds  falls under the  responsibility of
the Secretary-General.   Should  the General  Assembly decide  to adopt  the
proposal  referred  to  in  paragraph  50  above,   responsibility  for  the
establishment and management  of the trust fund  should be entrusted to  the
Secretary-General in  accordance with terms of  reference as  decided by the
Security Council.

56.   It  is  also the  view  of the  Secretary-General  that prior  to  the
establishment of any such trust fund, there should be some clear  indication
and assurance  that  voluntary  contributions from  Member States  would  be
forthcoming.


                    C.  Economic assistance by international
                        financial institutions

57.    At the  1994  and  1995 sessions  of  the Special  Committee,  it was
suggested  that rather than  envisaging the  setting up  of new institutions
for  the  assistance  to  third  States   affected  by  the  application  of
sanctions, utilization  should be made  of existing international  financial
institutions, such as the World Bank,  IMF, regional development banks,  the
General Agreement  on Tariffs  and Trade (GATT),  UNDP and  non-governmental
organizations.   Those  institutions, it  was  argued,  were well  placed to
assist  in  the  formulation  of  policies  and  in  coordinating  financial
assistance  to  adversely affected  States.   It  was  also  noted,  in this
connection, that international  financial institutions  should open  special
windows  of credit  to provide  direct  assistance  or to  support technical
projects, and that  the compensatory  and contingency financing facility  of
IMF should be more actively utilized.

58.   On the  other hand,  the view  was also  expressed that  international
financial  institutions  did  not  in  themselves  provide  a  comprehensive
solution,  since they  lacked  the  necessary additional  resources and  the
mechanisms to solve the problems.

59.  The report  of the Secretary-General  prepared pursuant to the note  by
the President  of the Security Council  (S/25036) regarding  the question of
special economic  problems of States as  a result of sanctions imposed under

Chapter  VII  of  the  Charter  of  the  United  Nations  (A/48/573-S/26705)
contains, in its  relevant sections, detailed  information on the assistance
activities  undertaken by  the  United  Nations  system, in  particular  the
international financial institutions (the World Bank  and IMF) and UNDP, and
the  regional  development  banks,  on  behalf  of  the  affected  countries
invoking Article 50 of the Charter.  Additional and more recent  information
in  this  regard  is  available  in  the  report  of  the Secretary-General,
entitled "Economic assistance  to States affected  by the  implementation of
the  Security Council  resolutions imposing  sanctions against  the  Federal
Republic of Yugoslavia (Serbia and Montenegro)"  (A/49/356), as well as  the
annual overview reports  of the Administrative Committee on Coordination for
the years 1992 (E/1993/81), 1993 (E/1994/19) and 1994 (E/1995/21).

60.  The information provided in those reports  indicates that the competent
agencies, organizations  and bodies of  the United Nations system, including
the  international  financial institutions,  share  the  concern  about  the
special economic problems of States arising  from the implementation by them
of sanctions  imposed under Chapter  VII of the  Charter and  have taken due
note  of  the relevant  recommendations of  the  Security Council  sanctions
committees as  well as the follow-up appeals for assistance  to the affected
countries.  In response, most of  the agencies intensified their  assistance
activities  with  regard  to  such  countries,  while  acting  within  their
respective mandates, existing facilities and available financial  resources.
In several  cases, they  undertook emergency  measures and launched  special
assistance projects  with  a  view  to mitigating  the  immediate  hardships
encountered and urgent needs faced by the affected countries.

61.  For example, IMF took  prompt action, in 1990, to  adapt and expand its
facilities  and  policies   to  provide  financial  support  to  its  member
countries affected by  the Gulf crisis.   Those measures, which  remained in
effect in  1991-1992,  as appropriate,  included:    (a) introduction  of  a
temporary  "oil element"  into the  compensatory and  contingency  financing
facility to compensate member countries for  sharp, unexpected rises in  the
cost  of their imports  of crude  petroleum, petroleum  products and natural
gas; (b)  quicker access to  compensatory credit  - in  the wake of  a steep
fall in export receipts - by using more  estimated, rather than actual, data
to  calculate the shortfall;  (c) broader coverage of compensatory financing
under  the compensatory  and  contingency financing  facility  by  extending
eligibility  for  financial  compensation  to  a  wider  range  of services,
including  shortfalls  in  earnings  from  pipelines,  canal  transit  fees,
shipping, transportation,  construction and insurance; (d) added flexibility
in obtaining  contingency financing  in the  framework of  IMF stand-by  and
extended arrangements already in  force that would have at least six  months
left  to go,  at the  time of  their review;  (e) increased  or  accelerated
disbursement of  financing under IMF arrangements  by rephasing of  drawings
and  augmentation  of  financing  to  member  countries  reinforcing   their
adjustment  efforts;   (f)  increased   flexibility  with   regard  to   the
availability of  low-cost financing extended  to poorer  countries under the
enhanced structural  adjustment facility;  and (g)  temporary relaxation  or
suspension of some borrowing limits under the enlarged access policy.

