Ukraine

Earl of Sandwich Excerpts

Tuesday 18th March 2014 Lords Chamber

[The Earl of Sandwich (CB)]

My Lords, the noble Baroness opening the debate rightly condemned Russian aggression in Crimea and MPs expressed similar disapproval earlier this afternoon. However, in the light of history, I am not sure that we could have done much about it.

I am a strong advocate of European enlargement, and it is undeniable that the acceptance of new applicants from eastern Europe and the Balkans has contributed to peace and stability there. However, as the EU nudges further east, we have to be especially careful not to upset and antagonise the Russian minority in Ukraine, or to risk that country becoming further divided. The noble Lord, Lord Chidgey, rightly referred to the innumerable instances of minorities all over Europe. The stealing back of Crimea makes eastern Ukraine the next target of Russian resentment and today’s attack on a Ukrainian garrison is ominous and another gross violation of international law.

The phrase “western allies” can be misleading. The EU cannot make a strong historical case for an alliance with Ukraine. As Kievan Rus, the first Slavic state converted to orthodox Christianity, Ukraine has been closely linked to Russia since its heyday in the 10th and 11th centuries. The country was subsequently ruled by both Lithuania and Poland, and its borders were never clearly drawn.

Crimea, too, has had a chequered history. The Crimean Tatars were dominant for more than three centuries until they were cruelly deported in large numbers by Stalin, and later unfairly discredited as Nazi sympathisers. Yet it was to prevent Russia from entering the Mediterranean that we fought alongside the Ottoman Empire in the Crimean War, but that policy obviously did not work.

I visited Yalta in 1964 and it never occurred to me then whether it was Russian or Ukrainian. Everything came under the USSR umbrella. I remember standing on the terrace overlooking the Black Sea where, in February 1945, the leaders of the US, UK and Russia had signed a historic agreement to divide Germany into three. Russia broke its promises then and it has broken them again now. The Cold War was still to come and nearly seven decades later we are wondering whether it has yet gone.

I do not expect war to break out over Ukraine. I prefer to think of the present crisis as a bad dream interrupting the course of history. It cannot and should not develop into hostilities. We have done with war in Europe, and I find the references to Sudetenland exaggerated and quite disturbing. All three Yalta powers should be honouring the 1994 Budapest agreement guaranteeing Ukraine’s territorial integrity. Instead, Putin is repeating his performance in Georgia in 2008 by first threatening and then virtually annexing sovereign territories in the name of defending Russian citizens.

What are President Putin’s motives? This has been the subject of great speculation, but it seems that the strongest motive is simply Mother Russia. This could be seen as imperialism and expansion in Crimea and eastern Ukraine but Crimea is inescapably part of Russian influence and naval domination of the Black Sea. Kiev, already central to the Rus legend, became the third city of the Soviet Union after Moscow and Leningrad. So we should not be too surprised that Ukraine is still on the Russian doorstep or that Russians have a great hankering after former glory.

While we, the US and individual states should complain to Russia through warnings and sanctions—as we would in any country where human rights and international law are aggressively violated—the EU should not make too many assumptions about Ukraine’s position as an ally. Ever since the Berlin Wall came down, Europe has faced east, looking beyond the boundaries of enlargement into new member states. It may be that the EU has been looking too enthusiastically at arrangements with countries directly bordering Russia. Since the Orange Revolution in Ukraine there has been a flurry of diplomatic visits to Kiev under the neighbourhood policy, as though Ukraine were already eligible for membership of the EU and NATO. In 2010, as we know, President Yanukovych excluded Euro-Atlantic security and NATO membership from Ukraine’s national security strategy, but the concepts of European integration and co-operation with NATO have remained and it is likely that Yulia Tymoshenko, if she is re-elected, will want to return to the previous strategy and risk further Russian hostility, reminiscent of former President Saakashvili in Georgia.

Let us not forget the bigger picture in which Russia has to live up to its international responsibilities. The Syrian uprising this week has entered its fourth year unresolved, and the parties still have to come to the table. The Iran negotiations are still delicate. We need the Russians if we are to make progress in these areas. I do not agree with previous speakers that we should detach them from the G8 altogether. The action in Crimea was illegal but there is little we can do about it now. The question asked by the noble Lord, Lord Campbell-Savours, on Kosovo is pertinent. Although the noble Lord is no longer in his place, I hope the Minister will spend a little time on that. It is of course President Putin’s own argument, and we must be careful in making the comparison, because the situation in Kosovo was, at a time of civil war, completely different.

In the mean time, while the interim Government of Ukraine wait for the May elections, every effort must be made—preferably through the OSCE and the new contact group which is being proposed—to support it and contain both Russian and Ukrainian battalions within their own borders. However, the more effective weapons are economic. Chancellor Merkel has taken a surprisingly tough line, accusing the Kremlin of following the law of the jungle and Mr Putin of living “in another world”. She is strongly insisting on new sanctions in the face of, it seems, at least two-thirds of Germans, who have serious doubts about their effectiveness.

While Germany remains the powerhouse of Europe, German companies will continue to trade with Russia and oligarchs will continue to visit their dachas in Baden Baden. France and Italy, not least as arms suppliers, are likely to make the same argument. Therefore, it is going to be a slow process. Sanctions will be pushed mainly by the United States, but Europe will more likely follow the market and select sanctions, which will only puncture its relationship—at least, that is my prediction. After all, Russia’s trade with Europe is more than 10 times that of the US, and the EU is unlikely to throw that away.

London has already lost a lot of Russian business in the scramble to anticipate sanctions. Would this not be an ideal time to review our dubious reputation as a money-laundering capital, as the noble Lord, Lord Chidgey, has already said, and identify the banks and companies that are living off illegal Russian investments and the laundered billions stashed away by Yanukovych and his family? Can the Minister please explain why this money could not be returned to Ukraine to support much-needed structural reforms alongside the new loans, or can the Government produce any other financial package for this purpose? What can the Government do through legislation to strengthen anti-money-laundering controls through the Financial Conduct Authority and other City watchdogs? Have any suspicious transactions in relation to Ukraine been reported to the FCA hitherto, and how can these be further investigated?

However the political and military crisis develops, what the latest power struggle comes down to in the end is, of course, aid and debt, and whether the EU and the IMF can afford to make up loans to Ukraine originally promised by Russia. If Russia turns down the energy tap, Germany and others must consider alternative gas supplies, which may not be immediately available from the US but they will be elsewhere. Ukraine at least has enough reserves of gas to get through to the elections.

Once our frantic diplomatic activity has achieved a stalemate, and perhaps, with luck, OSCE observers are in place, as usual it will be the markets that decide the future.