Illicit Finance: War in Ukraine Debate
Full Debate: Read Full DebateIain Duncan Smith
Main Page: Iain Duncan Smith (Conservative - Chingford and Woodford Green)Department Debates - View all Iain Duncan Smith's debates with the Foreign, Commonwealth & Development Office
(1 year, 1 month ago)
Commons ChamberI am grateful to be called to speak in this debate. I congratulate my hon. Friend the Member for Harwich and North Essex (Sir Bernard Jenkin) on securing this debate and on having spoken so clearly and passionately.
It is always a pleasure to follow the right hon. Member for Birmingham, Hodge Hill (Liam Byrne). As he knows, we have been following each other for some time over the past few years—actually I wish to rephrase that; this is not a stalking issue, but it could be seen to be something similar to that in a political context. It is good to follow him on this particular subject because he speaks a lot of common sense. I wish to go back to the last section of his remarks, which deal with seizure and the debate that is going on about that.
First, though, in response to the opening remarks of my hon. Friend the Member for Harwich and North Essex, it is hugely welcome that NATO membership has now expanded on the northern frontier. That is very important. It sends a strong message to Russia. Russian aggression has always been there below the surface. Sometimes it boiled over into remarks, but we always ignored it. The tendency of democracies and believers in freedom, freedom of speech and human rights is, sadly, too often to deal with countries on the basis of how they wish they were, rather than on the basis of what they are telling us what they are and what they will do. It happened in the 1930s. We ignored the nature of “Mein Kampf” and Hitler’s clear objectives, which he laid out endlessly. We kept saying that only one more step would satisfy that dictator and that he would be fine; it would not be a problem. But in fact, the more we gave him, the more he determined on and we ended up in a war. Appeasement did not work. It does not work here. And 60 million people died directly as a result of our failure to understand that, when dictators tell us what they are about to do, it is always good to recognise that they are actually sending us a signal, not wishing for something else.
That has happened here with Russia. Russia made it very clear what it was going to do, right the way from South Ossetia to the invasion of Crimea and the Donbas. These were very clear first steps in telling us that Greater Russia was on the move and was an objective of Putin, not just an idea. On the Minsk agreements, I remember sitting in Cabinet on this. I am not saying I was ahead of anyone else, but I remember saying, “How many of us here are really worried about the fact that there is an agreement now granting the right for Russia to sit on territory that it has invaded and occupied?” Everybody shrugged slightly and said, “Well, there’s not much we can do about it.” That, of course, was the signal to Putin that we were not prepared to stand up. That first phase only established for him the entirety of his project and its feasibility, and then there was the constant supply of weapons and the terrible shooting down of the airliner. Those were all constant steps, telling us the direction and that he was testing us. Every time he tested us, he succeeded: we backed down and did nothing. The result has been this final full invasion—or attempted invasion—of Ukraine.
In that context, I am slightly sorry that NATO was not able to send Ukraine a stronger signal about its future with regards to NATO. I agree with my hon. Friend the Member for Harwich and North Essex in that I applaud much of what the NATO-Ukraine Council did and think it is an excellent start, but I think we could have been more positive. America and Germany particularly stood in the way of the general mood of the council to offer more to Ukraine. I know that we probably could not have brought Ukraine in immediately, but everyone harped on about article 5 being the problem because it committed people to go to war. It does no such thing, by the way; it is always worth reading these things before pronouncing on them. Article 5 does not commit the nations in NATO to go directly to war. It commits them to agree together to take action as they deem “necessary”. Simply put, it is quite important that it is not an absolute: the declaration of a war against one is a war against all is then followed by actions as deemed necessary in nations. That means that, by and large, we will probably come together and do that, but it does not mean that we would have to be at war in Ukraine. We could have offered that relationship, and reading the article tells me that that is the case.
