Sanctions

Bob Stewart Excerpts

Tuesday 22nd February 2022 Commons Chamber

[Robert Jenrick]

My right hon. and learned Friend’s point has a lot to commend it. I suggest to the Government that they introduce further measures as quickly as possible, preferably in concert with our allies.

[Bob Stewart (Beckenham) (Con)]

My real worry is that Putin has actually been very clever: he has advanced into an area that his forces effectively control already and he will stop there. That would divide our allies—for example, Hungary and Germany may not agree—and we would not be able to get sanctions agreed internationally. That is the real worry and why he is not perhaps as mad as we think. He is actually doing this with purpose and he has a plan.

[Robert Jenrick]

My right hon. Friend makes a good point. If the scenario that plays out is the first of the ones that I described, there will be little opportunity to introduce further sanctions, because this may be all that Putin intends to do.

I want to make a last point on the specifics of the package that was announced, and I am afraid that I will repeat the comments of right hon. and hon. Members across the House. The banks that have been chosen are relatively minor. I worked as a corporate lawyer, including in Russia, and these are not the primary banks that international institutions, major corporations or the major oligarchs go to to seek finance, so the impact will be relatively limited. I have not seen the latest debates from the United States, but when I last looked at them, our colleagues and friends in the US Senate, for example, were looking at pursuing some of the larger banks such as SberBank. If we were going to make any impact, it would be important to bring forward measures against one, two or more of the larger banks, which are genuinely those that major institutions and the oligarchs whose names have been mentioned in this House today are more likely to use for finance.

Secondly, the list of individuals is very small, and the lion’s share of them have already been sanctioned for a long time by the United States. There are many others we could reach. In my work as a lawyer and in business, as managing director of Christie’s, I had the pleasure—if we can call it that—of meeting a number of the individuals who have been described today as oligarchs. Those individuals are not on the list. There is a much larger group of individuals we could and should now be reaching, and we could tackle them in a range of ways. In many respects, what they most fear is losing the ability to travel—to leave Russia and go skiing in France or Switzerland or shopping in London or Paris. It does not have to be a full sanction, but the list that we are currently considering is far too small.

If we were sitting in the same room as the Russian leadership today, I think we would see a very nonplussed reaction. There is more we can and should do. I hope that further measures will be brought forward in the coming days; I certainly stand ready, as I think all colleagues across the House do, to support them.

--- Later in debate ---

[Kevin Hollinrake (Thirsk and Malton) (Con)]

It is clear that Putin is not afraid to weaponise his foreign policy through his armed forces, and through oil and gas supplies. It is therefore only right that we look to weaponise our foreign policy in this regard using the City of London. It may well be that, as the Minister said, we will go further quickly, but so far we have not gone far enough. Of course it might not be in our financial interests to do this. Some financial interests—some of our domestic financial organisations—might suffer, but their financial interests cannot supersede the national interest.

When we have looked at sanctions on Russia before, not least in 2015, following the invasion of Crimea, we did not go anywhere near far enough. We did not sanction Russia’s oil and gas supplies, which make up 70% of its exports. We sanctioned things such as exports of milk—clearly, that is never going to go far enough. While Russia has been reducing its dependency on our capital markets, because it saw something like this happening in the future, countries in the EU, in particular, have not being doing the same with their dependency on Russian oil and gas exports.

Lots of people have talked today about Nord Stream 2. Obviously, I welcome the fact that there will be a sanction on that, in terms of preventing it from ever—at this point in time—pumping gas. However, we should not forget that no gas is travelling down Nord Stream 2 now and that all the gas comes into Germany on Nord Stream 1. Again, those oil and gas exports will continue into Germany and other nations. Clearly, there is a huge economic need for that gas going into Germany, but it is incumbent on us and on every nation across Europe—every peace-loving nation—to reduce our dependency on Russia in every economic area.

