Russia (Sanctions) (EU Exit) (Amendment) (No. 7) Regulations 2022
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Lord Ahmad of Wimbledon
That the Grand Committee do consider the Russia (Sanctions) (EU Exit) (Amendment) (No. 7) Regulations 2022.
Relevant documents: Instrument not yet reported by the Joint Committee on Statutory Instruments. 36th Report from the Secondary Legislation Scrutiny Committee
The Minister of State, Foreign, Commonwealth and Development Office (Lord Ahmad of Wimbledon) (Con)
My Lords, I will also speak to the Russia (Sanctions) (EU Exit) (Amendment) (No. 8) Regulations 2022. Copies of both sets of regulations were laid before this House on 30 March and 14 April 2022 respectively. They were laid under the powers provided by the Sanctions and Anti-Money Laundering Act 2018, and came into effect under the “made affirmative” procedure. Together with our wider package of measures, these new powers ratchet up the pressure on Mr Putin, degrading his war machine and further isolating Russia. They target three areas, and I will cover each in turn.
The first area relates to technical assistance in relation to shipping and aviation. Put simply, these new tools stop oligarchs accessing their luxury toys and deprive them of the benefits of the UK’s world-leading aviation and maritime industries and engineers. We are targeting not only oligarchs’ businesses but their assets and international lifestyles. This new prohibition complements those already imposed on Russia’s shipping and aviation sectors. We are continuing to ramp up the pressure, working in tandem with our international partners and supported by commercial decisions taken by key industry players.
Secondly, this new legislation extends the financial, trade and shipping sanctions imposed in relation to Crimea, so that they now cover the non-government-controlled territory in Donetsk and Luhansk. These measures prevent British companies and individuals investing in companies operating in non-government-controlled territory or purchasing land in those regions. They also prohibit the export of infrastructure-related goods and services, as well as the import of any goods originating in non-government-controlled territory.
The extension of these measures will constrain Russia’s ability to make these areas economically viable, as the equivalent measures have done in Crimea. These measures will remain in place for as long as needed to ensure that Russia ceases its destabilising activities and withdraws its military from the territory of Ukraine.
The third and final power is that of designation by description. As the Government sharpen their measures against Mr Putin and his regime, this power enables us to designate groups of individuals and entities. The economic crime Act removed some of the constraints on the Government’s power to designate by description, offering the Government maximum flexibility in designating persons, such as members of political bodies, as a group rather than individually. This legislation now ensures that this power is available to the Government to deploy in respect of the Russia sanctions regime. This will help us to target our sanctions against members of defined political bodies such as the Russian Duma and Federation Council. This is the first time that a designation by description power has been included in a UK sanctions regime, and it underlines our commitment to exploring all options.
As my noble friend Lord Sharpe committed to in the previous Grand Committee debate on Russia sanctions legislation, we have also corrected errors made in SIs Nos. 3, 5 and 6. Noble Lords will be aware that, given the context of Russia’s invasion, legislation has had to be drafted at significant pace. We will continue to deliver further legislation at pace, working to minimise further errors.
The second set of regulations that I shall cover are the trade measures set out in the Russia (Sanctions) (EU Exit) (Amendment) (No. 8) Regulations 2022. These measures are designed to constrain the Russian Government by disrupting the oil industry and other advanced industries that are critical to fuelling the Russian economy and Mr Putin’s regime. Through these measures, we have limited access to goods required by the Russian military-industrial complex to maintain and develop its capabilities. In addition, it is vital that we demonstrate to those supporting Russia’s behaviour that the United Kingdom recognises the role that they are playing and will hold them to account. That is why, further to our previous sanctions against oligarchs close to Putin, we have introduced a ban on the export of luxury goods. These regulations, developed in close co-ordination with our allies, will cut off Russian access to strategic supplies critical to key exporting markets, including in the energy sector, while increasing the economic pressure on Mr Putin’s regime.
Russia’s war against Ukraine is a barbaric attack on a sovereign democratic state, a point that we have all emphasised. It is an egregious violation of international law and the UN charter. The United Kingdom and our allies will continue to hold the Russian Government to account, including through sanctions and other economic measures. Those we have already imposed in co-ordination with our partners are having damaging and lasting consequences for Mr Putin’s regime. As I speak, 60% of its foreign currency reserves, worth more than £275 billion, are frozen. Our measures cutting off key revenue streams are also working. Russia is struggling to find buyers for its seaborne oil, which is threatening major export revenues.
