Russia (Sanctions) (EU Exit) (Amendment) (No. 4) Regulations 2022
The Minister for Europe and North America (James Cleverly) I beg to
move, That the Committee has considered the Russia (Sanctions) (EU
Exit) (Amendment) (No. 4) Regulations 2022 (S.I. 2022, No. 203).
The Chair With this it will be convenient to discuss the Russia
(Sanctions) (EU Exit) (Amendment) (No. 5) Regulations 2022 (S.I.
2022, No. 205) and the Russia (Sanctions) (EU Exit)
(Amendment)...Request free trial
Russia (Sanctions) (EU
Exit) (Amendment) (No. 4) Regulations 2022
The Minister for Europe and North America ()
I beg to move,
That the Committee has considered the Russia (Sanctions) (EU
Exit) (Amendment) (No. 4) Regulations 2022 (S.I. 2022, No.
203).
The Chair
With this it will be convenient to discuss the Russia (Sanctions)
(EU Exit) (Amendment) (No. 5) Regulations 2022 (S.I. 2022, No.
205) and the Russia (Sanctions) (EU Exit) (Amendment) (No. 6)
Regulations 2022 (S.I. 2022, No. 241).
Good afternoon, Mr Twigg. It is a pleasure to serve under your
chairmanship. Copies of the statutory instruments were laid
before the House on 1 and 8 March this year. The instruments
before us were laid under the powers provided by the Sanctions
and Anti-Money Laundering Act 2018, also known as the sanctions
Act. These instruments came into effect under the affirmative
procedure.
Side by side with our allies across the world, the UK has
executed the largest package of sanctions ever imposed. These new
regulations ratchet up the pressure to further isolate Russia and
degrade its economy in order to starve Putin’s war machine. With
your permission, Mr Twigg, I will tackle each of these statutory
instruments in turn.
I turn first to the maritime statutory instrument. On 1 March,
befitting our maritime heritage, we led the response and were the
first country to turn any Russian vessels away from our ports. We
introduced new restrictions barring all ships that are
Russian-owned, Russian-operated, Russian-controlled,
Russian-chartered, Russian-registered or Russian-flagged. The
regulations go further, providing new powers to direct Russian
vessels out of British ports and to detain Russian vessels
already in port. This is a powerful new tool against oligarchs
and wealthy individuals closely associated with Vladimir Putin’s
regime.
Finally on this statutory instrument, anyone connected with
Russia can no longer register a vessel and will have any existing
registrations terminated in the UK. This strips away the
competitive advantage provided by being a member of the UK’s
ships register, and we are working closely with the ports sector
to support it in upholding the regulations. We have issued
detailed guidance to support that on the ground.
The second of the regulations is the Russian central bank
statutory instrument, which was also laid before the House on 1
March. It introduces restrictions that prohibit any UK individual
or entity from providing financial services relating to foreign
exchange reserves and asset management involving the Central Bank
of Russia, the Russian national wealth fund and the Ministry of
Finance of the Russian Federation. This action, taken in close
co-ordination with the United States and the European Union,
prevents the Russian central bank from deploying its foreign
reserves in any way that undermines the impact of the sanctions
imposed by the UK and our allies. It undercuts the bank’s ability
to make foreign exchange transactions to support the Russian
rouble. Alongside the existing draft of financial sanctions, this
locks down the most severe of our other restrictions.
The third and final SI concerns aviation, space and insurance
products, and it was laid before the House on 8 March this year.
We introduced a new suite of aircraft sanctions and established
new Government powers to detain Russian aircraft in the UK. At
the same time, we extended the existing ban on Russian aircraft
from the UK, making it a criminal offence for any Russian
aircraft to fly here or land here. The ban includes any aircraft
owned, operated or chartered by anyone connected with Russia and
any individuals operating in UK airspace.
The new powers will also allow the Government to remove aircraft
belonging to designated Russian individuals from the UK aircraft
register. The statutory instrument builds on the critical
industry trade prohibitions that came into force on 1 March this
year. It will go further by extending those prohibitions to cover
all aviation and space goods and technology, and related
services, as well as the provision of insurance and reinsurance
services. Together with similar actions taken by our partners,
these measures are designed to severely constrain Russia’s
commercial air operations and logistics, and that will have an
impact on its economy.
