Repurposing Russian Assets to Rebuild Ukraine

David Lammy Excerpts

Tuesday 27th June 2023 Commons Chamber

[Mr David Lammy (Tottenham) (Lab)]

I beg to move,

That this House condemns Russia’s illegal invasion of Ukraine; stands in solidarity with Ukrainians in their resistance to Russia’s invasion of their sovereign state; recognises the enormous damage that Russia’s invasion has caused to Ukraine’s infrastructure, economy and institutions; commends the recent commitments made by the Government to support Ukraine’s recovery during the Ukraine Recovery Conference 2023; and calls on the Government to present a Bill before this House within 90 days to allow frozen Russian state assets held in the UK to be repurposed for Ukraine’s recovery.

Some of the most horrifying images from the start of the Ukraine war came out of Bucha, a city just outside Kyiv. Bodies of innocent Ukrainians were strewn across the street, some with their hands tied behind their backs, and dozens were buried in mass graves beside burned-out tanks representing Russian aggression. Today, much of the damage wreaked on Bucha has been repaired. Walking down its streets, it is almost impossible to imagine the atrocities committed just one year ago.

Rebuilding has become a motif of Ukrainian resistance. By April, Ukraine had cleared debris from 2,100 km of road, rebuilt 41 of the 330 destroyed bridges and renewed 900 railway points. But as Putin’s barbaric war continues, there remains so much more to do.

Putin’s illegal invasion of Ukraine began not last year but in 2014. However, for the past 16 months since the start of the full-scale invasion, Ukrainians have been continually bombarded from the land, the sea and the air by a dictator determined to destroy everything that their country represents: its freedom, its vibrancy—which I have seen on two occasions—and its spirit. Yet in the face of Putin’s barbarism, Ukrainians have defended their country with courage and a fierce determination to defend the values that they cherish. Ukrainians have shown themselves to be free and proud people who refuse to be controlled or subdued.

Since the invasion began we have seen that Putin will seek to destroy that which he cannot control. We should be under no illusion about the sheer scale of the destruction that Putin’s war has brought to Ukraine, nor about the high price paid by ordinary Ukrainians. The statistics speak for themselves. The United Nations estimates that almost 10,000 civilians have been killed. Millions more have been displaced from their homes. Over 150,000 buildings have been destroyed or damaged, including homes, schools, hospitals and many businesses. Tens of thousands of kilometres of road have been rendered useless.

Landmines and munitions are strewn across the country. Vast swathes of farmland have been ruined, forests have been burned down and national parks have been destroyed. Millions of Ukrainians have been forced into poverty, and parts of the country are facing a humanitarian crisis. In total, the World Bank estimates that up to $600 billion will be needed to fund Ukraine’s recovery and construction. That is around three times the size of Ukraine’s GDP, and the figure is rising by the day.

Beyond the physical damage, we must remember the profound psychological impact of the invasion on the Ukrainian people. A people who were full of optimism for the future are now having to come to terms with the loss of loved ones and the destruction of their homes and livelihoods. Where once there was hope there is now uncertainty and fear, with the war making it impossible to plan for the future. Although Putin has succeeded in bringing about destruction, Ukrainians have resisted through a sense of strength, defiance, innovation and ingenuity. What they have achieved, frankly, is astounding.

In the early part of the invasion, Putin tried everything he could to destroy Ukraine’s energy sector. In raid after raid, energy resources were the targets of bombs. At one point, almost half the power generation was destroyed. Yet only months later, Ukraine’s electricity grid is once again fully operational, and even exporting power to Europe. Streets that were reduced the craters have been rebuilt. Bridges that only months ago were destroyed are standing once more. Homes that were reduced to rubble are now rising again. Across Ukraine, people are doing whatever they can to get on with their lives and rebuild their broken livelihoods.

However, with all the ingenuity and strength in the world, Ukraine cannot take on the job of national reconstruction on its own, nor should it be expected to do so. Our greatest strength in support of Ukraine against Russia is our unity, as I said yesterday. Labour will continue to stand united with the Government, our allies and our partners until Ukraine wins. Likewise, we will stand with Ukraine as it begins the long and difficult process of rebuilding its proud country and forging the bright and ambitious future that Ukrainians deserve.

The Ukrainian people deserve justice for the suffering they have endured and they deserve to see Russia held accountable for its actions. Ukrainians have already paid the ultimate price for Putin’s imperialism and they deserve to rebuild their country without having to bear the burden of the cost. That is why the Labour party believes Russia must pay for Ukraine’s recovery. It is not just a matter of justice; it is also a matter of deterrence. If Russia is not held accountable for its actions it will only embolden it against others, and other aggressors will be emboldened. The message will be sent that the international community is not serious about preventing future wars. That is why it is vital we show Russia that there are consequences for aggression. We must make it clear that the world will not tolerate its actions.

