Countering Russian Aggression and Tackling Illicit Finance

John Baron Excerpts

Wednesday 23rd February 2022 Commons Chamber

[Mr John Baron (Basildon and Billericay) (Con)]

The second half of the Opposition’s motion relates to the economic crime Bill and, as many do, I have great sympathy with the points raised by hon. Members on both sides of the House over a period of time. I look forward to the economic crime Bill being introduced, and I think we could go further. We could provide further resources for the National Crime Agency, which has asked for them, and many of us on both sides of the House are underwhelmed by the extent of the British sanctions so far in response to what is clearly a Russian invasion of Ukraine.

It may be that we are not party to deliberations on the calibration of the response from western allies, and it may be that Nord Stream 2 was phase one and the City of London withdrawing its facilities will be a further step. In the absence of knowing what those deliberations are, the Government, on the face of it, have clearly not done enough in response through these petty, small sanctions considering the scale of the crime itself—the invasion of a sovereign, democratic country. With Members on both sides of the House having called it out as an illegal invasion of a sovereign country, we should remember that it is not a one-off. This Russian aggression started with the invasion of Georgia in 2008. Not everybody outside this place knows that 20% of the country of Georgia, a fifth, is still occupied by Russian troops. We tend not to dwell on that too often, but it has been followed by the annexation of Crimea and the war in eastern Ukraine. It is abundantly clear that Russian aggression must be met with the strongest possible response, including by providing the Ukrainian Government with all the means required to defend themselves.

[Clive Efford (Eltham) (Lab)]

Given that Georgia was 2008 and Crimea was 2014, should we not have been better prepared for sanctions?

[Mr Baron]

I told the House yesterday that I think we should have stronger sanctions. And it is not just about stronger sanction, as we also need stronger defence and more defence spending.

In the absence of any knowledge about the calibration of our response—that is not to say it does not exist—the sanctions were pitifully woeful. Many hon. Members on both sides of the House have been very underwhelmed by them.

We need to do everything we can to provide the Ukrainian Government with all the means required to defend themselves. That means economic support and additional supplies of lethal weapons with which to protect their sovereignty, primarily and hopefully to act as a deterrent but also, if it comes to it, for use in battle. If Russia does invade, there will be an ongoing resistance to support. NATO must also continue its programme of beefing up deployments across eastern Europe, the high north and the Black sea. We must show to Russia that NATO is serious about protecting its members, and we must remind Russia of our article 5 undertaking.

There are people in this country who say this is overly aggressive, but we should make it absolutely clear in this place that we do not seek conflict. I was a soldier back in the 1980s, and I remind the House that I have consistently voted against our military interventions over the past two decades. I opposed war in Iraq, believing that we went to war on a false premise. I opposed the morphing of the mission in Afghanistan after we had got rid of al-Qaeda in 2001. I was the only Conservative MP to vote against our Libyan intervention. And I opposed trying to arm certain sections of the rebels in Syria, as I felt that we underestimated the task at hand and that those weapons would have fallen into the wrong hands. I was opposed to all of that, but, as a former soldier, I also recognise that strong armed forces are the best way of deterring aggression.

[Martin Docherty-Hughes (West Dunbartonshire) (SNP)]

On deterrence after the fall of the Soviet Union, this political state, along with a range of other western states, gave opportunity for finance through oligarchy yet ignored ordinary Russians. Does the hon. Gentleman not think that if we had supported ordinary Russians to get the benefits of freedom and liberty in the west through golden visas for them, we would not now have 190,000 Russian troops on the borders of Ukraine?

[Mr Baron]

That is a bit of a tenuous link. Let us be clear: an aggressor is going to consider invading a country regardless of what visas have been given in a third country. Having said that, I agree that we need to look at this, and I made that point clear when I first stood up.