I commend the leadership of my right hon. Friend the Prime Minister in all this, as I commend the UK’s leadership. The beauty is that the Government and Prime Ministers have led the way on the issue in so many ways, as my hon. Friend the Member for Harwich and North Essex mentioned. The good news, of course, is that this House has not been divided on any of it. The House has sent a strong signal that Parliament stands by those in Ukraine and by the Government’s actions in trying to support them. That is very important because it is not always the case; in America, it is not necessarily the case at the moment. This Parliament has stood head and shoulders among most others, and it is because of that that we have been able to lead in terms of equipment, support, and recommendations with regards to NATO. The UK is influential in these matters and long may it remain so.
I return to the question raised by the right hon. Member for Birmingham, Hodge Hill: how do we deal with Ukraine’s aftermath? Right now, there is a debate taking place about frozen assets. We have frozen the private assets of some oligarchs and we have frozen the Russian national Government’s assets here in the UK, in America, in Canada and in various other nations through their markets. It is quite an interesting debate, though. We can certainly seize private assets, although even that has been debated—but it is quite clear that under international law it is wholly feasible for us to do so—but the real debate begins when it comes to very extensive Russian national assets that are now just sitting there. How can we deal with those? It is not the case that doing this immediately opens the door to the Chinese and others to seize our assets should they wish to. There are a number of arguments, which I will quickly run through.
There are a number of routes around the problem of sovereign immunity in relation to claims against Russia for its conduct in the war and an attempt to obtain access to those assets. Customary international law permits the imposition of sanctions and restraint of assets in furtherance of international peace and security and legitimate foreign policy objectives. That means that, if asset-freezing measures are failing to achieve those aims, it would seem—this is important—very permissible in principle for measures of seizure to be adopted as a necessary and proportionate next step. They are not ruled out; they are by a natural extension. We must view international law as a movable process that is not set in stone. It has always been capable to shift international law by what nations agree. This is an important, feasible point. States are obliged under international law to take all necessary and proportionate steps to bring an end to a breach of peremptory norms of international law. That is important, because it sets the tone for why we may look at this carefully.
The right hon. Gentleman is making an excellent speech. Is he as perplexed as I am about why NATO allies have not sought to bring forward, for example, a motion at the United Nations that could help to crystallise that change in norms? If we are to effect, for example, the interpretation of immunity laws, he is absolutely right that norms need to change. One way to do that is through a vote at the United Nations, which I would have thought we could win.
I agree; we are probably all going to agree. We have talked about the military alliance, but now we are in the realms of the economic alliance, because that is really where we win the peace. We may yet win the war, but that is no good if we leave behind a shell of a country that is incapable of operation, democracy or even economic wellbeing. Winning the peace is as vital, and we need to be planning for it now; they did that during the second world war. It is worth reminding ourselves that by the end of that war, they were very clear about what they were going to do.
Whether it is NATO, an alliance, the G7 or whoever, it is important that we form a bloc on these matters and agree, although I know there is a little resistance to that elsewhere. Furthermore, I believe that international law is not fixed, but is capable of development. Although the leadership of the UN Security Council is foreclosed because of Russia’s power of veto, there could be sufficient development to allow adjustment of the boundaries of state immunity in customary international law to allow enforcement of such international awards. For example, international law permits state assets to be frozen without any international court’s adjudication. We did not need permission for it; we did it. The reason it is done is because an action has taken place. International law could be developed to allow seizure pursuant to such adjudication.
The UN General Assembly has already adopted a resolution calling on Russia to pay reparations, and there is no reason why regional bodies such as the EU or the Council of Europe—not just NATO, but other bodies that could come together and do this—could not adopt specific resolutions providing a pathway to compensation and enforcement. That point was also made by the right hon. Member for Birmingham, Hodge Hill.
Frankly, there would appear to be no obstacle in international law to a state that imposes sanctions on Russian assets making it a condition for release of those sanctions that the Russian state honour any award made by the International Court of Justice or the European Court of Human Rights. This is another route that allows us to sanction Russia; if they fail to meet their requirements under the sanction, we simply seize their existing assets in balance with the sanctioning that was necessary. Overall, for those and many other reasons, the details of which I will not go through now, I think there is more scope for sanctioning.
