Illicit Finance: War in Ukraine

– in the House of Commons at 1:29 pm on 13 July 2023.

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[Relevant documents: Oral evidence taken before the Levelling Up, Housing and Communities Committee on 16 January 2023, on the Ukraine Refugee Schemes, HC 464; and summary of public engagement by the Levelling Up, Housing and Communities Committee, on the Homes for Ukraine scheme and Ukraine Family Scheme, reported to the House on 16 January 2023, HC 464]

Photo of Bernard Jenkin Bernard Jenkin Chair, Liaison Committee (Commons), Chair, Liaison Committee Sub-Committee on National Policy Statements, Chair, Liaison Committee Sub-Committee on National Policy Statements, Chair, Liaison Sub-Committee on Scrutiny of Strategic Thinking in Government, Chair, Liaison Sub-Committee on Scrutiny of Strategic Thinking in Government 1:41, 13 July 2023

I beg to move,

That this House
notes the Second Report of the Foreign Affairs Committee, The cost of complacency: illicit finance and the war in Ukraine, HC 168, and the other work by Committees of this House on the war in Ukraine;
affirms UK support for the government and armed forces of Ukraine in the defence of their country against the illegal and unprovoked invasion by President Putin’s military forces;
is deeply concerned at the suppression of democratic freedoms to the detriment of the Russian people and utterly condemns President Putin’s war of aggression;
reaffirms the UK’s steadfast support for NATO and the security of the UK’s allies and supports Sweden’s swift accession to the alliance;
and therefore urges the Government to continue and accelerate its support for the Ukrainian armed forces through the provision of weaponry and training, and through rallying international opinion and action in support of Ukraine, until the Russian armed forces have been expelled from all Ukrainian sovereign territory as recognised in international law.

It is my privilege to move the motion standing in my name and those of all the other Chairs of Committees who have signed it. I sense that the NATO statement may have sucked a little attention away from this debate, but that is not the point. Why is the Liaison Committee putting this motion forward for debate at all? The answer is simple: the Government have come to the House to make statements, take part in debates and answer questions, but the House itself has never expressed its collective view on the Ukraine war, on behalf of the people we represent. The Liaison Committee believes it important to agree this cross-party motion and to put it to the House, so that the House puts its view clearly on the record.

The Russian aggression in Ukraine is state-on-state warfare in our continent, and it represents the greatest existential threat to peace and security in Europe since world war two. Peace in Europe, and the era of peace in most of the world since that time, is the most signal achievement of the post-world war two era. Without victory for Ukraine, lasting peace will not be restored. What does victory mean? We should be clear about what it does not mean. It does not mean just stopping the fighting, by trading sovereign Ukrainian territory for peace, simply because Russia has occupied it. That would not be peace, but a defeat for Ukraine and for the whole of the free world.

Any peace after that would be a false peace because, first, Russia would have proved that illegal military aggression rewards the aggressor. Secondly, it would leave Russia, which is already rearming as fast as it can, to resume the war whenever it chose to do so. Neither Ukraine nor the rest of Europe would be safe from Russian aggression. This motion spells out what a Ukrainian victory must mean: nothing less than the wholesale rolling back of Russia’s armed forces out of Ukraine’s sovereign territory, as recognised in international law. I am grateful to His Majesty’s Opposition for agreeing on that clear wording. That is what the free nations of Europe, and of the whole world, must support Ukraine to achieve.

If we are to prevent Russia and other autocratic states, such as China, from proving that aggression pays, there can be no halfway house, no split-the-difference deal, that segments a sovereign state. That would shred what Winston Churchill called the “sinews of peace” in the title of his famous iron curtain speech, which helped to lay the foundations of the global security and stability that we have too readily taken for granted. The democratic powers would gain only short-term respite from further wars of aggression, selling out generations of blood spilt and of patient deterrence, to offer the next generation —well, exactly what? Who can ever forget that “peace in our time” in 1939 turned out to be a false respite?

So this motion is an important message. It is also a signal to our own public about how we are inviting our own voters to regard the Russian aggression. Our news channels and politics are cluttered with trivia, but also with any number of urgent issues that are also existential threats—not least, climate change and the race to net zero. But we need to convey an ugly truth: war, and the threat of war, displaces every other threat by its immediacy. If the globe, by neglect, cascades into the chaos and waste of increasing state-on-state warfare, with all its death and destruction, and economic and trade disruption, the net zero target will be just another casualty. So our democracy, and democracy around the world, must not fail this test.

The question is: how can Ukraine win this war, in the terms set out by the motion? On that, we find that some are more doubtful than others. We have had the strange spectacle of the US President’s reluctance to advance Ukraine’s membership of NATO, for fear that, as President Biden said:

“If the war is going on, then we’re all in war…with Russia”.

That somewhat misses the point. President Putin has himself declared that his war is a war against NATO. The fact is that we are already in the war. Denial of that is denial of the profound and dangerous consequences of this war for our own security. The democratic world cannot afford to stumble in our support for Ukraine. The House heard my right hon. Friend the Prime Minister confirm earlier that the Vilnius summit was one of the most significant in NATO’s history. Ukraine was not immediately offered NATO membership, as we and others might have hoped, but we should understand why. It is problematic to extend the article 5 protection to a nation that is being torn by conflict as we speak.

However, we can be pleased to see the words of the Vilnius communiqué:

“Ukraine’s future is in NATO.”

We can also be grateful for President Biden’s support for those words. Furthermore, the Vilnius summit dispensed with the requirement for the usual membership action plan, and also established a new NATO-Ukraine council, formalising a relationship between Ukraine and NATO. All that and, not least, the continuing active and practical support for Ukraine, reinforces the underlying intention of NATO nations, in principle, that we will accept only one outcome from the war: the complete expulsion of Russian armed forces from Ukrainian territory.

I wonder whether my right hon. Friend the Minister would agree that NATO membership for Ukraine is also essential as soon as the war ends. Will the Government commit to that? There will only be a significant flow of investment into a post-war Ukraine if that investment is underpinned by NATO’s article 5 security guarantee. When the Czech Republic was first offered accession talks for NATO membership in 1997, the flow of private foreign investment into the country doubled within a week.

I wonder whether the Labour Opposition can expand on their position on the commitment to NATO enlargement. Earlier this week, a slightly different motion was planned for today’s Order Paper, but I was persuaded to remove the reference to continuing NATO enlargement, in the interests of cross-party unity. That is what we are pursuing today, so this is a genuinely well-motivated inquiry. Why was it necessary to remove the reference to NATO enlargement?

Today, the Leader of the Opposition, Keir Starmer, supported enlarging it. I am grateful for that late support, but will Labour make clear its support for the text in paragraph 4 of the Vilnius communiqué? That includes the words:

“We reaffirm our commitment to NATO’s Open Door policy and to Article 10 of the Washington Treaty. Every nation has the right to choose its own security arrangements.”

Does Labour stand by the decision made at the Bucharest summit in 2008, reiterated this week in Vilnius, which says that not just Ukraine but Georgia

“will become a member of NATO”?

The House will await the shadow Minister’s response to those questions.

What Ukraine must also have now is more NATO standard weaponry and more training. It still does not have enough and, as its young men die on the battlefields, we should be forgiving of President Zelensky’s constant pleading. I am certain that the Secretary of State for Defence did not want to cause a stir with his slightly unguarded remarks, but they carried an important message that the Ukrainian Government and Ukrainian representatives can be more persuasive of others who are perhaps reluctant to support Ukraine, or reluctant to support it with the necessary weapons and matériel.

