Russia (Sanctions) (EU Exit) (Amendment) (No. 2) Regulations 2022 - Motion to Approve

– in the House of Lords at 3:02 pm on 3 March 2022.

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Lord Ahmad of Wimbledon:

Moved by Lord Ahmad of Wimbledon

That the Regulations laid before the House on 28 February be approved.

Relevant documents: 31st Report from the Secondary Legislation Scrutiny Committee. Instrument not yet reported by the Joint Committee on Statutory Instruments.

Photo of Lord Ahmad of Wimbledon Lord Ahmad of Wimbledon Minister of State (Foreign, Commonwealth and Development Office)

My Lords, these two statutory instruments were laid before the House on Monday 28 February 2022 under the powers provided by the Sanctions and Anti-Money Laundering Act 2018, also known as the sanctions Act, and came into effect on 1 March.

We have announced the largest and most severe package of economic sanctions ever in response to Putin’s premeditated and barbaric invasion. Working with our allies, we will continue to ratchet up the pressure. We have already imposed sanctions on President Putin, Foreign Minister Lavrov, five Russian banks, 120 businesses and a long list of oligarchs. Taken together, they target assets worth hundreds of billions of pounds. Importantly, we have also worked with our allies on this issue, agreeing to remove selected Russian banks from SWIFT and to target the Russian central bank, but we will go further.

We continue to stand with the Ukrainian people in their heroic efforts to face up to unbridled aggression. As I have said on a number of occasions, and as has been said by my right honourable friend the Foreign Secretary, nothing is off the table.

To update noble Lords on where we have got to on sanctions, overnight on 28 February we laid two new pieces of legislation on financial and trade measures. The first included a ban on Russian sovereign debt, a prohibition to limit access to sterling and a ban on any Russian company issuing securities or raising finance in the UK. These significantly strengthen our arsenal of sanctions against Russia. This is alongside increased trade measures, including a prohibition on sensitive dual-use items that could be used by the military and banning a further range of critical-industry goods, from high-tech to aircraft.

Sanctions announced by the United Kingdom and our allies are already having an important impact. Central bank interest rates have more than doubled, international businesses are quickly divesting, and the rouble is now trading at roughly a quarter of what it was when Mr Putin took power. That will impact the institutions that prop up Mr Putin and his cronies. We will continue to work with our allies to bring forward further sanctions and press for collective action to reduce western reliance on Russian energy. We will also continue to use every lever at our disposal to support the legitimate Government of Ukraine and, importantly, the Ukrainian people.

This legislation follows the “made affirmative” procedure set out in Section 55(3) of the Sanctions and Anti-Money Laundering Act 2018. These statutory instruments amend the Russia (Sanctions) (EU Exit) Regulations 2019. The powers in them will prevent Russian banks accessing sterling, which is a significant and new measure for the UK. Russian banks clear £146 billion of sterling payments through the UK financial system each year. Without the ability to make these payments in sterling, designated banks will not be able to pay for trade in sterling, invest in the United Kingdom or access UK financial markets. This matches the power the United States already has to prohibit access to the dollar, showing our joint resolve to remove Russia from the global financial and trade system. Around half of Russian trade is denominated in dollars and sterling. We have already used this power to designate Sberbank, the largest Russian bank.

The same statutory instrument prevents the Russian state raising debt here and isolates all Russian companies—of which there are over 3 million—from accessing UK capital markets. This measure goes further than those of our allies, banning all Russian companies from lucrative UK funding. Russian businesses listed in London have a combined market capitalisation of over £450 billion. This includes some of Russia’s largest state-owned enterprises, and the Kremlin is hugely reliant on their tax revenues. Banning them from raising debt in London will further increase the burden on the Russian state. Global giants such as Gazprom will no longer be able to issue debt or equity in London. In the last seven years, Russian companies have raised over $8 billion on the UK markets. We have put a stop to this.

The Russia (Sanctions) (EU Exit) (Amendment) (No. 3) Regulations 2022 ban exports to Russia across a range of items, including the dual-use list and other goods and technology critical to Russia’s military-industrial complex and its maritime and aviation sectors. The SI also bans a range of technical and financial services related to such items. With this legislation, enacted in alignment with the United States, the European Union and other partners, we will collectively cut off Russia’s high-tech imports. This includes critical, high-end technological equipment such as microelectronics, telecoms, sensors and marine and navigation equipment. It will blunt Russia’s military-industrial and technological capabilities, gradually degrade Russia’s commercial air fleet, and act as a drag on Russia’s economy for years to come. The Department for International Trade and the Treasury will offer advice and guidance to UK businesses that are affected.

