Moved by Lord Ahmad of Wimbledon That the Regulations laid before
the House on 28 February be approved. Relevant documents: 31st
Report from the Secondary Legislation Scrutiny Committee.
Instrument not yet reported by the Joint Committee on Statutory
Instruments. The Minister of State, Foreign, Commonwealth and
Development Office (Lord Ahmad of Wimbledon) (Con) My Lords, these
two statutory instruments were laid before the House on Monday 28
February 2022...Request free trial
Moved by
That the Regulations laid before the House on 28 February be
approved.
Relevant documents: 31st Report from the Secondary Legislation
Scrutiny Committee. Instrument not yet reported by the Joint
Committee on Statutory Instruments.
The Minister of State, Foreign, Commonwealth and Development
Office () (Con)
My Lords, these two statutory instruments were laid before the
House on Monday 28 February 2022 under the powers provided by the
Sanctions and Anti-Money Laundering Act 2018, also known as the
sanctions Act, and came into effect on 1 March.
We have announced the largest and most severe package of economic
sanctions ever in response to Putin’s premeditated and barbaric
invasion. Working with our allies, we will continue to ratchet up
the pressure. We have already imposed sanctions on President
Putin, Foreign Minister Lavrov, five Russian banks, 120
businesses and a long list of oligarchs. Taken together, they
target assets worth hundreds of billions of pounds. Importantly,
we have also worked with our allies on this issue, agreeing to
remove selected Russian banks from SWIFT and to target the
Russian central bank, but we will go further.
We continue to stand with the Ukrainian people in their heroic
efforts to face up to unbridled aggression. As I have said on a
number of occasions, and as has been said by my right honourable
friend the Foreign Secretary, nothing is off the table.
To update noble Lords on where we have got to on sanctions,
overnight on 28 February we laid two new pieces of legislation on
financial and trade measures. The first included a ban on Russian
sovereign debt, a prohibition to limit access to sterling and a
ban on any Russian company issuing securities or raising finance
in the UK. These significantly strengthen our arsenal of
sanctions against Russia. This is alongside increased trade
measures, including a prohibition on sensitive dual-use items
that could be used by the military and banning a further range of
critical-industry goods, from high-tech to aircraft.
Sanctions announced by the United Kingdom and our allies are
already having an important impact. Central bank interest rates
have more than doubled, international businesses are quickly
divesting, and the rouble is now trading at roughly a quarter of
what it was when Mr Putin took power. That will impact the
institutions that prop up Mr Putin and his cronies. We will
continue to work with our allies to bring forward further
sanctions and press for collective action to reduce western
reliance on Russian energy. We will also continue to use every
lever at our disposal to support the legitimate Government of
Ukraine and, importantly, the Ukrainian people.
This legislation follows the “made affirmative” procedure set out
in Section 55(3) of the Sanctions and Anti-Money Laundering Act
2018. These statutory instruments amend the Russia (Sanctions)
(EU Exit) Regulations 2019. The powers in them will prevent
Russian banks accessing sterling, which is a significant and new
measure for the UK. Russian banks clear £146 billion of sterling
payments through the UK financial system each year. Without the
ability to make these payments in sterling, designated banks will
not be able to pay for trade in sterling, invest in the United
Kingdom or access UK financial markets. This matches the power
the United States already has to prohibit access to the dollar,
showing our joint resolve to remove Russia from the global
financial and trade system. Around half of Russian trade is
denominated in dollars and sterling. We have already used this
power to designate Sberbank, the largest Russian bank.
The same statutory instrument prevents the Russian state raising
debt here and isolates all Russian companies—of which there are
over 3 million—from accessing UK capital markets. This measure
goes further than those of our allies, banning all Russian
companies from lucrative UK funding. Russian businesses listed in
London have a combined market capitalisation of over £450
billion. This includes some of Russia’s largest state-owned
enterprises, and the Kremlin is hugely reliant on their tax
revenues. Banning them from raising debt in London will further
increase the burden on the Russian state. Global giants such as
Gazprom will no longer be able to issue debt or equity in London.
In the last seven years, Russian companies have raised over $8
billion on the UK markets. We have put a stop to this.
The Russia (Sanctions) (EU Exit) (Amendment) (No. 3) Regulations
2022 ban exports to Russia across a range of items, including the
dual-use list and other goods and technology critical to Russia’s
military-industrial complex and its maritime and aviation
sectors. The SI also bans a range of technical and financial
services related to such items. With this legislation, enacted in
alignment with the United States, the European Union and other
partners, we will collectively cut off Russia’s high-tech
imports. This includes critical, high-end technological equipment
such as microelectronics, telecoms, sensors and marine and
navigation equipment. It will blunt Russia’s military-industrial
and technological capabilities, gradually degrade Russia’s
commercial air fleet, and act as a drag on Russia’s economy for
years to come. The Department for International Trade and the
Treasury will offer advice and guidance to UK businesses that are
affected.