The UK has been a trailblazer. The Government should be congratulated on the UK being the first nation to give significant military support to Ukraine, while countries such as the United States and Germany were holding back. We were the first to provide military training and lethal weapons, and the first to commit tanks and long-range missiles. It is in the interests of the whole world that the Ukrainian armed forces get what they need, and as fast as possible. The more they have now, the quicker they can achieve victory. It is a simple equation. The longer the war takes, the more expensive it will be for NATO countries and for the rest of the world in the longer term. It will also be more dangerous, because the longer we take to help Ukraine achieve victory, the bigger problem a belligerent Russia will become.

The UK does all of this not out of some misplaced notion of national vanity about our role in the world, but to defend our own national interest. The UK plays a vital leadership role in the world. The UK has to step up, or the world will become a far more dangerous place for our own citizens, as well as for everybody else. The post-war era of peace and security was founded on deterrence. When deterrence failed and the Russian tanks rolled into Ukraine on 24 February last year, the peace and security of Europe was shattered. It must be restored, or democracy around the world will have failed in its resolve and the dictators will have triumphed.

The motion before the House this afternoon is not just a declaration of support for the policy of His Majesty’s Government on Ukraine; it is a banner under which we must rally our people and the other democracies of the world, in support of the freedom and security of us all.

Photo of Liam Byrne Liam Byrne Labour, Birmingham, Hodge Hill 1:52, 13 July 2023

My gratitude goes to the Chair of the Liaison Committee, Sir Bernard Jenkin, and the Chair of the Backbench Business Committee, my hon. Friend Ian Mearns, for tabling the debate. My gratitude for this timing is matched only by my sadness that members of the Foreign Affairs Committee are travelling in Africa at the moment, in pursuit of their inquiry into counter-terrorism, and so the House will have to put up with me. I am not speaking on behalf of the Committee, but I am at least sharing the Committee’s analysis of what the Government have got right and where they have further to go—in some cases, much further.

I associate myself with the support for the motion expressed so eloquently by the hon. Member for Harwich and North Essex. The motion is well drafted and deserves the support of the whole House. I want to complement his excellent speech by sharing some analysis of the report by the Foreign Affairs Committee at the centre of the motion.

The truth is that many Members of the House—I can see some of them in the Chamber—have been warning about the need to re-contain Russia since President Putin’s speech to the Munich Security Council back in 2012. Threats always evolve, and today they are evolving faster than ever. There are new spectres abroad, but the most dangerous of those spectres is Russia.

At the core of the debate is an argument about how we defend our freedom, by reinventing our security for new times. Because Russia is the principal of those spectres, it is right that we spend most of our time today discussing how we re-contain Russia. In truth, it is about not simply supporting Ukraine in its fight, but understanding the new theatres of violence where Russia is on the march. As I hope we will see in the defence Command Paper next week, they will require us, as a country, to re-enforce our defences in the Arctic and our alliances in central Asia, and, crucially, transform our presence in Africa, where the Wagner Group is still a threat in some 14 to 15 countries, where it has extracted at least a quarter of a billion pounds to cashflow the wars of President Putin.

That takes us to the core of the argument set out in the Foreign Affairs Committee report. The threats that we have to confront now are not simply places on a map, but domains; they are the political, cyber and, crucially, economic worlds. We have to recognise that the way we will be attacked will not simply be by states, but by states acting together with others.

Those proxy forces will be more dangerous, in many ways. Sometimes it will be organisations such as the Islamic Revolutionary Guard Corps, acting in concert with the Government of Iran, but at other times it will be private military companies, such as the Wagner Group. Increasingly, these nexus threats will couple with organised crime groups and together they will exploit our vulnerabilities in the economic crime space, to generate the millions needed to cashflow violence. That is why the Foreign Affairs Committee, under the leadership of the then Chair, Tom Tugendhat, who is now the Minister for Security, spent so much time over the past couple of years looking at the question of illicit finance.

Russia is at the centre of the debate because we have to learn the simple truth that we have to re-contain Russia. When we look at Russian history, we see one clear lesson: Russia is constantly in the business of invading its neighbours. We have to remember the throttling of Berlin in 1948 and the invasions of Hungary, Czechoslovakia, Afghanistan, Georgia, Moldova and Ukraine. We in this House have to learn the lesson that a mainstay—a cornerstone—of our security policy has to be a strategy for re-containing Russia. We cannot change the geography of Russia, but we can and must end Russia’s ceaseless choreography of war.

With Sweden’s admission to NATO, along with Finland, we have now rebuilt NATO’s eastern flank. That task will not be complete, as the Chair of the Liaison Committee said, until Ukraine, and I hope one day Georgia, join NATO. But we have to recognise that there is an awful lot more that we need to do to close down the domains of politics, cyber and economy.

The Foreign Affairs Committee report focuses on the economic world. Frankly, it is a shame that it took the invasion of Ukraine to prompt the Government to get serious about bringing forward the Economic Crime and Corporate Transparency Bill, which is currently in the other House. At least the Government have made progress. I hope that we can build on what I hope is an emerging consensus in the other place about some of the reforms that will be needed. Together, we have to ensure that we have shut down Londongrad for good. For many years, our country has not simply been a target, but a crime scene. We have been the place where hundreds of billions of roubles, stolen from the Russian people, have been laundered and, in many cases, recycled into Putin’s ceaseless war of violence.

In the Foreign Affairs Committee’s report, we set out four basic sets of reforms needed in the fields of prevention, intelligence, enforcement and prosecution. In the realm of prevention, it is obviously vital that we impose upon directors some much tougher obligations and finally ensure that Companies House becomes a regulator, not a library where accounts are filed to gather dust.

Not many of us will remember this, but when this House decided to create limited liability laws, back in 1851, the Prime Minister of the day, Viscount Palmerston, confronted quite a contentious debate and a divided House. At one point he had to threaten the House with sitting right the way through to the summer in order to get the legislation on the books. Limited liability partnerships are not found in nature; they are the creation of us as legislators and create significant privileges for those who want to come together and form a company. Viscount Palmerston said that it would allow Britain’s army of small savers to combine their small pots together to create great firms of the future

“for the advantage of the community as a whole.”

He told the Commons:

“There is nothing that would more tend to the general advantage of the public.”—[Official Report, 26 July 1855;
Vol. 139, c. 1390.]

Yet today many are exploiting the licence to create companies, to create firms, that subvert the common good. We should stop them. That is why our Committee underlined the imperative of building a stronger Companies House and creating stronger obligations on directors, their proxies and their enablers. The Economic Crime and Corporate Transparency Bill does offer some progress, but it could be stronger. Crucially, we need to create a duty on the registrar to verify information, not simply provide a power that enables the registrar to do something. We need to toughen the obligations of corporate criminal liability. In fact, the report cited in the motion says that

“reform of outdated and ineffective corporate criminal liability laws which mean that it is difficult to hold large companies to account for economic crimes”— should be reformed.

On this front, the Government commissioned a report from the Law Commission some years ago. The options for change have been on the table since the summer of last year. I gently say to Ministers that it is time to move forward on those options.