It was Lord Bingham who said that the public policy consideration that had greatest claim on the loyalty of the law—this is really important—was that where there was a wrong, there should be a remedy. We must always be governed by that in law. That is why I believe it is wholly feasible for us now to start the process by which we may undertake the pathway to the potential seizure or subsequent seizure of Russian assets for reparations.
I will conclude by mentioning, as I did in a previous question to the Prime Minister, that I came back a few days ago from Ukraine. It was a privilege to be there, working with a remarkable charity that I have now supported twice in Ukraine, called Siobhan’s Trust, which—in a classically British kind of way—just set off when Russia invaded Ukraine and went towards the danger. The people from that charity have been feeding those dispossessed of their properties and fleeing the war. They moved into Ukraine and have now moved down near the frontline, and they feed people there from pizza trucks. They have made over 1 million pizzas for people in Ukraine, and they produce joy and hope in people’s hearts when they are there, as they wear what they call Ukrainian kilts and they put the boombox on. People’s faces really lift when they see this peculiarly quixotic British crowd—who seem impervious to the idea that they are within the range of shell shot—having fun; it lifts their spirits and brings them great hope.
The thing I discovered while I was out there, and the one thing I know from having served, is that war is terrible. War is horrendous. War hurts those who are not directly involved in it—more, perhaps, than those who are. It is a terrible, terrible affair, to be avoided at almost all costs, except when justice must prevail. However, talking to the military and to some of the guys I saw down there near the front about their problems and issues, I must say to the right hon. Member for Birmingham, Hodge Hill that we still have so much more to do.
Ukraine is the frontline of NATO. There is no beating about the bush: if Ukraine fails on this, we all fail, and the repercussions, as the right hon. Gentleman said, will be terrible. Ukraine’s war is already our war, whether we give it membership of NATO or not. It is our war. We started that when, much to Putin’s shock, we stood by what we said we would do.
The war in Ukraine has exposed our own failure to understand what war fighting really means. The truth is that almost all of us in NATO have abandoned the idea of the sheer extent of a full-scale war. When I talked to the Ukrainian soldiers, the amount of ammunition they told me they use on a daily basis is astonishing. We have forgotten that, so we do not have stockpiles appropriate to fighting war, and we have to replenish those in double-quick time, because they need that ammunition. They are running short of artillery ammunition, not because we do not want to give it to them, but because so many of us do not have enough artillery ammunition to give them right now, having placed contracts only recently. America, by and large, has many more stockpiles than we do, but it is a fact of life that if we wish to avoid war, we must prepare for it, and we simply have not prepared for it over the years to the extent we needed to.
The Ukrainians need that support. They need training; many of their soldiers get two or three weeks’ training and then they are on the frontline. I swear to God, having been a soldier myself, that it takes a long time to understand proper fieldcraft, and the less someone knows, the more likely they are to be wounded or killed, because they will take the wrong decisions. I will not say exactly what is required, but I must talk to the Government about what they could do. Ukraine also faces conscription issues.
The reality is that Ukraine must win this war, but it needs us to be literally, as Roosevelt once said, the “arsenal of democracy”. It is for us who are not on the frontline to supply those who are, so that they may achieve their goal of victory. With victory comes the second phase of reparations and restoration. We must be in that right to the finish, for if Ukraine fails first in the war, or fails subsequently in the peace, we will carry the blame for it, and rightly so. We will never be forgiven. I simply say to my right hon. Friend at the Dispatch Box, “This is our war. We must win it with them, or else we will all lose.”
My right hon. Friend is absolutely right. His efforts over a number of years while serving in the Government have helped to build that coalition of support and that confidence to enable Sweden to get to this point. Indeed, Finland is now a member of NATO.
Ukraine’s future place will also be in NATO, and the steps towards membership are now taking place. When allies agree and conditions are met, we will be in a position to extend a formal invitation to Ukraine. As the hon. Member for Hornsey and Wood Green (Catherine West) pointed out, and as the Prime Minister highlighted today—we can read the full detail in the Vilnius communiqué —the requirement for a membership action plan, for instance, has been dispensed with, which can speed up the process.