This debate also follows our announcement last week of fresh sanctions against Mr Putin’s war leaders. We have imposed sanctions on key leaders in Russia’s army, targeting those commanding the front line to commit these heinous acts. We have also targeted individuals outside Mr Putin’s military who are actively supporting his illegal invasion of Ukraine. These include Oleg Belozyorov, the CEO and chairman of Russian Railways, and Ilya Kiva, the defecting and expelled Ukrainian MP, who has publicly supported Russia’s actions in Ukraine.
We will continue our co-ordinated action against Russia in partnership with our allies, and encourage more and more countries to join us and act together. Working together, we can have the biggest possible impact on Mr Putin and his regime and, one hopes, end this abhorrent war. I beg to move.
Baroness McIntosh of Pickering (Con)
My Lords, I take this opportunity to thank my noble friend for introducing the regulations before us this afternoon, which I wholeheartedly support. I have two points of information that I would like to raise with him at this stage. On the first SI, No. 7, is he prepared to go further than the regulations before us this afternoon? I think that he was one of the Ministers I contacted about six months ago when there was a serious cyberattack on a transport firm in North Yorkshire. I was extremely disappointed at the time, although this is not a personal reflection on my noble friend, that I did not seem able to get any support for the company through normal channels such as Ministers like his good self and my noble friend Lord Grimstone.
I entirely endorse the thinking behind the regulations before us today, that we want to degrade the military effort of the Russians. I have no doubt whatever that these successful cyberattacks by a rogue state that is generally understood, in this case, to be Russia, have targeted a number of transport and infrastructure companies. Prior to that, they targeted a number of clothing companies. The one that is, perhaps, most significant, and is in the public domain, is FatFace, which I understand had to pay something like £1 million in ransom. I find it unacceptable that companies should be told that, at the moment, we do not have any means of counteracting these cyberattacks by hostile states such as Russia. I would like to understand where we are with this; if not today, because I have not given my noble friend any advance warning, I would welcome a written undertaking that could be shared by those contributing to the Committee this afternoon.
It is unacceptable that Russia has been able to fund its military aggression in Ukraine, and potentially also against countries such as Finland and Sweden, which are not part NATO, should they wish to apply to NATO. My reading of the situation is that the crime that Ukraine committed in the eyes of Russia and President Putin was in its wish to join the European Union and become a member of NATO. I declare an interest in Scandinavia, being half-Danish. If the Russian aggression goes as far as the Finnish border—which is huge, about 1,000 miles—if they were to be successful in Ukraine, and then had a full-frontal attack on either Finland or Sweden, that would be a very precarious position for the United Kingdom and our partners, and erstwhile previous allies in the European Union. That is in connection with SI No. 7. Can my noble friend update us on where we are in response to cyberattacks and in thwarting any attempt by a hostile state, such as Russia, to raise funds in that regard?
More briefly, on No. 8, I declare an interest in that I drive a diesel vehicle, which are heavily relied on in rural areas. In north Yorkshire and the north of England generally, diesel vehicles are vehicles of choice, particularly in inclement weather. We are not out of the woods yet; we may have a snowfall yet before spring is over. So, in bad weather—and also as a vehicle of choice for farming and off-road—we rely on diesel vehicles. I would like to understand the implications of targeting the fuel industry, to which my noble friend referred. I had no idea how dependent we are on Russia for our resources of diesel oil. I would like to understand what the alternative sources will be, and whether this will contribute to the ever-rising cost of diesel fuel.
I am grateful for the opportunity to raise my concerns, and I do support the regulations before us this afternoon.
Lord Ahmad of Wimbledon (Con)
My Lords, I first express my gratitude to all three noble Lords who have spoken—my noble friend Lady McIntosh and the noble Lords, Lord Purvis and Lord Collins, on behalf of the Opposition and the Liberal Democrats—for their strong and solid support of the Government’s approach to sanctions. I must admit, when I was given the responsibility of Sanctions Minister, I did not imagine the number of sanctions we would issue in this respect, but that shows the nature of the crisis. I am grateful for noble Lords’ support for the various steps we have taken.