Russia is not a large economy—its economy is smaller than that of Italy—so there are many things we can do to put further pressure on Russia through sanctions. These are things we have not done today—we have not discussed the potential for them today at all. People have talked about the SWIFT payment system. Clearly, Russia has other opportunities and can use other communications systems, but none the less addressing this would help. Preventing Russia from trading in sovereign debt has been mentioned, but what has not been mentioned is access to clearing banks. It would be catastrophic for Russia if we prevented its access to our clearing banks. Instead, we have sanctioned five very small banks. There may be good reason for that; there may be more provisions we need to put in place before we can apply further sanctions to the larger banks, and clearly there is interdependency between Russian banks and banks around the rest of the world.

The banks that we should be looking at are: VEB, which is the Russian development bank; the Russian Direct Investment Fund, which is the sovereign wealth fund; and, as a few Members have mentioned, Russia’s retail banks. SberBank has roughly 36% of SME—small and medium-sized enterprise—lending in Russia, with VTB having 20% of consumer loans. Clearly, we have to do this carefully and it may well be that we act in concert with other parties, not least the US, the EU and others. If we simply put sanctions on today, that could mean that Russian banks avoid having to settle debts to UK banks and banks in different parts of the world. Although we do not want to do anything that would cause systemic risk to UK financial markets, we are talking in the billions of dollars here rather than in the trillions, and there are other ways of shoring up our system to prevent that happening. However, what is important now is that there is no doubt that we need to go much, much further than we have done already.

[Bob Stewart]

Mr Putin may well have won, because we have not reacted hard enough. Small banks have been sanctioned, but we have not put in place real sanctions. So he will be sitting in Moscow tonight thinking, “I’ve just got to sit this one out and I will be able to play up the gains we have got extremely well to the Russian people.” We are really on dangerous ground by our weakness.

[Kevin Hollinrake]

That is certainly how it looks to me at this point in time, so it is important that we now move very quickly to take the further measures we have discussed today on the Floor of the House.

There is, of course, a wider context around this debate. Many Members on the Government and Opposition Benches have been calling for an economic crime Bill and talking about the failure to prevent economic crime. It is vital to make sure that measures such as sanctions are not subverted—that our banks follow the rules, basically. That would apply a lot of pressure on banks to make sure that sanctions are properly imposed. I have previously mentioned whistleblowers, the proper resourcing of our crime agencies, and the need to change the rules on unexplained wealth orders so that we can take wealth very quickly from people we identify.

I have outlined some more long-term measures that it will take some time to implement, but we could move very quickly with a register of overseas entities. We have previously had draft legislation—Members have mentioned being on the scrutiny Committees—so we could move really quickly. As has been mentioned, £1.5 billion-worth of property in the UK is owned by Russians who are connected to crime and corruption. Some 50% of that is registered in overseas territories and Crown dependencies, the public registers of which are not supposed to go live until 2023. The reform of Companies House would serve as a check and balance, and the move from register to regulator would mean we could properly establish the identities of directors and shareholders.

All those things I have mentioned could and should be done very quickly. That would have a meaningful effect on people connected to the Russian state. We need to act very quickly—we need action this day.

--- Later in debate ---

[Jim Shannon (Strangford) (DUP)]

It is a pleasure to speak in this debate, and I congratulate all right hon. and hon. Members on their contributions.

I want to make it clear that, having come from a place where I have lost loved ones to terrorism, where I have grown up with the threat of attack, where I have experienced the righteous anger when I have learned of senseless death, I am not a person who wants to see any community facing this. I do not want to see Ukraine facing this either. My heart is with the decent people of Ukraine whose lives are nothing more than pawns in a game, who will potentially lose their homes, their jobs and their loved ones as they seek simply to retain the ability to live their lives as Ukrainian citizens.

One of my very vivid memories as a child is seeing images of the six-day war, during which untrained women and young children took up arms to defend their nation. I remember thinking that this was amazing. It was only when I grew older that I realised that war is no place for anyone, let alone for untrained civilians, children and families.

