Russia (Sanctions) (EU Exit) (Amendment) (No. 4) Regulations

Baroness McIntosh of Pickering Excerpts

Tuesday 22nd March 2022 Grand Committee

[Lord Sharpe of Epsom (Con)]

My Lords, I shall speak to the following three statutory instruments, copies of which were laid before this House on 1 and 8 March: first, the Russia (Sanctions) (EU Exit) (Amendment) (No. 4) Regulations 2022; secondly, the Russia (Sanctions) (EU Exit) (Amendment) (No. 5) Regulations 2022; and. thirdly, the Russia (Sanctions) (EU Exit) (Amendment) (No. 6) Regulations 2022.

The instruments before us were laid under the powers provided by the Sanctions and Anti-Money Laundering Act 2018, also known as the sanctions Act, and came into effect under the “made affirmative” procedure. As part of our wider package of sanctions measures and designations, these new regulations ratchet up the pressure to further isolate Russia, degrade its economy, and starve out Putin’s war machine. We have worked tirelessly with allies across the world in response to Putin’s abhorrent war. Since Russia’s invasion began, the UK has delivered its largest package of sanctions ever imposed.

With your Lordships’ permission, I will tackle each of the three statutory instruments in turn. First, on the maritime statutory instrument, on 1 March the UK was the first country to turn any Russian vessels away from its ports. We introduced new restrictions, barring all ships that are Russian owned, operated, controlled, chartered, registered or flagged, and we did not stop there. These measures provide new powers to direct Russian vessels out of British ports and to detain Russian vessels already in port. These powers offer an important tool for targeting oligarchs and wealthy individuals closely associated with the Putin regime. Finally, anyone connected with Russia can no longer register a vessel and will have any existing registrations terminated. This strips away the competitive advantage provided by being a member of the UK Ship Register. We are working closely with those in the port sector to support them in upholding the regulations, and we have issued detailed guidance to support those on the ground.

The second statutory instrument—the No. 5 regulations —relates to the Russia central bank. Also on 1 March, we introduced new restrictions that prohibit any individual or entity from providing financial services, relating to foreign exchange reserve and asset management, involving the Central Bank of Russia, the Russian National Wealth Fund, and the Ministry of Finance of the Russian Federation. This action, taken in close co-ordination with the US and the EU, prevents the Russian central bank from deploying its reserves in ways that undermine the impact of sanctions imposed by us and our allies. It undercuts the bank’s ability to make foreign exchange transactions to support the Russian rouble. Alongside the existing raft of financial sanctions, this really locks down the most severe restrictions.

The third and final SI, concerning aviation, space and insurance products, was laid on 8 March. We introduced a new suite of aircraft sanctions and established new government powers to detain Russian aircraft in the UK. We were the first country to ban Russian aircraft from our airspace, on the 25 February. We have now extended this ban, making it a criminal offence for any Russian aircraft to fly or land here. The ban includes any aircraft owned, operated or chartered by anyone connected with Russia, and any individuals operating in UK airspace. The new powers will also allow the Government to remove aircraft belonging to designated Russian individuals from the UK aircraft register. The statutory instrument builds on critical industry trade prohibitions which came into force on 1 March. It will go further by extending the above prohibitions to cover all aviation and space goods, technology and related services, including the provision of insurance and reinsurance services. With similar action taken by our partners, these measures are designed to severely constrain Russia’s commercial air operations and logistics, with consequential impact on its economy.

Noble Lords will wish to be aware that the Government are intending to make some corrections to this SI shortly.

Russia’s assault is reprehensible, unprovoked, premeditated and a barbaric attack on Ukraine and on the very foundation of our societies and the rules by which we coexist. As my right honourable friend the Foreign Secretary has said previously, the UK will continue, as promised, to impose further sanctions against Putin and his regime if he does not change course. We will ratchet up our sanctions until Putin ends this invasion of choice, which represents a clear breach of international law and the UN charter. The UK and our international partners stand united in the face of Russian aggression. Putin has led the Russian people into a quagmire and turned Russia into an international pariah.

It does not stop at Governments. Indeed, we have seen all organisations—from banks to oil companies and from football leagues to singing competitions—make it clear that Putin and his allies must be isolated from the international community for his actions. The UK’s latest designations, announced on 14 March, mean that the UK’s total number of designated persons, entities and subsidiaries now stands above 1,000. Together with our allies, we are making Putin and his allies pay the price. Our unity demonstrates the strength of opposition against Russian aggression.

We are unwavering in our support for the people of Ukraine. We hold them in our hearts and minds at this terrible moment in their nation’s history. As a free and democratic country, Ukraine has the right to determine its own future, but it is clear that the Russian Government were never serious about engaging in diplomacy. They were only ever focused on their territorial ambitions. The UK and the international community stand against this naked aggression and for freedom, democracy and the sovereignty of nations around the world. Our new and upcoming sanctions regulations and measures will continue to show Putin that his abhorrent war is a massive strategic mistake. I beg to move.