[Alexander Stafford (Rother Valley) (Con)]

The right hon. Gentleman is making a very powerful point. I sympathise with what he is saying, but I am also if not concerned then questioning about some of his calls. The way I hear it is that he is calling for reparations. After the first world war, huge reparations were put on Germany and we know where that ended up. The German populace felt that they could not cope with the reparations, and that lead to the second world war. The right hon. Gentleman is calling for Russia to pay. Can we make sure that that does not affect the people of Russia, so they do not create another conflict?

[Mr Lammy]

This is a debate about repurposing. The hon. Gentleman might remember that after the first Gulf war, oil revenues were used to rebuild much of Kuwait. That is the central point that this debate is about. There is a consensus globally on the issue, with the Canadians, the United Nations and US Senators making progress in this regard. The debate is about repurposing. We have to be very careful to get the balance right. It is clear that we cannot leave Ukraine to do this on its own, so the question is: do we have the will to make this happen?

[Sir Iain Duncan Smith (Chingford and Woodford Green) (Con)]

I am grateful to the Opposition for selecting this subject for debate. I cannot be here to make a full contribution, but I just want to ask the right hon. Gentleman a simple question. During a recent debate in this place, we pretty much came to a consensus that the first stage is to look to repurpose the frozen assets: $300 billion-plus of national assets and maybe $50 billion of individual assets. They are sitting in our hands. They are not the same as reparations; they are funds that are in very clear existence. A lot of international lawyers think it can be done. I just wondered what the right hon. Gentleman thought.

[Mr Lammy]

The right hon. Gentleman is right. He is right about the football team we both support—it is not the only thing he is right about, but he is right about that—and he is right that more than $300 billion of Russian state assets have been frozen by our global partners, with £25 billion here in the UK. The central point is that those assets are frozen, so the question is, what are we going to do now?

[Dame Margaret Hodge (Barking) (Lab)]

My right hon. Friend is making a very powerful contribution. I think there is large consensus in the House on this issue. I just want to draw attention to the facts. We actually do not know how much money has been frozen, either Russian state money or money relating to sanctioned individuals. There is a figure I have seen from the Bank of Russia which suggests £26 billion and figures from the Government that suggest £18 billion. Does he not agree that it is imperative the Government should openly tell us how much money has been frozen, who it comes from and where it sits, so that we can follow the money and ensure that justice is done for the Ukrainians in their country?

[Mr Lammy]

My right hon. Friend has been so assiduous on these issues over many, many years. She is absolutely right that we cannot have the necessary quality of debate without transparency. That is what we need. I do not think that that ought to be a matter of dispute between us and the Government; I should have thought that it was something on which we could agree. I hope the Minister will be able to tell us whether those figures can, in a transparent fashion, be put in the Library and made available to the Foreign Affairs Committee, so that we can all work on a common basis.

[Liam Byrne (Birmingham, Hodge Hill) (Lab)]

My right hon. Friend the Member for Barking (Dame Margaret Hodge) has provoked me into intervening. Would we not be better served in the House if the Office of Financial Sanctions Implementation not only disclosed the full measure of the assets that we have frozen, but came to the House once a month to tell us what sanction waivers it had written that have allowed oligarchs with fortunes in this country to live high on the hog in their well-tended mansions, paid for with money that has been stolen from the Russian people? The Minister himself came close to agreeing with us in the Foreign Affairs Committee that our sanctions regime is in danger of being undermined by the Treasury writing sanctions waivers left, right and centre.

[Mr Lammy]

I agree with my right hon. Friend, who has raised these issues time and again. The concern is, of course, that there is not the appropriate ministerial oversight, that this place is being kept in the dark about fundamental, key issues, and that in the end the money of taxpayers in all our constituencies will fund these waivers. That is why the House should have both transparency and the opportunity to challenge and question those who make these decisions on our behalf. I hope that that is what Ministers are doing, but it does appear that this is happening without ministerial oversight.

[Sir Geoffrey Clifton-Brown (The Cotswolds) (Con)]

I agree entirely with the thrust of the right hon. Gentleman’s speech. Does he agree that the possible lacuna in the tracing of Russian assets is in Companies House and shell companies? Does he agree that we need to amend the regulations surrounding Companies House to provide proper verification of the people in charge of those companies, and allow Companies House to liaise more closely with the fraud authorities and report suspected fraud?

[Mr Lammy]

The hon. Gentleman is absolutely right. That has been a standing issue that the official Opposition have taken up. We do think further reform is necessary at Companies House, and we were slightly concerned that that was not supported by the Government in the Economic Crime and Corporate Transparency Bill.

