Republic of Belarus and the Russian Federation: Sanctions and Tariffs

(Limited Text - Ministerial Extracts only)

Wednesday 8th March 2023 Westminster Hall

[Siobhain McDonagh]

I am happy for anyone to contribute to the debate.

[The Parliamentary Under-Secretary of State for Foreign, Commonwealth and Development Affairs (David Rutley)]

indicated assent.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Foreign, Commonwealth and Development Affairs (David Rutley)]

It is a pleasure to serve with you in the Chair, Ms Fovargue. I congratulate the hon. Member for Mitcham and Morden (Siobhain McDonagh) on securing this important debate and on her commitment in broadly backing His Majesty’s Government’s approach to sanctions. It is always a great pleasure to work with her because she makes doing business very simple, which is much appreciated, even though the issues we are talking about are complex.

My right hon. Friend the Member for Berwick-upon-Tweed (Anne-Marie Trevelyan), the Minister for the Indo-Pacific, whose responsibilities include sanctions, would have been delighted to take part in the debate. She is travelling on ministerial duties, however, so it is my pleasure to respond to the important issues that have been raised on behalf of the Government.

[Mr Jonathan Lord (Woking) (Con)]

I think there is unanimity across the Chamber in support of what we have heard from the hon. Member for Mitcham and Morden (Siobhain McDonagh). Would a good start be to make sure, as a matter of some urgency and importance, that those product lists are the same for Belarus and Russia? That would surely undermine a lot of the shenanigans we have heard about this afternoon.

[David Rutley]

I thank my hon. Friend for his contribution and I recognise the point he has made. As I will discuss at greater length later in my speech, the sanction lists are reviewed regularly. I understand his point about comparing the lists side by side. Clearly, there are differences in the approach we take to both those countries, but I understand the points that he makes.

In the face of President Putin’s illegal and barbaric war, Britain is doing everything possible to support Ukraine and to make Russia pay the price. I will begin by outlining the extensive sanctions we have already imposed on Russia and Belarus, before turning to more detailed points set out by the hon. Member for Mitcham and Morden—the nuts and bolts, as she called them in her very well crafted speech.

We have co-ordinated with our international allies to respond to this unprovoked and barbaric invasion, and together we have unleashed the most severe package of sanctions ever imposed on a major economy. I know it is supported by many people and encouraged by many colleagues in this room. The UK alone has sanctioned over 1,500 individuals and entities since the start of the invasion.

[Ms Marie Rimmer (St Helens South and Whiston) (Lab)]

I congratulate my hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh) on securing the debate and thank the Minister for allowing me to intervene, especially as I was late to the debate. The US Secretary of State recently announced further sanctions to tackle the sanctions evasion network, notably against Igor Zimenkov, who was cleverly in possession of a Cypriot golden passport and therefore sanctions could not be placed upon him. Does the Minister agree that our own Government need to take further action on individuals and countries that are helping Russia to bypass sanctions, which is exactly what Igor Zimenkov did?

[David Rutley]

I thank the hon. Member for that contribution, and I recognise that it is sometimes difficult to arrive bang on time for the start of a debate. I am not familiar with that particular case. Where people seek to circumvent our sanctions regime, we will review that in two ways: first, by continually reviewing and updating our sanctions lists; and, secondly, through HMRC’s serious enforcement action, which I will come to in a minute.

The latest package of internationally co-ordinated sanctions and trade measures announced on 24 February includes export bans on every item that Russia has been found to be using on the battlefield to date. These are important sanctions. Our sanctions toolkit extends far beyond the designations of individuals or entities.

In the year since Russia’s full-scale invasion of Ukraine, the UK has introduced an array of measures targeting the trade, finance, military and industrial sectors. These measures target industries that support the war and prohibit all new investments in Russia via third countries. They are constraining Putin’s ability to maintain the occupation of Ukraine, and they are weakening and isolating the Russian economy.

Our trade measures alone reduced Russian goods imports to the UK by 99% between September and November last year, compared with the same period in 2021. UK goods exports to Russia fell by nearly 80% over the same period. More than £20 billion of UK-Russia trade in goods is now under full or partial sanction. By anybody’s metrics, these are substantive measures. But Putin has not acted alone. Lukashenko’s regime in Belarus has actively supported Russia’s illegal and unprovoked actions. That is why UK sanctions also apply to Belarusian individuals, entities and organisations who have aided and abetted this reckless aggression.

In July 2022, we introduced legislation imposing further sanctions on Belarus in response to its support for Russia’s war. These sanctions included giving the UK the power to detain and de-register Belarusian aircraft, and measures prohibiting Belarusian ships from entering UK ports. We also expanded existing financial sanctions measures, banning more Belarusian companies from issuing debt and securities in London or obtaining loans from UK banks, among other measures. The legislation introduced trade measures against Belarus, including bans on the export of critical industry goods and technologies, as well as luxury goods, and a ban on the import of iron and steel.

