The Ukraine Effect (European Affairs Committee Report)

Lord Banner Excerpts

Thursday 21st November 2024 Lords Chamber

[Lord Banner (Con)]

I start by congratulating His Majesty’s Government on their work to enable Ukraine finally to fire Storm Shadow missiles at military targets in Russia yesterday. I have already spoken in this House about just how important this is, not just to defend Ukraine from existential threat, but to defend us from the war which will not stop there if Putin is allowed to win.

I also congratulate the noble Lord, Lord Ricketts, and his committee on an excellent report. I agree with all its recommendations and shall make observations about two of them. I start with the imperative to fill any funding or weapons gap left by a change in US foreign policy by the incoming Administration. The report calls for UK-EU co-operation on this, and rightly so. If America pulls back, it is in the interest of all Europeans, including us, to step up, not give up.

International agencies in Kyiv reckon privately that if the heating and power grid in Ukraine were to fail in winter, Europe would face an influx of 5 million new refugees. If Ukraine falls, I am told that the figure may be several times that. The small boats crisis will pale into insignificance in comparison with the unprecedented humanitarian disaster that this would involve. It would be likely to become the single largest humanitarian crisis Europe has seen since the Second World War. Are Europe and the UK ready for this? It would be the price of inaction, indeed the price of insufficient action, at this critical moment for Ukraine.

The fall of Ukraine would moreover not be the end of Russia’s assault on European freedom and democracy; it would only be the beginning. In every respect, therefore, the long-term cost of letting Putin win is greater than the short-term cost of stopping him, even if we have to pay more in light of a change in US foreign policy. Can the Minister therefore confirm what work has been done, whether domestically or in conjunction with EU partners, to price the cost of filling any funding or weapons gap left by a change in US foreign policy, including consideration of how that might be apportioned across the EU and its European allies, such as us? Has any calculation been made of the possible countervailing cost of the humanitarian crisis that will be facing our country and the rest of our continent should Russia prevail?

It is also vital, I suggest, for European Governments to communicate with and persuade their electorates of why this is a justified investment, not just for Ukraine’s sake but for our and their sakes too. If, as a well-placed source suggested to me earlier this week, the UK’s pro-rata contribution were to come down to the cost of a cup of coffee per taxpayer per month—even if it were, frankly, a cup of coffee per day—should we not be explaining it in such clear terms to our electorate, and ditto our European neighbours? Few, surely, would doubt that this or anything like it is a price worth paying to secure freedom and democracy on our continent.

I turn now to the report’s recommendations relating to the reconstruction of Ukraine. The report makes a number of important points in this respect. I would like to draw particular attention to two: first, the need to authorise the use of frozen Russian state assets towards financing the rebuilding of Ukraine. Paragraph 83 of the report records the previous Foreign Secretary, my noble friend Lord Cameron of Chipping Norton, as acknowledging that there is, in his words, a “legal route” to this. I agree.

The legal position is set out comprehensively and convincingly in an article in the May 2024 edition of the Journal of International Banking and Financial Law, by Tetyana Nesterchuk of Fountain Court Chambers. In short, it would amount to a lawful off-setting, or advance payment, of Russia’s international law obligation to pay the cost of cleaning up after itself. I must make a full and frank disclosure: I am married to the article’s author. She always was the smartest lawyer in our house.

Do the new Government also accept, like my noble friend Lord Cameron, that using frozen Russian state assets in this way would be lawful? If so, will they commit to doing so without delay? Could this be done, for example, by amending the current Financial Assistance to Ukraine Bill, allowing not only interest from frozen assets but the underlying assets themselves to be deployed to repay loans to Ukraine? Unshackled by EU membership, with no obligation to wait while the ECB continues to dither, there is a golden opportunity for the UK to show global leadership on this issue and set an example for others to follow.

Secondly, there is the importance of the EU and the UK working together now to plan the rebuilding of Ukraine. As the committee rightly observes, this cannot wait until the final bullet is fired; it must happen now. In keeping with my earlier comments, a central consideration is the need to appreciate that investing in the reconstruction of Ukraine is not simply a one-way exercise in charity; there is something—in fact, quite a lot—in it for us, too. There are substantial long-term opportunities for the UK with trade, investment and natural resources if we take a lead in partnering with Ukraine to help it rebuild. If we do not, someone else will—China, for example, was already leasing swathes of Ukrainian agricultural land before the war started—and their gain will be our loss.

Here, too, it is right to collaborate with the EU, but we can take advantage of no longer being obliged rigidly to co-ordinate with it and take the opportunity to go further and faster. British businesses should be given greater fiscal incentives to invest in Ukraine. The built environment sector, in which I practise as a lawyer—architects, master planners, surveyors, engineers and the like—should be encouraged to train a new generation of Ukrainian apprentices, who can deploy the skills they learn in the decades-long rebuilding exercise ahead.

Some pioneers are already doing that off their own steam, such as NJL Consulting in Manchester, which is funding a Ukrainian student through a master’s degree in planning at the University of Manchester, followed by a placement with its planning consultancy, giving her the hardwiring to play her part in planning the restoration of Ukraine’s shattered cities. That kind of initiative should be more widespread. A range of levers is available to the Government to make it happen. I encourage them to consider how they may do that and to take advantage of their independence from the EU to shine the path for other member states to follow, rather than waiting for them to take the lead.