In conclusion, Russia’s invasion of Ukraine is part of a
long-term strategy. If we were to give ground now, Mr Putin’s
strategy of aggression would never end. Instead, he would be
emboldened, and his focus would simply move on to the next
target. The United Kingdom has been at the forefront of this
response. Importantly, we are acting in concert with our allies;
collectively, our measures will deliver a devastating blow to
Russia’s economy and military for years to come. The importance
of co-ordinating with our partners will allow our sanctions to
reverberate through Mr Putin’s regime.
We must remain firm and resolute in our response. We must rise to
this moment and, importantly, continue to stand with Ukraine and
its people. I am determined that we will continue to support them
in that choice. I beg to move.
(CB)
My Lords, I congratulate the Government on what they have done so
far, but does the Minister agree that this package has already
been overtaken? It is already inadequate against the developing
need. For example, the Germans have been able to impound the
yacht belonging to Mr Usmanov in Hamburg, yet he still has access
to his stately home in Guildford. How can that be?
(Con)
My Lords, I congratulate my noble friend on all his efforts and
those of Ministers in his and in other departments in both
places. However, there is a concern in the country that the
inevitable delay in passing the legislation which came into
effect on 1 March has perhaps meant that a number of assets have
been able to be moved. Are the Government concerned about
this?
Looking at SI No.194—I hope I have identified it correctly—I
understand that provision will be made for medicines and
humanitarian aid to reach Ukraine. I want to press my noble
friend as to what routes will be used. There are reports that
pharmacies in Ukraine are already facing a shortage of medicines.
There will need to safe routes in.
We can only imagine the level of injuries and casualties that are
having to be dealt with at this time. Is there any way in which
some of the casualties can be evacuated to neighbouring
countries? Is it the Government’s desire to send teams of
medically qualified people out from the United Kingdom to assist
with this humanitarian effort?
(CB)
My Lords, I congratulate the Government on having gone further
and faster than they had originally planned once the gravity of
the situation became clear. Although this may be the largest ever
package of sanctions from the UK, can the Minister explain to the
House why there are so few individuals on our sanctions list
compared with the EU’s? Why, in a particular spirit of
generosity, are we allowing 18 months from when the legislation
comes into effect for those who wish to sell their houses and get
the proceeds out of the country to do so?
(Con)
My Lords, I agree with the noble Baroness’s last remark. I was on
the Joint Committee on the Draft Registration of Overseas
Entities Bill, which sat in 2019. Clearly, 18 months is far too
long if Clause 3 of the Economic Crime (Transparency and
Enforcement) Bill is to have any immediate effect.
Is there any possibility of having a look at the enemy aliens Act
of 1914? Of course, this is not an exact parallel, but there may
be suitable provisions within that old legislation, which was
renewed in 1919 after the end of the First World War. Could my
noble friend’s officials perhaps look at this legislation to see
if there are any useful provisions which could be modernised and
brought forward to be of value nowadays—accepting that the United
Kingdom is not “at war” with Russia?
While the measures which my noble friend has just announced are
hugely valuable, there are three groups of people on whom we need
to apply pressure, given that the Ukrainians are actuarily
unlikely to win a fighting war, brave as they are and incredible
as their resistance has been so far.
First, when the ordinary Russian public are queuing for bread in
Moscow because the Russian economy has collapsed, they will begin
to wonder why and they will begin to ask why Russian state
television and other state-controlled media operations have been
less than candid about why the Russian army has gone into
Ukraine, its level of success and the number of their children
who have been killed. I understand that the Russian army moves,
when it can, not just with armoured vehicles, artillery and
infantry but with mobile crematoriums, so that the soldiers who
are killed are immediately disposed of and the Russian public do
not get to know about the huge numbers who have been killed.
3.15pm
Secondly, these measures are partly directed towards the
oligarchs and the banking system. I understand that the current
sanctions have so far caused about $630 billion in foreign
currency reserves and about 80% of the Russian banking sector to
be disconnected from the United States financial system. I dare
say that there will be similar, if not quite so large,
consequences for Russians holding money in this jurisdiction.
That is good, but there must be plenty more that we could do.
Indeed, the European Union has a longer list of targets than we
do, and I urge the Government to increase the number of our
targets at least to the level of the EU’s. The rouble is in
freefall but, despite all these sanctions, we must remember that
North Korea, Iran and Syria, despite being sanctioned at various
times, still seem to be operating, even if not happily, under
their respective and utterly unattractive Governments.