It is not simply directors who need stronger obligations; enablers do, too. That is why our report advised the Government to study the lessons from, for example, the enablers Bill from the United States Congress and the Countering America’s Adversaries Through Sanctions Act. These contain protections that should be aligned with UK law. The Economic Crime and Corporate Transparency Bill makes it easier for the Law Society to impose penalties on bad lawyers, but far more important are Lord Agnew’s amendments to the Bill, which were passed in the other place. I hope the Minister can confirm that the Government will not resist those amendments when that Bill comes to us in the next week or two. These require nominees to declare who they are working for. That will help us to identify who the persons of significant control are. It introduces an offence for nominees who do not declare themselves. That is a recommendation of the Financial Action Task Force, and the investigations by both the BBC and The Times have underlined just why we need it. They found that Viktor Fedotov, a Russian-born oil executive accused of £143 million-worth of contracting fraud in Russia, owns two properties in the UK via offshore trust structures, administered by the wealth management firm JCC. But owing to the nominee loophole, Mr Fedotov is not named as the beneficial owner of the corporate trustees that hold property in his name. That is the kind of loophole that made Londongrad possible. We should close it and we should close it together.

The other place has also supplied amendments that close exemptions for trusts, which would stop trusts in the Register of Overseas Entities being used as an opaque vehicle for illicit finance. The other place has also introduced amendments creating sanctions for directors failing to prevent money laundering. It has also closed the loophole that allows small and medium-sized enterprises to escape these sorts of obligations. The amendments are sensible. They are supported by both sides of the House. I hope the Minister, when she winds up, will be able to confirm that the Government will not seek to oppose those amendments.

Secondly, our Committee reflected on the kind of intelligence that we will need to track down bad people who finance Putin’s regime. We thought it was therefore essential that the Government now fulfil their commitment to publish their review of the tier 1 golden visa scheme. That has been promised repeatedly and it is time that we saw it on the table here in the House. Crucially, our Committee was unanimous that better protection was needed for journalists under a revised and comprehensive anti-SLAPP set of laws, but also new protections with a whistleblowing Bill. We asked the Foreign, Commonwealth and Development Office to push for a whistleblowing Bill to offer protection for those who speak out or uncover economic crimes. As yet, we have had no plans from the Government to fulfil that recommendation.

The third area, which is possibly the most significant, is the enforcement gap. We know that this is a problem. Organisations such as the Atlantic Council have been so concerned that they have warned that the UK’s effort to tackle kleptocracy is

“in severe danger of being shown as a paper tiger”.

Obviously, the key is to increase funding for law enforcement. The Government have promised £400 million to fund a three-year programme, but economic crime costs this country £350 billion. In 2019, the head of the National Crime Agency said that the budget needed for the NCA was closer to £3 billion. The Royal United Services Institute says that annual investment of at least a quarter of a billion pounds is needed. We could raise that money if only we took on the argument of setting, say, a £100 fee for setting up new companies, which is, of course, the fee level recommended by the Treasury Committee. That is double what His Majesty’s Government are currently proposing. We need stronger proposals from Ministers to plug the gap where our credibility should be.

Finally, enforcement will mean little if we cannot prosecute the criminals once we find them. That is why we welcomed the sanctions that have been passed by His Majesty’s Government, but, like many people in this House—I suspect that Sir Iain Duncan Smith will pursue this point—we are also clear on our Committee that assets should be seized, not simply frozen. We know that it will take some international action at the United Nations to change the norms in international law around immunity for organisations such as central banks. It is also important that we move ahead with the prosecution of Russia for aggression, so that it cannot claim in some way that it is a victim under the terms of the European convention. But, again, what most of us in this House want to see is a Bill on that table that shows how we will seize assets, not simply freeze them.

Important measures have been brought forward in the other place, too. The Economic Crime and Corporate Transparency Bill would widely extend cost caps beyond simply unexplained wealth orders. Again, it is extremely important that Ministers accept rather than reject those measures. But, taken together, we have now taken, through the work of many people on both sides of the House, some serious measures that will shut down Londongrad, and that will learn the lessons from the way in which Putin was able to cash-flow his violence through exploiting his friends in the City of London and elsewhere. We must accept that, even when Ukraine is triumphant, the Russian threat will simply transform itself once again. That is why we must ensure that our economic system, which we have worked so hard to create, is disrupted and denied to those who wish us ill.

Photo of Iain Duncan Smith Iain Duncan Smith Conservative, Chingford and Woodford Green 2:06, 13 July 2023

I am grateful to be called to speak in this debate. I congratulate my hon. Friend Sir Bernard Jenkin on securing this debate and on having spoken so clearly and passionately.

It is always a pleasure to follow Liam Byrne. As he knows, we have been following each other for some time over the past few years—actually I wish to rephrase that; this is not a stalking issue, but it could be seen to be something similar to that in a political context. It is good to follow him on this particular subject because he speaks a lot of common sense. I wish to go back to the last section of his remarks, which deal with seizure and the debate that is going on about that.

First, though, in response to the opening remarks of my hon. Friend the Member for Harwich and North Essex, it is hugely welcome that NATO membership has now expanded on the northern frontier. That is very important. It sends a strong message to Russia. Russian aggression has always been there below the surface. Sometimes it boiled over into remarks, but we always ignored it. The tendency of democracies and believers in freedom, freedom of speech and human rights is, sadly, too often to deal with countries on the basis of how they wish they were, rather than on the basis of what they are telling us what they are and what they will do. It happened in the 1930s. We ignored the nature of “Mein Kampf” and Hitler’s clear objectives, which he laid out endlessly. We kept saying that only one more step would satisfy that dictator and that he would be fine; it would not be a problem. But in fact, the more we gave him, the more he determined on and we ended up in a war. Appeasement did not work. It does not work here. And 60 million people died directly as a result of our failure to understand that, when dictators tell us what they are about to do, it is always good to recognise that they are actually sending us a signal, not wishing for something else.

That has happened here with Russia. Russia made it very clear what it was going to do, right the way from South Ossetia to the invasion of Crimea and the Donbas. These were very clear first steps in telling us that Greater Russia was on the move and was an objective of Putin, not just an idea. On the Minsk agreements, I remember sitting in Cabinet on this. I am not saying I was ahead of anyone else, but I remember saying, “How many of us here are really worried about the fact that there is an agreement now granting the right for Russia to sit on territory that it has invaded and occupied?” Everybody shrugged slightly and said, “Well, there’s not much we can do about it.” That, of course, was the signal to Putin that we were not prepared to stand up. That first phase only established for him the entirety of his project and its feasibility, and then there was the constant supply of weapons and the terrible shooting down of the airliner. Those were all constant steps, telling us the direction and that he was testing us. Every time he tested us, he succeeded: we backed down and did nothing. The result has been this final full invasion—or attempted invasion—of Ukraine.

In that context, I am slightly sorry that NATO was not able to send Ukraine a stronger signal about its future with regards to NATO. I agree with my hon. Friend the Member for Harwich and North Essex in that I applaud much of what the NATO-Ukraine Council did and think it is an excellent start, but I think we could have been more positive. America and Germany particularly stood in the way of the general mood of the council to offer more to Ukraine. I know that we probably could not have brought Ukraine in immediately, but everyone harped on about article 5 being the problem because it committed people to go to war. It does no such thing, by the way; it is always worth reading these things before pronouncing on them. Article 5 does not commit the nations in NATO to go directly to war. It commits them to agree together to take action as they deem “necessary”. Simply put, it is quite important that it is not an absolute: the declaration of a war against one is a war against all is then followed by actions as deemed necessary in nations. That means that, by and large, we will probably come together and do that, but it does not mean that we would have to be at war in Ukraine. We could have offered that relationship, and reading the article tells me that that is the case.