In conclusion, Russia’s invasion of Ukraine is part of a long-term strategy. If we were to give ground now, Mr Putin’s strategy of aggression would never end. Instead, he would be emboldened, and his focus would simply move on to the next target. The United Kingdom has been at the forefront of this response. Importantly, we are acting in concert with our allies; collectively, our measures will deliver a devastating blow to Russia’s economy and military for years to come. The importance of co-ordinating with our partners will allow our sanctions to reverberate through Mr Putin’s regime.

We must remain firm and resolute in our response. We must rise to this moment and, importantly, continue to stand with Ukraine and its people. I am determined that we will continue to support them in that choice. I beg to move.

Photo of Lord McDonald of Salford Lord McDonald of Salford Crossbench

My Lords, I congratulate the Government on what they have done so far, but does the Minister agree that this package has already been overtaken? It is already inadequate against the developing need. For example, the Germans have been able to impound the yacht belonging to Mr Usmanov in Hamburg, yet he still has access to his stately home in Guildford. How can that be?

Photo of Baroness McIntosh of Pickering Baroness McIntosh of Pickering Conservative

My Lords, I congratulate my noble friend on all his efforts and those of Ministers in his and in other departments in both places. However, there is a concern in the country that the inevitable delay in passing the legislation which came into effect on 1 March has perhaps meant that a number of assets have been able to be moved. Are the Government concerned about this?

Looking at SI No.194—I hope I have identified it correctly—I understand that provision will be made for medicines and humanitarian aid to reach Ukraine. I want to press my noble friend as to what routes will be used. There are reports that pharmacies in Ukraine are already facing a shortage of medicines. There will need to safe routes in.

We can only imagine the level of injuries and casualties that are having to be dealt with at this time. Is there any way in which some of the casualties can be evacuated to neighbouring countries? Is it the Government’s desire to send teams of medically qualified people out from the United Kingdom to assist with this humanitarian effort?

Photo of Baroness Wheatcroft Baroness Wheatcroft Crossbench

My Lords, I congratulate the Government on having gone further and faster than they had originally planned once the gravity of the situation became clear. Although this may be the largest ever package of sanctions from the UK, can the Minister explain to the House why there are so few individuals on our sanctions list compared with the EU’s? Why, in a particular spirit of generosity, are we allowing 18 months from when the legislation comes into effect for those who wish to sell their houses and get the proceeds out of the country to do so?

Photo of Lord Garnier Lord Garnier Conservative

My Lords, I agree with the noble Baroness’s last remark. I was on the Joint Committee on the Draft Registration of Overseas Entities Bill, which sat in 2019. Clearly, 18 months is far too long if Clause 3 of the Economic Crime (Transparency and Enforcement) Bill is to have any immediate effect.

Is there any possibility of having a look at the enemy aliens Act of 1914? Of course, this is not an exact parallel, but there may be suitable provisions within that old legislation, which was renewed in 1919 after the end of the First World War. Could my noble friend’s officials perhaps look at this legislation to see if there are any useful provisions which could be modernised and brought forward to be of value nowadays—accepting that the United Kingdom is not “at war” with Russia?

While the measures which my noble friend has just announced are hugely valuable, there are three groups of people on whom we need to apply pressure, given that the Ukrainians are actuarily unlikely to win a fighting war, brave as they are and incredible as their resistance has been so far.

First, when the ordinary Russian public are queuing for bread in Moscow because the Russian economy has collapsed, they will begin to wonder why and they will begin to ask why Russian state television and other state-controlled media operations have been less than candid about why the Russian army has gone into Ukraine, its level of success and the number of their children who have been killed. I understand that the Russian army moves, when it can, not just with armoured vehicles, artillery and infantry but with mobile crematoriums, so that the soldiers who are killed are immediately disposed of and the Russian public do not get to know about the huge numbers who have been killed.

Secondly, these measures are partly directed towards the oligarchs and the banking system. I understand that the current sanctions have so far caused about $630 billion in foreign currency reserves and about 80% of the Russian banking sector to be disconnected from the United States financial system. I dare say that there will be similar, if not quite so large, consequences for Russians holding money in this jurisdiction. That is good, but there must be plenty more that we could do. Indeed, the European Union has a longer list of targets than we do, and I urge the Government to increase the number of our targets at least to the level of the EU’s. The rouble is in freefall but, despite all these sanctions, we must remember that North Korea, Iran and Syria, despite being sanctioned at various times, still seem to be operating, even if not happily, under their respective and utterly unattractive Governments.

The third group upon which we need to apply pressure, whether directly or indirectly, is the inner and outer circles within the Kremlin. Once they lose faith in Putin—they have plenty of reasons to do so, and these reasons will grow—his position as the modern dictator of Russia will become even weaker than it currently is.