The third group upon which we need to apply pressure, whether
directly or indirectly, is the inner and outer circles within the
Kremlin. Once they lose faith in Putin—they have plenty of
reasons to do so, and these reasons will grow—his position as the
modern dictator of Russia will become even weaker than it
currently is.
So, there are three groups that I ask the Government to think
about, some of whom can be attacked through sanctions, and some
through a media and information war; and some can be influenced
by the collapse of the Russian economy. As I said, the Ukrainians
will not win a fighting war, despite their very best efforts—and
I salute everything they are doing to save their country—but we
can help them extra-militarily through applying acute and
constant pressure on the three groups I have outlined.
(Non-Afl)
My Lords, I congratulate the Minister and the Government on the
tough regime of sanctions that has been introduced this week, and
I agree with every word of the previous speech.
This is an extraordinary time. Civilians are being bombed and war
crimes are being committed, and extraordinary times require
special and extraordinary responses. Ministers are completely
right to say that one of the ways to isolate a weakened Putin and
to put him under pressure is to target him and his supporters and
the money they have stolen from the impoverished people of
Russia. As the Foreign Secretary has said, we should sanction
Russian government Ministers, senior officials, Putin’s inner
circle, the oligarchs who look after his funds, members of the
parliament and senior members of the security services and armed
forces.
We in this country have a particular responsibility, because so
much of the money looted from the people of Russia has been spent
and invested here in London. The way to identify the funds, the
properties that such people have bought and the businesses they
have invested in is to target those who enable them to spend and
invest these funds. Just as accountants are required to report
clients they suspect of tax evasion, so other businesses and
professionals should be required to report people they suspect of
benefiting from Putin’s regime. We should make it a legal
requirement for lawyers, accountants, company formation agencies,
financial services firms, investment companies and estate agents
to report on the structures and holdings set up to allow
sanctioned individuals to hold assets in this country. Surely,
this would make the whole sanctions process swifter, simpler and
more straightforward. Will the Minister look at including
measures such as this in the sanctions Bill being brought forward
in the next few days?
Secondly, is it true, as Politico reported this morning, that
during the rollover of EU sanctions rules into British law during
the Brexit process, the UK sanctions regime became significantly
more procedurally complex because the new laws were amended to
ensure procedural fairness for those being sanctioned, to
strengthen measures those sanctions could take in response, and
to ensure that sanctions were imposed in what was described at
the time as a “proportionate manner”? If it is the case that
these changes made the imposition of sanctions more complicated
and difficult here in the UK than in the EU or the US, should we
not use the legislation that the Minister is bringing forward to
unravel these changes so that we can speed these processes
up?
Thirdly, is it also the case, as reported in this morning’s
Times, that the Government are finding it difficult—despite the
work the Minister is doing, which I applaud, and the work of his
officials, who I know are working flat out on this—to impose
sanctions swiftly because of a shortage of lawyers and officials
able to carry out the work? If so, what plans do Ministers have
to recruit more people urgently to do this?
Finally, what happens to funds and property and other assets that
are frozen or seized from people in this process? I suggest that
they be held in trust to support the future democratic Government
of a free Ukraine, to rebuild their economy.
(LD)
My Lords, I raise again with the Government the issue of
cryptocurrencies. Effectively, Russians cannot now transfer
roubles into dollars, euros and pounds sterling but they can
transfer into cryptocurrency. The Minister will know that the
Ukrainian Minister of Finance on Monday called on all the
decentralised finance—the DeFi exchanges—to remove Russia from
their schemes. Some, such as Coinbase, have done so, but
others—Binance is the big one that comes to mind—have decided to
sanction only the 100 names on the sanctions list and otherwise
to allow free translation of roubles into cryptocurrency. We have
heard from the Ukrainian Government that this is a serious
mechanism for evading sanctions. Binance, which I mentioned, is
registered in the Cayman Islands and therefore falls into the UK
financial family. What more will the Minister do to prevent what
may have looked like a loophole from becoming what is now growing
into—a major escape hole?
(CB)
My Lords, these are dark days. I am delighted to follow and
identify with the initial remarks of the noble and learned Lord,
, and the noble Lord, Lord
Austin. Our hearts are with the brave people of Ukraine. The
Russian people will suffer long-term hardship but nothing
compared to that befalling the extraordinary people of
Ukraine.
It is no fault of the Russian people that they have no
understanding of the reality of why they are being fully
penalised. It is quite astounding that, from my calls to Russia,
their perception of what is going on in Ukraine borders, frankly,
on the fanciful. Disinformation is rife. These measures are very
necessary and the UK Government are doing exactly what they have
to do. They have my full support.