Never did I imagine that I would again be at home watching a TV screen with images of elderly women and young teenagers being taught the rudimentaries of taking up arms to defend themselves, their homes and their nation against unacceptable aggression. This image did not inspire me as it did when I was a child. Instead, it saddened me that life for that lady will never be the same after she pulls that trigger—possibly—and does what she must do to protect herself and those whom she loves in Ukraine.

This time round, there is a difference for me. I am no longer a boy with dreams of a glorious war, when I did not really understand what it was. I am a man living with the scars of war, as others do in this Chamber. I am thinking here of the right hon. and gallant Member for Beckenham (Bob Stewart).

Just today, I have been contacted by constituents urging us to do the right thing by the Ukrainian people, as, in doing so, we are doing the right thing by democracy. There is nobody in this House who believes that we should do nothing and allow Putin to carry out his plans for Ukraine. The call of freedom and democracy is far too loud, and the question for this House is how we respond.

It is clear from all the comments we have heard so far that, with respect to the Minister and the Government, the steps that are being taken are understandable but do not go far enough. I welcome the sanctions outlined in the statutory instruments, and I welcome these steps, but it must be made clear that they are initial steps—the first stage in what we do. They must be a precursor to decisive action taken with our allies, because it is clear that Russian aggression will not dissolve in the face of what will equate to a parking fine for a millionaire—irritating, but in no way life-changing. That disappoints me.

While we must not rush to war, we must not rule out the need for our troops, along with our allies, to remind Putin that democracy is something we have laid our lives down to protect before and that, if necessary, we will do so again. I firmly believe that NATO should invite Ukraine to join it, or Ukraine should apply to NATO and be accepted. Upon that acceptance, NATO troops could carry out NATO manoeuvres in Ukraine, support our allies against the aggression of Russia and protect the 44 million Ukrainians.

[Bob Stewart]

I thank the hon. Gentleman, my good friend. As I know, having spent a lot of time working in NATO, the problem is that NATO requires unanimity for any action. There are 30 members, and one of them is Hungary, which has already said it supports Putin. That will hamstring any action whatsoever.

[Jim Shannon]

I thank the right hon. Gentleman for that intervention. He always brings his wisdom and his knowledge to these debates. At the same time, I am the eternal optimist in this world; I always believe in better things to come—it is probably my nature—so I believe that NATO can reach out collectively and strongly to support that request from Ukraine, if it comes.

Putin has met with Macron, spoken with the PM and Zoomed with America’s president, yet those discussions have only allowed him more time to plan and co-ordinate, and time to wage his misinformation war online to stir up Russians who believe his lies and will stake their lives for the honour of their nation—honour that has not, in reality, been impinged by any actions of the Ukrainian people. We can debunk their videos by looking at timestamps and comparing sound files, and it is clear that misinformation is the cause of the day.

Putin has lied to us, he has lied to his own and he will continue to lie to fulfil his agenda. We cannot take anything he says at face value. We must make the most of the alliance of NATO, the EU and the USA. I have been heartened to see the American President remember that, rather than mere “Brits”, as he calls us, we are, he states, America’s greatest ally. We must be united in the steps that are taken. We must show Putin that division over our exit from Europe or any other issue will not stop the NATO alliance and our determination to meet these acts of aggression in a responsive and suitable manner, as our shared responsibility.

I am thankful for the Prime Minister’s statement of our defence capacity and state of readiness, and I am proud that our troops are well known to be the best in the world. Putin knows that too; while we consider sending troops, he must know there is a mechanism to make that happen if he does not immediately pull back from his nefarious aims.

I support these sanctions, but only as part of a clear and forceful plan to stand against Putin’s aggression and with those who stand for democracy. If we are silent now, there is no doubt in my mind that the forced reunification of the USSR will be the only end to Putin’s scheme. We have a duty to act. We must act with caution, with wisdom and with a cool head, but President Putin must be under no illusion: the British people will meet our obligations through this country and through NATO, with the co-operation of others and the USA, and take action in defence of the very same principle, so important and so critical, that our grandparents fought for and won the victory for—freedom itself.