62.  In more general terms, IMF  has indicated (see A/48/573-S/26705,  para.
142)  that it  can  provide help  through policy  advice,  including  a full
assessment of the country's external situation,  aimed at ensuring that  the
mix  of adjustment  policies and  external financing adopted  are consistent
with  the  country's medium-term  objectives.    The  Fund  can also  assist
through  efforts  to  mobilize  financial   assistance  in  the  context  of
consultative  groups, including  playing an  important technical  assistance
role for  these and  other groups.   The  Fund has  also  indicated that  it
stands ready  to provide financial  assistance under its existing facilities
to  any member  experiencing  balance of  payments  difficulties,  including
those related to the spill-over effects of sanctions.

63.  In its  turn, the World Bank  has reported (see A/48/573-S/26705, para.
143) that assistance  measures available  to Bank members provided  adequate
flexibility for prompt actions to be taken to  help meet the most  immediate

needs  of affected countries.   The  measures cover the  following five main
areas:    (a)  assistance  in designing  appropriate  policy  responses; (b)
accelerated  disbursements from  existing  loans  and  credits; (c)  use  of
coordination  mechanisms  such  as  consultative  groups,  to  mobilize  and
coordinate support  for affected States;  (d) increased cost-sharing  limits
to enable the Bank to  finance a higher  proportion of costs of ongoing  and
new  projects;  and (e)  expanded  lending  by  the  International Bank  for
Reconstruction  and  Development  (IBRD)  or  the International  Development
Association (IDA).

64.    At  the regional  level, financial  and  technical assistance  to the
affected  countries has  also  been  provided  by the  regional  development
banks:   the African  Development Bank  (AfDB), the  Asian Development  Bank
(ADB),  the European  Bank for  Reconstruction and  Development (EBRD),  the
Inter-American  Development Bank  (IDB) and  the Islamic  Development  Bank.
Thus, the  responses of  these institutions  to the  Gulf crisis  comprised,
within their respective  mandates and operational frameworks, the  provision
of  grants and soft loans  to the most  seriously affected countries, rapid-
disbursement funding for assistance programmes, financing of key  production
inputs, enhanced  lending and  technical cooperation (see  A/48/573-S/26705,
para. 123).  However, some of these banks  have indicated that their charter
and  founding  agreements impose  certain  limitations  or  prohibitions  on
particular types of  action (e.g., fast disbursing budgetary assistance,  in
the  case of  EBRD).    Nevertheless,  it  is  essential that  the  regional
development banks  realize,  to  the  extent possible,  their  potential  in
insulating member States from the collateral damage of sanctions.

 65.  Based  on the available information, it appears that the international
financial institutions, both at the global  and regional levels, possess, in
principle, the  required expertise,  existing instruments  and resources  to
assist Member States in coping with such external shocks  to their economies
as  the imposition  of  sanctions.   Indeed, the  World  Bank and  IMF  have
substantial  programmes  of  financial  and  technical  assistance  to  most
countries  that  have  been  affected  by  the  implementation of  sanctions
against   Iraq  and  the   Federal  Republic   of  Yugoslavia   (Serbia  and
Montenegro).   In practice, these programmes  of assistance  are designed in
the context of the country's overall economic situation and are intended  to
support  more  comprehensive  and  longer  term  objectives  of   structural
adjustment, economic  reform or  systemic transformation.  It is  important,
therefore,  that such  ongoing assistance  programmes be  reviewed  by these
institutions  on a  case-by-case basis  when  appeals for  special  economic
assistance under the provisions of Article 50 so  require, in order to  make
them  as  responsive  as  possible  to  the  particular,   sanctions-related
problems of the affected countries.