Lord Clarke of Nottingham (Con)
My Lords, I fully support these sanctions and I congratulate the
Government on the packages brought forward. I look forward with
interest to the replies to be given to several of the detailed
points raised about exactly how firmly they will be enforced.
I will look forward a little. The medium to long-term reality is
that we are applying these sanctions against Russia, but Russia
is almost certain in the end to achieve some degree of military
success. A new reality will dawn, probably with a puppet
Government in Ukraine, and the whole issue will start fading from
international debate, from the media and so on. What are the
Government’s plans for the medium term and, if necessary, the
longer-term future in sustaining these sanctions and this level
of pressure on the Russian regime?
In reality, there will be quite rapidly a tendency to put
pressure on the Government to allow people to return to a new
normality: to allow Russian companies to have access to the City
of London again and to ease sanctions causing financial losses to
lawyers, accountants and firms here. Is the Minister able to
assure me that, as far as the British Government are concerned,
we intend to retain this degree of sanctions until some
satisfactory solution to the political problem is achieved, with
a genuine agreement with a respectable Ukrainian Government who
have proper regard to international law and national sovereignty?
Will the British Government remain one of the more robust in the
western lands? There will be considerable pressure to stop doing
so much once we have, as it were, done our best to protect the
Ukrainian regime during the conflict.
The sooner we start addressing that problem, the sooner we will
start facing up to realistic problems that we must plan for. The
Russians will undoubtedly, for example, try to ensure that the
sanctions do quite a bit of damage to western economies, and will
start trying to use their influence on the oil and energy markets
to demonstrate that they can cause us some continuing loss unless
we begin to lose interest—shall we say?—in the crisis that has so
shocked the world. Are we determined to be one of those western
countries that will seek to maintain the fullest force of
sanctions we can unless and until a satisfactory solution is
reached with the Russian regime?
(LD)
My Lords, it is a pleasure to follow the noble and learned Lord,
who has just given the Government some wise advice which I hope
the Minister will carry back to his colleagues.
We welcome the sanctions and look forward to the arrival of the
economic crime Bill when it comes from the Commons the week after
next. That has flushed out quite a lot of advice and some very
strong comments from people who have been looking at the area of
economic crime and kleptocracy in this country. One of the
threads coming through, which goes back to the issue of what we
can do now to stem that flight of capital, is that we are not
fully using the anti-money laundering laws that we already have
on statute in order to do that now. Will the Minister agree that
more can be done with current legislation, which can be used to
help stem the flow of money stolen from the people of Russia?
Does he undertake to redouble efforts with all the bodies that
have the power to use these anti-money laundering laws to get on
and do it?
(LD)
My Lords, I welcome these measures on behalf of these Benches and
I thank the Minister for maintaining contact and giving advance
notice.
These are both the culmination of weeks of lobbying from
Parliament to have sight of further measures but also, as noted
in this short debate—including by the Minister—the start of a
process. They are of a differing character, as the noble and
learned Lord, Lord Clarke, indicated. Perhaps these are now of a
more strategic nature which will be medium and long term, and
perhaps they will have a different characteristic from the
sanctions regime that we have put in place, which is different
from what the EU scheme envisaged.
The noble Lord, , rightly raised a
number of weeks ago with the noble Baroness, Lady Williams, in
the Home Office, why, as my noble friend indicated, we had not been using
existing legislation. It has been highlighted for a number of
months that the weak point in the global efforts against money
laundering and kleptocracy is in fact the UK. Therefore,
questions such as that of the noble Lord, Lord McDonald, are
quite right. There is a niggling fear that the UK is still behind
the US and the EU in making sure that there is, as the Foreign
Secretary said a number of weeks ago, no place to hide for
kleptocrats. However, as we have seen, because the Government
have now, due to persuasion from Parliament, brought forward the
first of the economic crime Bills, there have been, regrettably,
plenty of places to hide.
3.30pm
However, we welcome these measures and support them. We have
called for wider and further support, including specifically on
the point that has been raised consistently and effectively by my
noble friend about cryptocurrencies. She raised it with the
Ukrainian ambassador when parliamentarians from both Houses met
that representative of that extremely brave nation.
We welcome the Government’s additions overnight regarding
sterling trade, but can the Minister outline whether we can
expand them further to include UK trading houses that operate in
denominations other than sterling? London is the centre of many
key sectors—energy and specifically gold—where we are leading the
world. I understand that beyond the sanctions regime there are
landlords in London who are now exiting agreements, for example,
with Gazprom Marketing & Trading Ltd. There are voluntary
exits of tenancy agreements that are beyond the sanctions regime,
but within the scope of very considerable reputational risk. As
the SIs indicate, if fully enforced, this represents only 12% of
UK exports to Russia. In many areas, the nearly 90% of private
sector activity will have the biggest impact. A lot of decisions
are being made because of reputational risk.