So, there are three groups that I ask the Government to think about, some of whom can be attacked through sanctions, and some through a media and information war; and some can be influenced by the collapse of the Russian economy. As I said, the Ukrainians will not win a fighting war, despite their very best efforts—and I salute everything they are doing to save their country—but we can help them extra-militarily through applying acute and constant pressure on the three groups I have outlined.

Photo of Lord Austin of Dudley Lord Austin of Dudley Non-affiliated 3:15, 3 March 2022

My Lords, I congratulate the Minister and the Government on the tough regime of sanctions that has been introduced this week, and I agree with every word of the previous speech.

This is an extraordinary time. Civilians are being bombed and war crimes are being committed, and extraordinary times require special and extraordinary responses. Ministers are completely right to say that one of the ways to isolate a weakened Putin and to put him under pressure is to target him and his supporters and the money they have stolen from the impoverished people of Russia. As the Foreign Secretary has said, we should sanction Russian government Ministers, senior officials, Putin’s inner circle, the oligarchs who look after his funds, members of the parliament and senior members of the security services and armed forces.

We in this country have a particular responsibility, because so much of the money looted from the people of Russia has been spent and invested here in London. The way to identify the funds, the properties that such people have bought and the businesses they have invested in is to target those who enable them to spend and invest these funds. Just as accountants are required to report clients they suspect of tax evasion, so other businesses and professionals should be required to report people they suspect of benefiting from Putin’s regime. We should make it a legal requirement for lawyers, accountants, company formation agencies, financial services firms, investment companies and estate agents to report on the structures and holdings set up to allow sanctioned individuals to hold assets in this country. Surely, this would make the whole sanctions process swifter, simpler and more straightforward. Will the Minister look at including measures such as this in the sanctions Bill being brought forward in the next few days?

Secondly, is it true, as Politico reported this morning, that during the rollover of EU sanctions rules into British law during the Brexit process, the UK sanctions regime became significantly more procedurally complex because the new laws were amended to ensure procedural fairness for those being sanctioned, to strengthen measures those sanctions could take in response, and to ensure that sanctions were imposed in what was described at the time as a “proportionate manner”? If it is the case that these changes made the imposition of sanctions more complicated and difficult here in the UK than in the EU or the US, should we not use the legislation that the Minister is bringing forward to unravel these changes so that we can speed these processes up?

Thirdly, is it also the case, as reported in this morning’s Times, that the Government are finding it difficult—despite the work the Minister is doing, which I applaud, and the work of his officials, who I know are working flat out on this—to impose sanctions swiftly because of a shortage of lawyers and officials able to carry out the work? If so, what plans do Ministers have to recruit more people urgently to do this?

Finally, what happens to funds and property and other assets that are frozen or seized from people in this process? I suggest that they be held in trust to support the future democratic Government of a free Ukraine, to rebuild their economy.

Photo of Baroness Kramer Baroness Kramer Liberal Democrat Lords Spokesperson (Treasury and Economy)

My Lords, I raise again with the Government the issue of cryptocurrencies. Effectively, Russians cannot now transfer roubles into dollars, euros and pounds sterling but they can transfer into cryptocurrency. The Minister will know that the Ukrainian Minister of Finance on Monday called on all the decentralised finance—the DeFi exchanges—to remove Russia from their schemes. Some, such as Coinbase, have done so, but others—Binance is the big one that comes to mind—have decided to sanction only the 100 names on the sanctions list and otherwise to allow free translation of roubles into cryptocurrency. We have heard from the Ukrainian Government that this is a serious mechanism for evading sanctions. Binance, which I mentioned, is registered in the Cayman Islands and therefore falls into the UK financial family. What more will the Minister do to prevent what may have looked like a loophole from becoming what is now growing into—a major escape hole?

Photo of Viscount Waverley Viscount Waverley Crossbench

My Lords, these are dark days. I am delighted to follow and identify with the initial remarks of the noble and learned Lord, Lord Garnier, and the noble Lord, Lord Austin. Our hearts are with the brave people of Ukraine. The Russian people will suffer long-term hardship but nothing compared to that befalling the extraordinary people of Ukraine.

It is no fault of the Russian people that they have no understanding of the reality of why they are being fully penalised. It is quite astounding that, from my calls to Russia, their perception of what is going on in Ukraine borders, frankly, on the fanciful. Disinformation is rife. These measures are very necessary and the UK Government are doing exactly what they have to do. They have my full support.

