Ukraine

Lord Kerr of Kinlochard Excerpts

Tuesday 18th March 2014 Lords Chamber

[Lord Kerr of Kinlochard (CB)]

My Lords, I begin with a tribute to the speech made by the Minister, which I found extremely informative. I thank her for maintaining her tradition of keeping the House well informed as this crisis develops. I also agree with many of the things she said, particularly what she said about the role of the Prime Minister at the European Council 10 days ago. The constructive role he played was greatly appreciated, particularly in Poland.

I cannot claim any particular expertise on Ukraine. It is a very long time since I lived in Russia. I lived in Moscow many years before the noble Baroness, Lady Suttie, lived in Russia and probably many years before she was anything more than a gleam in her father’s eye, but I knew Kiev and Crimea quite well back in the 1960s. I know Kiev a little more recently, but there are many noble Lords in the House with more expertise than me. I will therefore approach the issue by trying to devise some principles.

The first principle that I think the British Government are acting on—it is very important to keep it in mind—is that the aim of policy should not be to punish Russia but to help Ukraine. Although helping Ukraine does of course mean direct support and assistance, it also means deterring Russia from continuing down its present course. I do not think that that amounts to reckless bellicosity. Provided we ensure that all our policies are designed to assist Ukraine, we will not go far wrong.

There are three traps that policy needs to avoid, and I think British government policy is avoiding them. The first is the pipeline heresy, which was well exploded in an excellent speech by the noble Lord, Lord Howell of Guildford. Pipelines mean that one has tied suppliers. The Russians, by choosing to invest in pipelines rather than LNG, have ensured that we have leverage over them. In the medium term, we, as the noble Lord, Lord Howell, said, can buy more Norwegian or Algerian pipeline gas. We can get LNG that is freely available, at a price that will go down, from Nigeria and the Gulf because there is no market in America any more thanks to fracking. If Gazprom cannot sell its gas to us, it cannot sell it anywhere because it has no other market to supply, so Europe has no need to cringe because of its energy deficit.

It must of course work to correct that energy deficit: the noble Lord, Lord Howell, was right again. To some extent, it has done so, compared with the 2008 crisis. Slovakia, Hungary and Poland are less exposed now than they were because the pipelines previously flowed in only one direction and they now have reverse flow from west to east. We need be less inhibited than we were at the time of the Georgia crisis in 2008.

In the long term, there is no doubt that fracking means that the United States will be exporting LNG. There is clearly a need for many more gasification plants. It is particularly astonishing that Germany does not have one yet. However, in the medium term this is not a big problem, and in the short term we have had a warm winter in Europe and stocks are high.

Coal is phenomenally cheap because Appalachian coal has been driven out of the American power generation market by natural gas. Therefore, it can underprice Russian coal. Forty per cent of coal in this country still comes from Russia, but it does not have to. We could, if we wanted, reopen those contracts. I am not saying that we should do these things: my point is simply that the pipeline heresy is a heresy. We do not need to feel that Gazprom controls the EU’s policy.

The second heresy is to believe that EU sanctions set a ceiling on what we, the French, the Germans or the Poles could do or threaten to do to help Kiev. They do not set a ceiling; they set a floor. A convoy does not need to move at the speed of the slowest ship and only as far as that ship will go. There is an argument that the UK and France should think about going further and faster because we are signatories to the 1994 Budapest memorandum, which has been described and discussed already. However, I will make the point that in 1994, Ukraine’s nuclear arsenal was the third largest in the world. It was bigger than those of the next three, the French, the British and the Chinese, put together. All that was removed as a result of the Budapest memorandum, so I do not think that our policy in the present crisis should be determined only by the need to support and help our friends in Ukraine. We need also to think about how to sustain the policy we have had for many years on non-proliferation. It will be harder to persuade the near-nuclear powers not to go for warhead and missile development and weaponisation in the future if it is seen that the guarantees that the Ukrainians certainly think they got in 1994 are worth nothing.

The third heresy is the shoulder shrug which says that Ukraine is a basket case and nothing can be done. Ukraine is still the world’s second largest grain exporter. The country is phenomenally rich in minerals and in largely unexploited hydrocarbons. It is, as I think the noble Lord, Lord Howell, also said, natural fracking country. No one is doing it yet because no one invests in Ukraine. That is because Ukraine has had the bad luck to have five successive corrupt kleptocracies. Twenty years ago, the per capita wealth of Ukraine was on a par with that of Poland. Today, Poland’s per capita income is four times that of Ukraine. It is a rich country that has been very badly governed, and of course it is bankrupt. Some 30% of its budget is spent on debt service, so no wonder it cannot pay its bills. However, with a good Government that could change very quickly, which would be in everyone’s interest, including Russia’s.

