The Ukraine Effect (European Affairs Committee Report)
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The Parliamentary Under-Secretary of State, Foreign, Commonwealth and Development Office (Baroness Chapman of Darlington) (Lab)
My Lords, I thank the noble Lord, Lord Callanan, for his speech and for the way the Opposition are approaching this important issue. It is vital that we maintain the bipartisan approach towards Ukraine, and we continue to appreciate his words and sentiments and the way in which the noble Lord puts his points across.
I thank the noble Lord, Lord Ricketts, and all noble Lords on the European Affairs Committee for the valuable insights in the report. Normally I complain about the length of time it takes for us to get to examine these reports, but on this occasion I do not think it has been a problem. It may even have been a benefit that some months have passed.
I particularly thank the noble Lord, Lord Levene, for his valedictory speech and for his years of service. As the noble Baroness, Lady Helic, said, he has done so much and brought a lot of experience to bear, and I shall remember his golden rules.
Earlier this week we passed a grim milestone, as the Foreign Secretary said in the other place. Not only is it 1,000 days since Putin’s full-scale invasion stunned the world and brought turmoil, violence and bloodshed to millions, including the Russian people, but 1,000 days of Ukrainian bravery has inspired the world to stand with Ukraine.
Russia’s illegal and unprovoked invasion of Ukraine poses a direct threat to European and Euro-Atlantic security. It struck at the heart of the international rules-based system on which our shared global security and prosperity depend, and that is why supporting Ukraine to defend itself against Russian aggression is this Government’s foreign and defence priority.
The Foreign Secretary has made it his personal mission to do all we can to constrain the Kremlin. Earlier this week he announced more sanctions in response to Iran’s transfer of ballistic missiles to Russia, including on Iran Air, and measures against the monsters who forcibly deported Ukrainian children for attempted indoctrination by the Kremlin.
All this builds on the sanctions that we have ramped up, sanctioning almost 40 vessels in Putin’s shadow fleet of oil tankers, leaving many of them idling or at anchor since sanctions were imposed; sanctioning cybercriminals from the aptly named Evil Corp; sanctioning Russian troops who used chemical weapons on the battlefield and mercenaries responsible for destabilising Africa; and sanctioning firms that supply Russia’s military-industrial complex, including Chinese firms, sending critical components for weapons including drones. Indeed, the cost of components has risen by 30% for the Russian defence sector, and Russia’s military exports have fallen to levels not seen since the Soviet Union’s collapse.
The UK’s military, economic, political and diplomatic support for Ukraine remains ironclad as we have made clear to the world just what is at stake. The vivid description by the noble Lord, Lord Banner, of the cost of allowing Ukraine to fall is vital. We work alongside our European partners to rally international support. The noble Baroness, Lady Ludford, encouraged the deepening of our defence and security co-operation, and she is right to do that.
Since taking office, the Foreign Secretary has visited Ukraine with US Secretary of State Tony Blinken, the first such joint visit to any country for more than a decade. He discussed Ukraine with the EU Foreign Affairs Council in October, the first appearance by a Foreign Secretary at a regular council meeting since our exit from the EU, and in recent days he chaired a meeting of the United Nations Security Council on Ukraine before joining a meeting of close European allies to discuss how to bolster our support for Ukraine.
In our very first week in office, my right honourable friend the Prime Minister confirmed that we would provide £3 billion a year in military aid this year, next year and every year that it is needed. That includes my right honourable friend the Defence Secretary’s announcement earlier this week of more funding for Ukraine’s navy and for drones, and the extension of Operation Interflex, which has trained more than 50,000 Ukrainian troops to date.
We have increased non-military support for Ukraine this financial year. We will give at least £250 million in bilateral assistance for work such as protecting the Ukrainian power grid, which this weekend suffered one of Russia’s biggest aerial assaults since August, involving 120 missiles and 90 drones, causing an emergency blackout in several regions across the country just as the Ukrainian people head into winter, when temperatures can drop to minus 20 degrees.
Crucially, with the realism so eloquently expressed by the noble Lord, Lord Liddle, our bilateral support, both military and non-military, will be higher this financial year than in any previous financial year since the war began. As many noble Lords are urging, we are finding creative ways to strengthen the Ukrainian economy. We have brought the UK-Ukraine digital trade deal into force, so that Ukraine benefits from cheaper and quicker trade. UK Export Finance has provided more than £500 million in loan guarantees, including for Ukraine’s own defence industry.
British International Investment is working with the European Bank for Reconstruction and Development to support Ukrainian trade. By the end of this year, we will have deployed a further $484 million in World Bank loan guarantees. Colleagues have now begun debating a Bill confirming a new £2.6 billion loan to Ukraine as part of a G7 package of $50 billion to sustain Ukraine’s fight, all paid for by the profits from frozen Russian assets primarily held in the EU.