Photo of Lord Clarke of Nottingham Lord Clarke of Nottingham Conservative

My Lords, I fully support these sanctions and I congratulate the Government on the packages brought forward. I look forward with interest to the replies to be given to several of the detailed points raised about exactly how firmly they will be enforced.

I will look forward a little. The medium to long-term reality is that we are applying these sanctions against Russia, but Russia is almost certain in the end to achieve some degree of military success. A new reality will dawn, probably with a puppet Government in Ukraine, and the whole issue will start fading from international debate, from the media and so on. What are the Government’s plans for the medium term and, if necessary, the longer-term future in sustaining these sanctions and this level of pressure on the Russian regime?

In reality, there will be quite rapidly a tendency to put pressure on the Government to allow people to return to a new normality: to allow Russian companies to have access to the City of London again and to ease sanctions causing financial losses to lawyers, accountants and firms here. Is the Minister able to assure me that, as far as the British Government are concerned, we intend to retain this degree of sanctions until some satisfactory solution to the political problem is achieved, with a genuine agreement with a respectable Ukrainian Government who have proper regard to international law and national sovereignty? Will the British Government remain one of the more robust in the western lands? There will be considerable pressure to stop doing so much once we have, as it were, done our best to protect the Ukrainian regime during the conflict.

The sooner we start addressing that problem, the sooner we will start facing up to realistic problems that we must plan for. The Russians will undoubtedly, for example, try to ensure that the sanctions do quite a bit of damage to western economies, and will start trying to use their influence on the oil and energy markets to demonstrate that they can cause us some continuing loss unless we begin to lose interest—shall we say?—in the crisis that has so shocked the world. Are we determined to be one of those western countries that will seek to maintain the fullest force of sanctions we can unless and until a satisfactory solution is reached with the Russian regime?

Photo of Lord Fox Lord Fox Liberal Democrat Lords Spokesperson (Business, Energy and Industrial Strategy)

My Lords, it is a pleasure to follow the noble and learned Lord, who has just given the Government some wise advice which I hope the Minister will carry back to his colleagues.

We welcome the sanctions and look forward to the arrival of the economic crime Bill when it comes from the Commons the week after next. That has flushed out quite a lot of advice and some very strong comments from people who have been looking at the area of economic crime and kleptocracy in this country. One of the threads coming through, which goes back to the issue of what we can do now to stem that flight of capital, is that we are not fully using the anti-money laundering laws that we already have on statute in order to do that now. Will the Minister agree that more can be done with current legislation, which can be used to help stem the flow of money stolen from the people of Russia? Does he undertake to redouble efforts with all the bodies that have the power to use these anti-money laundering laws to get on and do it?

Photo of Lord Purvis of Tweed Lord Purvis of Tweed Liberal Democrat Lords Spokesperson (International Trade), Liberal Democrat Lords Spokesperson (International Development), Liberal Democrat Lords Spokesperson (Foreign and Commonwealth Affairs)

My Lords, I welcome these measures on behalf of these Benches and I thank the Minister for maintaining contact and giving advance notice.

These are both the culmination of weeks of lobbying from Parliament to have sight of further measures but also, as noted in this short debate—including by the Minister—the start of a process. They are of a differing character, as the noble and learned Lord, Lord Clarke, indicated. Perhaps these are now of a more strategic nature which will be medium and long term, and perhaps they will have a different characteristic from the sanctions regime that we have put in place, which is different from what the EU scheme envisaged.

The noble Lord, Lord Austin of Dudley, rightly raised a number of weeks ago with the noble Baroness, Lady Williams, in the Home Office, why, as my noble friend Lord Fox indicated, we had not been using existing legislation. It has been highlighted for a number of months that the weak point in the global efforts against money laundering and kleptocracy is in fact the UK. Therefore, questions such as that of the noble Lord, Lord McDonald, are quite right. There is a niggling fear that the UK is still behind the US and the EU in making sure that there is, as the Foreign Secretary said a number of weeks ago, no place to hide for kleptocrats. However, as we have seen, because the Government have now, due to persuasion from Parliament, brought forward the first of the economic crime Bills, there have been, regrettably, plenty of places to hide.

However, we welcome these measures and support them. We have called for wider and further support, including specifically on the point that has been raised consistently and effectively by my noble friend about cryptocurrencies. She raised it with the Ukrainian ambassador when parliamentarians from both Houses met that representative of that extremely brave nation.

We welcome the Government’s additions overnight regarding sterling trade, but can the Minister outline whether we can expand them further to include UK trading houses that operate in denominations other than sterling? London is the centre of many key sectors—energy and specifically gold—where we are leading the world. I understand that beyond the sanctions regime there are landlords in London who are now exiting agreements, for example, with Gazprom Marketing & Trading Ltd. There are voluntary exits of tenancy agreements that are beyond the sanctions regime, but within the scope of very considerable reputational risk. As the SIs indicate, if fully enforced, this represents only 12% of UK exports to Russia. In many areas, the nearly 90% of private sector activity will have the biggest impact. A lot of decisions are being made because of reputational risk.