The regulations represent some of the most significant sanctions
implemented by the UK, but we have imposed, and will continue to
impose, further sanctions on Putin and his regime, as promised.
We will continue to ratchet up our sanctions until Putin ends his
outrageous, unprovoked attack on Ukraine, which represents a
clear breach of international law and the UN charter.
We are grateful to organisations from banks to oil companies,
from football leagues to singing competitions, for making it
clear that Putin and his allies must be isolated from the
international community for their actions. On 10 March, my right
hon. Friend the Foreign Secretary announced a full asset freeze
and travel ban against seven of Russia’s wealthiest and most
influential oligarchs. The following day, we sanctioned 386
members of the Duma for their support for the Ukrainian breakaway
regions of Luhansk and Donetsk, and for their complicity in
Putin’s war of choice. On 15 March, my right hon. Friend
announced more than 370 new sanctions, made possible thanks to
our new, urgently passed Economic Crime (Transparency and
Enforcement) Act 2022. Those designations take the UK’s total
number of designated persons, entities and subsidiaries to
1,000.
Together with our allies, we are making Putin and his allies pay
the price for their aggression. Our unity demonstrates the
strength of opposition to Russian aggression. I end by
reiterating our unwavering support for the people of Ukraine. We
hold them in our hearts and minds at this most terrible moment in
their nation’s history. As a free and democratic country, Ukraine
has the right to determine its own future. It is clear that the
Russian Government were never serious about engaging in
diplomacy; they were only ever focused on their territorial
ambitions. The UK and the international community stand against
this naked aggression, and for freedom, democracy and the
sovereignty of nations around the world. Our new and upcoming
sanctions regulations and measures will continue to show Putin
that his abhorrent war is a massive strategic mistake. We pay
tribute to the Government and people of Ukraine. I commend the
regulations to the Committee.
4.38pm
(Cardiff South and Penarth)
(Lab/Co-op)
It is a pleasure to serve under your chairpersonship, Mr Twigg. I
thank the Minister for the points that he has set out; indeed, I
thank the whole team at the Foreign, Commonwealth and Development
Office, and those in other Departments who are working on
bringing in these sanctions measures. I do not intend to detain
the Committee long; in line with the approach that we have taken
on these matters to date, we wholeheartedly support the
Government’s efforts to target the Putin regime in response to
its unjustifiable, unprovoked attack on Ukraine, and the heinous
aggression and atrocities that we see almost daily.
I have a number of questions for the Minister, which I hope he
can answer. Let me begin by reiterating that we Labour Members
stand in utter condemnation of President Putin’s invasion, and in
complete solidarity with the people of Ukraine, who are showing
extraordinary courage and resilience, and are making
extraordinary sacrifices, in resisting this onslaught. I am sure
that the Minister met, as I did, the four Members of the
Ukrainian Parliament who came here. They are remarkable women who
are speaking up, and who undertook the journey here at great risk
to themselves. They had powerful messages for all of us in this
House about what is needed. I hope he has taken on board many of
the issues that they raised with him and others on all sides of
the House.
We have pledged to work with the Government at speed to ensure
the House can pass the necessary legislative measures. We urge
the Government to continue to go faster, further, broader and
deeper, not least because as Russian forces encounter the
courageous Ukrainian defence, the fighting has got bloodier and
increasingly indiscriminate. We have seen absolutely appalling
scenes in Mariupol in the last few days—utterly horrific attacks
on civilians and the attack on the shopping centre in Kyiv
overnight. Let us remember that we are here passing these
sanctions because of the Russian regime’s unprovoked and
indiscriminate aggression against the people of Ukraine.