It is profoundly in our interests and those of the UK’s European partners to make sure that Ukraine is able to restore its sovereignty and territorial integrity and the integrity of international law, including the UN charter. Just as Russia’s full-scale invasion of Ukraine has made NATO stronger, it has brought about intensified foreign policy co-operation between the UK and the EU.
We are working together closely on a wide range of issues, from sanctions against Russia and making sure Ukraine gets the resources it needs to sustain its military campaign and grow its economy, to training Ukrainian soldiers, recovery and reconstruction. This Government are committed to continuing and strengthening this co-operation.
I was asked to comment on Storm Shadow, but I do not think it would be wise to go any further than the Defence Secretary did this morning. I do not have anything in addition to say—just that, as the Prime Minister has said, it is important that we double down and ensure that Ukraine gets the support it needs.
The noble Baroness, Lady Nicholson, rightly praised the support of many of Ukraine’s neighbours and welcomed the work across Europe to help Ukraine. We welcome the progress that Ukraine is making. She was talking about accession to the EU. We welcome the progress that has been made on its path to Euro-Atlantic integration, and we welcome the EU’s continued commitment to Ukraine.
The noble Lord, Lord Alderdice, and the noble Baroness, Lady Helic, asked about talks on UK participation in Permanent Structured Cooperation, PESCO. The UK will continue to progress our application to join the PESCO military mobility project. We will explore the opportunity to engage with other projects that align with UK interests on a project-by-project basis, and we continue to review the progress of other PESCO projects.
I note the speech of the noble Lord, Lord Ricketts, and how the UK can be a force in cybersecurity, AI and soft power. I think that point might actually have been made by the noble and gallant Lord, Lord Stirrup—if it was, he will have to forgive me. His point was that projects are very good but that strategic leadership and integration are far better. His encouragement of fresh thinking and creativity on this is very welcome.
Noble Lords including the noble Baroness, Lady Helic, and the noble Lord, Lord Callanan, asked about EU-UK sanctions co-operation, and this is important. We continue to prioritise co-ordination with international partners including the EU to enhance the impact of our collective sanctions and share information more seamlessly. We have frequent engagement with EU institutions and member states at all levels. We hold quarterly consultations with the EU to enable strategic co-ordination and co-operation on sanctions.
We will continue to work closely with the EU to jointly engage with countries where we are seeing spikes in trade of sanctioned goods with Russia, as many noble Lords mentioned. This has included the central Asia region and the UAE. In early September the UK sanctions director, the EU sanctions envoy and the US sanctions co-ordinator jointly visited Malaysia to discuss growing trade and maritime circumvention risks in the south-east Asia region. Together we are developing our collective offer of capacity building and technical assistance to third countries to support improved sanctions compliance and enforcement, and to offer assistance to both government and the private sector.
The noble Lords, Lord Alderdice and Lord Ricketts, and the noble Baroness, Lady Suttie, asked about the impact of sanctions on Russia. Sanctions have deprived Russia of over $400 billion since February 2022. By one estimate, that is equivalent to four more years of funding for Putin’s invasion of Ukraine. The UK has sanctioned over 2,100 individuals and entities under the Russia sanctions regime, over 1,900 of which have been sanctioned since Putin’s full-scale invasion. Over £22 billion of Russian assets have been frozen because of UK financial sanctions.
Putin thought that he could take Kyiv in three days; two and a half years on, his military is turning to North Korea and Iran for supplies. Sanctions are putting grit in the system; they are increasing costs and delays and reducing equipment quality. Russia has managed only to stabilise supplies, not increase them, and at a cost. Russia has been forced to pay over 135% more for microelectronics; over 320% more for advanced machine tools, procured by China and Turkey; and over 210% more to import critical US-origin items through third countries.
By the end of the first two years of the war, Russia had lost about 3,000 tanks and 5,000 other armoured vehicles. The difficulty in getting components is hampering Russia’s ability to build new tanks and infantry vehicles, as well as to refurbish old ones. A “new” Russian T-90M tank captured by Ukraine last year was found to have a gun made in 1992. Since the imposition of the oil price cap, data from the Russian Ministry of Finance showed a 30% reduction in tax revenues from oil in 2023, compared to the year before.
Thanks to the efforts of the UK and our allies, Putin faces extreme costs from the conflict. According to Putin himself, sanctions are causing a colossal number of difficulties. Of course, sanctions are only one lever and when people say, “Are sanctions working?”, that is probably the wrong way to look at this. They are one tool that we can use.