Regarding loopholes, it is still a concern that the UK has what they consider to be world-leading firms in what is euphemistically called risk management. Many have recruited, to put it politely, former colleagues of the noble Lord, Lord McDonald, and those from within slightly murkier areas of the British intelligence communities. However, there is a trade in second passports, at the moment. The UK can act very firmly with our Commonwealth friends to ensure that those who are potentially in scope of the sanctions cannot quickly secure second passports and utilise others. It is the sanctions regime for not only trade and finance but ministries of justice around the world, and for the Home Office and passport-issuing agencies. There is merit in saying that, if we are now asking questions about where the source of wealth is, there should be questions about why people are seeking second passports, especially in British Overseas Territories and within our Commonwealth family.

In speaking to me earlier, my noble friend Lord Fox referred to kleptocratic capital flight. We will give the economic crime Bill a fair wind and work with the Government in expediting its scrutiny, but we will want it to be tough. It will not have the effect that we want it to have if it cannot be implemented. The noble Lord, Lord Sharpe of Epsom, said in a letter to my noble friend Lady Northover in January that the sanctions unit in the Government has between 40 and 49 staff. That is insufficient for the task that is now ahead of us. Therefore, looking at the capacity and ensuring it is better co-ordinated will be essential.

Regarding other areas of avoidance and enablers, I agree with my noble friend Lady Northover that giving people a legal grace period is not insufficient. I hope that the Government will consider Liberal Democrat proposals to ensure that the new measures can be retrospective to the time of the Bill’s introduction, and that they give fair hearing to the proposal of a clause to ensure that there will be no risk of that legislation being avoided. I hope the Government will give that fair hearing and use other elements such as that indicated by President Biden in his state of the union address—legal mechanisms for seizure. My right honourable friend Ed Davey MP indicated to the Prime Minister over a week ago that we should be serving notice that assets would be seized.

Finally, if the noble and learned Lord, Lord Clarke, is right—and I think he will be—that this will be medium to long term, there will be both other countries negatively affected by this global sanctions regime, especially developing countries, and countries that will be the source of alternative supplies for those we are sanctioning, especially of minerals and technologies. We all know and have debated at length the passive position of India, China and the UAE in the United Nations. Countries that should be in our minds are both those that are alternative sources for Russia, which we are sanctioning, and, as I raised during Questions earlier, those that through no fault of their own face negative impacts from the higher prices of energy and wheat.

To prevent the slow and steady creep back to normality the Government could act by publishing risk registers of those who they believe will be in scope and disclosing publicly those who are lobbying against these measures, or indeed, lobbying for them to be delayed. Full transparency will be the enemy of those seeking to avoid these measures, in many respects. I hope the Government will consider actions to prevent that kind of flight, which we all know is regrettably happening now.

Photo of Lord Collins of Highbury Lord Collins of Highbury Opposition Whip (Lords), Shadow Spokesperson (Foreign and Commonwealth Affairs and International Development), Shadow Deputy Leader of the House of Lords 3:30, 3 March 2022

My Lords, I too fully welcome the introduction of these sanctions. The Government will have our full support in holding Putin and his acolytes to account. I believe—and I said this earlier to the noble Lord—that the noble and learned Lord, Lord Clarke, is right; these sanctions are about not only how effective they will be, but how sustainable they will be. We need to focus on their sustainability as much as their effectiveness.

I reiterate the promise of the shadow Minister for Europe, my honourable friend Stephen Doughty, that we will work with the Government at speed to pass any necessary legislation to this effect. Russia’s invasion is an act of barbarism which requires a united response from all who value the principles of sovereignty and democracy, which must include measures to exclude it from the benefits of the global financial system.

Reflecting all contributions from noble Lords today, our only ask is that the Government go further and faster. I said this morning in Oral Questions that one of the problems with the strategy of ratcheting up is that there is an element of forewarning, which obviously has an effect. In the areas of asset freezing of Russian banks and oligarchs, there is a serious risk of asset flight. The noble Lord, Lord McDonald, mentioned this point very effectively. I asked the Minister this morning whether there has been any preliminary assessment of whether this has already happened. That is one of the things in terms of preparation. Like other noble Lords, we welcome the new legislation to set up a register of overseas entities holding UK property, but the decision, as noble Lords have pointed out, to delay its introduction for 18 months clearly allows oligarchs to escape sanctions.