We need to be clear that we need strong defence. One reason I opposed those recent interventions over the past 20 years is because I felt that they distracted us from the real business of countering traditional state-on-state threats. War should always be a means of last resort, once all other avenues have been exhausted, but the real danger was state-on-state threats, including Russia and, increasingly, an assertive China. We all know that jaw-jaw is better than war-war, but jaw-jaw is most effective when supported and backed up by strong armed forces, because potential adversaries then listen. After a decade of hollowing out our defence capabilities and cutting the number of soldiers, we need to get serious about defence and reverse those trends. The Prime Minister is right to say that we have had the largest increase in the defence budget since the end of the cold war—we are standing at about 2.4%, if we believe Government figures—but I suggest that we need to do much more. We still have the smallest Army since the Napoleonic times, if not before. We still have too few ships able to guard our aircraft carriers, and our air defences are thin. As a former soldier, I can promise the House that there is no substitute for boots on the ground. I buy the technology argument—everything about drones and how we have to be up to speed with cyber and all the rest—but there is no substitute for boots on the ground if we want to dominate ground. That is a simple fact.

I ask the Government to seriously think about this, but I also ask the Opposition to do so. For 20 years I have been in this place and I have banged on, together with others, on both sides of the House, about the need for increased defence spending. That has largely fallen on deaf ears. Some Opposition Members will remember that in 2013 I led the revolt from those on the Government Benches on the Bill that became the Defence Reform Act 2014, which was cutting regular troops and trying to replace them with reservists. With the help of the Scottish nationalists and Labour, we tried to get the Government to think again. Unfortunately, I was unable to carry a sufficient number of Conservative Members, but we came close. So I am not standing here being a hypocrite and suggesting this in a way to try to make party political points. I am asking the Labour party, the official Opposition, to do something. The establishment in this country still does not get it on defence. We need a substantial and sustained increase in defence spending, to act as a deterrent, not to be used in an offensive manner. Deterrence is the best way.

The Labour party has a very proud history in this area. It was a Labour Government who signed us up to NATO and who were determined that we had a nuclear deterrent. I suggest to the official Opposition that we need to start at 3% for defence spending but not tie this to a particular percentage of GDP, because GDP fluctuates. We need to start at 3% and then build on it, because we are entering an era where there is a battle for democracy yet to be had. I hope I am not being too dramatic when I say that. We need strong armed forces for that, and the Labour party, the official Opposition, has a role in this.

Having these debates is great, but we have had them so many times before about defence spending and other issues and interventions. If the Labour party was to say, “We are going to commit to a substantial and sustainable level of defence spending”, it would move the dial in the debate. The official Opposition would be surprised at just how much support there is on the Conservative Benches for a substantial increase in defence spending—well above the 2.4% figure we heard bandied about by the Prime Minister yesterday. The official Opposition have an opportunity to move the dial on this, and I encourage them to take it. This is an important issue on the doorstep, contrary to what many people suggest; people are proud of their armed forces. There is also an opportunity to be a force of good for the Union, as we are proud of our armed forces across the four nations of the UK.

I am conscious that others wish to speak, but may I briefly return to this point about the new era we have now entered with regard to the battle for democracy? We believed that democracy would sweep the field after the cold war, because it was blatantly obvious that it was the right thing, but democracy is a fragile concept. We fundamentally believe in it in this place, but let us never underestimate the number of oligarchs and totalitarian individuals out there—states, even—who want to overthrow democracy. We have to nurture, encourage and protect it. But what are we doing? We have a weak foreign policy when it comes to potential aggressors, and not just potential ones; when there is an invasion of a sovereign country we are debating quite petty sanctions. We need to step up to the plate.

I also suggest to the House that this is not just about hard power—quite the contrary, as the cold war was won largely because we won the soft power battle. We need to further finance our diplomatic sources and our diplomacy generally. One reason why I voted against the Libyan intervention, when I was the only Tory to do so and was very unpopular with my own party, was because we simply did not know what was happening on the ground. We did not have the diplomats there kicking the tyres and feeling the dust. We used to have great expertise in this area but we have hollowed it out, through cuts, and those cuts can be counterproductive. They can be a false economy. If we do not know what is happening on the ground, these decisions are much riskier. Satellites and technology take us only so far; we need experts on the ground.