66.   In this  connection, Governments  have called  upon the  international
financial institutions  to consider how the  existing facilities  of IMF and
the  World  Bank's mechanisms  might  be  better  utilized  to mitigate  the
adverse  effects  of  sanctions on  third  States.   In  response,  IMF  has
undertaken efforts  to ensure that the  affected countries  receive a higher
than average access to the Fund's resources and  that their drawings be made
on more favourable  terms, in recognition of  the losses and  costs incurred
by  them as  a  result  of the  sanctions  regime.   Similarly,  within  the
priorities  of the  investment programmes  in  the affected  countries,  the
World  Bank   and  some   regional  development   banks  have   contemplated
redesigning the relevant  projects, to reallocate funds under existing loans
and  credits and  expanding  lending,  taking  into account  the  sanctions-
related  concerns.    Most  important,  however,  is  the  need  to mobilize
additional financial  resources from  all potential  funding sources  (e.g.,
through Consultative  Group meetings for  the countries concerned), in order
to address specifically and directly the  special economic problems of third
States arising from the implementation of  measures imposed by the  Security
Council.

67.   Moreover,  certain streamlining  or  adjustment  may be  desirable  in
reporting  procedures  that  would  enable  all  the  donors,  including the

international  financial institutions,  to  identify clearly  and distinctly
the assistance provided by them to  alleviate the special economic  problems
of the affected  countries invoking Article  50 of  the Charter.   In  turn,
such improvements would make it easier to collect, aggregate and assess  the
relevant   information  to   be  submitted   by  the   Secretariat  to   the
intergovernmental  bodies  concerned,  thereby  facilitating their  periodic
review and  appraisal  of the  collective  response  of the  United  Nations
system  and  the  international  community  at  large  to  the  appeals  for
assistance to the affected States.


D.  Bilateral economic assistance

68.   In  the  course  of  the  two  most recent  sessions  of  the  Special
Committee,  it was  noted that  third  States  affected by  Security Council
sanctions  could  avail  themselves  of  bilateral  assistance  from   donor
countries and  that a  number of affected  States had in  fact already  been
assisted in that manner.  It was also noted that problems stemming from  the
imposition of sanctions were  in many cases  part and parcel of the  overall
economic situation of the  affected States and did not lend themselves to  a
piecemeal solution.   It was also  suggested that  the possibilities offered
by trade  preferences and  investments in  particularly affected  industries
deserved to be further explored.

69.   In connection with the  possibility of  bilateral economic assistance,
the  Secretary-General  would  like to  note  that,  in  the  absence  of  a
permanent mechanism at the United Nations  for the implementation of Article
50, economic assistance to  the affected States has thus far depended on the
political  will  of  countries  that  are  in  a  position to  provide  such
assistance  and   on  the  capacity   of  ad   hoc  assistance  coordination
arrangements to mobilize and channel additional  resources in support of the
countries in need.   Appeals launched by the Secretary-General on behalf  of
the affected  countries have not necessarily  evoked the  full and effective
response of the international  community, in part for lack of an established
forum  for  consultations between  the  countries  concerned  and the  donor
community  at  large,  where an  assessment  of  needs,  based  on  a common
methodology,  could  be  correlated  with  joint  elaboration  of   specific
remedial measures, including the identification of funding sources.

70.   Although  several donor  countries provided  to  the Secretary-General
specific information on their assistance to  the affected States, which  was
summarized in  the previous  reports on  the subject (see  A/48/573-S/26705,
paras. 107-113, and A/49/356,  paras. 35-43).   It has not been possible  in
all  cases  to  identify  distinctly  and   estimate  fully  the  amount  of
assistance directly  intended to  address the special  economic problems  of
the affected States.  It would however appear that the  bulk of the reported
assistance has been part  of the ongoing assistance  activities and has  not
necessarily involved additionality  of funds  to compensate  for the  actual
losses  and additional costs incurred  by the affected countries as a result
of the sanctions.   In many  instances, such outcome has  been disappointing
for the  affected countries  that, while  appreciating the emergency  relief
efforts,  continue to believe  that the response  by the  donor community at
large  has not been commensurate  with the magnitude of  their hardships, in
particular the longer term effects of the sanctions on their economies.