I commend the leadership of my right hon. Friend the Prime Minister in all this, as I commend the UK’s leadership. The beauty is that the Government and Prime Ministers have led the way on the issue in so many ways, as my hon. Friend the Member for Harwich and North Essex mentioned. The good news, of course, is that this House has not been divided on any of it. The House has sent a strong signal that Parliament stands by those in Ukraine and by the Government’s actions in trying to support them. That is very important because it is not always the case; in America, it is not necessarily the case at the moment. This Parliament has stood head and shoulders among most others, and it is because of that that we have been able to lead in terms of equipment, support, and recommendations with regards to NATO. The UK is influential in these matters and long may it remain so.

I return to the question raised by the right hon. Member for Birmingham, Hodge Hill: how do we deal with Ukraine’s aftermath? Right now, there is a debate taking place about frozen assets. We have frozen the private assets of some oligarchs and we have frozen the Russian national Government’s assets here in the UK, in America, in Canada and in various other nations through their markets. It is quite an interesting debate, though. We can certainly seize private assets, although even that has been debated—but it is quite clear that under international law it is wholly feasible for us to do so—but the real debate begins when it comes to very extensive Russian national assets that are now just sitting there. How can we deal with those? It is not the case that doing this immediately opens the door to the Chinese and others to seize our assets should they wish to. There are a number of arguments, which I will quickly run through.

There are a number of routes around the problem of sovereign immunity in relation to claims against Russia for its conduct in the war and an attempt to obtain access to those assets. Customary international law permits the imposition of sanctions and restraint of assets in furtherance of international peace and security and legitimate foreign policy objectives. That means that, if asset-freezing measures are failing to achieve those aims, it would seem—this is important—very permissible in principle for measures of seizure to be adopted as a necessary and proportionate next step. They are not ruled out; they are by a natural extension. We must view international law as a movable process that is not set in stone. It has always been capable to shift international law by what nations agree. This is an important, feasible point. States are obliged under international law to take all necessary and proportionate steps to bring an end to a breach of peremptory norms of international law. That is important, because it sets the tone for why we may look at this carefully.

Photo of Liam Byrne Liam Byrne Labour, Birmingham, Hodge Hill

The right hon. Gentleman is making an excellent speech. Is he as perplexed as I am about why NATO allies have not sought to bring forward, for example, a motion at the United Nations that could help to crystallise that change in norms? If we are to effect, for example, the interpretation of immunity laws, he is absolutely right that norms need to change. One way to do that is through a vote at the United Nations, which I would have thought we could win.

Photo of Iain Duncan Smith Iain Duncan Smith Conservative, Chingford and Woodford Green

I agree; we are probably all going to agree. We have talked about the military alliance, but now we are in the realms of the economic alliance, because that is really where we win the peace. We may yet win the war, but that is no good if we leave behind a shell of a country that is incapable of operation, democracy or even economic wellbeing. Winning the peace is as vital, and we need to be planning for it now; they did that during the second world war. It is worth reminding ourselves that by the end of that war, they were very clear about what they were going to do.

Whether it is NATO, an alliance, the G7 or whoever, it is important that we form a bloc on these matters and agree, although I know there is a little resistance to that elsewhere. Furthermore, I believe that international law is not fixed, but is capable of development. Although the leadership of the UN Security Council is foreclosed because of Russia’s power of veto, there could be sufficient development to allow adjustment of the boundaries of state immunity in customary international law to allow enforcement of such international awards. For example, international law permits state assets to be frozen without any international court’s adjudication. We did not need permission for it; we did it. The reason it is done is because an action has taken place. International law could be developed to allow seizure pursuant to such adjudication.

The UN General Assembly has already adopted a resolution calling on Russia to pay reparations, and there is no reason why regional bodies such as the EU or the Council of Europe—not just NATO, but other bodies that could come together and do this—could not adopt specific resolutions providing a pathway to compensation and enforcement. That point was also made by the right hon. Member for Birmingham, Hodge Hill.

Frankly, there would appear to be no obstacle in international law to a state that imposes sanctions on Russian assets making it a condition for release of those sanctions that the Russian state honour any award made by the International Court of Justice or the European Court of Human Rights. This is another route that allows us to sanction Russia; if they fail to meet their requirements under the sanction, we simply seize their existing assets in balance with the sanctioning that was necessary. Overall, for those and many other reasons, the details of which I will not go through now, I think there is more scope for sanctioning.

It was Lord Bingham who said that the public policy consideration that had greatest claim on the loyalty of the law—this is really important—was that where there was a wrong, there should be a remedy. We must always be governed by that in law. That is why I believe it is wholly feasible for us now to start the process by which we may undertake the pathway to the potential seizure or subsequent seizure of Russian assets for reparations.

I will conclude by mentioning, as I did in a previous question to the Prime Minister, that I came back a few days ago from Ukraine. It was a privilege to be there, working with a remarkable charity that I have now supported twice in Ukraine, called Siobhan’s Trust, which—in a classically British kind of way—just set off when Russia invaded Ukraine and went towards the danger. The people from that charity have been feeding those dispossessed of their properties and fleeing the war. They moved into Ukraine and have now moved down near the frontline, and they feed people there from pizza trucks. They have made over 1 million pizzas for people in Ukraine, and they produce joy and hope in people’s hearts when they are there, as they wear what they call Ukrainian kilts and they put the boombox on. People’s faces really lift when they see this peculiarly quixotic British crowd—who seem impervious to the idea that they are within the range of shell shot—having fun; it lifts their spirits and brings them great hope.

The thing I discovered while I was out there, and the one thing I know from having served, is that war is terrible. War is horrendous. War hurts those who are not directly involved in it—more, perhaps, than those who are. It is a terrible, terrible affair, to be avoided at almost all costs, except when justice must prevail. However, talking to the military and to some of the guys I saw down there near the front about their problems and issues, I must say to the right hon. Member for Birmingham, Hodge Hill that we still have so much more to do.

Ukraine is the frontline of NATO. There is no beating about the bush: if Ukraine fails on this, we all fail, and the repercussions, as the right hon. Gentleman said, will be terrible. Ukraine’s war is already our war, whether we give it membership of NATO or not. It is our war. We started that when, much to Putin’s shock, we stood by what we said we would do.

The war in Ukraine has exposed our own failure to understand what war fighting really means. The truth is that almost all of us in NATO have abandoned the idea of the sheer extent of a full-scale war. When I talked to the Ukrainian soldiers, the amount of ammunition they told me they use on a daily basis is astonishing. We have forgotten that, so we do not have stockpiles appropriate to fighting war, and we have to replenish those in double-quick time, because they need that ammunition. They are running short of artillery ammunition, not because we do not want to give it to them, but because so many of us do not have enough artillery ammunition to give them right now, having placed contracts only recently. America, by and large, has many more stockpiles than we do, but it is a fact of life that if we wish to avoid war, we must prepare for it, and we simply have not prepared for it over the years to the extent we needed to.

The Ukrainians need that support. They need training; many of their soldiers get two or three weeks’ training and then they are on the frontline. I swear to God, having been a soldier myself, that it takes a long time to understand proper fieldcraft, and the less someone knows, the more likely they are to be wounded or killed, because they will take the wrong decisions. I will not say exactly what is required, but I must talk to the Government about what they could do. Ukraine also faces conscription issues.

The reality is that Ukraine must win this war, but it needs us to be literally, as Roosevelt once said, the “arsenal of democracy”. It is for us who are not on the frontline to supply those who are, so that they may achieve their goal of victory. With victory comes the second phase of reparations and restoration. We must be in that right to the finish, for if Ukraine fails first in the war, or fails subsequently in the peace, we will carry the blame for it, and rightly so. We will never be forgiven. I simply say to my right hon. Friend at the Dispatch Box, “This is our war. We must win it with them, or else we will all lose.”

