Ukraine

Lord Davies of Stamford Excerpts

Tuesday 18th March 2014 Lords Chamber

[Baroness Warsi]

My Lords, I will have an opportunity to consider that specific question and will make sure that it is answered during this debate if we have that information.

On 6 March, an extraordinary meeting of the European Council in which the Prime Minister played a pivotal role agreed a three-phase approach to stand up to Russia’s illegal behaviour: first, immediate steps to respond to what Russia has done; secondly, urgent work on a set of measures to follow if Russia refuses to enter dialogue with the Ukrainian Government; and, thirdly, a set of further, far-reaching consequences should Russia take further steps to destabilise the situation in Ukraine.

I am sure that your Lordships would appreciate more detail on each of those steps, and I will take them in turn. First, as a response to what Russia has already done, immediate steps have already been taken. We have suspended preparations for the G8 summit in Sochi indefinitely. We have withdrawn royal and ministerial visits to the Sochi Paralympic Games. Work on a comprehensive new agreement on relations between Russia and the European Union has ceased, and the EU has suspended discussions on a more liberal visa regime in the Schengen area—a long-standing goal of Russian policy.

In the second phase, and in company with other allies, we have worked to persuade Russia to negotiate with the Government of Ukraine about their concerns rather than resorting to illegal measures. We have pushed for the creation of a contact group, first proposed by the Prime Minister back in January. The European Council agreed that such talks should start within a matter of days or further measures would be adopted—the so-called second phase. Yesterday, on 17 March, the Foreign Affairs Council agreed additional measures including asset freezes and travel bans against 21 individuals responsible for actions which undermine or threaten the territorial integrity, sovereignty and independence of Ukraine. These measures are in addition to those already agreed against Yanukovych and his circle.

[Lord Davies of Stamford (Lab)]

Has the Minister noted President Putin’s contemptuous remarks about those sanctions this morning? Did she also note that yesterday the Russian stock market rose by more than 5% in one day with relief that the sanctions were so weak and shallow? In effect, have these sanctions not been so derisory as to ensure that the Russians feel that there is hardly any cost at all to them in taking over Crimea, which has a great psychological as well as a strategic significance for them? It was really cheap at the price that we have set.

[Baroness Warsi]

My Lords, I did notice the specific comments to which the noble Lord refers. We fundamentally believe that the issue of sanctions will work; indeed, it has worked in a number of scenarios in relation to other foreign policy matters. These sanctions are currently being kept under review and the situation as it develops will be responded to with further measures, including further sanctions.

Thirdly and most significantly, the Council agreed that if further steps were taken by Russia to destabilise Ukraine there would be “additional and far-reaching consequences” for the relationship between Russia and the EU, including,

“in a broad range of economic areas”.

The Prime Minister played a leading role in helping to reach this agreement, including through convening a meeting with fellow leaders from France, Germany, Italy and Poland on the morning of the Council. Such sanctions would have consequences for many EU member states, including Britain, but the Government believe that the costs of not standing up to aggression are far greater.

Finally, the Council sent a clear message of support to Ukraine by agreeing to accelerate the signature of the political part of the EU’s association agreement with Ukraine and by unilaterally lowering trade tariffs. The EU has now frozen the assets of 18 people linked to the former regime, and Britain has deployed a team to Kiev from our National Crime Agency to help the new Ukrainian Government track down misappropriated funds. Ukraine also needs support for its economy. My right honourable friend the Foreign Secretary has been at the forefront of efforts to co-ordinate an international package of support for Ukraine, drawing principally on IMF and EU funds.

The Prime Minister announced last week that we would review all UK bilateral military co-operation with Russia. Today, my right honourable friend the Foreign Secretary has announced that we have suspended all such co-operation, including the signing of the military technical co-operation agreement, along with the cancellation of this year’s France-Russia-US-UK naval exercise and the suspension of a proposed Royal Navy ship visit to St Petersburg and of all senior military visits. We believe that under current circumstances, there is a compelling case for EU member states to suspend export licensing for military and dual-use items destined for units of the Russian armed forces or other state agencies which could be, or are being, deployed against Ukraine. The UK has now, with immediate effect, suspended all licence and application processing for licences for direct export to Russia. We will also suspended licences for exports to a third country for incorporation into equipment for export to Russia where there is a clear risk that the end product could and will be used against Ukraine.

A major focus for the interim Government in Ukraine and the international community is to ensure that the pre-term presidential elections called for 25 May are properly conducted, enabling all Ukrainians, including Russian speakers and minorities, to choose their leaders freely. Britain is providing technical assistance to support these elections and to assist with reforms on public finance management, debt management and energy pricing.

Europe is facing a grave challenge to the peace and security that we have worked so hard to build since the end of the Second World War. That security has hinged on respecting the territorial integrity of our neighbours. History has taught us many hard lessons about the dangers of turning a blind eye when the rights of fellow Europeans are being threatened. I am sure noble Lords will agree with the Prime Minister’s recent statement that we must stand up to aggression, uphold international law and support the Ukrainian Government and the Ukrainian people. They surely have the right to make their own choices about their own future. That is right for Europe, right for Ukraine and right for Britain.

