Russia: Sanctions

Lord Bishop of Leeds Excerpts

Monday 11th September 2023 Lords Chamber

Asked by

[The Lord Bishop of Leeds]

To ask His Majesty’s Government what assessment they have made of the impact of sanctions against Russia in the wake of its invasion of Ukraine.

[The Minister of State, Foreign, Commonwealth and Development Office (Lord Ahmad of Wimbledon) (Con)]

My Lords, sanctions by the United Kingdom and its international partners have starved Russia of key western goods and technology, degrading Russia’s military and restricting its capacity to fight a 21st-century war. UK exports of machinery and transport equipment have decreased by 98%. Sanctions also limit Russia’s financial resources. The UK has sanctioned 29 Russian banks, accounting for over 90% of the Russian banking sector. We have also frozen over £18 billion-worth of Russian assets in the UK. Without sanctions, we estimate that Russia would have over $400 billion more to fund its war machine.

[The Lord Bishop of Leeds]

My Lords, I thank the Minister for his answer. The stated aim of sanctions is to

“encourage Russia to cease its destabilising actions in Ukraine”.

It seems to me that there is no evidence that sanctions have had any such impact. Russian GDP has dropped by a mere 2% and the country is skilled in circumventing sanctioned goods through third countries. Despite being subject to 13,000 different sanctions, which I think is more than any other country before, they have made no appreciable difference to Russia’s behaviour—we think of its links with North Korea, China, Iran and so on. Are the Government therefore prepared to move to more precisely targeted smart sanctions, the aims of which are clearly defined and the impact of which more measurable?

[Lord Ahmad of Wimbledon (Con)]

My Lords, the right reverend Prelate talked about the impact of sanctions. I can share with him that sanctions are having a direct impact. On revenues alone, they have left Russia’s budget in deficit, rather than the surplus that the Russian Government themselves predicted for 2022. Russia has suffered an annual deficit of £47 billion, the second highest of the post-Soviet era. Russia’s energy revenues fell 47% in the first half of this year. At the same time, global oil prices are lower. Less immediately visible, but more importantly in the long-term, more than 1,000 foreign businesses have left Russia, along with thousands of high-skilled workers. More continues to be done, as we co-ordinate and work with other countries. Particularly notable recently is that Armenia, Turkey and Kazakhstan have taken action on the issue of supply chains, which the right reverend Prelate raised. That kind of co-ordination is important if we are going to make these sanctions work across the piece.