Regarding loopholes, it is still a concern that the UK has what
they consider to be world-leading firms in what is
euphemistically called risk management. Many have recruited, to
put it politely, former colleagues of the noble Lord, Lord
McDonald, and those from within slightly murkier areas of the
British intelligence communities. However, there is a trade in
second passports, at the moment. The UK can act very firmly with
our Commonwealth friends to ensure that those who are potentially
in scope of the sanctions cannot quickly secure second passports
and utilise others. It is the sanctions regime for not only trade
and finance but ministries of justice around the world, and for
the Home Office and passport-issuing agencies. There is merit in
saying that, if we are now asking questions about where the
source of wealth is, there should be questions about why people
are seeking second passports, especially in British Overseas
Territories and within our Commonwealth family.
In speaking to me earlier, my noble friend referred to kleptocratic capital
flight. We will give the economic crime Bill a fair wind and work
with the Government in expediting its scrutiny, but we will want
it to be tough. It will not have the effect that we want it to
have if it cannot be implemented. The noble Lord, , said in a letter to
my noble friend Lady Northover in January that the sanctions unit
in the Government has between 40 and 49 staff. That is
insufficient for the task that is now ahead of us. Therefore,
looking at the capacity and ensuring it is better co-ordinated
will be essential.
Regarding other areas of avoidance and enablers, I agree with my
noble friend Lady Northover that giving people a legal grace
period is not insufficient. I hope that the Government will
consider Liberal Democrat proposals to ensure that the new
measures can be retrospective to the time of the Bill’s
introduction, and that they give fair hearing to the proposal of
a clause to ensure that there will be no risk of that legislation
being avoided. I hope the Government will give that fair hearing
and use other elements such as that indicated by President Biden
in his state of the union address—legal mechanisms for seizure.
My right honourable friend MP indicated to the Prime Minister over a week ago that
we should be serving notice that assets would be seized.
Finally, if the noble and learned Lord, Lord Clarke, is right—and
I think he will be—that this will be medium to long term, there
will be both other countries negatively affected by this global
sanctions regime, especially developing countries, and countries
that will be the source of alternative supplies for those we are
sanctioning, especially of minerals and technologies. We all know
and have debated at length the passive position of India, China
and the UAE in the United Nations. Countries that should be in
our minds are both those that are alternative sources for Russia,
which we are sanctioning, and, as I raised during Questions
earlier, those that through no fault of their own face negative
impacts from the higher prices of energy and wheat.
To prevent the slow and steady creep back to normality the
Government could act by publishing risk registers of those who
they believe will be in scope and disclosing publicly those who
are lobbying against these measures, or indeed, lobbying for them
to be delayed. Full transparency will be the enemy of those
seeking to avoid these measures, in many respects. I hope the
Government will consider actions to prevent that kind of flight,
which we all know is regrettably happening now.
(Lab)
My Lords, I too fully welcome the introduction of these
sanctions. The Government will have our full support in holding
Putin and his acolytes to account. I believe—and I said this
earlier to the noble Lord—that the noble and learned Lord, Lord
Clarke, is right; these sanctions are about not only how
effective they will be, but how sustainable they will be. We need
to focus on their sustainability as much as their
effectiveness.
I reiterate the promise of the shadow Minister for Europe, my
honourable friend , that we will work with the
Government at speed to pass any necessary legislation to this
effect. Russia’s invasion is an act of barbarism which requires a
united response from all who value the principles of sovereignty
and democracy, which must include measures to exclude it from the
benefits of the global financial system.
Reflecting all contributions from noble Lords today, our only ask
is that the Government go further and faster. I said this morning
in Oral Questions that one of the problems with the strategy of
ratcheting up is that there is an element of forewarning, which
obviously has an effect. In the areas of asset freezing of
Russian banks and oligarchs, there is a serious risk of asset
flight. The noble Lord, Lord McDonald, mentioned this point very
effectively. I asked the Minister this morning whether there has
been any preliminary assessment of whether this has already
happened. That is one of the things in terms of preparation. Like
other noble Lords, we welcome the new legislation to set up a
register of overseas entities holding UK property, but the
decision, as noble Lords have pointed out, to delay its
introduction for 18 months clearly allows oligarchs to escape
sanctions.
I also mentioned to the Minister earlier that Labour’s Front
Bench on the legislation in the House of Commons has tabled
measures to require the new register to come into force within 28
days of the legislation passing. I hope that the Government
accept this amendment. It is important that we remain united, as
I have said before, as a Parliament and a country.