71.  For example,  in the case of sanctions against Iraq, specific  measures
of bilateral  assistance included  debt relief,  untied emergency  commodity
loans  on highly  concessional  terms, project  and  development  assistance
loans, food  aid  and oil  deliveries.    In cooperation  with  humanitarian
agencies, bilateral  assistance was  also provided to displaced  persons and
refugees,  including repatriation of  migrant workers  to their countries of
origin.  Most important was  the establishment, in September 1990, by States
members of the Group of Seven  and of the European Community  as well as the
Gulf States  and  the  Republic of  Korea,  of  the  Gulf  Crisis  Financial
Coordination Group to  mobilize financial assistance  for the most seriously
affected countries.   In  1990-1991, the  Group committed a  total of  $15.7

billion, mainly to three "front-line" States  (Egypt, Jordan and Turkey), of
which about  $8.3 billion  was disbursed,  primarily as  balance-of-payments
grants and highly concessional loans,  in-kind assistance and project loans.
Since  the emergency operations have been completed,  no further information
regarding bilateral assistance to the affected States has been received.
  72.  In the case of sanctions against  the Federal Republic of  Yugoslavia
(Serbia and Montenegro), the important initiative  of the then Conference on
Security and  Cooperation in Europe (now  the Organization  for Security and
Cooperation  in  Europe (OSCE))  to  convene, in  early  1994  at  Vienna, a
special  meeting to identify  international projects to help affected States
in the region to  better cope with the effects of the sanctions has resulted
in defining a viable approach towards  supporting a number of infrastructure
projects  and integrating them  into a  longer term  regional perspective of
transport, infrastructure and communications development.  To this end,  the
Commission of  the European Communities allocated  in 1994  some 100 million
European Currency Units (ECUs), and the transport infrastructure  activities
financed under the  Poland Hungary Aid for the Reconstruction of the Economy
(PHARE)  programme  included  road rehabilitation  projects, border-crossing
modernization,  upgrading customs  facilities and  establishment  of customs
corridors.   However, the requirements of  the affected  countries go beyond
the  existing funding.   In particular,  additional resources  are needed to
carry out longer-term transport infrastructure projects  as well as to  take
special measures in  the fields of telecommunications, energy, water  supply
and the environment.   A proposal to convene  at the United  Nations special
consultative meetings on those issues, with  the participation of the  donor
countries,  relevant  agencies and  the  affected  countries,  was  recently
presented  to the  Secretary-General by  Bulgaria, Greece,  the Republic  of
Moldova, Romania and Ukraine (A/50/189-S/1995/412).


E.  Other forms of assistance

73.  At the 1994 session of the  Special Committee, the following  paragraph
was  suggested for  inclusion in  a  General  Assembly resolution  (see also
paras. 4, 13, 39 and 50 above): 

  "6.  All other  types of support,  including direct assistance in cash  or
in  kind,  provision  of  alternative  sources  of  supply  and  alternative
markets, specific  commodity purchase  agreements, compensatory  adjustments
of  international  tariffs, assistance  for  promotion  of  investments  and
technical cooperation to the affected countries, should be encouraged;" 2/

74.    It should  be  noted in  this  connection  that, in  addition  to the
economic  assistance  that  can  be  provided  by  international   financial
institutions and  bilateral donors,  there  is also  a wide  range of  other
types  of   support  that  can  be   provided  to   the  affected  countries
experiencing economic problems  arising from the  imposition of sanctions on
a  State or  States under  Article 50  of  the Charter.   These  can include
direct assistance in cash or in  kind, technical cooperation, the  provision
of  alternative  sources   of  supply  and  alternative  markets,   specific
commodity  purchase  agreements,  compensatory adjustments  of international
tariffs, and assistance for promotion of investments.

75.  There are  some organizational components of the United Nations  system
that may  be in  a position  to provide  policy advice and/or  assistance in
some of these areas,  including UNDP, the Office of the United Nations  High
Commissioner  for  Refugees (UNHCR),  the  United  Nations  Population  Fund
(UNFPA)  and  the  United  Nations  Conference  on   Trade  and  Development
(UNCTAD),  given their mandates  on various  technical areas.   In addition,
the World Trade Organization (WTO), the  successor organization to GATT, can
also be  of  assistance in  defining  special  trade provisions  for  States
affected  by sanctions imposed  on another  State where  the third countries
affected are contracting parties.  Such provisions  could include any of the
following:  (a)  the application of  trade restrictions so  as to  safeguard
balance of  payments;  (b) the  granting  of  special trade  preferences  to
affected countries  on  a temporary  basis by  other members  of the  United

Nations such  as suspension  of custom  tariffs and  non-tariff measures  on
their export products, and (c) the granting of special measures in the  form
of concessional  credits and financial aid  to offset  critical shortages in
the supply of basic goods and commodities.