[Dame Margaret Hodge]

I too have been provoked, by the intervention from the hon. Member for The Cotswolds (Sir Geoffrey Clifton-Brown). He was right to say that the reform of Companies House and greater transparency about beneficial ownership are vital, but that will give us information only about companies, as opposed to trusts. Last week Lord Agnew of Oulton, a Conservative peer, successfully moved an amendment that would have provided some visibility in who controls trusts. We know that Abramovich, for instance, has transferred a large amount of his money into trusts controlled by his children, including a daughter aged about nine. If we do not have transparency, we cannot follow the money, and we cannot ensure that the assets of sanctioned individuals are really being held so that they can be repurposed to help the people of Ukraine.

[Mr Lammy]

I am, again, grateful to my right hon. Friend—first for raising the issue of transparency, and secondly for raising the issue of Lord Agnew’s amendment and endorsing the point that has already been made. I hope the Minister will tell us whether the Government might give that amendment some support, so that we can benefit from the satisfaction we should gain from this debate. I recognise that it is an Opposition day debate, and we are using our time as an Opposition to bring these issues to the forefront because it has been many months since the Government said that they wanted to act, but the debate is being held in a spirit of the national interest, and I hope everyone can recognise that.

The question, then, is “Who should pay for Ukraine’s recovery?” The Labour party’s view is that the answer is Russia, and one way of ensuring that this happens is repurposing Russian state assets that have been frozen in the United Kingdom. The Government have said at least since October 2022 that they are supportive of seizing Russian state assets to fund Ukraine’s reconstruction, but in the eight months since, no specific proposals have been forthcoming. From the very beginning of Putin’s invasion, Labour has worked with the Government to ensure that our sanctions framework is as effective as it can be, notwithstanding the issues that have been raised from both Back Benches today.

[Sir Chris Bryant (Rhondda) (Lab)]

If I am honest, Ministers have been a bit flip-floppy about this issue. The Foreign Secretary was remarkably snooty about it in the House only yesterday, when he said that I am apparently an idiot because I do not understand international law. Some of us have been arguing cross-party in favour of trying to seize Russian state assets and repurpose them for the rebuilding of Ukraine. I thought that that was the accepted, long-term destination of the Government, even if they had not quite managed to get there. I think that the objection the Foreign Secretary has is around the State Immunity Act 1978. We would need to amend it to be able to proceed, but that is perfectly available to us.

[Mr Lammy]

That is, of course, central to the work my hon. Friend has been doing in his Seizure of Russian State Assets and Support for Ukraine Bill. I think the House could come together to amend the State Immunity Act. I do not want to comment on the Foreign Secretary, except to say that, in my experience, if he has had an overnight flight, he can be a little prickly, but we will not hold it against him.

Since the beginning of the invasion, more than £25 billion of Russian state assets have been frozen in the United Kingdom, and more than $350 billion of Russian state assets have been frozen by our global allies, and those vital assets could be used to help fund Ukraine’s recovery. Since February last year, my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) and I have been pushing the Government on this issue relentlessly, and I pay tribute to the great work of my hon. Friend the Member for Rhondda (Sir Chris Bryant), who tabled his ten-minute rule Bill specifically to speed up the Government’s efforts in this area.

Each time, the Government’s response to Members of this House has been that the Government support repurposing Russian state assets but that it is complex. We fully accept that, but we do not accept—and I do not think, given its mood, that the House accepts—that this issue is insurmountably complex or that we should not try to meet this challenge.

We accept the concern that, on the whole, it is not good for any Government to seize another state’s assets and that the right to property is fundamental to the rule of law, but there are exceptions to that rule. For example, the law reserves the right to fine people and deprive them of ill-gotten gains. In the same vein, we recognise concerns that repurposing Russia’s central bank reserves could violate Russia’s sovereign immunity but, again, there are exceptions to that rule. We believe that Russia’s continued refusal to comply with international human rights law or to follow the orders of the International Court of Justice are good grounds for such an exception.

Simply put, we believe that Putin’s full-scale invasion of Ukraine represents a wholly exceptional act, from which exceptional countermeasures can flow, and we are not alone in that belief. As the Minister will know, the Canadians have had legislation in place since December last year to repurpose frozen Russian assets, and it is a similar common law jurisdiction to ours. The European Union is working at pace to ensure that Russian central bank reserves can be repurposed by the summer. Last month, United States politicians laid a Bill that would allow for state assets to be repurposed. Finally, we must remember that the UN General Assembly has voted on this very issue, adopting a resolution that calls for Russia to pay war reparations to Ukraine and for states to transfer Russian state assets into a central bank account to be repurposed. This begs the question: why, then, are the Government lagging behind our international allies in this area? We believe we must rise to this challenge, and we must rise to it now.