[Danny Kruger (Devizes) (Con)]

I concur with what my hon. Friend was saying a moment ago about the need for the Labour party to commit to greater defence spending. Labour Members often challenge us about the need to increase development spending and I agree with them on that. He mentions diplomacy as well, and I wonder whether there is the opportunity for a cross-party agreement on sustained investment in our defence and our diplomatic service, and restoring development spending to 0.7% as soon as possible—and perhaps even going beyond it? I wonder whether there is an opportunity to increase all of our commitments to the international community and perhaps achieve a cross-party consensus.

[Mr Baron]

I thank my hon. Friend for the intervention, and I certainly think there is greater scope for cross-party consensus on these key issues. We come together in condemnation of Russia and events such as this, but we need also to come together on such things as defence spending and diplomatic spending.

Let me return to soft power. I am chairman of the all-party parliamentary group on the British Council, and I know that some Members on the Opposition Benches have served with the British Council. We work together in trying to promote the interests of the British Council, but let me cite a further example of where we are going wrong as a country. Last year, the Government failed to meet the £10 million shortfall between the British Council’s commercial activities—predominantly the teaching of English in the far east, mostly in China—and the money the Government supplied. That £10 million shortfall has resulted in the closure of 20 country operations. That is not global Britain or the furthering of the interests of soft power. The British Council is a key instrument of our soft power capability. We are a soft power superpower, but we should never take that for granted.

[Anthony Mangnall (Totnes) (Con)]

My hon. Friend is taking us on a journey. I appreciate the point he made about increased military spending and an increase in boots on the ground in our armed forces, but does he feel that we as Members of Parliament do not have the full facts, whereas Ministers and officials do and see far more than we do? It is not necessarily right to criticise them for what they may or may not have seen. On top of that, we should be aware that there must be a sliding scale in respect of the sanctions on Russia. We cannot put everything on Russia all at once; we have to see how the situation develops.

[Mr Baron]

I am afraid my hon. Friend has greater faith than I have. We have an excellent civil service and, by and large, parties on both sides of the Chamber have supplied good Ministers, but I would not have blind faith in every single Minister or official. The bottom line is that we are making cuts when there should not be cuts. When it comes to the calibration of the response, what my hon. Friend says may be the case, but there has been no calibration of the response since Russia’s invasion of Georgia in 2008. There has been absolutely nothing, so I would not necessarily assume that we should suddenly come round and say there must be a calibration now.

I have had the nod from Madam Deputy Speaker, so I am conscious that I need to move on. On the issue of soft power, in addition to the closure of 20 country operations last year, we face further country closures this year because, despite the FCDO’s budget going up 21% in the comprehensive spending review, the British Council’s budget is, believe it or not, falling again, stirring up questions about cuts.

In conclusion, in taking on the oligarchs and those who do not believe in democracy, we have to have a rounded response. We need to increase defence spending—I have called on the Labour party to help us to move the dial on that and to work in as cross-party a fashion as possible; we need more money for the diplomatic service; and we need to make sure we fund every avenue of our soft power capability, because it is going to be a battle of minds and ideas as much as it is going to be a battle of hard power.

[Several hon. Members rose—]

--- Later in debate ---

[Mr McFadden]

I respect the right hon. Member’s experience and agree absolutely with his intervention. Let us call things what they are: not breakaway republics, but step-by-step annexation; not peacekeepers, but an invading force. We have seen the pattern over and over again.

The former High Representative of the European Union, Baroness Ashton, has spoken about President Putin’s strategy of the wedge. He seizes part of the territory of a neighbouring country—Abkhazia and South Ossetia in Georgia, or parts of the Donbas in Ukraine. By holding the wedge, he seeks to limit the freedom of those countries to join international associations. He seeks to absorb the rest of the country in managing the conflict that he has created. He uses up resources, he creates a refugee problem and, if he cannot take over neighbouring countries entirely, he at least ensures that they are not free to develop as they wish because they are not whole and their freedom is compromised.

That “Greater Russia” mindset has been behind President Putin’s policy towards Ukraine for the past eight years. Right now, it is not fully clear whether he will be content just to hold the wedge or whether he will go further, but even what he has done so far is already limiting Ukraine’s options and choices for the future.