I also mentioned to the Minister earlier that Labour’s Front Bench on the legislation in the House of Commons has tabled measures to require the new register to come into force within 28 days of the legislation passing. I hope that the Government accept this amendment. It is important that we remain united, as I have said before, as a Parliament and a country.

The steps taken to cut Russia out of the western economic system are particularly welcome, and the efforts on SWIFT and the Government’s push to get a global response to that has been really important. It has been well known that Russia has been developing alternatives to SWIFT since calls first emerged for Russia’s exclusion during the invasion of Crimea. I hope that the Minister can update the House on what assessment the Government have made of Russia’s potential for developing an alternative, again picking up a point made by the noble and learned Lord, Lord Clarke, about the sustainability of our actions.

Given that not all Russian banks are currently included, the Government are right to call for an expansion. Has the FCDO had any recent high-level conversations about that? The Government should also consider how they can widen the number of banks that are prevented from accessing sterling and expand sectoral sanctions. The Minister mentioned those, but we should even be thinking of the insurance market. There are other areas and the noble and learned Lord, Lord Garnier, was right to focus on the interest groups that may have the most influence on Putin and his acolytes. I agree with the points he made. One not insignificant idea on export controls is to look at the luxury goods going into Russia. We know that cars are included, but there is a whole other range. That visibility could address the point made by the noble and learned Lord about soft power and how we raise awareness in Russian people’s minds about the impact of their Government’s action.

The designation of further individuals was highlighted by the noble Lord, Lord McDonald, and the point was raised on Radio 4’s “Today” programme. The Prime Minister suggested that more than 100 further persons could now be sanctioned. It is clearly now possible that those with links to the Kremlin will use that as a warning to sell their assets. We have seen that the Chelsea owner, Roman Abramovich, is seeking to offload the club, with a price tag believed to be £3 billion. His multimillion-pound residential properties are also up for sale. He says that proceeds will be donated to good causes, but the truth is that we will never know where that money will ultimately end up. Does the Minister believe that Mr Abramovich’s actions have been driven, at least in part, by the Prime Minister’s incorrect assertion that he was on the UK sanctions list? Do the Government agree that any form of pre-notification, or indeed inclusion of grace periods for certain banks, severely undermines the effectiveness of sanctions? I have heard the Minister repeatedly say in the Chamber in the past that he will not indicate or respond about future designations because it does precisely that.

We need to return to the point about how fast we designate people. When the Government extend their designations—I hope that will be soon—I hope that they will allow parliamentarians to suggest further targets. We had this debate about the mechanisms for informing the Government and the FCDO about possible targets when we debated the sanctions Bill. That intelligence may go beyond normal intelligence service facilities, but we should be open to those sorts of suggestions.

Finally, we must all remember that Russia is supported by Belarus and treat Lukashenko’s regime as belligerent. The sanctions announced against individuals in Belarus are a step in the right direction, but we should consider other options for deterring their involvement. Do the Government plan to match the measures announced by the EU for banning machinery exports to Belarus? As the noble and learned Lord, Lord Clarke, said, it is misguided to think that we have time on our side. For as long as the Kremlin continues this campaign of violence, we must hold to account all those who enable it. We welcome these sanctions but look forward to further measures being brought forward on a speedy basis.

Photo of Lord Ahmad of Wimbledon Lord Ahmad of Wimbledon Minister of State (Foreign, Commonwealth and Development Office) 3:45, 3 March 2022

My Lords, I thank all noble Lords for their strong support for the sanctions more broadly and specifically for the measures that we are debating today. I say from the outset that I agree totally with the noble Lord, Lord Fox. Existing laws and processes should be fully leveraged to ensure that those actions that have been taken can be fully applied rather than our just waiting for new legislation to pass. The noble Lord, Lord Austin, and others, pointed to the importance of resourcing. I assure him that it is at the forefront of our thinking, both in the context of the FCDO and across government, including the Home Office.

I am grateful to all noble Lords who have contributed on the specific sanctions before us, but as I expected—it is no surprise to anyone—our discussion this afternoon has gone much wider. I am sure that will be reflective of the upcoming debates both on the legislation and on specific issues relating to the unravelling of the situation in Ukraine.

The noble Lord, Lord McDonald—I nearly said “noble friend”; he was certainly a friend when he was a PUS—will know all too well that I cannot comment on specific designations. Nevertheless, I hear what he says. In this regard, I assure him and all in your Lordships’ House that we are aligning ourselves. Where there are designations which are reflective of partners who may have moved forward more quickly or broadly, we are working closely with them. Questions are often asked about our alignment particularly with the EU. Noble Lords may be aware that my right honourable friend the Foreign Secretary has been invited, along with representatives of the United States, to attend the European Union Foreign Affairs Council to ensure that we are fully aligned in how we move forward, both in the governance structures and in the specific designations. That underlines the challenge that we face but also, importantly, the collaboration and collective response from the Government of the United Kingdom and Governments of key partners, including those within the European Union. My right honourable friend the Foreign Secretary is visiting key partners today as I speak.

