  The dynamics of a dissipative Poynting dominated flow subject to a radiation
drag due to Compton scattering of ambient photons by relativistic electrons
accelerated in reconnecting current sheets is studied. It is found that the
efficiency at which magnetic energy is converted to radiation is limited to a
maximum value of $\epsilon_c=3l_{dis}\,\sigma_0/4(\sigma_0+1)$, where
$\sigma_0$ is the initial magnetization of the flow and $l_{dis}\le1$ the
fraction of initial Poynting flux that can dissipate. The asymptotic Lorentz
factor satisfies $\Gamma_\infty\ge\Gamma_0(1+l_{dis}\,\sigma_0/4)$, where
$\Gamma_0$ is the initial Lorentz factor. This limit is approached in cases
where the cooling time is shorter than the local dissipation time. A somewhat
smaller radiative efficiency is expected if radiative losses are dominated by
synchrotron and SSC emissions. It is suggested that under certain conditions
magnetic field dissipation may occur in two distinct phases: On small scales,
asymmetric magnetic fields that are advected into the polar region and dragged
out by the outflow dissipate to a more stable configuration. The dissipated
energy is released predominantly as gamma rays. On much larger scales, the
outflow encounters a flat density profile medium and re-collimates. This leads
to further dissipation and wobbling of the jet head by the kink instability, as
found recently in 3D MHD simulations. Within the framework of a model proposed
recently to explain the dichotomy of radio loud AGN, this scenario can account
for the unification of gamma-ray blazars with FRI and FRII radio sources.