Members raised the question of Georgia’s potential accession to NATO. The UK supports Georgia joining NATO, as agreed at the Bucharest summit in 2008. We are taking steps with allies to develop the capabilities of Georgia and to prepare it for membership through a comprehensive support package, in concert with other NATO allies.
I turn to the issue of sanctions and to the Foreign Affairs Committee’s report on illicit finance. I thank all contributors to the Committee’s report, which is very thorough. We have co-ordinated sanctions with our international allies to impose a serious cost on Putin for his imperial ambitions. More than 60% of Putin’s war chest of foreign reserves has been immobilised, worth £275 billion. Our own sanctions package is the largest and most severe we have ever imposed on a major economy, and it is undermining Russia’s war effort.
Following her question about the cocktail of crypto- currencies, I can confirm to the hon. Member for Hornsey and Wood Green that we are actively monitoring the use of cryptoassets to detect potential instances of sanctions evasion. The use of cryptoassets to circumvent economic sanctions is a criminal offence under the Sanctions and Anti-Money Laundering Act 2018. As she pointed out, they are complex instruments, and the teams work hard on that. That is already under close review.
Reacting quickly to the invasion of Ukraine, we enacted the Economic Crime (Transparency and Enforcement) Act 2022, sanctioning over 1,600 individuals and entities and freezing £18 billion of Russian assets. We will continue to bear down on kleptocrats, criminals and terrorists who abuse our open economy through our new Economic Crime and Corporate Transparency Bill, and we will ensure that dirty money has nowhere to hide at home or overseas.
I am grateful to my right hon. Friend for her comments, but I want to test this further. Are the Government reviewing carefully whether those frozen assets could be seized and used for reparations, or do they consider that that is not feasible and therefore are not doing anything about it?
If my right hon. Friend will give me a moment, I shall attempt to answer that question in due course.
The right hon. Member will know that I am unable to answer that at this point—it is a question for the Leader of the House—but I have no doubt that it has been heard and that the cross-party support for that measure has been duly noted.
We are working closely with our international partners to address the impact of Russia’s war on global food prices and food security for the world’s poorest. That includes working to keep exports of Ukrainian grain flowing through the UN Black sea grain initiative, which has helped more than 32 million tonnes of grain and other foodstuffs to reach countries around the world.
To respond to the point that my right hon. Friend the Member for Esher and Walton (Dominic Raab) made about Turkey’s commitment—that country’s assistance in keeping that grain initiative flowing despite the continued challenges—we should all commend its efforts, quietly and behind the scenes, to make sure that those flows of food can continue. Its commitment has been exemplary.
Russia continues to delay and obstruct inspections of ships, but food cannot be a weapon. It is reprehensible that Russia is threatening not to extend the deal, which would increase food prices for the world’s poorest, so the UK is supporting Turkey and the UN in their very focused efforts to ensure that the initiative can continue unimpeded, and to renew the grain deal beyond 17 July. Just yesterday, the UN Secretary-General sent a further proposal to Russia to address concerns over the export of Russian food and fertiliser. The UN offer on the table will give stability to both the Black sea grain initiative and Russian agricultural exports, helping to provide easier access to food across the world.
Forgive me—my right hon. Friend is being generous with her time. It suddenly struck me that a year ago, when the blockade was on and Ukraine could not get the grain out, there was serious discussion, even at NATO level, that in response it might be feasible—and that this could be made known to Putin—that if Russia failed to allow that grain to go through peacefully, it could be convoyed through by members of NATO, but not as a NATO exercise. Are the Government keeping that possibility open? It might be a good idea to let Putin know that it may well be possible to convoy those ships from Odessa through to the wider world.
I thank my right hon. Friend for his intervention. Turkey, in particular, is making incredible efforts and has continuing negotiations and conversations as a close neighbour and the guardian of the Dardanelles—that critical piece of water through which all these ships have to pass. It is clearly managing that situation, and we continue to support Turkey’s efforts to find ongoing solutions. My right hon. Friend the Foreign Secretary will be chairing a session of the UN Security Council next week to discuss exactly these issues—the impacts of the war, both in Ukraine and across the world.