We cannot afford to have a sanctions gap. At some points during
this process, we have been critical of the speed with which the
Government have introduced measures. The Minister gave some
details of the number of measures that have been brought in, but
they were all lumped together in one group. It would be helpful
if the Minister set out the exact number of measures that have
been introduced and the exact number of individuals and entities
that have been targeted, perhaps with a breakdown by date. He
mentioned that things had sped up since the introduction of the
Economic Crime (Transparency and Enforcement) Act, which we
supported, but I am keen to see details on how quickly that has
happened. The reason we made those changes in the first place was
to give the Foreign, Commonwealth and Development Office more
legal ability to sanction individuals without challenges such as
it has experienced.
I want to ask the Minister about the resourcing of that unit and
the other implementing units. Passing the sanctions is one thing,
but we must inform all the relevant sectors, some of which are
complex, and enforce the sanctions across all those sectors. They
will affect many companies and individuals who may have had
interactions with individuals or companies linked to the regime.
What is being done to staff up the FCDO and, crucially, the
Office of Financial Sanctions Implementation? I understand that
it has only 37 full-time equivalent staff. What are the
Government’s plans to increase that number urgently and ensure we
have the maximum amount of resources for drafting and, crucially,
implementing these measures?
Will the Minister update us on the situation in the overseas
territories and Crown dependencies? I draw attention to my
declaration of my recent visit to Gibraltar, where I asked
questions about implementation in the overseas territories. They
are crucial to ensuring that we tackle the individuals who have
sought to hide their money and move their assets around. Is it
his understanding that all the OTs and CDs have implemented these
measures all in their different legislative and constitutional
ways? That is critical, not least when it comes to measures on
financial services and shipping, given the role that OTs and CDs
play in those things.
On shipping, I welcome the measures that are being taken. This
issue has been raised repeatedly by MPs in Ukraine and others—a
number of Members have received briefings on it in recent days.
Could the Minister clarify what is being done about maritime
insurance for cargoes? I understand that nine out of 10 of the
main shipping firms operating in and out of Russia are now not
undertaking operations there, although the Chinese shipping firm
COSCO is still doing so. Given the role of the UK, and
particularly Lloyd’s of London, in maritime insurance, can the
Minister explain whether insurance companies are providing
insurance for Russian cargoes? Without those crucial insurance
and reinsurance services, it will not be possible to transport
those cargoes. It would be helpful for the Committee to
understand that.
The Minister mentioned the measures relating to aerospace and
space activities. Could he provide an update on the reports over
the weekend of an aircraft that was allegedly seized at Biggin
Hill airport? I know the Transport Secretary was dealing with
that, but has there been any resolution? Have there been other
examples of aircraft or air transport trying to use UK airspace,
particularly at general aviation airports and others away from
the main cargo hubs, or of oligarchs attempting to flee from the
measures we have introduced? What implementation has there been?
Implementation is critical.
We will have all seen the remarkable scenes of the cosmonauts
boarding the international space station, and we have all raised
concerns about the company OneWeb and the proposed launch of its
satellites from the Russian facilities. I understand that there
have been updates in recent hours about plans to move that
launch. Does the Minister have any information about that? Given
our role in space activities, and in satellite technology in
particular, it is crucial that we are not subtly funding Russian
space activities through our own commercial ventures. Of course,
we have co-operation with the European Space Agency, with its
spaceport in Guiana. It is crucial that we are using that, and
other American launch facilities. We should not be using an
agency that may have had some incredibly proud cosmonauts, but
whose own head has said some frankly appalling things in recent
days.
The Minister mentioned a range of companies affected by the
sanctions. While a number of the big name companies—especially
those with UK links—have stopped operating in Russia, which is
welcome, we are aware of a substantial list of major brands
located elsewhere in Europe. I will not name individuals; I am
sure that the Minister is aware of whom I am referring to. What
discussions is he having with our allies in European Union member
states, and indeed non-European Union member states that are
allies none the less, about what pressure is being put on some of
those big brand names to cease their operations in Russia? Quite
rightly, many Ukrainians have been raising the matter with
Members of this House, and asking how some of those organisations
are still operating and bankrolling the Russian regime by the
back door.
