Russia (Sanctions) (EU Exit) (Amendment) Regulations 2023

Barry Gardiner Excerpts

Monday 15th May 2023 General Committees

[The Parliamentary Under-Secretary of State for Foreign, Commonwealth and Development Affairs (Leo Docherty)]

I beg to move,

That the Committee has considered the Russia (Sanctions) (EU Exit) (Amendment) Regulations 2023 (S.I. 2023, No. 440).

I am pleased to be here in place of the Minister of State, Foreign, Commonwealth and Development Office, my right hon. Friend the Member for Berwick-upon-Tweed (Anne-Marie Trevelyan), who is travelling.

The regulations amend the Russia (Sanctions) (EU Exit) Regulations 2019. The statutory instrument was laid on 20 April 2023 under powers provided by the Sanctions and Anti-Money Laundering Act 2018 and contains measures on which we have co-ordinated with our international partners to increase the pressure on Putin for waging an illegal and brutal war against Ukraine. The measures place further constraints on Putin’s war machine and Russia’s economy, thereby adding further force to the largest and most severe package of economic sanctions that Russia has ever faced.

The instrument delivers on the UK Government’s commitment to ban the export of all items that have been used by Russian forces on the battlefield to date. It builds on extensive bans in previous legislation by widening export prohibitions to include additional aircraft and vehicle parts, radio and other electronic equipment, biotechnology assets and 3D printing machinery. The second tranche of measures in the legislation prohibits the important of nearly 150 additional types of goods that generate export revenue for the Russian economy. The instrument captures products as diverse as cigars, wood, tools and machinery. The third tranche of new restrictions covers the import of iron and steel products, including metal from Russia that has been processed in third countries.

The additional sanctions underline the UK’s leadership role on Russian trade sanctions. They will inflict further economic damage and constrain Putin’s ability to equip and fund his illegal war. The measures were applied from 21 April 2023, with the exception of the prohibition on iron and steel products processes in third countries, which will enter into force on 30 September 2023—the same date as the EU’s equivalent ban.

Before I finish my opening remarks, let me take this opportunity to update the House on a separate sanctions measure that was announced in April 2022. After careful consideration, the Government have decided not to proceed with a cap on funds held by Russian nationals in UK bank accounts. Having considered that policy option, we have concluded that carefully targeted sanctions against high net worth supporters and beneficiaries of Putin’s regime is a more effective way to achieve our objective. The decision follows careful scrutiny of the policy by relevant officials across Government and in consultation with industry, and is in line with our objective of ensuring that our sanctions are targeted and effective.

As this latest package of sanctions demonstrates, we will continue to impose hard-hitting sanctions against the Russian state and its supporters. This package alone adds a further £280 million-worth of exports and around £145 million-worth of imports to our prohibited list. As with all our sanctions, the latest package has been developed in co-ordination with our international partners. We will continue to work with them to identify and address any gaps or loopholes that emerge in our sanctions regime.

[Barry Gardiner (Brent North) (Lab)]

The Minister talks about loopholes; will he confirm whether it is correct that the stated origin of petroleum is determined by where it is refined? Given that oil and gas products are sold on the international market, is he entirely confident that Russian oil and gas that is refined elsewhere is not finding its way into the UK and thereby avoiding the sanctions?

[Leo Docherty]

We are fully seized of the need for constant vigilance in that regard, because we would of course want to prevent any attempt by the Russian regime to circumnavigate sanctions.

[Barry Gardiner]

I am grateful to the Minister for that interim response, but it does not quite answer the question that I posed, which was about whether the declared origin of petroleum products is determined by where it is refined. We may believe, or it may be on the ticket, that petroleum has come from a perfectly legitimate source when it has not. It would be helpful if the Minister could outline the Government’s strategies to ensure that the sanctions that we are putting in place are effective.

[Leo Docherty]

I do not want to give an inaccurate answer on behalf of the Minister of State, so I will ask her to write to the hon. Gentleman, but I am totally seized of the importance of that question.

To conclude, these latest measures demonstrate our determination to target those who participate in or facilitate Putin’s illegal war of choice. Sanctions continue to work. Russia is increasingly isolated and cut off from western markets, services and supply chains. Key sectors of the Russian economy have fallen off a cliff and its economic outlook is very bleak indeed. The UK Government will use sanctions to ratchet up the military and economic pressure on Russia until Putin ends his brutal invasion of Ukraine. We welcome the clear and continued cross-party support for this course of action. I therefore commend the regulations to the Committee.

--- Later in debate ---

[Tommy Sheppard (Edinburgh East) (SNP)]

The third party supports every opportunity that we can take to apply leverage to the Russian Government to cease and desist their illegal war and occupation in Ukraine, so we are relaxed about supporting the proposals in the statutory instrument, but I have three brief observations. First, like others I wonder why, given that the invasion happened on 24 February last year and the war has escalated to its present level, it has taken nearly 15 months for us to debate these measures. Secondly, with regard to iron and steel there will be a delay of another three and a half months before the measures come into effect; why is that?

Thirdly, throughout the section on revenue-generating goods, there is repeated reference to the fact that it is a defence against breaking the law if the respondent can demonstrate that they did not know that it was in operation. Normally, ignorance of the law is no defence against committing a crime, so I wonder why it has been felt necessary to state it not once but in every relevant regulation. If there is a reason for it, that is all well and good, but I am concerned that it could be used as a loophole. As the regulations are implemented, will the Department monitor the number of instances in which that defence is cited? If it is being used egregiously, we will need to take action to tighten it up.

[Barry Gardiner]

Does the hon. Gentleman, like me, want to push the question slightly further and ask the Minister whether any contracts were known to be in the pipeline that might have resulted in the legislation being delayed in the way that the hon. Gentleman just outlined, or indeed whether any contracts are now in the pipeline in relation to steel products that would make it convenient to have a delay in the legislation? Does he think that it would be sensible for the Minister to write to us to give reassurance on those points?

[Tommy Sheppard]

I concur with those observations and ask the Minister to respond. I can give a personal example: I am currently very much engaged in supporting the refurbishment of the King’s Theatre in Edinburgh, which is a very big project. The price has escalated for a number of reasons, one of which is that the contractors are no longer using Russian steel, which was in the original proposals. That has led to a price increase. Given that that is happening in the real world, there must presumably be other contractors engaged who are not so concerned to demonstrate their action against Russian suppliers and the Russian Government. That is presumably why the regulations are necessary, but my point stands about the need to evaluate and monitor the number of times when ignorance is cited as a defence.