Russia (Sanctions) (EU Exit) (Amendment) (No. 2) Regulations 2023

John Howell Excerpts

Monday 10th July 2023 General Committees

[The Minister of State, Foreign, Commonwealth and Development Office (Anne-Marie Trevelyan)]

I beg to move,

That the Committee has considered the Russia (Sanctions) (EU Exit) (Amendment) (No. 2) Regulations 2023 (S.I. 2023, No. 665).

The regulations amend the Russia (Sanctions) (EU Exit) Regulations 2019. This statutory instrument was laid on 19 June 2023 under powers provided by the Sanctions and Anti-Money Laundering Act 2018. The instrument was considered and not reported by both the Joint Committee on Statutory Instruments and the Secondary Legislation Scrutiny Committee. It was approved by the House of Lords on 5 July.

The regulations contain measures that increase the pressure on Mr Putin as we continue to support Ukraine and its people in their resistance to his illegal war. The first part of this legislation is an amendment to enable us to keep sanctions in place until Russia pays for damage it has caused to Ukraine. In March this year, the World Bank estimated that the reconstruction of Ukraine will cost more than $400 billion, a figure that rises daily. On 21 and 22 June, the UK co-hosted the Ukraine recovery conference here in London, galvanising international support. By the end of the conference, international commitments towards Ukraine’s recovery and reconstruction topped more than $60 billion.

The Prime Minister’s message at the conference was clear: Russia must pay for the destruction that it has wreaked. That is why we are keeping up economic pressure on Russia with an unprecedented package of sanctions targeting more than 1,600 individuals and entities since the start of the invasion. That includes dozens of banks with clearable assets worth £1 trillion and more than 130 oligarchs, freezing £18 billion in assets and costing Russia £20 billion in trade.

We have maximised the impact of those measures by co-ordinating with key international partners. Together, we constrain the funding for Mr Putin’s war machine, inflict huge economic cost and demonstrate our support for Ukraine. Russia’s economy faces a deficit of nearly $50 billion in 2022, the second highest of the post-Soviet era. With our partners, we are choking off Putin’s access to key technologies that he needs on the battlefield.

We have not stopped there. This legislation marks further progress in our battle against Putin’s unwanted aggression. Building on the commitment by G7 leaders in May that sovereign assets will remain immobilised until Russia pays up, this statutory instrument enables us to keep sanctions in place until Russia does that. I am proud that the United Kingdom is the first member of the sanctions coalition to make that commitment real. We will continue to demonstrate international leadership as we look to increase the pressure on Putin and those who support him.

As internal criticism of Mr Putin’s war grows, we will introduce a new route for those under sanctions to request that their frozen funds are used for Ukrainian reconstruction. Let me be clear: there is no negotiation, no quid pro quo, no relief from sanctions and no access for those individuals to their assets while they remain under sanction. However, if they wish to do the right thing and use their frozen funds to help right the wrongs caused by Putin’s invasion, there will be an approved route for them so to do.

We will also tighten the net on those hiding assets in the UK. We will require individuals and entities in the UK, or UK persons overseas designated under the Russia regime, to disclose assets they hold in this country. A failure to do so could result in financial penalties or the confiscation of assets. We will legislate to require those holding assets in the UK on behalf of the Central Bank of Russia, the Russian Ministry of Finance or the Russian national wealth fund to disclose them to the Treasury. Our action will increase transparency on where such assets are held and limit opportunities for sanctions evasion.

Several Committee members participated in the debate in the House of Commons on 27 June and will be aware of the active debate with our international partners on the use of sanctioned assets to support Ukraine’s recovery. No country has yet found a solution that we are confident is legally sustainable, but we are working closely with our allies on the handling of seized Russian assets and will continue to do so.

[John Howell (Henley) (Con)]

I do not want to detain the Committee; I will just say that I welcome the regulations. It was agreed at the Reykjavik summit that countries should put in place, through their own legislation, this sort of move to have a go at the Russians. Does the Minister see this as a good model that we can export to other countries to follow?

[Anne-Marie Trevelyan]

I thank my hon. Friend for his support and for that important question. As we are the first to introduce such legislation, we hope that it will act as a basis from which others might wish to build their programmes. Our partners are also working on solutions, and we are working very much hand in hand. If progress is made by international partners, we will learn from that, too. Importantly, nothing is off the table. We have a cross-Government taskforce carefully considering all proposals, including those that our partners might bring forward.

The second part of the legislation amends the definition of non-Government controlled Ukrainian territory, including Crimea and the non-Government controlled areas of the Donetsk and Luhansk oblasts, to incorporate all the non-Government controlled areas of the Kherson and Zaporizhzhia oblasts. The change reflects the dynamic situation that we see on the ground. The way the regulations are drafted will allow our sanctions to keep pace with the changing circumstances of the conflict and the shifting territorial control in the oblasts.

Measures applying to non-Government controlled Ukrainian territory in areas of finance, trade and shipping will therefore now apply to all the areas not currently under the control of the Ukrainian Government.