I will first address some of the specific questions that have arisen. On timing, we are working at pace, as I am sure the noble Lords, Lord Purvis and Lord Collins, who raised this issue, accept. At the same time, I appreciate noble Lords’ support for the amendments and changes we have had to make to the governance structures to allow urgent procedures to be implemented for sanctions. That has certainly helped us move far more quickly and allowed the sanctions to be imposed in the quickest manner possible and, as the noble Lord, Lord Purvis, suggested, in a complementary fashion to those of the partners we are working with, notably the United States and the European Union.
While I will not go into how many sanctions the EU has vis-à-vis the US, ourselves or other partners, I assure both noble Lords that we are working very much in tandem and consolidating with our partners to ensure that we continue to sanction individuals. As an aside, to draw a comparison with a separate issue within the Balkans, we recently sanctioned Minister Dodik, a Serbian member of the tripartite presidency. I assure noble Lords that the teams are working at pace and we are ensuring that we keep a specific eye on the wider impacts of the invasion of Ukraine. I will continue to update noble Lords as far as possible in advance of the measures we are taking, as I have done previously. I am grateful to both noble Lords for their co-operation in this respect. The noble Lord, Lord Purvis, mentioned specific names. While he is quite right that I cannot comment specifically, for obvious reasons, nothing and no individual is off the table in the actions we will take and have already taken quite directly.
My noble friend rightly raised cyberattacks, cybersecurity and the challenges they pose. First and foremost, the minds of Her Majesty’s Government are very much alive to cyber, but not just based on what is happening today in Ukraine. We have been monitoring it very closely, not just enhancing our security and capabilities but ensuring that we are fully prepared to deal with cyberattacks. They have increased, and there are a number of actors who commit them. We have increasingly called them out over the last few years, repeatedly in partnership and association with our key partners.
I ask the noble Baroness to write to me reminding me of the details of the particular case that she raised, and I apologise on behalf of whichever part of government that response should have come from. Equally, I reassure her that we are taking specific actions and measures, defensively and in tandem with our partners, to identify and call out cyberattacks. All I will say at this stage about our cyber capabilities is that I have seen the National Cyber Security Centre and it is very much state of the art. As I say, I will take up my noble friend’s offer and ask her to write to me with further details specific to her question.
My noble friend also talked about the rising cost of diesel fuel, the measures that we have taken and what they mean for the UK economy and for consumers specifically. Any measures that we take have an impact. This does not relate to energy specifically, but there is an exemption for food exports, for example. However, Russia is choosing not to use that provision and export. The narrative that is then built, of course, is that it is the sanctions that are causing the food security issues. This was directly on people’s minds on a recent visit to north Africa, Egypt in particular.
All the sanctions that we are undertaking will have a cost, but we carry out detailed impact assessments before any measure is taken. Has there been a rise in fuel costs at the pumps? Of course there has. It is a global response to the challenge we are facing. However, the UK has been on the front foot in looking at our own energy security and energy supply and how we can adopt more sustainable measures. On the specific sanctions that we have imposed on this occasion, I direct my noble friend to the impact assessment, but if there are any more specific details I will include them in the letter that I will write to her.
The noble Lord, Lord Collins, rightly asked whether the sanctions were having any impact on Russia. The short answer is that they are. Sanctions imposed by the UK and its international partners are having quite damaging consequences for Russia and its ability to wage war. As an example, £275 billion of Russia’s foreign currency reserves—60%—is currently frozen. Russian seaborne oil is struggling to find buyers, which is threatening the stability of its export revenues. Sanctions have also hastened an interesting element: a Russian brain drain. A Russian IT association estimates that 50,000 to 70,000 computer specialists have already left the country, with another 100,000 personnel expected to leave in April despite travel restrictions. Estimates for Russia’s GDP growth in 2022 now range from minus 8.5% to minus 15%. I hope that information helps to answer the noble Lord’s question about whether these sanctions have an impact. Yes they do, and he and I share the same thought: that they are having a particular impact because we are bringing them in conjunction with our key partners and allies.
The other question was whether these sanctions were having an impact on the ground, particularly in Russian minds. It is important to demonstrate to those supporting Russia’s behaviour that the UK recognises the role they are playing, and since the start of the war they have seen how we have increased the pressure not just on those who are directly involved with the Ukrainian invasion but on Russian institutions and Russian individuals. That is clearly understood, and by targeting Mr Putin’s closest allies we are isolating them on the world stage, thereby impacting their ability to influence decision-making.
