Frozen Russian Assets: Ukraine

Julian Lewis Excerpts

Monday 6th January 2025 Commons Chamber

[Gareth Davies]

I will take one more intervention.

[Sir Julian Lewis (New Forest East) (Con)]

The key point is the one made by my hon. Friend the Member for Runnymede and Weybridge (Dr Spencer) about the distinction between private assets—even such tainted ones as are held by oligarchs—and state assets. The mover of this motion, the hon. Member for Tunbridge Wells (Mike Martin), will correct me if I am wrong, but the $300 billion-worth of assets referred to in the motion are state assets. In a publication by the International Institute for Strategic Studies in May last year, no fewer than 11 professors and other legal experts were unanimous in saying that when it comes to state assets, there is no legal obstacle for seizure by a third-party state, such as ourselves.

[Gareth Davies]

I welcome the intervention by my right hon. Friend, who is extremely diligent in his assessment of such matters. I will allow the Minister, who is actually in the Government, to provide their legal assessment of what may or may not be possible. I have set out our concerns, which we are happy to continue to debate and discuss, as I have said, but it is right that throughout the House we continue in our support for Ukraine. It is right that we continue to discuss all the ways we can support the Ukrainians. If there is a way, we should look at it.

[The Minister of State, Foreign, Commonwealth and Development Office (Stephen Doughty)]

I thank the hon. Member for Tunbridge Wells (Mike Martin) and other colleagues across the House for tabling this important debate. He made a powerful speech, starting out with the horrific story of Sasha. It made me think not only of similar stories I have heard directly, but of the work done in communities throughout the UK in maintaining Ukrainian culture and heritage—the very culture, heritage and language that Putin is trying to erase from the lives of those children. I visited the centre in my constituency in Cardiff just a few weeks before Christmas.

I am grateful to all right hon. and hon. Members for their contributions and their challenge. They have made some important points and they can be assured that I have listened to them all carefully. It is important to emphasise that we have again seen absolute unity in this House in our desire to support Ukraine in its fight and that Russia must pay. Those are the two key messages coming out of the debate for me.

As all of us in the Chamber know well, Russia’s assault on Ukraine is an unprovoked, premeditated and barbaric attack against a sovereign democratic state. As the shadow Minister, the hon. Member for Grantham and Bourne (Gareth Davies) said, the Christmas day attacks reinforced the shocking and barbaric nature of what Russia is doing. The UK and our international partners stand united. We cannot let aggressors like Putin succeed.

I will attempt to respond to many of the points that have been made, which have all been important, but I will start by underlining the magnitude of the UK’s response to Putin’s invasion. We have sanctioned more than 2,100 individuals and entities. We have frozen more than £22 billion-worth of private assets under the Russia sanctions regime. The shadow Minister asked for some allocation by type, and I will certainly try to write to him with further detail on that.

Alongside G7 partners, we have immobilised Russian state assets in our jurisdiction, too. We have led international shipping sanctions that have disrupted the Russian shadow fleet, leaving oil tankers idling across the globe unable to continue their trade. We have ramped up action since July to include a further 89 tankers, barring them from our ports and denying them access to maritime services. We have also sanctioned nine vessels involved in the shipping of liquefied natural gas from Russia, which has contributed to Russia’s largest producer suspending production.

All that is alongside measures targeting firms supplying Russia’s military industrial complex, including Chinese companies sending components for drones. We have sanctioned cyber-criminals and mercenaries seeking to destabilise African countries, not to mention Russian troops for the appalling use of chemical weapons on the battlefield. These carefully constructed and wide-ranging packages are having a significant impact on Putin’s ability to finance his war, eroding Russian oil revenues and supporting Ukraine on the battlefield.

There was a lot of talk about war economics from my hon. Friend the Member for Loughborough (Dr Sandher), but the fact is that Russia is paying many times more for components that are often of poorer quality and in much lower quantities than it needs. By disrupting the Russian oil industry, we are putting further pressure on the Kremlin. It has all contributed to a Russian economy that is in trouble, with inflation at close to 10%, interest rates at 21% and the rouble in decline. Putin has told his population not to panic, but disagreements between officials and industrialists are increasingly vocal, and that should serve as a reminder not only to Putin but to the wider world that there is a high price to pay for assaulting the democracy, sovereignty and territorial integrity of another nation.