What should we do? I have four thoughts about this. First, it is obvious that generous emergency aid should be made available now. It should come from the IMF, the EU and bilaterally from the Americans. I see that there is a Bill in Congress for $1 billion; I hope it gets through. That is needed to get the country through the six months that will see the parliamentary and presidential elections, the new constitution and a new Government. In my view, we are talking not only about capital aid—much of which can be loan money because we are lending to a country that is potentially rich and will repay—but about technical assistance, particularly in the area of juridical, legal and constitutional reform on issues of governance, where I think there is a particular role for this country to play.

Secondly, the Russians must be deterred from disrupting the six-month process that the Ukrainians have set themselves. As the noble Baroness, Lady Suttie, said, Kiev must continue to be statesmanlike and conciliatory about language laws and minority rights, and not make the terrible mistake that arose briefly on the language laws. The world’s eyes and ears need to be on Donetsk, Kharkiv and Odessa. It was easy for the Russians to create facts on the ground in Crimea because the world was not watching and the OSCE monitors were not let in. The Kiev Government want them in now, so we, the EU, the OSCE and all those who are concerned for the future of Ukraine should be responding to that. We need observers on the ground to make sure that false facts are not created.

Thirdly, there is a need for a dialogue with Moscow about whether its current zero-sum game approach, as shown in Putin’s speech today, is really in its interests. I strongly believe that, as the noble Lord, Lord Howell, said, a prosperous Ukraine is in the Russians’ interest. I do not think it is in their interest that their near-abroad—the Kazakhstans, Turkmenistans, Azerbaijans, Armenias, Georgias and Moldovas—should see Moscow as threatening and overbearing. However, that is how Moscow is seen today as a result of what has just happened in Crimea, particularly in the Muslim republics. The reactions of the Tatars in Crimea were predictable, and their fate is of concern to their coreligionists.

The Russians also need their EU markets, so the points I made earlier about sanctions are relevant. They need the inward investment that their action in Crimea will certainly now deter. We need to encourage them not to believe their own propaganda: Ukraine is not about to join NATO and the US is not about to deploy missiles on the Russian border. In fact, NATO membership is not on offer and has not been on offer for a considerable time. It was US policy for a time to offer it, but the European allies did not agree. As far as I know, no British Government have agreed, and it is not British policy now that Ukraine should be invited to join NATO—I hope the Minister will confirm that. The Russians maintain that it is. It would be a great pity if it was, and it would be a mistaken policy, for reasons that have been mentioned in this debate. However, I do not think it is the case, and that needs to be made clear.

Being slightly daring now, I should like to go a little further and make what is perhaps a more constructive suggestion. Some recent statements from Moscow, including one yesterday, seem to imply that Russia would like a status for Ukraine comparable to that achieved by Austria with the state treaty in 1955. If that were genuinely what a freely elected Ukrainian Parliament wanted—I have no idea whether it is or might be—and if the Russians would genuinely back off, as they did in Austria in 1955, and could convince Ukraine that they would respect a Ukrainian state treaty, just as Russia respected the Austrian state treaty and not as it treated the Budapest memorandum, then it seems to me that a very interesting negotiation is possible. Of course, it all hangs on what the Ukrainians want. They cannot have access to the alliance but they could have some other form of collective security guarantee, perhaps more binding than the Budapest memorandum has come to be.

Lastly, we need to remember our other friends in the region that are now feeling threatened. For Moldova, the parallel between Crimea and Transnistria is disturbingly close—the Russians have 2,000 troops on the ground in Transnistria, and the illegal referendum has already happened. It happened in Gagauzia on 2 February and, astonishingly enough, produced a majority in favour of closer links with Moscow and no move towards the European Union. Russian Deputy Prime Minister Rogozin has already warned that Moldova will lose Transnistria if it continues to move towards the EU. So far, Moldova’s nerve holds, but where are our observers? Where is our presence on the ground in Moldova?

What about the Baltic states? When they suffered, in 1940, precisely the same fate that has now befallen Crimea, the United Kingdom, greatly to its credit, never recognised their incorporation into the USSR. Most other countries did, but we have never recognised it. We maintained the embassies of the three independent republics in London right through until the collapse of the Soviet Union. Now they are our allies and are in NATO. They have a deep bond with this country because we did not let them down the way everybody else did. It is really quite important that we should be seen to be standing by them again lest President Putin mistakenly think that Article 5 of the Washington treaty is a dead letter. Foreign Minister Steinmeier was in the three Baltic capitals 10 days ago. I hope that we will follow.

The noble Lord, Lord Cormack, spoke of the Monroe doctrine. Alas, the Brezhnev doctrine is probably more relevant. I do not like it at all. I do not believe in spheres of influence. I do believe that democracy and self-determination must take precedence. That is why I think our policy should rest on the central pivot of: what can we do to help Kiev and others who currently feel threatened?