I was asked about Chelsea Football Club. I am afraid I am no further forward than when I was last asked about this. The funds remain frozen while a new foundation is established. We continue to hold talks with Mr Abramovich. All I can do, I suppose, is to promise to redouble our efforts and try to reach a solution as quickly as possible.
The noble Lords, Lord Callanan and Lord Risby, and the noble Baronesses, Lady Blackstone and Lady Suttie, among others, asked about sanctions enforcement. The idea of sanctions is that they work well as a deterrent, and we are working to make sure that businesses know how to comply with our sanctions regime. However, we accept that they have given rise to some challenges, which is why the Minister for Europe, who has responsibility for sanctions, is reviewing how they work, as you would expect of a new Government.
The noble Baroness, Lady Ludford, the noble Lord, Lord Hannay, and others asked about the overseas territories. I can confirm that these issues were raised at this week’s JMC with the OTs. We are committed to working with them to investigate and act on any evidence of breaches. For noble Lords’ information, a communique will be issued at the end of the conference, and I expect sanctions to feature in it.
The noble Lord, Lord Ricketts, asked about the shadow fleet. The shadow fleet undermines our sanctions and poses serious maritime security and environmental risks. We are working closely with partners to tackle the risks posed by these vessels. Since July, the Government have sanctioned 39 vessels under the Russia regime that were transporting oil originating in Russia to a third country, leaving many of them idling or at anchor since the sanctions were imposed. The Government have also sanctioned nine LNG carriers and six vessels involved in the transporting of military goods, and another four oil tankers and two military goods transport vessels were sanctioned under the previous Administration. In July, the UK hosted the European Political Community at Blenheim Palace, as noble Lords will know, and launched a call to action to tackle Russia’s shadow fleet. It was signed by 40-plus countries and has since been endorsed by the US and Canada.
The noble Baronesses, Lady Blackstone and Lady Suttie, and the noble Lord, Lord Tugendhat, asked about the recovery and reconstruction of Ukraine. This is an important issue, and I can assure noble Lords that we are working closely with a range of international partners—including the EU and EU member states such as Germany, France, Italy, Poland, Sweden, Denmark and the Netherlands—to deliver reforms and economic support for Ukraine’s recovery and reconstruction through the Ukraine donor platform and bilaterally.
The noble Lord, Lord Risby, invited me to explore the French insurance scheme, and I am happy to do that. The right reverend Prelate the Bishop of Chichester reminded us, too, of the value of faith-based organisations. It was good to hear about the work the Church is doing in Ukraine.
Like the noble Baroness, Lady Suttie, I, too, met the delegation from Lviv recently, and we discussed the psychological, societal and physical reconstruction that is needed. The noble Baroness, Lady Hayter, spoke movingly about these issues in her speech. We were asked about the airport. The UK specialists are in close contact with Ukraine about the airport, and we are providing technical assistance to get it open safely.
On the issue of reconstruction, the noble Lord, Lord Banner, was inspiring in his vision. It is vital that we keep the hope that he expressed. I think I remember that last time, he read us a note from his niece. I take this opportunity to wish her and the rest of his family well in Ukraine.
I thank the noble Lord, Lord Teverson, for noting that, on the issue of UK-EU security co-operation, on 14 October the Foreign Secretary attended the EU Foreign Affairs Council. I hope the noble Lord will welcome the fact that we agreed to work towards a security partnership and have committed to six-monthly foreign policy dialogues, starting in early 2025. We are engaging with the External Action Service to explore options for a new security partnership, focused on foreign policy and defence co-operation. In particular, we want to work closely to address wider global challenges, including economic headwinds, geopolitical competition, irregular migration, climate change and energy prices, which pose fundamental challenges to the shared values of the UK and EU.
I listened carefully to the noble Lord, Lord Godson, and I would just say that no one wants to spend years reopening old divides. This is not about renegotiating or relitigating Brexit; it is about looking forward and realising the potential of the UK-EU relationship as it stands today. He spoke about his frustrations at the EU’s treatment of third countries. We get it, but clearly, the EU is free to make its own choices. We are no longer members, so of course, our influence is not what it was; but the relationship is improving now, and we see this as being very much in the UK’s interests.
I end by echoing the Foreign Secretary in recent days and weeks. He said:
“UK security is indivisible from European security. This government is determined to reset our relationships and deepen ties with our European partners in order to make us all safer”.
We are working with our international partners, including our European colleagues, because we are always stronger when we work with others, for the freedom of all states the world over to choose their own future. That includes brave Ukrainians, who need not just words but actions. This Government have not wavered, ramping up the pressure on Russia, stepping up support to Ukraine and rallying the international community. We can all be proud of the unity we have shown as this country proves that Britain will remain Ukraine’s staunchest friend throughout this war and in the peace that follows.