Edited by Larissa van den Herik
Chapter 12: UN sanctions and international financial institutions
Resolutions of the UN Security Council imposing sanctions have sometimes addressed international financial institutions (IFIs) and requested these to adopt a certain course of conduct in relation to the sanctions, e.g. to refrain from new lending commitments in targeted countries. This chapter attempts to clarify the question of the extent to which IFIs are under a legal obligation to adhere to and implement UN sanctions (whether enacted by the UN Security Council or recommended by the General Assembly), and what are the potential limits to such obligations, in particular in situations where actions required to comply with UN sanctions regimes appear prima facie as conflicting with the mandates and objectives of IFIs. The analysis will build on a review of the practice of the General Assembly and the Security Council in their efforts to influence the behaviour of IFIs through sanctions, as well as of the actual behaviour of IFIs in response to such requests by the General Assembly or the Council, through the cases of Southern Rhodesia, South Africa, Portugal, Iraq, the DPRK and Iran. The chapter will proceed with an evaluation of the practice against the background of the applicable legal framework. The discussion will concentrate on the issue of primacy (or hierarchy) between the constituent instruments of IFIs, their Relationship Agreements with the UN (for those IFIs which are ‘specialized agencies’ in the UN system, such as the IMF and the entities composing the World Bank), and the UN Charter. In this context the present chapter will examine the legal arguments put forward by those advocating the primacy of Security Council resolutions, as well as those sometimes invoked by IFIs, based on their independence from the UN system and their constitutional obligation of political neutrality. Keywords international financial institutions (IFIs), UN sanctions, World Bank, IMF, UN Security Council, UN General Assembly
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