The steps taken to cut Russia out of the western economic system
are particularly welcome, and the efforts on SWIFT and the
Government’s push to get a global response to that has been
really important. It has been well known that Russia has been
developing alternatives to SWIFT since calls first emerged for
Russia’s exclusion during the invasion of Crimea. I hope that the
Minister can update the House on what assessment the Government
have made of Russia’s potential for developing an alternative,
again picking up a point made by the noble and learned Lord, Lord
Clarke, about the sustainability of our actions.
Given that not all Russian banks are currently included, the
Government are right to call for an expansion. Has the FCDO had
any recent high-level conversations about that? The Government
should also consider how they can widen the number of banks that
are prevented from accessing sterling and expand sectoral
sanctions. The Minister mentioned those, but we should even be
thinking of the insurance market. There are other areas and the
noble and learned Lord, , was right to focus on the
interest groups that may have the most influence on Putin and his
acolytes. I agree with the points he made. One not insignificant
idea on export controls is to look at the luxury goods going into
Russia. We know that cars are included, but there is a whole
other range. That visibility could address the point made by the
noble and learned Lord about soft power and how we raise
awareness in Russian people’s minds about the impact of their
Government’s action.
The designation of further individuals was highlighted by the
noble Lord, Lord McDonald, and the point was raised on Radio 4’s
“Today” programme. The Prime Minister suggested that more than
100 further persons could now be sanctioned. It is clearly now
possible that those with links to the Kremlin will use that as a
warning to sell their assets. We have seen that the Chelsea
owner, Roman Abramovich, is seeking to offload the club, with a
price tag believed to be £3 billion. His multimillion-pound
residential properties are also up for sale. He says that
proceeds will be donated to good causes, but the truth is that we
will never know where that money will ultimately end up. Does the
Minister believe that Mr Abramovich’s actions have been driven,
at least in part, by the Prime Minister’s incorrect assertion
that he was on the UK sanctions list? Do the Government agree
that any form of pre-notification, or indeed inclusion of grace
periods for certain banks, severely undermines the effectiveness
of sanctions? I have heard the Minister repeatedly say in the
Chamber in the past that he will not indicate or respond about
future designations because it does precisely that.
We need to return to the point about how fast we designate
people. When the Government extend their designations—I hope that
will be soon—I hope that they will allow parliamentarians to
suggest further targets. We had this debate about the mechanisms
for informing the Government and the FCDO about possible targets
when we debated the sanctions Bill. That intelligence may go
beyond normal intelligence service facilities, but we should be
open to those sorts of suggestions.
Finally, we must all remember that Russia is supported by Belarus
and treat Lukashenko’s regime as belligerent. The sanctions
announced against individuals in Belarus are a step in the right
direction, but we should consider other options for deterring
their involvement. Do the Government plan to match the measures
announced by the EU for banning machinery exports to Belarus? As
the noble and learned Lord, Lord Clarke, said, it is misguided to
think that we have time on our side. For as long as the Kremlin
continues this campaign of violence, we must hold to account all
those who enable it. We welcome these sanctions but look forward
to further measures being brought forward on a speedy basis.
3.45pm
(Con)
My Lords, I thank all noble Lords for their strong support for
the sanctions more broadly and specifically for the measures that
we are debating today. I say from the outset that I agree totally
with the noble Lord, . Existing laws and processes
should be fully leveraged to ensure that those actions that have
been taken can be fully applied rather than our just waiting for
new legislation to pass. The noble Lord, Lord Austin, and others,
pointed to the importance of resourcing. I assure him that it is
at the forefront of our thinking, both in the context of the FCDO
and across government, including the Home Office.
I am grateful to all noble Lords who have contributed on the
specific sanctions before us, but as I expected—it is no surprise
to anyone—our discussion this afternoon has gone much wider. I am
sure that will be reflective of the upcoming debates both on the
legislation and on specific issues relating to the unravelling of
the situation in Ukraine.
The noble Lord, Lord McDonald—I nearly said “noble friend”; he
was certainly a friend when he was a PUS—will know all too well
that I cannot comment on specific designations. Nevertheless, I
hear what he says. In this regard, I assure him and all in your
Lordships’ House that we are aligning ourselves. Where there are
designations which are reflective of partners who may have moved
forward more quickly or broadly, we are working closely with
them. Questions are often asked about our alignment particularly
with the EU. Noble Lords may be aware that my right honourable
friend the Foreign Secretary has been invited, along with
representatives of the United States, to attend the European
Union Foreign Affairs Council to ensure that we are fully aligned
in how we move forward, both in the governance structures and in
the specific designations. That underlines the challenge that we
face but also, importantly, the collaboration and collective
response from the Government of the United Kingdom and
Governments of key partners, including those within the European
Union. My right honourable friend the Foreign Secretary is
visiting key partners today as I speak.