[Baroness McIntosh of Pickering (Con)]

I am most grateful to my noble friend for setting out the instruments before us, which I am delighted to say I support most warmly.

There seems to be a general trend in each of the statutory instruments that I have participated in, and that is that corrections are being made. I understand the pressure and the timeframe that my noble friend and the department are under. I wonder whether he can set out to us what the corrections are that he had in mind; I am sure they are only minor.

I do not want to detract at all from the scale of the sanctions that my noble friend has set out today, but given that most of the items that are the subject of the regulations before us, such as Russian ships, may have already been moved out of our area and that those who had finances in UK banks may have already moved them, how confident is my noble friend that we are sufficiently targeting sanctions to degrade the Russian economy in the way that my noble friend has set out, which I entirely support?

Each set of regulations sets out that there could be unintended consequences. In particular, paragraph 12.2 of the Explanatory Memorandum to the Russia (Sanctions) (EU Exit) (Amendment) (No. 5) Regulations sets out:

“There could also be unintended consequences, such as a negative impact on bilateral trade.”


I do not intend to criticise the Government at all for the sanctions we have imposed. We realise that there will be a quid pro quo, but I wonder to what extent my noble friend has had discussions with European Union countries and a wider international grouping, particularly as regards the assessment they have made of the inflationary impact and the potential shortage of food.

We have seen the cost of fertiliser, household fuel and diesel rise. I admit that I run a diesel car, and I have been staggered. I have seen the cost rise from £1.72 to £1.92 per litre, and I am told it will go higher. Properties off the grid in this country are dependent—as I am in the north of England—on oil-fired heating. I did not realise that we are dependent on additives and diesel from Russia. I wonder what other sources we might be looking at in that regard.

I am mindful of the fact that, since we left the European Union, we have been particularly dependent on Ukrainian workers, as we were told by my noble friend Lord Benyon in answer to a Question in the House recently. Ukrainian workers make up 75% to 80% of those who pick our local crops of fruit and vegetables. As we near the time of year when that happens, we will have to look at how we can work on the supply chains in this regard. Also, I know for a fact that DFDS carries a lot of supplies between continental Europe and the UK. It is a slightly separate issue, I know, but to what extent might the supply chain be impacted by the fact that we now have this little difficulty with P&O Ferries? I hope that it can be resolved.

Although I welcome the sanctions, I am concerned about whether we will be able to handle and deal with the impact of higher food prices, which we are seeing in the shops. Those of us who live in rural areas are seeing that impact on the cost of deliveries in the cost of diesel, the cost of heating fuel and the other measures that I referred to. However, I wish my noble friend the Minister and the department every speed in hopefully bringing the Russian invasion to a swift conclusion.

[Lord Purvis of Tweed (LD)]

My Lords, as always, it is a pleasure to follow the noble Baroness on these issues. As is customary, she asked some really practical questions in her contribution. I share them, living in a rural area and having formerly represented a constituency that, both for industry and for individual families, will operate under a similar set of new circumstances with new costs. It is inevitable that some of the consequences of this horrific aggression by the Putin regime mean that we must diversify part of our energy dependence in certain areas and that some of our trade in certain areas may have to be changed. This is not just in the UK; it is also with our wider trading partners, which I will touch on in a moment.

I thank the Minister for introducing these regulations. I support them. They address some of the issues that were raised in the Chamber when the Statement was repeated and the Government announced that sanctions would be forthcoming, particularly in maritime, insurance, financial services and aviation. I will touch on those briefly in a moment.

The Minister is absolutely right that the sanctions put in place against the regime and the state apparatus should be as tough as possible. I think that they can go further; I hope that we will be able to debate some areas in the coming days and weeks, with the Government taking the next step. It is welcome that more than 1,000 individuals have now been named but, regrettably, the Government have been slower than some of our partners in identifying individuals and putting in place the legislative regime.

As the Minister said, the conflict is now entering an even more horrific stage . As the Russian advance falters in many areas, it is resorting to tactics seen in grim fashion in Chechnya and Syria: systematically razing whole communities to the ground; terrorising populations; directly and indirectly targeting civilians; and knowingly targeting mothers and children. These are war crimes that are being seen clearly daily. Therefore, part of our sanctions regime must be complemented by further activity to ensure that there is no impunity for these crimes. We are not in the realm of prevention; we need to move over to the phase of punishment.

On the other hand, the ongoing resilience and bravery of the Ukrainian people, who are sacrificing their lives for the hopes and aspirations of liberty and the freedom to choose their partnerships and alliances—and, indeed, to join the European Union—is literally awesome and inspiring, even in such grim circumstances. We will have consensus in this Committee, but I want to put on the record that I share others’ general revulsion at the Prime Minister making a connection between the Brexit debate in this country and this horrible war. I hope that the Minister will distance himself from such remarks; I do not think I would hear the Minister say that in the Chamber, but it was a jarring moment.