Photo of Ronnie Cowan Ronnie Cowan Scottish National Party, Inverclyde 2:22, 13 July 2023

I will not take up too much of the House’s time, or repeat the arguments that have been eloquently put forward by previous speakers, but I would like to touch briefly on the finance aspect of the debate. It is a great irony that when we talk about murky finances and the war in Ukraine, we come back to issues of transparency in the UK time and again. The initial flurry of activity and enthusiasm to track down the wealth of sanctioned Russian elites has well and truly ground to a halt.

Where do we stand now? The Foreign Affairs Committee’s report slammed the UK Government for needing a war to galvanise them into action, stating:

“The measures in the Economic Crime (Transparency and Enforcement) Act 2022…do not go far or fast enough” and fail to

“address the fundamental mismatch between the resources of law enforcement agencies and their targets.”

The report also stated that, while Ministers had

“spoken eloquently…about the need to clamp down on kleptocrats, rhetoric has not been matched by constructive action.”

A year on, it is hard to see what has changed. Corrupt money still flows into the United Kingdom and the UK Government seem to struggle to deal with allegations of corruption closer to home. The sad fact is that the so-called London laundromat was a national security issue long before the war in Ukraine, and it will continue to be one unless Westminster finally acts decisively. The UK sanctions regime should now move from being reactive to being proactive and preventive.

The SNP calls for the establishment of an independent illicit finance commissioner to monitor the presence of assets in the UK linked to human rights abusers. The UK cannot afford to be the weakest link in the western alliance’s struggle against Russia’s illicit finance for a single day longer. While other countries are taking strides to legislate for how frozen Russian assets can be legally seized, the UK Government have yet to make the leap from rhetoric to law making.

The forthcoming King’s Speech should include new legislation to further crack down on illicit finance in the UK financial system. Transparency International has pointed out a number of key failings. The UK Government need to be publicly accountable for the measures they have taken, to get serious about targeting illicit wealth within their borders and to collect and release the data in a more systematic manner, enabling journalists, civil society and the wider public to evaluate their efforts. As one corrupt money flows expert at Transparency International said:

“The intermittently released figures on blocked assets may seem impressive but likely represent a small fraction of all Russian dirty money hidden across the world… Governments need to be honest about the challenges they face in tracing and seizing the assets. They also need to explain what’s preventing them from pursuing further accountability measures—including confiscation—in relation to potentially illicit assets. This can help us better understand what reforms are needed.”

Economic crime has been an afterthought for far too long. The National Crime Agency budget has declined in real terms by 4.5% over the past five years. Approximately 225,000 people work in policing in England and Wales, covering London, right at the centre of this mess, but just 1,700 of them—less than 1%—work on all types of economic crime. The UK Government could follow the lead of the Dutch Parliament and set up a trust fund based on seized money from Russia and Russian oligarchs to fund the Prime Minister’s proposed Marshall plan to help rebuild Ukraine.

In the Republic of Ireland, property is frozen and subsequently forfeited if it appears to the court that a person is in possession or control of property that constitutes, directly or indirectly, proceeds of crime. The success of the Irish system stems partly from the resources provided to its Criminal Assets Bureau—something the UK has not traditionally been willing to do. The war in Ukraine has shown us that we need to close the loopholes, and we need to close them now.

Photo of Catherine West Catherine West Shadow Minister (Foreign and Commonwealth Affairs) 2:27, 13 July 2023

I thank Sir Bernard Jenkin for bringing this motion before the House. I also thank Alicia Kearns, who is currently travelling, and the Foreign Affairs Committee for their efforts in authoring the report, which shines a light on the scourge of illicit finance that continues to erode our economic and political institutions, the impacts of which have been made all the more apparent by Putin’s illegal and egregious war of aggression against Ukraine.

As was outlined in the integrated review of 2021 and reinforced in the refresh, Russia remains the UK’s most acute threat. Our national security and that of our closest allies is intrinsically linked to the outcome of the war in Ukraine, and it remains incontrovertible that assets laundered through London and the UK are having a direct impact on the Kremlin’s capacity to wage that war. Labour has been in lockstep with the Government all along on this question, and we will continue to be, should the Government bring forward further steps to strengthen the UK’s position. However, we consider it our duty as an Opposition to make clear where we believe the Government need to do more, and today is a good example.

I wanted to focus on the NATO question, but we went through it quite thoroughly this morning. In light of the Prime Minister’s challenge to us all to look back on what Mr Stoltenberg said at the conference and on page 4 of the report—I was making notes—perhaps collectively we should go back, look at the conference and its findings, and come back with a further strengthening of our position. I can guarantee that Labour will be in lockstep with the Government on this; I think both this debate and this morning’s statement have shown that.

Let me address very briefly the matters that have been raised in the debate. My right hon. Friend Liam Byrne outlined a number of concerns. He watches this issue closely and has been involved—together with my right hon. Friend Dame Margaret Hodge—in these questions for many years in this House. It is imperative that the Government come forward as quickly as possible with the measures that are needed.

I extend my thanks to the charity that Sir Iain Duncan Smith mentioned. We all have examples of people who have come forward in the past couple of years and shown amazing compassion and strength. I know so many families in Hornsey and Wood Green who have opened their doors and had families stay, even beyond the six months. Even though the scheme was not perfect—we all knew that—it was fantastic to see our citizens come forward to help.

To move on to the substance of the FAC’s report, it is clear that if the Government had introduced the necessary legislation in time, they could have stemmed the flow of illicit finance prior to Russia’s full-scale invasion of Ukraine. However, kleptocrats and oligarchs have been emboldened, believing fundamentally that their vast wealth will be safe in London and that their assets will flourish. To go further on that thought, perhaps we could do more on the question of property and China, rather than waiting until tensions develop in that particular relationship.

The Labour party has been pressing the Government for action for years, and has raised the issue of illicit finance several times on the Floor of the House. In January, the shadow Foreign Secretary, my right hon. Friend Mr Lammy, made it clear that when we are in Government we will answer calls from the US and beyond to establish a transatlantic anti-corruption council to co-ordinate the international fight against corruption, money laundering and illicit finance. In a speech just this week at the Bingham Centre, my right hon. Friend announced that Labour would join calls for the establishment of an international anti-corruption court designed to prosecute the most egregious acts of corruption across the globe.

The FAC report illustrates that the measures adopted in the Economic Crime (Transparency and Enforcement) Act 2022 did not go far enough to tackle to the problem. It states that the steps taken by the Government since February last year

“are not preventative but rather constitute damage limitation”— damage brought about by years of apathy on the issue. The new Economic Crime and Corporate Transparency Bill finally acts on some, but not all, of the promises in the Government’s 2019 economic crime plan. Indeed, the six-month delay between the two pieces of legislation has allowed thousands more illicit companies to register.

We welcome the Bill, but it must go much further to ensure not just that we keep up, but that when it comes to cracking down on illicit finance, Britain holds the gold standard. It was therefore profoundly disappointing that in Committee back in January there was little in the way of movement from the Government, even when they struggled to find fault with our amendments and new clauses. Every single effort by Opposition parties to strengthen the Bill was met by resistance from Ministers, and every Opposition amendment that was pressed to a vote was defeated. As a result, Committee stage amounted to little more than a litany of missed opportunities, forcing us to return to those arguments once again in this debate, as we will no doubt have to do again during the Bill’s remaining stages.

Although we welcome the fact that the Government have finally U-turned on introducing a corporate criminal liability offence, the Bill’s provisions on Companies House and the supervision of third-party enablers, especially trusted company service providers, are too weak and do not match international standards. The Bill also fails to set out a strategy to recoup assets seized through economic crime enforcement and to compensate the victims. The right hon. Member for Chingford and Woodford Green mentioned righting a wrong—finding a remedy.

