Brexit: Sanctions Policy (European Union Committee Report)

Lord Anderson of Swansea Excerpts

Thursday 3rd May 2018 Lords Chamber

[Lord Anderson of Swansea (Lab)]

My Lords, I join in congratulating the noble Baroness and her committee and welcome what is a highly timely report—timely not only in the sense that the EU Committee is carrying out a whole series of reports via its sub-committees on the implications of leaving the European Union, but also with respect to our policy on Russia. We go back to the death by a Russian agent of Litvinenko and that agent now being in the Duma in Russia. We think of the invasion of Georgia in 2008, and the fact that Russia and its minions still occupy South Ossetia and Abkhazia. We think of other actions, such as the recent tragedy in Salisbury, and of course Ukraine, including Crimea. The only problem about Crimea is that it is claimed as a maxim of diplomacy that we follow the road sign that says, “Do not enter box unless your exit is clear”. If we make sanctions on Russia wholly contingent on Russia’s leaving the Crimea, that, alas, will never happen, and there is therefore no obvious exit in terms of sanctions if we follow that route. Russia seems to be permanently in the Crimea, and there comes a point, after Salisbury and the chemical bombing by its ally Assad, when Russia must learn the lesson of behaving properly in international affairs and must also learn that there is conduct that will not be accepted and for which it will have to pay a price.

Sanctions, as was said in the committee report, are a most useful soft power tool, short of war. Some dismiss sanctions as gesture politics and, of course, they are not always effective and do not always hit the right targets. Iran and North Korea have been mentioned. I was fairly involved in the 1980s as the opposition spokesman on Africa, with the history of the anti-apartheid struggle. There is no doubt that, at that time, the sports boycott had a significant effect on public opinion on South Africa, and private sanctions by the financial community—illustrated by the effect of the 1986 failure of Chase Manhattan to roll over loans—had a major effect on the South African economy.

I note that, in response to the noble Baroness, Lady Deech, on her Written Question of 13 March, the noble Lord, Lord Ahmad, replied that sanctions are indeed biting in Russia. I remind him of his reply: of the 3.7% decline in Russian GDP in 2015, Citibank estimates that 0.4% was due to the sanctions. Perhaps more importantly, it has made it more difficult for Russia to access western finance. As the noble Lord, Lord Horam, has just said, the role of the City of London is particularly important in this context. However desirable sanctions may be through the United Nations, the experience of the Russian veto in the UN Security Council on sanctions for Syria illustrates the limitations of that route. For us, by far the most useful institution is the European Union, where over 50% of the sanctions we impose are autonomous and where we in the UK have played a leading role. There is no doubt that the clout of a unified European Union response is powerful, both as a sword in bringing pressure on such countries and as a shield to protect EU member states against counter sanctions, if we were to carry out those sanctions on our own.

The possible isolation of the United Kingdom in this field would be neither attractive nor effective, so our aim must surely be to retain as much influence on EU policy as possible, even when we are outside the formal structures. The committee has looked at a whole variety of possibilities, the disadvantage being of course, on the evidence from Norway and Switzerland—in paragraphs 80 and 81 of the report—that, however closely we align ourselves and however inventive we are in respect of EU sanctions, we will be outside the club and thus following decisions over which we have no or very limited influence.

My first observation, therefore, is that any alternative to our current membership cannot be an improvement for us. I have seen a similar position in the EU sub-committee on which I have the privilege to serve—the judicial committee—both in terms of consumer protection, where any alternative is worse, according to those in the field, than the current relationship we have with the European Union, and also on the dispute resolution report that we have just published. What is clear is that this is an exercise in damage limitation for the United Kingdom. It is true, as the committee concludes, that there are several possible options which could be mutually beneficial, and who doubts that it is most important and mutually beneficial for us and the European Union that we work together? We have so much experience and so many resources, not least our intelligence resources, to bring to the table. But all other options are less desirable and make us weaker, and that is true over the field of foreign policy as a whole.

My second observation is that currently, our considerable expertise in the field is highly respected in the European Union and beyond, and its loss would weaken EU sanctions regimes. Not only that: our reduced weight in the debate would have a serious effect on the balance within the European Union. If we look, for example, at the EU sanctions against Russia, a number of countries, either because of geography or history, or more particularly because of their economic interests, are very wobbly on those sanctions. I think of Hungary, Austria—where both left and right are much weaker on Russia—to some extent the Czech Republic, certainly Cyprus, and certainly Italy in its current configuration, as it seeks a coalition. All these are reluctant partners in respect of sanctions against Russia, and the balance within the European Union will be substantially altered if our weight is taken from it. The loss of our influence is one reason why Russia belatedly intervened in the EU referendum, and we saw the allegations yesterday from the Conservative Member for the Isle of Wight about one Brexiteer tycoon who played a role on behalf of Russia in that referendum debate.

My next observation is far more positive: I turn to the question of sanctions against individuals for human rights violations. I commend and welcome the recent moves of the Government in this field. In the previous Parliament, the Government amended the Criminal Finances Act to allow our law enforcement agencies to recover from property in the UK the proceeds of human rights abuses, wherever in the world they are committed. This was the first part of the US Magnitsky Act; on the second part, on visa bans, the Government argued that adequate powers were available to exclude individuals whose presence was not conducive to the public good.

This week, in Tuesday’s debate on Report on the Sanctions and Anti-Money Laundering Bill, the Government went very much further. The result will be that sanctions can be made to prevent, or in response to, gross human rights abuse or violations. This is defined in a separate government amendment—I commend Sir Alan Duncan on his willingness to listen on this—to include the torture of a person by a public official or by a person in an official capacity, where the tortured person has sought to expose the illegal activity of a public official or to defend human rights or fundamental freedoms. This is a most welcome response to the Magnitsky case. Your Lordships may recall that Magnitsky, a Russian national, was an agent of Hermitage Capital Management who was tortured to death in a Russian prison. Subsequently, through an evidence trail, it became clear that Russian tax officials benefited financially from their misdeeds. The Russians took no action save to pursue Bill Browder, the head of Hermitage Capital Management, relentlessly, including at the moment in Cyprus.

Finally, there is a variety of relevant laws in force in this area in the US—the Magnitsky Act—Canada, Latvia and Lithuania. Relying on these precedents, and the precedent set by our own Government, I am producing a report to the Committee on Legal Affairs and Human Rights of the Parliamentary Assembly of the Council of Europe, which will encourage all members of wider European bodies to enact similar laws. The spreading of such precedence across the membership of the Council of Europe will be a memorial to Sergei Magnitsky himself and a tribute to Bill Browder, who has waged a most effective lobbying campaign to highlight the wrong done to Magnitsky and to seek an appropriate international response.