The noble Lord, Lord Purvis, talked of the visit today of Secretary-General Guterres, whom I have met directly on a couple of occasions specific to this crisis. During my last visit to the UN Security Council two weeks ago I met Rosemary DiCarlo, the Under-Secretary-General for Political Affairs. I emphasised that of course it is important to reach a peaceful negotiation; the impediment was Russia’s lack of direct engagement with the Secretary-General. We saw that again in the press conference, with Mr Lavrov attempting to change the narrative, but from what I saw today the Secretary-General sought to correct that narrative quite directly at the press conference. It is also important to see that engagement that would take place with President Zelensky in Kyiv. I have also been directly stressing the point that we are a P5 member, as is France, and it is important that the Secretary-General ensures that appropriate briefings are arranged with partners, including the US as another P5 member, and Brussels itself with our EU partners. I will update noble Lords in that respect.
The noble Lord, Lord Collins, raised the issue of the support that we are extending to the International Criminal Court. We have already allocated £1 million directly to the prosecutor, and we have extended support through technology and people; we have appointed Sir Howard Morrison directly to support the prosecutor in Ukraine. I was in Germany recently; our German friends have also now allocated €1 million to the prosecutor’s office, and we are working closely with the ICC to establish exactly what the requirements are. As this support increases, I will continue to update noble Lords.
There is an important lesson here as well. The Ukrainian crisis has shown how we have come together. The ability to stand up this investigation very early on has resulted in support directly for the prosecutor’s role rather than after the event. During a live crisis we are already into the area of collecting evidence and ensuring that it can be sustained and presented to The Hague and to the prosecutor’s office at the earliest time.
I will share another element with noble Lords. We are working closely with key neighbouring partners; for example, I visited Poland recently, as did colleagues including the Foreign Secretary. We are co-ordinating very much the same approach in a structured form of working together to provide any information we can to the prosecutor’s role.
The noble Lord, Lord Collins, raised the issue of humanitarian support. We have allocated £220 million and have already distributed well over half of that directly to agencies on the ground. He talked of early April. I am in the midst of completing and signing off on an updated WMS which I and the Foreign Secretary are finalising, and we hope to share the detail of that very soon. However, we are working hand in glove with the Ukrainian Government. Noble Lords will know that they have appointed a particular humanitarian co-ordinator, and the humanitarian envoy Nick Dyer recently met the Ukrainian lead and co-ordinator during his visit to Lviv in Ukraine.
On genocide, an issue mentioned by the noble Lord, Lord Purvis, we need to take encouragement. The Government’s position does not change—that it is for a court to make that adjudication. However, the fact that the prosecutor has engaged early sets the tone for what may or may not emerge from that.
The noble Lord, Lord Collins, rightly talked about the absolutely abhorrent nature of rape and sexual violence being used as a weapon of war and asked specifically about some of the measures we have taken. I can share a very live issue with noble Lords. After the event that I chaired at the UN Security Council, where we were honoured to have the absolutely courageous and exemplary Nadia Murad give evidence to us as a briefer, we launched the Murad code, which allows for a structured way of collecting evidence of sexual violence, rape and other such crimes to ensure that it meets the threshold for a successful prosecution. Too often, tragically, victims of sexual violence have to give repeated testimonies, which itself dilutes their ability to reach a successful prosecution. We have not only launched the Murad code; over the last two weeks we have specifically developed and yesterday completed its Ukrainian translation, and we are working with other authorities to see how quickly we can make that available to every person crossing the border. For example, we used a QR code to talk through the detail of some of our schemes, and I have directed officials to look at whether we can use that same QR code to share information on the Murad code directly, particularly with women crossing the border from Ukraine.
Lord Ahmad of Wimbledon (Con)
Sorry. Yes, we are working very closely with overseas territories. All the measures are applied quite directly through orders in council, apart from in two overseas territories that legislate directly for themselves. I believe that is Gibraltar and Bermuda, but they are working very closely to the same effect. Our teams and our overseas territories team are working very closely with the OTs on specific applications. Again, if I may, specifically on the application of these sanctions and the result or reports received from the OTs, I will share that with the noble Lord in writing.
I trust I have answered all the questions asked. I will of course write where appropriate. I thank noble Lords once again for their specific questions and, most importantly, for the strong support that we continue to see on the important issue of Russian sanctions. I commend these regulations to the Committee.