76.  For example, in  the case of sanctions against  the Federal Republic of
Yugoslavia  (Serbia and  Montenegro),  some  ideas of  alternative forms  of
compensation/assistance,  other than  direct  monetary compensation,  to the
affected  countries were  elaborated (see  A/49/356, paras.  64-66).   These
included, inter alia:   (a) a set-aside programme,  under which a portion of
the  future   reconstruction  and   development  projects   in  Bosnia   and
Herzegovina could be set aside or  subcontracted to the interested  affected
countries  to help  them develop  their businesses;  (b)  trade concessions,
such as  allocating to the affected  countries some of  the quotas that  had
previously belonged  to the  target State or otherwise  providing favourable
access  to markets for their  goods and services; (c) "doable programmes" in
the affected countries,  under which donors  would contribute  technical and
other project-specific assistance on a priority  basis; and (d) promotion of
foreign  investment  to the  affected  countries,  through  multilateral  or
bilateral investment guarantees by the donor  Governments.  Given the nature
of  the  above  proposals,  they  were  intended  for  consideration  by the
competent  national and  international authorities  on whom  their  possible
approval and realization would be incumbent.


F.  Secretariat arrangements

77.   At the  1995 session  of the Special Committee,  support was expressed
for  the Secretary-General's  proposal  contained in  his "Supplement  to an
Agenda for Peace" to establish a mechanism,  also referred to in  paragraphs
9 and 14 above,  which, inter alia,  would explore ways of assisting  Member
States  that  are  suffering  collateral  damage  and  to  evaluate   claims
submitted by such States under Article 50.

78.   In  view of  the increased  reliance  of the  Security Council  on the
instrument of sanctions, the Secretary-General has taken steps to  reinforce
the unit  dealing directly  with sanctions  in the  Department of  Political
Affairs.   Furthermore,   cooperation   and   coordination   with   regional
intergovernmental organizations has  been considerably enhanced with a  view
to  providing the  sanctions  committees and  the  Secretariat  with customs
advice and other needed expertise.

79.  However, further steps  need to be taken in  order to tackle  the whole
gamut  of problems encountered  in the  implementation of  sanctions and, in
particular,  to  strengthen  the  Secretariat's  analytical  and  assessment
capability  to  gauge the  effectiveness of  sanctions and  their collateral
effects.   Since the purpose of  the proposed mechanism  would be to  assist
the  Security Council  and its  sanctions committees,  it would  have to  be
located in  the United  Nations Secretariat,  but should  draw on  expertise
available  throughout the  United Nations  system,  especially that  of  the
Bretton Woods institutions.   It should  also be  in a  position to  benefit
from   outside  specialized   expertise  not   readily  available   in   the
Secretariat.

80.  In  the light of  the above, it would appear  as particularly important
that  the proposed mechanism  on sanctions  should pay  special attention to
exploring all  appropriate ways and means  of assisting -  both on bilateral
and multilateral levels -  States that are suffering  collateral damage.   A
first practical step in  this direction could be the development, under  the
auspices  of  the  Administrative  Committee  on  Coordination,  of  general
guidelines concerning  assistance to  countries invoking  Article 50  of the
Charter.   These guidelines, to  be prepared  in close cooperation  with the
donor community, the relevant agencies of the  United Nations system and the
affected  countries,  may contain  such  elements  as  (a)  an inventory  of
assistance measures used in  the past and recommended for the future; (b)  a
designation of  an appropriate forum  for consultations  among all concerned

to  mobilize  and channel  the  resources  to  provide  assistance; and  (c)
monitoring,  coordination  and   assessment  arrangements.    The   proposed
methodology for  impact assessment  referred to  in paragraph  44 above  may
also become  part of  the guidelines,  in order  to ensure  the needed  link
between the two processes in the practical implementation of Article 50.


Notes

  1/   See  Official Records  of  the  General Assembly,  Fiftieth  Session,
Supplement No. 33 (A/50/33).

  2/   Official  Records  of  the  General  Assembly,  Forty-ninth  Session,
Supplement No. 33 (A/49/33), para. 52.

  3/  See:   report of the  Secretary-General prepared pursuant to the  note
by the  President of the Security  Council (S/25036)  regarding the question
of  special economic  problems of  States as  a result  of sanctions imposed
under Chapter  VII of the Charter  of the  United Nations (A/48/573-S/26705,
paras.  70-86);  World  Economic  and Social  Survey,  1994  (United Nations
publication,  Sales No.  E.94.II.C.1, Box  IV.2);  report of  the Secretary-
General on economic assistance to States  affected by the implementation  of
the  Security Council  resolutions imposing  sanctions against  the  Federal
Republic of Yugoslavia (Serbia and Montenegro) (A/49/356).


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