Russia (Sanctions) (EU Exit) (Amendment) (No. 7) Regulations 2022

Baroness McIntosh of Pickering Excerpts

Tuesday 26th April 2022 Grand 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 Purvis of Tweed (LD)]

My Lords, as always it is a pleasure to follow the noble Baroness and the very valid points that she raises. As someone who lives in and represented a rural area, I know that she speaks with great authority. We support these measures and, indeed, since we last debated, we have seen the continuing, grotesque practices of the Putin regime. It is now clearly in a strategic phase of seeking to demolish whole areas of Ukraine and make it virtually uninhabitable for the people. This is closer to what the President of the United States described as genocide. While I know that that has been debated frequently in this House in other contexts, it is starting to look increasingly like this is the practice of Putin. It reinforces the need for the urgent capture of evidence of the war crimes that he is permitting.

We also support the other measures and their corrections. I understand when the Minister says that they were moved at pace—but while they have been put forward at pace and we support them, there are certain elements where we have been behind our allies in these measures. On the Liberal Democrat Benches and on the Labour Benches, we have called for action to be stronger and sooner.