Indeed, although we also welcome the steps taken in the Bill on cryptocurrencies, what consideration is being given to sanctioning cryptocurrency mixers Tornado Cash and Blender? [Interruption.] It is not a cocktail! The US Treasury has sanctioned both; why have we not? Will the Government bring the UK into line with the US Treasury’s approach? Putin and his cronies are more than capable of exploiting such gaps in our regime, so why are we so slow and allowing that to persist? That example is illustrative of the Government’s strategy when it comes to tackling Russia here at home. The report outlines that well:

“Although Ministers have spoken eloquently in the House about the need to clamp down on kleptocrats, rhetoric has not been matched by constructive action. Meanwhile, corrupt money has continued to flow into the UK.”

More broadly, even the limited progress that the legislation offers is hampered by the fact that the Government are not sufficiently resourcing the bodies tasked with enforcing the changes. Ronnie Cowan went into the question of resource in detail, so I will not repeat that point, but the report finds that 0.042% of GDP is spent on funding national-level economic crime and enforcement bodies. As a result, money laundering prosecutions have dropped by 35% in the past five years.

Photo of Liam Byrne Liam Byrne Labour, Birmingham, Hodge Hill

My hon. Friend is making a brilliant speech. On her point about enforcement, one thing the Government could commit to this afternoon is the Prime Minister appointing a new anti-corruption tsar, which would help. Many of us in the House are grateful for the leadership of my right hon. Friend Dame Margaret Hodge, who is not in her place. She has written to the Prime Minister asking him to make that appointment. Surely that is something that the Minister could give us some good news about.

Photo of Catherine West Catherine West Shadow Minister (Foreign and Commonwealth Affairs)

I will allow that message to pass straight across the Dispatch Box to the Minister so that she can answer it. That query was going to be in my concluding remarks, so now I will not need to repeat it.

Spotlight on Corruption highlights that the Bill

“only funds the first two years of the plan”,

so we need to plan for more and more finance, particularly as this sort of crime and online crime become more complex. Will the Minister outline how the Government will ensure that the plan has necessary funding to ensure that public investment matches the scale of the challenge that we face? The National Crime Agency, the Serious Fraud Office and other bodies urgently need further resourcing to row back years of inactivity in this area and to protect legitimate business and safeguard our national security.

We must also do far more to oppose those who seek to use their wealth to avoid scrutiny, skirt the law and remain beyond the reach of those who enforce it. We therefore welcome the fact that the Government are, through amendments to the Economic Crime and Corporate Transparency Bill, finally providing judges with greater powers to dismiss lawsuits designed purely to evade scrutiny and stifle freedom of speech. We in this House all followed the case of the excellent author Catherine Belton, who was taken to court on a frivolous basis, on one of those trumped-up charges, and suffered a great deal of distress as a result.

In January, revelations came to light that in 2021, the Treasury, which was then under the leadership of the current Prime Minister, issued special licences allowing Wagner Group warlord Yevgeny Prigozhin to circumvent sanctions issued before Putin’s illegal invasion of Ukraine and to level legal proceedings against a UK journalist. That highlights fundamental problems in the Government’s competence—not only on SLAPPs, but in their seemingly flippant issuing of general licences and exemptions to our sanctions regime, with virtually no ministerial oversight. As my right hon. Friend the Member for Barking made clear in a letter to the Prime Minister, and as my right hon. Friend the Member for Birmingham, Hodge Hill reminded us, it has now been 400 days since the Government’s anti-corruption champion resigned.

Labour will continue to push the Government on the full seizure and repurposing of Russian state assets. There has been little or no movement from the Government on that issue in more than 500 days, despite our Opposition day motion of three weeks ago setting out the means to do so, and despite the fact that our allies are finding the courage to forge ahead. We must keep up. When can we expect the Government to introduce legislation that would allow the repurposing of Russian state assets? The Canadians have already done it; when will the UK Government catch up?

That issue is coupled with the challenge of closing loopholes in our regime that still allow the prohibitions established in secondary legislation to be circumvented. I understand that the Minister will write to the shadow Minister, my hon. Friend Stephen Doughty, after he raised at a statutory instrument Committee on Monday the question of the continued flow of Russian oil.

Fundamentally, the FAC report catalogues a litany of errors and shortfalls, and illustrates the extent of the Government’s sluggishness in bringing forward legislation fit to tackle the challenges that it outlines. We support the steps taken in the Economic Crime Act and the Economic Crime and Corporate Transparency Bill, which has been in the other place, but changes in the law must be accompanied by a decisive shift in culture on tackling illicit finance, on Government proactiveness, and on authorities having the means, resources and focus to tackle the issues at their core.

I thank all colleagues for their contributions, and particularly the Foreign Affairs Committee for its forensic and fair appraisal of the UK’s performance in this area. Positive steps have been taken, and we welcome them. We have made it clear that we will support the Government where we believe they are getting it right, but progress cannot now beget apathy and complacency. There is a long way to go to expunge dirty money from this country entirely. We owe it to the people of Ukraine to tear such finances from our institutions root and stem.

I hope that the Minister has heard the views of colleagues and will provide assurances that the Government will not take their foot of the pedal when our priority must be to build on the progress that has been made.

Photo of Anne-Marie Trevelyan Anne-Marie Trevelyan Minister of State (Foreign, Commonwealth and Development Office) 2:39, 13 July 2023

I am grateful to my hon. Friend Sir Bernard Jenkin and the Backbench Business Committee for securing the debate. I also thank all Members for their insightful contributions and questions and all contributors to the Foreign Affairs Committee’s inquiry. I understand that the Committee’s members are travelling and therefore not able to be with us today. My hon. Friend the Minister for Europe would have been delighted to take part in the debate, as it is his brief, but he is unavailable. It is my pleasure to respond on behalf of the Government.

When Putin launched this awful, illegal war, he gambled that our resolve would falter, but he was wrong then, and he is wrong now. Russia’s military is failing on the battlefield, with the counter-offensive making increasing progress—Ukraine has gained more ground in the last month than Russia has in the last year. Russia’s economy is failing at home, as we tighten the stranglehold of sanctions. The image of the NATO leaders standing shoulder to shoulder with President Zelensky in Vilnius yesterday sent a powerful message to the world: we will stand with Ukraine for as long as it takes.

When the Prime Minister met President Zelensky at NATO yesterday, he paid tribute to the courage and bravery of Ukraine’s armed forces on the frontlines, and they discussed the increasing progress of the counter-offensive. The Prime Minster outlined a new package of UK support for Ukraine, including thousands of additional rounds of Challenger 2 ammunition, more than 70 combat and logistics vehicles and a £50 million support package for equipment repair, as well as the establishment of a new military rehabilitation centre.

I am incredibly proud of the UK’s role at the forefront of international support for Ukraine. In this debate and in the Prime Minister’s statement earlier today, Members have reflected the extraordinary sense of purpose we have as UK citizens in support of the Ukrainians and their incredible bravery. Our military, humanitarian and economic support to Ukraine so far amounts to over £9.3 billion. We gave £2.3 billion in military aid last year, second only to the United States, and we will match that this year. The UK was the first country in the world to train Ukrainian troops, the first in Europe to provide lethal weapons, the first to commit tanks and the first to provide long-range missiles, and we are at the forefront of a coalition to train and equip the Ukrainian air force.

