What EU sanctions policy can learn from European mutual defence

Members of the European Union traditionally adopt sanctions jointly. And there are many good reasons for this, including a desire to maintain the integrity of their political union and the single market. But, to better defend itself against aggressive economic attacks from states such as China and Russia, the EU could draw inspiration from its often-overlooked mutual defence clause, Article 42.7.

Member states can trigger this article without the involvement of EU institutions. They request and provide aid and assistance on an exclusively bilateral basis. So, in practice, an ad hoc coalition of member states supports the country that has become “victim of an armed attack”, as Article 42.7 defines it. The article is a legal construct full of ambiguities, which can create dangerous uncertainties for Europe’s defence policy. However, despite Article 42.7’s limitations, its bilateral trigger mechanism could serve as a model in member states’ efforts to improve their response to acute economic attacks that threaten their sovereignty.

Adherence to institutional traditions can cause more harm than good in an age when geopolitics and economics are closely intertwined. In certain instances of economic coercion, the unanimous voting procedure that the Foreign Affairs Council (FAC) uses to impose counter-sanctions – a delicate, controversial process that raises a wide range of issues – can be such a harmful tradition.

For some of the EU’s more assertive trading partners, targeted sanctions have long been a common tool to put European entities under economic pressure and thereby influence member states’ political decisions. A case in point is China’s imposition in March 2021 of aggressive counter-sanctions on European diplomats, researchers, and retailers – a move that came in response to EU human rights sanctions on the country. For the bloc, however, the use of sanctions remains mostly limited to the traditional boundaries of its Common Foreign and Security Policy, as a means to “prevent conflict or respond to emerging or current crises”. Yet European leaders often seem to overlook the fact that economic coercion can easily cause such conflicts and crises – by violating sovereign decision-making, a core principle of international law.

After Russia threatened in April 2021 to ban Czech beer imports, some members of the government in Prague probably regretted their attempt to hold Russian intelligence agencies accountable for explosions at an ammunition dump near Vrbetice in 2014. And, perhaps more prominently, some German officials probably still shudder at the thought of Beijing’s threat to impose tariffs on cars imported from Germany – a warning intended to prevent Berlin from rejecting Huawei’s bid to build the country’s 5G infrastructure. Needless to say, this verbal threat likely contributed to the Christian Democratic Party’s decision not to ban Huawei altogether.

EU counter-sanctions could constitute an effective and legitimate response to such gross violations of sovereignty through economic coercion. Personal sanctions, such as asset freezes or travel bans, need not impose direct costs on the European economy; the fact that they are country-neutral could limit an escalation of tensions between the coercive actor and the member state that has come under attack.

Adherence to institutional traditions can cause more harm than good in an age when geopolitics and economics are closely intertwined

Simultaneously, sanctioned government officials or company executives would likely think twice the next time they considered blackmailing European firms or politicians – at least in theory. But, in practice, no such targeted individual or entity would believe that the FAC could achieve the unanimity required to impose counter-sanctions. This is partly because economic coercion usually has asymmetric effects – in the sense that it damages one member state more than others. At a minimum, the coercive actor would have enough time to think about ways to circumvent counter-sanctions long before they were enforced. In short, the need for unanimity comes at the cost of deterrence.

To become a more credible tool to counter acute economic attacks, EU sanctions policy could borrow from Article 42.7. When France activated the article after the 2015 Bataclan terrorist attack, it did not have to wait for a unanimous decision by the FAC, but could immediately ask other member states for support bilaterally. Most EU governments agreed to assist France in some way. Those that provided no assistance included not just neutral Austria and Malta but also, for instance, Bulgaria and Croatia. France avoided tedious Council negotiations to get these countries on board, allowing it to receive swift, efficient support from a coalition of member states.

EU sanctions policy could imitate this coalition-building mechanism in response to gross violations of sovereignty through economic coercion. For example, if China pressured Germany with the threat of car tariffs once again – and thereby infringed on Berlin’s sovereign decision-making – German officials could consider a proportionate response through counter-sanctions. Rather than engaging in lengthy and probably unsuccessful FAC negotiations, they could approach like-minded member states bilaterally to engage in coordinated enforcement of counter-sanctions. Such coalition-led measures would be an effective deterrent – especially if the Chinese did not know who the Germans were approaching, how large the resulting coalition would be, and how much damage the sanctions would cause.

This is certainly a bold proposal. As such coalition arrangements risk fragmenting the EU, they should never become the norm. But the resurgence of geoeconomics poses challenges that the EU’s complex institutional set-up struggles to cope with.

There is an important lesson in France’s decision to activate Article 42.7 rather than NATO’s Article 5 or the EU’s unanimity-bound solidarity clause: member states do not have to accept that the unanimity requirement prevents Europe from defending itself against armed attacks, so why should they do so in response to economic coercion? If European leaders were to learn this lesson, it would be a massive step forward for the EU’s sanctions policy, as well as for the defence of European sovereignty and rules-based international trade.