Many questions have rightly been asked about enforcement. Since coming into office I have been clear, as has the Foreign Secretary, that we must have the necessary powers and tools to implement and enforce our sanctions regimes effectively. Strengthening the system is a top priority for this Government and, with the support of ministerial colleagues, I have launched a cross-Government review to examine how we can make it easier for businesses to comply with sanctions, but also bring the full force of the law to bear on those who do not. We are working across Government Departments on that.

We have introduced new powers for the Office of Trade Sanctions Implementation and for the Department for Transport. In September last year, the Financial Conduct Authority fined Starling bank almost £29 million in relation to its financial sanctions controls and screening. Last month, the National Crime Agency disrupted multibillion-dollar Russian money laundering networks with links to drugs, ransomware and espionage, resulting in 84 arrests. It also seized more than £20 million in cash and cryptocurrency.

The Foreign Secretary, who was rightly referenced in the debate, has launched an important campaign on tackling illicit finance and kleptocracy, including by dealing with those who enable them. We have made it clear that we will not hesitate to do what is necessary to clamp down on those who seek to evade our sanctions.

We want to ensure that Ukraine emerges from the war with a modernised and inclusive economy that is resilient to Russian threats. That is as important as providing it with the crucial military support that it needs. We will therefore continue to work across a range of donor platforms to leverage private investments such as those at the Ukraine recovery conference with the work of UK Export Finance and British International Investment.

We have committed £12.8 billion in military, humanitarian and economic support to Ukraine. As was rightly referenced, we have often been the first mover when it has come to vital lethal assistance, whether in respect of Storm Shadow missiles, Challenger 2 tanks or, of course, the NLAWs at the start of the war. We have also recommitted to £3 billion a year for as long as it takes and signed a long-term bilateral security co-operation agreement—we were the first of 25 countries to do so.

As was rightly referenced, the Chancellor has further announced that we will provide £2.26 billion of additional support to Ukraine as part of the G7 extraordinary revenue acceleration loans to Ukraine scheme. I thank hon. Members across the House for ensuring the speedy passage of the legislation, which passed its Third Reading unanimously, to put that in place. Crucially, those funds will be repaid not by Ukraine but by the extraordinary profits made on sanctioned Russian state assets held in the European Union.

The fundamental questions about what more we can do to use Russian assets for the benefit of Ukraine were at the heart of the debate. The Government and our G7 partners have repeatedly affirmed our position. Russia’s obligations under international law are clear: it must pay for the damage it has caused to Ukraine. The ERA loan and our contribution will ensure that Ukraine can receive the financial support that it needs now—it was right to focus on getting that out the door, because we urgently need to support Ukraine now—with the profits generated on sanctioned Russian sovereign assets providing that. I reassure colleagues throughout the House who have rightly asked a lot of searching and challenging questions that we are committed to considering all possible lawful avenues by which Russia can be made to meet its obligation to pay for the damage it is causing to Ukraine. We continue to work with allies to that end.

I confirm that I spoke to Foreign Ministers from across Europe on that and other crucial aspects of our support for Ukraine just before the House rose in December. We will continue to update Parliament on the progress of that work. However, I hope hon. Members will understand that it would not be appropriate to provide a running commentary on discussions, as allies have committed to keeping those private, including in respect of the specific sums of Russian sovereign assets that are currently frozen.

[Sir Julian Lewis]

I absolutely accept what the Minister says. Does he appreciate that with the possibility of President Trump withdrawing some, if not all, American aid to Ukraine, the substitution of a substantial volume of financial support will become essential? That is one reason behind our concern about the assets possibly being seized.

[Stephen Doughty]

We are all concerned to get Ukraine the support that it needs, and as quickly as possible. It is wrong to speculate on what the future Administration might choose to do. Let us remember that the package came through from the United States with strong bipartisan support, and much of the support to Ukraine even before the 2022 invasion came from the first Trump Administration. Let us be clear that there is support there and that there is unity across the Atlantic on support for Ukraine.