The measures that we have taken are already having a significant
impact, but I assure noble Lords that I have listened carefully
to and made note of their suggestions as to what more we can do
in consultation with our allies. As we debate legislation which
enables what action we can take, further announcements will be
made. The noble Lord, Lord Collins, talked about Belarus. We will
debate the specific application of those sanctions in the coming
days. We will introduce further sanctions and prohibitions on
financial services relating to foreign reserves exchange and
asset management by the Russian central bank. These too will be
before us in the coming days.
My noble friend Lady McIntosh rightly talked about ensuring
humanitarian carve-outs from our sanctions. From our experience
in Afghanistan, I have been very minded to ensure that this is
part and parcel not just of our thinking but of our processes. My
engagement earlier this week in Geneva with key partners working
on the ground, including the various agencies of the UN but also
the likes of the ICRC, was focused on the very issue that she
highlighted.
The United Kingdom has also said that we will work with our
allies in NATO. On Friday, NATO leaders reiterated their
commitment to Article 5 in solidarity and support for Ukraine,
which many noble Lords mentioned. We will also provide further
humanitarian support, which has been announced by my right
honourable friend the Prime Minister. The UK has also announced
£100 million of new funding to aid efforts to build Ukraine’s
resilience and reduce reliance on Russian energy supplies. I
listened very carefully to the noble Lord, Lord Austin, about
particular assets held and how they are best utilised. Past
conflicts have also demonstrated the legal challenges that apply,
depending on who owns what assets and the legitimacy of the
Government of a given country to have a right to those assets. We
can talk of conflicts past, on which we are still trying to
unravel some of those issues. I am sure that noble Lords welcome
the additional £100 million of new funding from the United
Kingdom to build Ukraine’s resilience and reduce reliance on
other areas, including energy and security.
My noble and learned friend rightly highlighted the
different groups. Again, that is very much part and parcel of our
thinking on how we can target further work and co-ordination with
our key partners. I am also minded very much to agree with him on
the important issue of Russian disinformation. The Russian
Government are conducting an aggressive set of information
operations against Ukraine and NATO in a shameful attempt to
justify action against Ukraine. I have to say to my noble and
learned friend that I think we all take encouragement that the
protests against Russia’s actions are not limited to countries
outside Russia. We have certainly seen disgraceful scenes today
of protests being again put down in St Petersburg by Russian
military and security forces, but they show that the Russian
people totally despise the actions being taken by President
Putin, and we will work to see how we can strengthen our
influence through soft power.
Whoever we target under designation criteria will remain subject
to a test of appropriateness, as set out under the sanctions Act.
I have made this point before: our values and our system
acknowledges that we have a robust legal framework to our
sanctions, and we will need to consider carefully how sanctioning
individuals helps to achieve the purposes of the regime. The
whole essence—and I say this as the UK’s Human Rights Minister—is
very important to me in the fairness that we apply when we look
at such issues. However, equally, we are very much committed as a
champion of freedom and democracy to tackle corruption and
illicit finance that directly undermine security and democracy.
The UK will use our autonomous sanctions and other tools to send
the clearest possible message that the UK is not a safe haven for
illicit wealth or financial flows, including those from
Russia.
The noble Baroness, Lady Kramer, rightly raised the issue of
cryptocurrencies, which are not so specific to the current
instrument, but crypto-assets are economic resources and are
therefore covered by the UK’s financial sanctions. I believe that
with the economic crime Bill and other measures that will be
taken there will be broader discussions about that issue. The
noble Baroness is totally right that where we identify the
so-called loopholes that have been used creatively, to put it
that way, by those seeking to avoid particular rules, regulations
and sanctions, we need to close them down as quickly as possible,
but in conjunction with our partners and allies.
My noble friend Lady Wheatcroft raised the issue of property. My
understanding is that properties subject to asset freezes are not
directly seized, but they cannot be sold and employees cannot
work in those properties. She raised the issue of the 18-month
figure, which I think is very much within the provisions of the
economic crime Bill that has been introduced. If I may, I shall
write detailing the specifics. There are qualifications within
that, but she is right to raise the issue. As I say, I am sure
that it will come up in the debates we have on the Bill.
My noble and learned friend also raised the issue of EU
comparisons. As I have already said, we are working together
closely. Where we are perhaps ahead or behind any of our key
partners we are looking to align as quickly as possible on
specific steps that we are taking.