(Bethnal Green and Bow)
(Lab)
I am grateful to my hon. Friend for giving way. The Treasury
Committee recently received evidence from a number of experts
about sanctions. One of the issues that has come up is that some
of the companies need further guidance and advice. They are
self-sanctioning, which is welcome, but they could do with more
advice, guidance and support from the Government. It would be
great if the Minister could pick that up, in terms of next
steps.
I thank my hon. Friend for making an important point, which
relates to the questions I raised about enforcement and
implementation bodies, and particularly the Office of Financial
Sanctions Implementation. They have got to be resourced to engage
not only in enforcement, but in the provision of education and
information to companies that want to do the right thing. These
are incredibly complex matters that are moving at speed.
On countries that are not currently sanctioning, some of which we
have alliances and relationships with, can the Minister provide
an update about what diplomatic efforts we are making to bring
them into the global coalition against the Putin regime? The
Minister will be aware—we raised the matter in Westminster Hall
the other day—of threats to a number of the countries that are
sanctioning, including in the western Balkans. What steps are we
taking to reassure and reinforce them?
I have two final questions. The Government have previously
referred to an intention to limit the deposits that can be made
by Russian nationals. I raised the matter with the Minister on 1
March. Is that now included in these measures, or is it a further
measure to come? There is also a constant question, which other
Members may raise, about Scottish limited partnerships. Can the
Minister provide an update on how that issue is being dealt
with?
The Opposition’s broad intent is to support the Government on
these measures and to support them in acting in the toughest way
possible against the Putin regime. We will not seek to divide the
Committee, but I hope that the Minister will be able to provide
some important clarifications.
4.48pm
(Stirling) (SNP)
It is a pleasure to serve under your chairmanship, Mr Twigg. I am
conscious when making any speech that nobody ever criticised a
speech for being too short, so I too do not intend to detain the
Committee. We support the measures. We have called for them, we
urge the Minister to greater efforts and he has our support.
The SNP stands foursquare with the people of Ukraine—an innocent
people who have suffered a terrible act of aggression from their
neighbour. It really is poignant that we are debating the
technicalities of legislation while they are fighting for their
lives and homeland. It is a moment when we should all stand
together.
While we support the measures, I would like to make a couple of
general points. I am concerned about the British overseas
territories and the territorial extent of the measures. I am
concerned that we could be creating loopholes that will be taken
advantage of really quickly, unless the approach is really
comprehensive. Particularly given the extreme mobility of planes,
boats and money, I think there is a real risk. Again, the
Minister has our support in closing those loopholes, but they
should be on our agenda.
On the complementarity of the sanctions that the UK is
implementing, vis-à-vis the EU and the US sanctions, different
places obviously have proceeded at different paces, according to
their own domestic legislative circumstances—I understand
that—but could the Minister assure us that the aim is to mirror
exactly the EU and US efforts, and that we will get there in due
course? It is an open question as to how different places have
dealt with this, but the aim surely has to be a global coalition
in which we are doing the same stuff, and the same people should
be sanctioned by everybody, regardless of who did it first.
On the general sanctions, I support this package, but I am
concerned about its extent, and the lack of sunset clause for any
of this. A huge amount of power is being given to the Executive
to sanction individuals. I would be grateful for an assurance
that the Government’s view is that these measures will be
time-limited. I am not asking for a date at the moment—that would
be irresponsible—but an assurance that these measures will not be
a permanent addition to the armoury would be very welcome to
those of us who are concerned about long-term overweening
consequences.
I echo the comments by the Labour spokesperson, the hon. Member
for Cardiff South and Penarth, on compensation, particularly in
relation to the Russia (Sanctions) (EU Exit) (Amendment) (No. 6)
Regulations 2022, on financial measures. I note that a full
impact assessment has not been produced for that instrument, but
it says that costs are likely for UK businesses. Where is the
thinking on compensation? I am thinking particularly of the
smaller operators. Some organisations just should not have been
doing the business they were doing—they can suffer the
consequences—but a number of smaller operators will be in deep
trouble because of this. An assurance that there will be more
advice available and a flexible approach to compensation—I am
asking not for the details of it but for a commitment to that
principle—would be useful today.