Our humanitarian assistance, delivered through the Government of Ukraine, the UN, non-governmental organisations and the International Committee of the Red Cross, is saving lives and helping to protect the most vulnerable, including women and children, the elderly and those with disabilities. The UK has committed £347 million of humanitarian assistance since February 2022, and we have helped to reach over 15.8 million people in need during this crisis. Our economic support includes over £1.7 billion in fiscal support to Ukraine, including approximately £1.65 billion in guarantees for World Bank and European Bank for Reconstruction and Development lending and £74 million in direct budgetary assistance.

The international community is united in supporting Ukraine, and our diplomatic response has been broad and comprehensive. We continue to work to strengthen NATO. It is in everyone’s interest for Sweden to join; its accession makes us all safer. Ukraine’s future place is in NATO, and it has already taken steps toward membership.

Photo of Dominic Raab Dominic Raab Conservative, Esher and Walton

The Government have done an excellent job and shown real leadership on Ukraine. My right hon. Friend mentioned Sweden joining NATO. As important as that is, given its assets—submarines and fighter pilots—it is also telling that the UK and others have persuaded Turkey to remove its veto, coaxing it back into the fold. The truth is that to outlast Putin, we do not just need to rely on the support we already have; we have to grow it, and that was a good example of a big win for UK diplomacy and the wider NATO alliance.

Photo of Anne-Marie Trevelyan Anne-Marie Trevelyan Minister of State (Foreign, Commonwealth and Development Office)

My right hon. Friend is absolutely right. His efforts over a number of years while serving in the Government have helped to build that coalition of support and that confidence to enable Sweden to get to this point. Indeed, Finland is now a member of NATO.

Ukraine’s future place will also be in NATO, and the steps towards membership are now taking place. When allies agree and conditions are met, we will be in a position to extend a formal invitation to Ukraine. As Catherine West pointed out, and as the Prime Minister highlighted today—we can read the full detail in the Vilnius communiqué —the requirement for a membership action plan, for instance, has been dispensed with, which can speed up the process.

Members raised the question of Georgia’s potential accession to NATO. The UK supports Georgia joining NATO, as agreed at the Bucharest summit in 2008. We are taking steps with allies to develop the capabilities of Georgia and to prepare it for membership through a comprehensive support package, in concert with other NATO allies.

I turn to the issue of sanctions and to the Foreign Affairs Committee’s report on illicit finance. I thank all contributors to the Committee’s report, which is very thorough. We have co-ordinated sanctions with our international allies to impose a serious cost on Putin for his imperial ambitions. More than 60% of Putin’s war chest of foreign reserves has been immobilised, worth £275 billion. Our own sanctions package is the largest and most severe we have ever imposed on a major economy, and it is undermining Russia’s war effort.

Following her question about the cocktail of crypto- currencies, I can confirm to the hon. Member for Hornsey and Wood Green that we are actively monitoring the use of cryptoassets to detect potential instances of sanctions evasion. The use of cryptoassets to circumvent economic sanctions is a criminal offence under the Sanctions and Anti-Money Laundering Act 2018. As she pointed out, they are complex instruments, and the teams work hard on that. That is already under close review.

Reacting quickly to the invasion of Ukraine, we enacted the Economic Crime (Transparency and Enforcement) Act 2022, sanctioning over 1,600 individuals and entities and freezing £18 billion of Russian assets. We will continue to bear down on kleptocrats, criminals and terrorists who abuse our open economy through our new Economic Crime and Corporate Transparency Bill, and we will ensure that dirty money has nowhere to hide at home or overseas.

Photo of Iain Duncan Smith Iain Duncan Smith Conservative, Chingford and Woodford Green

I am grateful to my right hon. Friend for her comments, but I want to test this further. Are the Government reviewing carefully whether those frozen assets could be seized and used for reparations, or do they consider that that is not feasible and therefore are not doing anything about it?

Photo of Anne-Marie Trevelyan Anne-Marie Trevelyan Minister of State (Foreign, Commonwealth and Development Office)

If my right hon. Friend will give me a moment, I shall attempt to answer that question in due course.

Photo of Liam Byrne Liam Byrne Labour, Birmingham, Hodge Hill

I am grateful to the Minister for giving way; she is being characteristically generous. Could she tell the House whether that bearing down on economic criminals will include Government acceptance of the excellent amendments tabled by Lord Agnew in the other place, which have widespread support in this House?

Photo of Anne-Marie Trevelyan Anne-Marie Trevelyan Minister of State (Foreign, Commonwealth and Development Office)

The right hon. Member will know that I am unable to answer that at this point—it is a question for the Leader of the House—but I have no doubt that it has been heard and that the cross-party support for that measure has been duly noted.

We are working closely with our international partners to address the impact of Russia’s war on global food prices and food security for the world’s poorest. That includes working to keep exports of Ukrainian grain flowing through the UN Black sea grain initiative, which has helped more than 32 million tonnes of grain and other foodstuffs to reach countries around the world.

To respond to the point that my right hon. Friend Dominic Raab made about Turkey’s commitment—that country’s assistance in keeping that grain initiative flowing despite the continued challenges—we should all commend its efforts, quietly and behind the scenes, to make sure that those flows of food can continue. Its commitment has been exemplary.

Russia continues to delay and obstruct inspections of ships, but food cannot be a weapon. It is reprehensible that Russia is threatening not to extend the deal, which would increase food prices for the world’s poorest, so the UK is supporting Turkey and the UN in their very focused efforts to ensure that the initiative can continue unimpeded, and to renew the grain deal beyond 17 July. Just yesterday, the UN Secretary-General sent a further proposal to Russia to address concerns over the export of Russian food and fertiliser. The UN offer on the table will give stability to both the Black sea grain initiative and Russian agricultural exports, helping to provide easier access to food across the world.

Photo of Iain Duncan Smith Iain Duncan Smith Conservative, Chingford and Woodford Green

Forgive me—my right hon. Friend is being generous with her time. It suddenly struck me that a year ago, when the blockade was on and Ukraine could not get the grain out, there was serious discussion, even at NATO level, that in response it might be feasible—and that this could be made known to Putin—that if Russia failed to allow that grain to go through peacefully, it could be convoyed through by members of NATO, but not as a NATO exercise. Are the Government keeping that possibility open? It might be a good idea to let Putin know that it may well be possible to convoy those ships from Odessa through to the wider world.

Photo of Anne-Marie Trevelyan Anne-Marie Trevelyan Minister of State (Foreign, Commonwealth and Development Office)

I thank my right hon. Friend for his intervention. Turkey, in particular, is making incredible efforts and has continuing negotiations and conversations as a close neighbour and the guardian of the Dardanelles—that critical piece of water through which all these ships have to pass. It is clearly managing that situation, and we continue to support Turkey’s efforts to find ongoing solutions. My right hon. Friend the Foreign Secretary will be chairing a session of the UN Security Council next week to discuss exactly these issues—the impacts of the war, both in Ukraine and across the world.

Turning to an issue that colleagues are rightly focused on, we are of course looking to the future while dealing with the present-day challenges of supporting the Ukrainians as they prosecute the war. We are supporting the office of Ukraine’s prosecutor general to help it investigate and prosecute alleged war crimes. The UK provided £2.5 million of funding to support Ukraine’s domestic investigations and prosecutions in 2022, and we intend to provide similar levels of funding this year. We welcome the steps taken by the independent International Criminal Court to hold those at the top of the Russian regime to account, including Vladimir Putin. We have provided an additional £2 million to the ICC for evidence collection and support for victims and witnesses, and in May, along with 40 other states, we signed an agreement to create a new international register of damage caused by Russian aggression against Ukraine. That is an important step in the pursuit of justice for the Ukrainian people.

