Brexit: Sanctions Policy (European Union Committee Report)

Lord Horam Excerpts

Thursday 3rd May 2018 Lords Chamber

[Lord Horam (Con)]

My Lords, the Minister will now be aware from the long list of questions that my noble friend Lady Verma listed that she did a sterling job as chair of the committee, of which I was a member. As she did, I first thank the clerks and advisers to the committee. We are sadly losing Eva George, who was the clerk to the committee. She is going to the International Affairs Committee. She was a model of clerkly conduct—I hope that is noted at the clerk level.

One of the knacks of the committee, for which I am grateful to my colleagues, is its habit of coming out with extremely timely reports. This knack was also evident when the chairman was my noble friend Lord Tugendhat, who I am glad to see in his place. We did a report on Operation Sophia, which addressed the problem of refugees coming across the Mediterranean when it was at its very height, which received quite a lot of publicity. Very early in the discussions about Brexit, we issued two reports on the options for trade which were very well received, and we are at the moment on a third leg of that, looking at customs arrangements—discussed yesterday in the Cabinet, as Members will be aware. In particular, we took evidence from the Freight Transport Association on the issue of a customs partnership, which is one option that the Cabinet discussed yesterday. The House will be interested to know the evidence that we had from James Hookham, the deputy chief executive of the Freight Transport Association. I quote from the press interview he gave, for the sake of clarity, where he said that the customs partnership was “sound”, showed “positive forward thinking” and was a good outcome for everyone concerned. That is rather different from the view taken by one of my colleagues along the Corridor who said that it was “cretinous”. That was the view of exactly the same thing as people operating these things on the ground think of as “sound”. The adjective cretinous can be rather applied to those who wish to apply customs barriers where there are none today. However, that is another debate for another time. Let me come on to the subject of this report, which is, of course, sanctions.

As my noble friend Lady Verma said, we made three significant suggestions. The first was that sanctions should clearly be a subset of foreign policy. There should be an overall strategic view that sanctions fit into successfully. They must also be co-ordinated properly. As one of the Russians in London said the other day, “If they push us out of London, we’ll just go to Paris”. If it is not co-ordinated, that is the sort of thing that could well happen.

It was made clear to us by the noble Baroness, Lady Ashton, who has had a distinguished career in the European Union, that post Brexit we will not be at the table. We therefore proposed that we should form some kind of political forum in which we could have influence. That positive suggestion was raised again in her remarks by my noble friend. I hope the Minister will respond to that very clearly.

The fact is that we will continue to have influence in the European Union, whatever the arrangements, because we are a significant financial centre and sanctions are at their most effective when they are applied to the individual and make it difficult for them to conduct their normal business, whatever it may be. We should also remember in that context that the British economy is, above all, a services economy. Some 78% of our GDP is in services of one kind or another and that will have influence in this area.

Finally, I will comment on the three areas where sanctions at the moment are having an influence. First, on Russia, the move by the United States on sanctions last month was quite a game-changer because the sanctions relate not merely to human rights but to corruption and how money was originally obtained. Anyone who has read the book by Bill Browder, the American entrepreneur who worked extensively in Russia, will be aware of the problems that led to the Magnitsky Act in the United States, which has had considerable bearing on the behaviour of Russian oligarchs of that kind. In this country, anyone who saw the television series “McMafia” and read the book by Misha Glenny will know the effect in London. The Government have to decide how far we will follow up the game-changing sanctions put on by the United States. It is certainly the case that while Ukraine and Crimea are issues between us and Russia, we cannot in any way afford to relax sanctions, they must remain in place. I do not think there can be any going back on that. It is a matter of international concern.

In addition, we should try to understand Russia perhaps more comprehensively and fundamentally than we have in the past. Russia is coming out of a period when it has felt itself to be a great world power. It had an empire—the Soviet Union—around it. We, as a country which has also come out of a period of empire, should have some sympathy for the psychological effect of that diminution of influence in the world. I always remember reading Jan Morris’s great trilogy of the British Empire, which finished with Farewell the Trumpets. There is a sense in which a country feels diminished and therefore has to exert its power and sense of power in the world, and we should understand the psychology of that, as I said.

Therefore, we should be careful what we do in relation to sanctions, as well as about the implications for the City of London of the amount of Russian money there. But I think that we are now pursuing the right attitude, and I am very pleased with what happened at the other end of Parliament this week on a question of transparency in relation to overseas territories. I think that we all welcomed that, because the fundamental issue here is transparency—and we need more transparency, not only for the overseas territories but in the London financial and property markets. It is outrageous that we simply do not know who owns properties in the middle of London, when they are pushing up prices and having a really damaging effect on the lives of ordinary Londoners and ordinary citizens of this country. We should know who owns those properties; we do not know at the moment. It is one area in which the Government can do things unilaterally without too much co-ordination but with a beneficial effect. That is a step that the Government should take.

Secondly, on Iran, sanctions have clearly had an effect and been very successful in winding down its nuclear ambitions. It seems to me that, far from wanting to do as President Trump wants to do and scrapping the arrangements that we have, what is happening reinforces the importance of those arrangements. If Iran feels that the international community and the Americans in particular have turned against it, it will become a more dangerous operator in the Middle East, not less dangerous. In that respect, the Europeans should keep their act together and not go along the path that President Trump appears to be walking down.

On North Korea, we do not really know what is agitating the North Korean leader or what has brought him to the negotiating table. It may well be more Chinese actions and sanctions than anything that President Trump has done—we will have to wait and see. But it is clearly ongoing and is of significance to all of us.

Finally, on Brexit as a whole and the UK influence in the sanctions area after Brexit, the Minister, Alan Duncan, in the Government’s response to our report, put it well when he said:

“The UK is a Permanent Member of the UN Security Council and an active member of other international fora. We have a substantial global reach, with a diplomatic network of 270 posts, world-class security services and extensive military capabilities. The UK is the only major country to meet both the 2% defence spending target and the UN 0.7% target for Official Development Assistance”.


I would add to that that we are also a significant financial centre and will continue to be. All of that is soft power, and hard power, of a significant kind, and I believe that we can wield it well post Brexit, just as much as we have pre-Brexit, provided that we have a strategic view, co-operate in the way that the committee concluded and can put the right amount of resources into our foreign policy and military and defence capability.