Beyond those points, I reiterate that we are happy to support
these measures. I suspect that they will not be the last ones
that we see, but the Minister has our support in these
endeavours. We should all stand together at this time.
4.51pm
I am very glad to put on record the Government’s recognition of
the constructive tone that has been taken by both Her Majesty’s
Opposition and the SNP, not just in today’s statutory instrument
debate but throughout this process. I recognise that there is a
duty on Opposition parties to push the Government and to hold the
Government to account, and in this instance, it has been done in
a genuinely constructive way that is designed to reinforce what
we are all hoping to achieve, which is to put meaningful pressure
on the right bits of the Russian system, so that we close down
the financial freedom of those individuals who are propping up
Putin and his regime and helping to fund his war effort. I
recognise that sometimes in opposition it is easier to be
completely focused on opposing for the sake of opposition, and
that sometimes supportive opposition is harder to execute, but
the tone that the Opposition parties have taken has been noticed
and recognised.
In relation to specific details—times, dates, locations and so
on—if the hon. Member for Cardiff South and Penarth, my shadow,
does not mind, I will write to him on that. Actually, I will
rephrase that: I will either write to him or ensure that the
information is deposited in such a way that the whole House can
see it, because that is important. On his point about
enforcement, which was brought up on the Floor of the House,
there are institutions, businesses and individuals who want to do
the right thing, but we are indeed in uncharted waters and
unprecedented times; they want to ensure that they do not
inadvertently fall foul of our sanctions system, and we want to
help them with that.
Ultimately, enforcement of the sanctions will be done by
different bits of Government. The hon. Gentleman referred to the
Office of Financial Sanctions Implementation; I will return to
the staffing numbers, and whether they are secondments or
permanent posts. It is part of the enforcement regime, as are HM
Treasury and the Home Office. Obviously, the Department for
Transport has a big role to play in relation to both aviation and
ports. We will continue to liaise closely with ports and airports
to ensure that they understand exactly what they need to do. The
hon. Gentleman mentioned a specific instance about small
airfields. We are conscious that elite air travellers tend not to
use Luton, Gatwick or Heathrow so much. We are very focused on
smaller airfields, and will be working with them to ensure that
people do not use them to slip through the net. I will not go
into the details of that incident, but we are absolutely aware of
what he is talking about, and we are seeking to take effective
action.
Both hon. Gentlemen asked in various ways about overseas
territories and Crown dependencies. The sanctions regime applies
in all UK Crown dependencies and overseas territories, either by
Orders in Council or through the jurisdictions’ own legislative
processes. We are working with them to ensure that the regime is
put in place quickly, and that there are no loopholes or
opportunities to move between regimes.
Will the Minister tell us, or perhaps write to us about, where
that has got to? I understand that for some jurisdictions, the
changes were effectively automatic—in fact, some of them were
ahead of us—but for some, the changes took longer. Obviously, we
cannot allow loopholes in this process, particularly within our
British family.
As the hon. Gentleman says, there are different processes in
different parts of the Crown dependencies and overseas
territories. I assure him that they all have a genuine desire to
get things done quickly. As he says, in some instances, they
moved ahead of the UK. I have no doubt that the process will be
quick enough to prevent any leakage of the kind that he
suggested.
The hon. Member for Bethnal Green and Bow () spoke about working with the
financial and business sectors to help implementation. I have
covered that, and we will continue to work with those
sectors.
While the Minister is at it, can he look at how we can bolster
the staff make-up in the Office of Financial Sanctions
Implementation? I appreciate that things are happening very
quickly, but can we ensure that expertise is brought in as
quickly as possible, and that we learn lessons from other
countries, such as the United States, on this issue?
We are looking to make sure that the implementation is effective,
because we have seen that in most instances, sanctions have a
deterrent effect. People do not attempt to breach the sanctions,
because they know that we are keeping a close eye on them. We
need an effective enforcement regime, and we will make sure that
it is as effective for these sanctions as for the initial
sanctions regime.