Just a few weeks ago, in June, we co-hosted with our Ukrainian friends the 2023 Ukraine recovery conference here in London. That conference raised over $60 billion, including a new €50 billion EU facility and $3 billion in UK guarantees to World Bank lending. Almost 500 companies from 42 countries, worth more than $5.2 trillion, pledged to back Ukraine’s reconstruction through the Ukraine business compact. The conference also agreed to forge a new G7+ clean energy partnership to help Ukraine rebuild a net zero energy system connected to Europe.

Members rightly want to see continued sanctions, asset freezes and travel bans during this very difficult time. Just last week, I was proud to bring in new legislation that will enable sanctions to be maintained until Moscow pays compensation for the reconstruction of Ukraine and a route is developed for Ukrainian reconstruction. We will, of course, also be creating a route to allow individuals to voluntarily hand over those assets of theirs that are presently frozen into a fund to support reconstruction. That will be a one-way ticket: if those people feel that they have realised the error of their ways, it will be an opportunity for them to support Ukraine’s reconstruction.

Photo of Liam Byrne Liam Byrne Labour, Birmingham, Hodge Hill

I am grateful to the Minister, because I do not think the House had had a chance to cross-examine her on that point. Is she saying that sanctions will remain in place until Russia has stumped up the full bill for reconstruction, and if so, what are the expectations of the amount that Russia will need to pay in order to get those sanctions lifted?

Photo of Anne-Marie Trevelyan Anne-Marie Trevelyan Minister of State (Foreign, Commonwealth and Development Office)

The right hon. Member asks an important question. Sadly, that figure grows day by day—I think the latest assessments are that something like $400 billion is expected for the reconstruction, but as the war goes on, that figure is likely to grow as more infrastructure is damaged. Greater reparations would be required to help Ukraine get back on her feet completely, but the new legislation will enable existing sanctions to stay in place until agreements on that compensation payment are reached. Discussions about what that might look like will continue in due course.

Photo of Iain Duncan Smith Iain Duncan Smith Conservative, Chingford and Woodford Green

Again, I apologise for breaking the Minister’s train of thought, but can I take her back to a comment I made earlier? It is believed categorically, whatever else we do about the seizure of assets, that it is wholly feasible for the alliance, or each country in turn, to agree to say to Russia, whenever we end hostilities, that what is owed by Russia is x amount, that we have frozen x plus whatever amount, and that we will hold that amount frozen until Russia delivers what is required of it in reparations for the rebuilding and reconstitution of Ukraine. Failing any assistance on that, we will seize those assets as a result of its failure to pay what is agreed to be the reparation bill. That is completely feasible within international law and does not require any great change. Is the Foreign Office seriously thinking about that as a very clear position at this stage?

Photo of Anne-Marie Trevelyan Anne-Marie Trevelyan Minister of State (Foreign, Commonwealth and Development Office)

My right hon. Friend raises such an important point. Of course, discussions with international partners will continue, to ensure that when we reach such a point—we must first help the Ukrainians to win and end this terrible war—those solutions can be put in place and, indeed, whatever the figure is can be reached. However, by bringing through the legislation last week, we have enabled one further step in ensuring that we stop any of the funds that are presently sanctioned from being released.

Importantly, on enforcement, which was raised by a number of colleagues, we have committed £50 million, following through from the integrated review refresh, to improve the enforcement of the sanctions regime. That will help us work with key partners to build both the capacity and capability to ensure that we can and do enforce the sanctions that are in place. The new G7 enforcement co-ordination mechanism, which was announced at the G7 summit just a few weeks ago, will enable the international community to tackle sanctions enforcement more effectively together.

In conclusion, I know that this House will join me in calling on Putin to withdraw Russian forces from Ukrainian territory and end this barbaric war.

Photo of Ronnie Cowan Ronnie Cowan Scottish National Party, Inverclyde

I have a small point to make, just before the Minister brings the debate to a conclusion. I fully understand why we are looking at ending the war in Ukraine, freeing it from the yoke of Russia and helping it rebuild itself, but can she please assure me about this? In a global perspective, the same figures we are talking about here could be used to fund the UK’s diplomatic service, foreign embassies and trade deals, which all help us maintain peace globally, but no matter how much money we throw at that, it is a pittance compared with the cost of war, with both the financial and humanitarian costs.

Photo of Anne-Marie Trevelyan Anne-Marie Trevelyan Minister of State (Foreign, Commonwealth and Development Office)

As the hon. Member rightly says, our focus must be on providing in every way we can, with our international allies, all the tools needed to support the Ukrainians in their incredibly brave battle to win this war. In doing that, we will be able to support them to return to peaceful day-to-day life, so that their young people can see an exciting future as free Ukrainians once again.

Importantly—and we always hope Mr Putin is listening to understand just how seriously we see this—when he launched this war he genuinely gambled that our resolve would somehow falter, but he was wrong then and he is wrong now. For instance, my right hon. Friend Sir Iain Duncan Smith mentioned the wonderful young people who support the incredible positive work of Siobhan’s Trust, with the simplicity of saying, “We will bring you a pizza while you are on the frontline, just to give you the moral support to keep you going while doing that hardest of jobs in defending your families and your territory.” The positivity from our young people and so many others from across the world going into supporting Ukrainians makes it as clear as it can be that we will all stand alongside those incredibly brave Ukrainians until such time as they win. We will not waver because they will not waver. Their bravery is absolutely extraordinary. NATO is not to be divided. We will not tire, and we will continue until justice is seen for Ukraine.

Photo of Bernard Jenkin Bernard Jenkin Chair, Liaison Committee (Commons), Chair, Liaison Committee Sub-Committee on National Policy Statements, Chair, Liaison Committee Sub-Committee on National Policy Statements, Chair, Liaison Sub-Committee on Scrutiny of Strategic Thinking in Government, Chair, Liaison Sub-Committee on Scrutiny of Strategic Thinking in Government 2:59, 13 July 2023

Every day I wake, I thank the Lord that I am not caught up in a war. Each of us should do that. It is the most solemn duty of Government to protect our people from the prospect and threat of war. It has been my honour to put this motion on the Order Paper on behalf of the Liaison Committee, and I thank all members of that Committee for their support. I also thank all those who have participated in the debate. It has not been a debate wracked by dispute and contention; it has been a consensual afternoon. I hope that there is no need to divide the House on the motion and that, by the time I sit down, the House of Commons will have spoken for the people of Ukraine, for the global peace and security that this country can contribute to the world, and for the safety and security of our own people, their prosperity and prospects. I believe that, despite this being a quiet little debate, it is quite an important occasion for the House of Commons. Thank you very much, Mr Deputy Speaker.

Question put and agreed to.


That this House
notes the Second Report of the Foreign Affairs Committee, The cost of complacency: illicit finance and the war in Ukraine, HC 168, and the other work by Committees of this House on the war in Ukraine;
affirms UK support for the government and armed forces of Ukraine in the defence of their country against the illegal and unprovoked invasion by President Putin’s military forces;
is deeply concerned at the suppression of democratic freedoms to the detriment of the Russian people and utterly condemns President Putin’s war of aggression;
reaffirms the UK’s steadfast support for NATO and the security of the UK’s allies and supports Sweden’s swift accession to the alliance;
and therefore urges the Government to continue and accelerate its support for the Ukrainian armed forces through the provision of weaponry and training, and through rallying international opinion and action in support of Ukraine, until the Russian armed forces have been expelled from all Ukrainian sovereign territory as recognised in international law.