Turning to an issue that colleagues are rightly focused on, we are of course looking to the future while dealing with the present-day challenges of supporting the Ukrainians as they prosecute the war. We are supporting the office of Ukraine’s prosecutor general to help it investigate and prosecute alleged war crimes. The UK provided £2.5 million of funding to support Ukraine’s domestic investigations and prosecutions in 2022, and we intend to provide similar levels of funding this year. We welcome the steps taken by the independent International Criminal Court to hold those at the top of the Russian regime to account, including Vladimir Putin. We have provided an additional £2 million to the ICC for evidence collection and support for victims and witnesses, and in May, along with 40 other states, we signed an agreement to create a new international register of damage caused by Russian aggression against Ukraine. That is an important step in the pursuit of justice for the Ukrainian people.
Just a few weeks ago, in June, we co-hosted with our Ukrainian friends the 2023 Ukraine recovery conference here in London. That conference raised over $60 billion, including a new €50 billion EU facility and $3 billion in UK guarantees to World Bank lending. Almost 500 companies from 42 countries, worth more than $5.2 trillion, pledged to back Ukraine’s reconstruction through the Ukraine business compact. The conference also agreed to forge a new G7+ clean energy partnership to help Ukraine rebuild a net zero energy system connected to Europe.
Members rightly want to see continued sanctions, asset freezes and travel bans during this very difficult time. Just last week, I was proud to bring in new legislation that will enable sanctions to be maintained until Moscow pays compensation for the reconstruction of Ukraine and a route is developed for Ukrainian reconstruction. We will, of course, also be creating a route to allow individuals to voluntarily hand over those assets of theirs that are presently frozen into a fund to support reconstruction. That will be a one-way ticket: if those people feel that they have realised the error of their ways, it will be an opportunity for them to support Ukraine’s reconstruction.
The right hon. Member asks an important question. Sadly, that figure grows day by day—I think the latest assessments are that something like $400 billion is expected for the reconstruction, but as the war goes on, that figure is likely to grow as more infrastructure is damaged. Greater reparations would be required to help Ukraine get back on her feet completely, but the new legislation will enable existing sanctions to stay in place until agreements on that compensation payment are reached. Discussions about what that might look like will continue in due course.
Again, I apologise for breaking the Minister’s train of thought, but can I take her back to a comment I made earlier? It is believed categorically, whatever else we do about the seizure of assets, that it is wholly feasible for the alliance, or each country in turn, to agree to say to Russia, whenever we end hostilities, that what is owed by Russia is x amount, that we have frozen x plus whatever amount, and that we will hold that amount frozen until Russia delivers what is required of it in reparations for the rebuilding and reconstitution of Ukraine. Failing any assistance on that, we will seize those assets as a result of its failure to pay what is agreed to be the reparation bill. That is completely feasible within international law and does not require any great change. Is the Foreign Office seriously thinking about that as a very clear position at this stage?
My right hon. Friend raises such an important point. Of course, discussions with international partners will continue, to ensure that when we reach such a point—we must first help the Ukrainians to win and end this terrible war—those solutions can be put in place and, indeed, whatever the figure is can be reached. However, by bringing through the legislation last week, we have enabled one further step in ensuring that we stop any of the funds that are presently sanctioned from being released.
Importantly, on enforcement, which was raised by a number of colleagues, we have committed £50 million, following through from the integrated review refresh, to improve the enforcement of the sanctions regime. That will help us work with key partners to build both the capacity and capability to ensure that we can and do enforce the sanctions that are in place. The new G7 enforcement co-ordination mechanism, which was announced at the G7 summit just a few weeks ago, will enable the international community to tackle sanctions enforcement more effectively together.
In conclusion, I know that this House will join me in calling on Putin to withdraw Russian forces from Ukrainian territory and end this barbaric war.