The hon. Member for Stirling spoke about close co-ordination with
our international friends and allies. I am glad he raised the
point that our various legal jurisdictions and processes are not
identical, so the initial responses were necessarily slightly
different. At all stages, we have worked very closely with our
international partners. Indeed, at the meeting of G7 Foreign
Ministers in Liverpool in December last year, we agreed what our
collective sanctions response would be in the event of an
invasion; it feels like a lifetime ago, even though it was only a
few weeks ago. However, the initial action, and vote in the Duma,
fell short of the threshold that had been discussed.
Internationally, we all responded in our respective ways, but
there was absolute unanimity of purpose. Since then, we have
relatively quickly, and with the help of the Opposition parties,
taken Acts through Parliament. We can now co-ordinate even more
tightly. We can take our allies’ preparatory work on sanctions
and use it to bring forward our own, which massively speeds up
the process and increases co-ordination. My right hon. colleagues
at various levels of Government will be working once again with
their G7 counterparts later this week, examining what pan-G7
sanctions packages would look like.
The hon. Member for Stirling raised the question of how we
de-escalate from this, which is a legitimate point. At the
moment, we are not speaking much about what a de-escalation
process would look like—understandably, I think. Our message is
very clear: the sanctions will bite harder and get more painful
the longer this continues, and if the Russian regime wants
sanctions to ease, it has to cease its invasion and its attack
against Ukraine and remove its troops. Then we will consider how
we de-escalate. As for what protections will be in place in
future, as the hon. Gentleman said, these sanctions powers are
rightly powerful, and the House will of course want to make an
assessment of what enduring level of power is appropriate for a
Government. That is a very important argument, but it is an
argument for a different point in time.
We will continue to apply more pressure to Putin’s regime,
including through further sanctions.
I sense the Minister may be coming towards the end of his
remarks. Before he sits down, could he say something about the
crucial question of maritime insurance of cargos? If he is less
well equipped to respond to that question, perhaps he could come
back to us in writing. It is a critical issue, particularly given
the role of the UK in the maritime insurance market.
The hon. Gentleman makes a very good point and, ever the
gentleman, has allowed me the elegant “get out of jail free” card
that is the option of writing to him on this important subject.
Let me check very quickly—[Interruption.] No, that is not the
right answer. I will write to the hon. Gentleman on this issue,
because I do not want to get “nearly but not quite”; I want to
absolutely nail it.
When it comes to applying sanctions, the unanimity of voice from
those across UK politics, in every part of the UK, and in the
international community should send a very clear message to
Vladimir Putin: he cannot, and will not, be successful in his
attack against Ukraine. He should now cease that attack and
withdraw his troops, and I am glad that the UK’s sanctions will
increase the pressure on him until he does so. I thank the
Committee for its contributions, and for its support for the
sanctions.
I am sure the Minister is about to deal with the question about
compensation.
Again, I do not want to run ahead of what has been publicly
committed to, but I take the point the hon. Gentleman has made
about supporting businesses and, indeed, countries that are doing
the right thing. Those countries will perhaps feel a much greater
financial impact than we will in the UK. We will ensure that we
stand in solidarity with not just the Ukrainian people at this
difficult time, but with the companies, individuals and countries
that have chosen to do the right thing, knowing that it will
bring them a degree of financial and economic pain. I assure the
hon. Gentleman that we will look at that issue very seriously. I
commend the regulations to the Committee, and hope that Members
will support them.
Question put and agreed to.
Resolved,
That the Committee has considered the Russia (Sanctions) (EU
Exit) (Amendment) (No. 4) Regulations 2022 (S.I. 2022, No.
203).
RUSSIA (SANCTIONS) (EU EXIT) (AMENDMENT) (NO. 5) REGULATIONS
2022
Resolved,
That the Committee has considered the Russia (Sanctions) (EU
Exit) (Amendment) (No. 5) Regulations 2022 (S.I. 2022, No.
205).—(.)
RUSSIA (SANCTIONS) (EU EXIT) (AMENDMENT) (NO. 6) REGULATIONS
2022
Resolved,
That the Committee has considered the Russia (Sanctions) (EU
Exit) (Amendment) (No. 6) Regulations 2022 (S.I. 2022, No.
241).—(.)
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