The measures that we have taken are already having a significant impact, but I assure noble Lords that I have listened carefully to and made note of their suggestions as to what more we can do in consultation with our allies. As we debate legislation which enables what action we can take, further announcements will be made. The noble Lord, Lord Collins, talked about Belarus. We will debate the specific application of those sanctions in the coming days. We will introduce further sanctions and prohibitions on financial services relating to foreign reserves exchange and asset management by the Russian central bank. These too will be before us in the coming days.

My noble friend Lady McIntosh rightly talked about ensuring humanitarian carve-outs from our sanctions. From our experience in Afghanistan, I have been very minded to ensure that this is part and parcel not just of our thinking but of our processes. My engagement earlier this week in Geneva with key partners working on the ground, including the various agencies of the UN but also the likes of the ICRC, was focused on the very issue that she highlighted.

The United Kingdom has also said that we will work with our allies in NATO. On Friday, NATO leaders reiterated their commitment to Article 5 in solidarity and support for Ukraine, which many noble Lords mentioned. We will also provide further humanitarian support, which has been announced by my right honourable friend the Prime Minister. The UK has also announced £100 million of new funding to aid efforts to build Ukraine’s resilience and reduce reliance on Russian energy supplies. I listened very carefully to the noble Lord, Lord Austin, about particular assets held and how they are best utilised. Past conflicts have also demonstrated the legal challenges that apply, depending on who owns what assets and the legitimacy of the Government of a given country to have a right to those assets. We can talk of conflicts past, on which we are still trying to unravel some of those issues. I am sure that noble Lords welcome the additional £100 million of new funding from the United Kingdom to build Ukraine’s resilience and reduce reliance on other areas, including energy and security.

My noble and learned friend Lord Garnier rightly highlighted the different groups. Again, that is very much part and parcel of our thinking on how we can target further work and co-ordination with our key partners. I am also minded very much to agree with him on the important issue of Russian disinformation. The Russian Government are conducting an aggressive set of information operations against Ukraine and NATO in a shameful attempt to justify action against Ukraine. I have to say to my noble and learned friend that I think we all take encouragement that the protests against Russia’s actions are not limited to countries outside Russia. We have certainly seen disgraceful scenes today of protests being again put down in St Petersburg by Russian military and security forces, but they show that the Russian people totally despise the actions being taken by President Putin, and we will work to see how we can strengthen our influence through soft power.

Whoever we target under designation criteria will remain subject to a test of appropriateness, as set out under the sanctions Act. I have made this point before: our values and our system acknowledges that we have a robust legal framework to our sanctions, and we will need to consider carefully how sanctioning individuals helps to achieve the purposes of the regime. The whole essence—and I say this as the UK’s Human Rights Minister—is very important to me in the fairness that we apply when we look at such issues. However, equally, we are very much committed as a champion of freedom and democracy to tackle corruption and illicit finance that directly undermine security and democracy. The UK will use our autonomous sanctions and other tools to send the clearest possible message that the UK is not a safe haven for illicit wealth or financial flows, including those from Russia.

The noble Baroness, Lady Kramer, rightly raised the issue of cryptocurrencies, which are not so specific to the current instrument, but crypto-assets are economic resources and are therefore covered by the UK’s financial sanctions. I believe that with the economic crime Bill and other measures that will be taken there will be broader discussions about that issue. The noble Baroness is totally right that where we identify the so-called loopholes that have been used creatively, to put it that way, by those seeking to avoid particular rules, regulations and sanctions, we need to close them down as quickly as possible, but in conjunction with our partners and allies.

My noble friend Lady Wheatcroft raised the issue of property. My understanding is that properties subject to asset freezes are not directly seized, but they cannot be sold and employees cannot work in those properties. She raised the issue of the 18-month figure, which I think is very much within the provisions of the economic crime Bill that has been introduced. If I may, I shall write detailing the specifics. There are qualifications within that, but she is right to raise the issue. As I say, I am sure that it will come up in the debates we have on the Bill.

My noble and learned friend Lord Garnier also raised the issue of EU comparisons. As I have already said, we are working together closely. Where we are perhaps ahead or behind any of our key partners we are looking to align as quickly as possible on specific steps that we are taking.