Since before Russia’s invasion of Ukraine, Lukashenko’s regime in Belarus has shown continued disregard for international law and has committed ongoing violations of the fundamental freedoms and human rights of the Belarusian people. The regime initiated a brutal crackdown in 2020, which continues today, in response to protests which followed the flawed 2020 elections.

The UK previously introduced sanctions against Belarusian individuals, entities and organisations who have supported and facilitated the Lukashenko regime’s human rights violations. These sanctions signal our discontent and are intended to coerce the Belarusian regime to change their behaviour. In total, with the addition of our designations since Russia’s illegal invasion of Ukraine, the UK has targeted more than 120 Belarusian individuals and entities.

Tariff measures are adding further weight to our response, tightening the screws on Putin and his supporters. Between March last year and January this year, we introduced four batches of 35% tariff increases on a wide range of goods from Russia and Belarus worth over £2.4 billion, from vodka and caviar to certain metals, chemicals and plastics. Tariff increases on Belarus have been made in line with the evolving sanctions positions as part of our co-ordinated response.

[Hywel Williams]

Before the Minister moves on, is he in a position to comment on how Russia is evading some of the sanctions broadly imposed by the west by trading with countries that are developing or emerging markets? Russia is evading our sanctions, however well we impose them.

[David Rutley]

I will come on to what we are doing to tackle circumvention in a little more detail. The Russians are doing everything they can to try to avoid these sanctions, because they are biting on their economy. We continually need to refresh our sanctions approach to respond to that, and we are.

The hon. Member for Mitcham and Morden will be aware that a letter to the Foreign Secretary in January was passed to HMRC, as the lead enforcement authority for trade sanctions, for further review. As I am sure she will understand, HMRC cannot and does not comment on specific cases. However, I can assure her that the Government and HMRC take this and all reported alleged sanctions violations very seriously indeed.

I will take this opportunity to acknowledge the important role that businesses can and do play in providing us with information and intelligence about suspected sanctions breaches, such as by self-reporting. That is an important part of our sanctions enforcement architecture, and it is vital to help to inform the action that is taken.

The hon. Lady asked about steel and aluminium products. That issue relates to differences in the scope of the UK’s Russia and Belarus sanctions regimes, as has been highlighted by a number of colleagues. Different regimes serve different foreign policy objectives. Although there are links between Russia and Belarus sanctions, they are distinct. We keep our sanctions under review. Given Russia’s ongoing and outrageous actions in Ukraine, we have continued to bring forward new measures since the invasion last year.

[Sir Iain Duncan Smith]

I understand where the Minister is now, but is not the problem that there seems to be no exchange between Departments as to exactly how this works? It seems illogical to me that different countries now sanction different groups and industries in different ways. Surely, the key here—this relates to the measure that I raised earlier—is that we now sanction far fewer individuals than the United States does. On industrial sanctions, we seem to have no common purpose. With respect to the Minister, and I am a big supporter of his, he should surely go back to his Department and set out that it is not good enough to say there are different regimes. We know how involved Belarus is with Russia, and we know what the links are. We should treat them both exactly the same and get on with it.

[David Rutley]

I thank my right hon. Friend, who knows that I am also his fan, because we worked together—or, rather, I worked for him a long time ago; let us be clear about that. I respect him enormously on a range of issues.

I say gently that the UK has worked closely with our international partners to maximise the impact of our sanctions, and we have taken co-ordinated action to ratchet up economic pressure on Russia. It is not just about comparison, although I know my right hon. Friend is very hot on that issue; it is also about collective action to ensure we get maximum impact. We have demonstrated leadership in the most impactful areas. For example, we are the only international partners with designated top executives at Rosatom, the Russian state nuclear corporation—a key Ukrainian priority.

Let me come back briefly to sanctions circumvention, which is an important issue. We will continue to bear down on Russia and Belarus by implementing further sanctions and leaning in to tackle Russia’s attempt to circumvent measures that are already in place, as we have done over the past year. That means coming down hard on sanctions evaders, closing loopholes and working with our international partners to undermine Russia’s attempts to build global resilience to western sanctions. That includes through the G7, which reaffirmed unwavering support for Ukraine on 24 February, one year on from Russia’s illegal invasion.

We are also addressing the threat of third country circumvention—that is a point that the hon. Member for Mitcham and Morden made earlier—by using diplomatic channels to limit the size of the international market to which Russia can turn. The UK Government and our law enforcement agencies are using a range of tools to ensure that all forms of circumvention are identified and tackled, including by taking criminal enforcement action where appropriate.

We are taking action and having an effect, but I understand the points that have been raised. We will continually review our sanctions package and enforcement measures, and we will come down as hard as we can on those who seek to evade and avoid the sanctions regime.

Question put and agreed to.