[Sir Iain Duncan Smith]

I apologise for interrupting the right hon. Gentleman again.

Sovereign immunity applies in international law to foreign judicial processes. It is clear in international law that sovereign immunity does not apply to administrative or legislative processes, such as Bills. It is quite possible for us to pursue this by tabling legislation, as America has, to secure that process in the courts. Sovereign immunity applies only to judicial processes, so it would be wholly feasible in legislative terms.

[Mr Lammy]

The right hon. Gentleman is absolutely right. Very few countries now consider sovereign immunity to be an absolute immunity, and there have been many exceptions. Meeting damages, particularly those awarded by international courts and tribunals, is one such example. The State Immunity Act also expressly restricts sovereign immunity.

I agree with the right hon. Gentleman that Russia’s continued refusal to abide by international law provides us with exceptions, and we should now table legislation to make it clear that there are exceptions.

[Richard Graham (Gloucester) (Con)]

The right hon. Gentleman is making a powerful point about the importance of rebuilding Ukraine. All of us who were at the Ukraine recovery conference will have noted the key point that about $400 billion-worth of rebuilding is needed, coming from both the public sector and the private sector with huge support from the World Bank, and so on. Does he agree that part of this is not just getting Russian assets to play their part, very important though that is, but thinking about some of the softer aspects of rebuilding, including the work of organisations such as the Westminster Foundation for Democracy, to make sure that Ukraine emerges from this horrible invasion into a much better world, in all senses—a stronger democracy, less corruption and more for us all to be incredibly happy about?

[Mr Lammy]

The hon. Gentleman is right. President Zelensky committed to that at last week’s Ukraine recovery conference, and we need to support him. Democracy is forged in people-to-people contact. That was the case before the war—I remember meeting civil society in Ukraine and, frankly, they were very clear that there was work to be done—and it will most definitely be the case after the war.

[Sir Chris Bryant]

That prompts another thought in my little head. Quite a lot of people on social media have criticised the idea of doing any reconstruction of Ukraine now, saying that we should wait until the end of the war. I hope the shadow Foreign Secretary will agree that that is a preposterous suggestion. People need homes, schools, playgrounds and hospitals now and, actually, quite a lot of rebuilding is already ongoing. We need to give that a rocket booster to make sure it can happen at pace.

[Mr Lammy]

My hon. Friend is right, and it is why I wanted to mention in my speech that work is happening in Ukraine now, which is extraordinary. We should be behind that work, in defiance of Putin’s imperialism.

We will continue to work with the Government to ensure that Ukraine gets the support it needs to win this war. From the start of this invasion, we have been united on providing Ukraine with the military, economic, diplomatic and humanitarian support it needs. We commend the Government for the commitments they made to support Ukraine at the Ukraine recovery conference last week. We welcome the International Monetary Fund’s announcement of $15 billion to support Ukraine over four years, and we welcome the announcement of £250 million of extra funding from British International Investment. However, just as we pressed the Government to move further and faster on sanctions, in a constructive spirit, at the start of the full-scale invasion, today we are urging the Government to come forward with a legislative plan to repurpose Russian state assets for Ukraine’s recovery.

[Sir Geoffrey Clifton-Brown]

The right hon. Gentleman is a lawyer. Is he aware that one of the biggest arbitration cases ever is before the United Kingdom commercial court? It concerns the seizure by Russia, a month before it went to war in Ukraine, of several hundred civil commercial aircraft. That case is going to cover many billions of pounds, both here and in the US. When we consider what measures we take against Russia, should we not consider that act of expropriation by the Russian authorities?

[Mr Lammy]

The hon. Gentleman puts before the House an important case, which we should look at very closely, as it will be of concern to all of us in relation to how we move forward in these areas. It has been some time since I practised law, although I was pleased to be made an honorary doctor of laws by the University of Glasgow last week.

The UK has a part to play in supporting Ukraine not only today, but for tomorrow and in the decades to come. We believe that we can go further. The frozen Russian state assets held in the UK could have a transformative impact on the future of Ukraine. Let us imagine the good that £26 billion could do if we reappropriated it with the sole purpose of securing a positive future for the people of Ukraine. Russia forfeited its rights to these assets when Putin embarked on his barbaric and illegal invasion, and the least we can do is join our international allies in repurposing these assets for the benefit of Ukrainians. The Government have had more than a year to come up with this legislation, but there has been no plan, no action and no progress. We call on them to treat this matter with the urgency we believe it deserves and to come up with the required legislation within the next 90 days. That gets us to a place where in the autumn we could come together as a House to make this happen—if need be, this could be in the next Session of Parliament. Labour will support the Government in any way we can to make sure that this succeeds, and of course we will hold them to account if they should fail.