On the issue raised by my noble and learned friend Lord Clarke, he may not remember, but I remember as a much younger man listening to one of his speeches in a think tank. We were discussing Iraq at that time. My noble and learned friend articulated very clearly—and his views have come to pass—that an intervention in Iraq would not resolve the conflict, as some of it was embedded in religious differences based on 1,500 years of different perspectives. I agree with him that this is about the long haul. I assure my noble and learned friend that we are absolutely determined that the actions we are taking today will remain robust. The United Kingdom has been playing a leading role in ensuring that as we work with our international partners, particularly those in the European Union, we recognise their challenges and where there are issues, for example with Germany and energy, we make the case powerfully and constructively while recognising that we need to move together.

I say to my noble and learned friend that it will not just be about the resolve of the United Kingdom. This resolve will need to be reflected within the wider international community to ensure we are fully aligned. That is why, in terms of our ministerial engagement, we are speaking extensively with our key partners, not just on a daily basis but on an hourly one. My right honourable friend the Prime Minister, the Foreign Secretary, other Ministers and I are travelling quite extensively. We are taking action, as was shown by the United Nations vote yesterday. We are working with the US, the EU, the G7 and the OSCE. It is good to see how we are working with other key partners and perhaps even with those partners or other countries where we do not see eye to eye and with countries where we have big differences, including China. The fact that China abstained not once but twice—once at the Security Council and then yesterday at the General Assembly—shows that diplomacy and diplomatic efforts are also vital in our response.

I have sought to cover the specifics—

Photo of Lord Purvis of Tweed Lord Purvis of Tweed Liberal Democrat Lords Spokesperson (International Trade), Liberal Democrat Lords Spokesperson (International Development), Liberal Democrat Lords Spokesperson (Foreign and Commonwealth Affairs)

With regard to China and the position of the UK, as the Minister will know, the UK is a global hub, not only for oil trading but also for shipping and for insurance of that global shipping. Especially with Russia and China, insurance—I think the noble Lord, Lord Collins, referenced insurance, but I did not pick up what the Minister had said about that—for shipping is one of the key elements in doing real harm to the Russian oil and gas sector. A lot of it is brokered through London. Can the Government please outline what they intend to do about this sector?

Photo of Lord Ahmad of Wimbledon Lord Ahmad of Wimbledon Minister of State (Foreign, Commonwealth and Development Office)

My Lords, the specifics of shipping—the noble Lord had also raised wider issues such as bullion—are very much part of our thinking. On shipping specifically, the noble Lord will know that we have already taken the lead. My right honourable friend the Transport Secretary introduced certain measures that restrict the movement of Russian vessels and their landing in UK ports. The noble Lord is right to raise the broader issue of insurance and the hub and the role that the United Kingdom plays. We will be taking further measures in this respect and the details of them will follow.

As I have said throughout this whole process, as these measures are coming in, it is a very fluid situation. We are working as quickly as we can. There is the legislation in front of us that we are approving today—I hope that will be the case—and other measures already under way, some announced and some not. I do not want to pre-empt them. However, the noble Lord is quite right to raise the shipping sector. I hope that the steps specific to that sector that we have already taken indicate the Government’s route in terms of our intention to work further to limit, as the noble Lord says, the effectiveness of Russian activity in that sector.

If there are more specifics, as I said to the noble Baroness, Lady Wheatcroft, I will write specifically on those questions, but I assure noble Lords that we will continue to work very closely both within your Lordships’ House but also beyond. I am particularly grateful to the Front Benches and other noble Lords for their advice and insights, but also, I say, once again, for their strong support for the actions the Government are taking as we stand up to the regime which is now persisting. I use that word quite deliberately. Ministers are often questioned when we waver between the use of “Government” and “regime”. The distinction I would draw is that when the Government of a country seek to suppress their own people in a way that does not allow anyone the right to protest, when a Government seek to eliminate and eradicate the right of a neighbouring country to exist, it is right that we use that different word and call it a regime. That is what Mr Putin’s regime currently is. Its ability to wage war in Ukraine must be disabled.

It is important that we work to ensure that the economic impact is felt by those oligarchs and businesses that support the Russian regime. It is important that we take action but, equally, at the same time, we must send a strong signal to the Russian people that this war, this challenge, the economic war we impose against the Putin regime, is not against them; these are actions to ensure that we act against Mr Putin and his supporters. We continue to stand by those brave, courageous people in Russia who protest against his actions. Most important is that this House sends a very clear message, as it has done today, that we stand with the people of Ukraine. We will continue to have debates on this specific issue and once again I thank all noble Lords for their strong expressions of unity on the actions the Government are taking in support of Ukraine and the people of Ukraine.

Motion agreed.