How should we respond? Some lessons have been learned. The solidarity shown by the United States, the United Kingdom and most European countries in recent weeks has been important and impressive. Calling out the troop build-up and the creation of flashpoint incidents and false flag pretexts has shone a welcome light on what is happening. The development of open source intelligence has exposed the ham-fisted propaganda emerging from Russia and its troll factories.

Allied unity is important, but so too is allied resolve. In the past, we have set red lines, but when they were breached we have drawn back. The result in Syria was the repeated use of chemical weapons and the ability for Russia to dictate the course of events for years afterwards. This time, if we talk about maximum sanctions for military action, we have to be prepared to carry them out. Who really believes that sanctioning just three people who have already been on the US list for years will deter President Putin from acting further? No wonder the Royal United Services Institute, the respected defence and foreign policy think-tank, described yesterday’s actions as like having

“turned up to a gunfight with a peashooter.”

The Government’s actions have to match their rhetoric. Yesterday, that simply was not the case. The Minister’s defence is that this is simply the first tranche and that there is more to come, but what is the case for waiting, given what we have seen? Is there anything in President Putin’s actions in recent days to suggest that he is in compromise mode? He is not. He is testing us every hour.

Not only do we need a sanctions regime that matches the seriousness of what has been done, but we need determined action to clean up what the Intelligence and Security Committee has called the London laundromat.

[Mr Baron]

Will the right hon. Gentleman give way?

[Mr McFadden]

I will press on, because we are short of time.

Our country and our capital city should not be a welcome home for illicit finance, the proceeds of looting and the proceeds of kleptocracy. There is a basic problem: if sanctions are to work, we have to know what people own. The Government have been sitting on a registration of overseas entities Bill for four years, and it has been six years since it was first talked about. How can sanctions be effective if we do not have legislation to show us what people own? Queen’s Speech after Queen’s Speech has passed without action. Only a few weeks ago, the Government’s own counter-fraud Minister resigned, saying that that legislation was once again to be set aside. Today, it looks as if it may be delayed further. It must be brought forward as soon as possible.

At the heart of money laundering is the use of shell companies to hide the true nature of ownership behind layer after layer of needless complexity. That lack of transparency is the fraudster’s friend. Reform of Companies House is long overdue, but, again, pledges to reform it have not been matched by action. If we are serious about policing kleptocracy and fraud, we have to change this situation and empower our register of companies to be a regulator, not just a library of information—and sometimes a library of dodgy information at that. The recommendations of the Intelligence and Security Committee’s report on Russia have to be implemented. Our agencies have to be resourced to use the powers that they have, otherwise the legislation that we pass in this place is just bits of paper. We also have to be alive to the network of enablers who act as the praetorian guard for the oligarchs here in the UK.

As has already been said, it is not only money that is laundered here, but also reputations. The donation to a university, the purchase of a football club, the sponsoring of a gallery, donations to the Conservative party—all that is designed to burnish the reputations of those involved. In the whole history of this, one fact stands out: the interests of finance have trumped those of security. Then, when people call this out, there is the punitive legal action designed to shut people up and designed to stop the brave investigative journalists whom we should be thanking for the work they have done in exposing what is happening.

The Prime Minister’s defence yesterday was to accuse those of us who question many of these actions of Russophobia, and indeed the Minister repeated that today in her opening remarks. Does she, and does he, really think that the CVs of those involved in this are those of ordinary Russians? Russia is a country where the vast majority of the wealth is owned by about 500 people. We should not confuse those who live off Russia’s wealth with the sweat and toil of the Russian people who created the wealth in the first place. That is no defence for the funding of the Conservative party, and it is no defence for the actions of oligarchs. How does the Prime Minister think they made their wealth in the first place? They did it with the support and backing of the Russian regime. It is the wealth of the Russian people that is being laundered, not the proceeds of exceptional talent or enterprise or creativity or ingenuity.

We stand at a dangerous moment, one that requires not only unity between allies but resolve, for weakness here will be noticed by those elsewhere in the world who are looking for territorial gains. This is not just a matter of finance; it is a matter of national security, and that means the maximum package of actions. It means sticking to the red lines that we have set. That is what we urge the Government to do, and it is action that today’s Labour party will support.