On the issue raised by my noble and learned friend Lord Clarke,
he may not remember, but I remember as a much younger man
listening to one of his speeches in a think tank. We were
discussing Iraq at that time. My noble and learned friend
articulated very clearly—and his views have come to pass—that an
intervention in Iraq would not resolve the conflict, as some of
it was embedded in religious differences based on 1,500 years of
different perspectives. I agree with him that this is about the
long haul. I assure my noble and learned friend that we are
absolutely determined that the actions we are taking today will
remain robust. The United Kingdom has been playing a leading role
in ensuring that as we work with our international partners,
particularly those in the European Union, we recognise their
challenges and where there are issues, for example with Germany
and energy, we make the case powerfully and constructively while
recognising that we need to move together.
I say to my noble and learned friend that it will not just be
about the resolve of the United Kingdom. This resolve will need
to be reflected within the wider international community to
ensure we are fully aligned. That is why, in terms of our
ministerial engagement, we are speaking extensively with our key
partners, not just on a daily basis but on an hourly one. My
right honourable friend the Prime Minister, the Foreign
Secretary, other Ministers and I are travelling quite
extensively. We are taking action, as was shown by the United
Nations vote yesterday. We are working with the US, the EU, the
G7 and the OSCE. It is good to see how we are working with other
key partners and perhaps even with those partners or other
countries where we do not see eye to eye and with countries where
we have big differences, including China. The fact that China
abstained not once but twice—once at the Security Council and
then yesterday at the General Assembly—shows that diplomacy and
diplomatic efforts are also vital in our response.
I have sought to cover the specifics—
(LD)
With regard to China and the position of the UK, as the Minister
will know, the UK is a global hub, not only for oil trading but
also for shipping and for insurance of that global shipping.
Especially with Russia and China, insurance—I think the noble
Lord, Lord Collins, referenced insurance, but I did not pick up
what the Minister had said about that—for shipping is one of the
key elements in doing real harm to the Russian oil and gas
sector. A lot of it is brokered through London. Can the
Government please outline what they intend to do about this
sector?
(Con)
My Lords, the specifics of shipping—the noble Lord had also
raised wider issues such as bullion—are very much part of our
thinking. On shipping specifically, the noble Lord will know that
we have already taken the lead. My right honourable friend the
Transport Secretary introduced certain measures that restrict the
movement of Russian vessels and their landing in UK ports. The
noble Lord is right to raise the broader issue of insurance and
the hub and the role that the United Kingdom plays. We will be
taking further measures in this respect and the details of them
will follow.
As I have said throughout this whole process, as these measures
are coming in, it is a very fluid situation. We are working as
quickly as we can. There is the legislation in front of us that
we are approving today—I hope that will be the case—and other
measures already under way, some announced and some not. I do not
want to pre-empt them. However, the noble Lord is quite right to
raise the shipping sector. I hope that the steps specific to that
sector that we have already taken indicate the Government’s route
in terms of our intention to work further to limit, as the noble
Lord says, the effectiveness of Russian activity in that
sector.
4.00pm
If there are more specifics, as I said to the noble Baroness,
Lady Wheatcroft, I will write specifically on those questions,
but I assure noble Lords that we will continue to work very
closely both within your Lordships’ House but also beyond. I am
particularly grateful to the Front Benches and other noble Lords
for their advice and insights, but also, I say, once again, for
their strong support for the actions the Government are taking as
we stand up to the regime which is now persisting. I use that
word quite deliberately. Ministers are often questioned when we
waver between the use of “Government” and “regime”. The
distinction I would draw is that when the Government of a country
seek to suppress their own people in a way that does not allow
anyone the right to protest, when a Government seek to eliminate
and eradicate the right of a neighbouring country to exist, it is
right that we use that different word and call it a regime. That
is what Mr Putin’s regime currently is. Its ability to wage war
in Ukraine must be disabled.
It is important that we work to ensure that the economic impact
is felt by those oligarchs and businesses that support the
Russian regime. It is important that we take action but, equally,
at the same time, we must send a strong signal to the Russian
people that this war, this challenge, the economic war we impose
against the Putin regime, is not against them; these are actions
to ensure that we act against Mr Putin and his supporters. We
continue to stand by those brave, courageous people in Russia who
protest against his actions. Most important is that this House
sends a very clear message, as it has done today, that we stand
with the people of Ukraine. We will continue to have debates on
this specific issue and once again I thank all noble Lords for
their strong expressions of unity on the actions the Government
are taking in support of Ukraine and the people of Ukraine.
Motion agreed.
Russia (Sanctions) (EU Exit) (Amendment) (No. 3) Regulations
2022
Motion to Approve
4.02pm
Moved by
That the Regulations laid before the House on 28 February be
approved.
Relevant documents: 31st Report from the Secondary Legislation
Scrutiny Committee. Instrument not yet reported by the Joint
Committee on Statutory Instruments.
Motion agreed.
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