Russia (Sanctions) (EU Exit) (Amendment) (No. 7) Regulations 2022 Russia (Sanctions) (EU Exit) (Amendment) (No. 8) Regulations 2022

Emma Hardy Excerpts

Monday 25th April 2022 General Committees

[James Cleverly]

Once again, I am grateful for the tone taken by the hon. Member for Cardiff South and Penarth from the Opposition Front Bench and by Opposition Members. I can assure hon. Members that their questions are taken in the spirit in which they were asked. I know that Members are trying to ensure that the sanctions regime is as effective as possible as quickly as possible. Although I do not always agree with their interpretation of events, it is absolutely right that they push the Government to go as far and as fast as we can.

It is of course impossible to give a precise figure on the scale of the sanctions, but it is unprecedented; we are talking about values in the hundreds of billions of pounds. We have seen the effect on Russia’s economy. As I speak, the estimates are of approximately 60% of the value of its foreign currency reserves—something around £275 billion.

Each nation’s sanctions regime is defined by the legislative framework in that country, but we are acting in close co-ordination, and I have regular conversations with other deputy Foreign Ministers, particularly in the Quint—the US, France, Germany, the UK and Italy. More broadly, the co-ordinated value of our sanctions is making a significant difference to the situation in Russia and is applying genuine pressure. There is a reason why the UK is singled out for criticism by Vladimir Putin: our sanctions are hurting him.

I do not accept the criticism that others have gone further or faster than the UK. Each of us has worked differently—as I said, because of the legislative framework in which we operate—but when it came to financial services, in particular, the UK moved very effectively. We led the pack when it came to excluding Russia from the SWIFT banking payments information system, which has had a very significant effect.

As we now bring forward regulations such as these, and work in collaboration and co-ordination with international partners, it becomes increasingly hard for Russian oligarchs to use proxies to squirrel their money away in other forms. I am pleased that one thing that is demonstrably true is that, in response to Vladimir Putin’s unwarranted aggression against Ukraine, the international community has pulled more closely together, rather than being fragmented, as he had hoped.

On that point, I, the Foreign Secretary and other Ministers, including the Prime Minister, regularly encourage other countries to distance themselves from Russia, in part through votes at the United Nations. A number of countries have voted differently from previous voting patterns and have voted to criticise Russia at the United Nations. That includes India, and the Prime Minister did raise the issue of isolating Russia in his talks with Prime Minister Modi. I do not have the details, but I can confirm that it was raised.

[Emma Hardy (Kingston upon Hull West and Hessle) (Lab)]

On the question of India, we know that Russia has been buying up gold, and 22% of its assets are now held physically in gold. I read an article earlier that said:

“Moscow may need to look east to central banks in nations like India or China to sell gold or secure loans using it”.

The Minister has just mentioned India, and I wondered whether the issue of how Russia will use its gold reserves was raised during the Prime Minister’s visit to India.

[James Cleverly]

As I say, I do not have that level of detail. However, I can assure the hon. Lady that I have raised the isolation of Russia on the international stage with Indian representatives, and I did that on my last trip to the United Nations. As I said, on his trip the Prime Minister raised the importance of us acting in solidarity against Russia. The details of gold reserves, and where they are expended, is an important one. We will continue to press countries that are not currently sanctioning Russia to look carefully at what is going on and particularly, as the hon. Members for Cardiff South and Penarth and for City of Chester said, at the appalling images coming out of Bucha and the areas around Kyiv and at the artillery strikes in the south-eastern part of Ukraine. We will continue to push on those issues.

With regard to the loopholes, I do not recognise the scenario that the hon. Member for Cardiff South and Penarth put forward. The definition of which individuals and entities we are able to sanction has been broadened quite significantly—I would need to get the precise wording for, but “derived benefit from” gives us quite a significant degree of latitude, and also gives us an opportunity to look into the actions of proxies and individuals who are being used in an attempt to circumvent our sanctions.

--- Later in debate ---

[James Cleverly]

I will ensure that those figures, where we have access to them, are made available.

Asset seizures are an incredibly emotive area, and this comes to the broad point that the hon. Member for Cardiff South and Penarth made about the speed with which sanctions are brought forward. As I say we repaired some errors, and there is a balance to be had between drafting quickly—we are drafting these sanctions more quickly than ever before—and ensuring that they are absolutely robust and watertight. All our actions are put in place with two broad things in mind: first, the ability to ensure that Vladimir Putin does not win in Ukraine and to choke off his ability to fund his war machine, and secondly making sure that the sanctions are legally robust. When it comes to asset seizures, we have looked, and will continue to look, at what is doable, but in all instances we want to make sure that we do not do anything to undermine the legal strength of our sanctions regime. Asset seizures are an area that we have to make sure is legally watertight to ensure that we do not inadvertently create legal pressure that might undermine our sanctions work more broadly.

The hon. Member for City of Chester raised the issue of lifting sanctions. Obviously, our demands of Vladimir Putin are clear, and they are in support of the Ukrainian negotiating teams. However, I assure the hon. Gentleman that we will not be in any rush to lift those sanctions. As he says, given the images of what appears, prima facie, to be the direct targeting of civilians and civilian infrastructure, we will want to ensure that those who should be held to account are held to account, and we will ensure that our sanctions regime supports that wider move towards justice.

[Emma Hardy]

Just before the Minister concludes, will he address the point that has been raised about the repurposing of assets?

[James Cleverly]

Yes. It is important to remember that the primary aim of our sanctions regime is to choke off the financial supply to the Russian war machine. Our sanctions deny oligarchs access to money, assets and luxury goods. They apply pressure, as the hon. Member for City of Chester said, to the top end of the regime and prevent money from flowing around the Russian system.

Repurposing would take us towards an asset-seizure scenario, and we would need to ensure that, were we to pursue that, it did not in any way undermine the primary function of the sanctions regime, which is to choke off financing. Our regime is working by limiting the flow of capital to the Russian war machine.