The reality on the ground in Ukraine has constantly changed over the past few weeks and, regrettably, will continue to do so. I have sought to keep the House regularly informed through debates and Questions and have benefited from the expertise and knowledge of noble Lords from all sides of the House. Today’s debate is another timely opportunity to update noble Lords and to take note of the interventions, suggestions and views of the House.

--- Later in debate ---

[Lord Howell of Guildford (Con)]

My Lords, I feel that in a dangerous situation of this kind the first duty is to escape from hyperbole. This is not a renewal of the Cold War and the 20th-century ideological conflict, which has passed into history. It is certainly not the greatest crisis in Europe since 1945—that is an absurd exaggeration—let alone a repeat of the horrors of Sudetenland. If anything, it is the old 19th-century struggle involving unending tensions in the eternally disputed lands between Russia and Europe and the always unanswered question of where Europe ends, whether Russia is part of it and in whose sphere the regions and the lands in between should lie.

But there is a huge difference. In the 21st century, conditions internationally have totally changed. The world is now hyper-connected at every level, from schoolchildren in their schools, to universities, to business, to science, to major corporations and every conceivable interest in between. We are wound together in ways that not even some of our policymakers have fully grasped. Even in the past five years there has been a total transformation of the international landscape and huge shifts of power, with which some people in Moscow, and perhaps some even in the West, seem not to have caught up.

Of course there should be no appeasement of rough methods and treaty breaches, but nor should there be any hysteria. I have in mind the primitive outpourings in the New York Times and the ridiculous over-the-top piece in yesterday’s Financial Times saying that this was going to be the end of democracy in our time. Nor should we be driven by demands on the White House to show more machismo—“See off the Russkies”, and so on—and we certainly should not buy into the “weak Obama” story being spread about, although I must say that I think he made a huge mistake yesterday in using the word “never” about Crimea’s changing status. Rule 1 is never to use the word “never”. When I hear speeches of the sabre-rattling kind, I share the view of Bismarck, who said:

“The only thing we learn from history is that we learn nothing”.

He went on to say:

“The secret of politics? Make a good treaty with Russia”.

But of course he was sacked after that.

I believe that we should view the current crisis in two perspectives, which are not totally separate but which comprise two distinct areas. For the medium term, I fully support making Vladimir Putin and the cronies in his circle count the full and very painful cost of trying to use force in the rest of Ukraine, should they be so stupid as to do so. Not only will force not work in an age of street empowerment, as former President Yanukovych found out all too rapidly, but it will ruin Russia even while it certainly will hurt us as well. My noble friend Lady Warsi rightly referred to that.

However, our leverage is far greater in the medium term than many people realise. The financial screws can bring down the weak Russian financial system, while the vital gas and oil revenues, on which the whole of Putin’s Russia and certainly his inner clique float, can be drained away in due course. That is his jugular vein. Russia today is living on the hopes of high gas and oil prices; I believe that the budget can be balanced if the price is $119 a barrel. That can easily be undermined and removed. It could take time, because of course the idea that USA shale gas can come to the immediate rescue is a fantasy. It has been a fantastic story—shale gas provided 3% of US needs four years ago and provides 30% to 35% today—but just at the moment US gas inventories are extremely low and the gas export terminals are not yet completed.

None the less, gradually and in due course Europe can live without Russian gas, or it will acquire the customer power to beat down the price substantially, thus removing Gazprom’s monopoly position in the central European customer countries—as long as it is not stopped by misplaced green zealotry, which of course could undermine even that. Piped gas can come from Norway and from Azerbaijan in the Caspian region, while LNG can come from just about everywhere in growing quantities. Eventually, shale gas will indeed change everything, as I kept warning my colleagues in the Foreign and Commonwealth Office during my time there, but it will not be tomorrow. That is the medium term, where we are actually in a very strong position. We should have the confidence to develop it and set it out quite clearly to Mr Putin and his advisers.

It is on the immediate Crimean vote where we really need a sense of proportion and a lot of creative diplomacy. To let the Crimean situation escalate into an East-West military confrontation with total Russian isolation—if that was possible, which in fact it is not—would be to abort world recovery and to create massive worldwide suffering and probably political turmoil all round, on an impossible scale. To say that there should, instead, be a search for a deal is not appeasement; it is common sense. If there is to be a search for a deal, it should include urging Russia to wait until there is a fully elected Government in Kiev—Russia of course completely rejects the current interim Government—before rushing to complete the 100% annexation of Crimea, although it looks very late in the day from Mr Putin’s speech this morning, and to work with and talk to the new Government in Kiev when they are elected.

Ironically, taking Crimea away from Ukraine makes a Europe-inclined Government much more likely. This is a curious twist of the situation, because it would return a majority in favour of those looking west rather than east. In exchange, there could be a lifting of the targeted sanctions that we have now put in place and joint agreement in the proposed contact group, which both sides have agreed on, to work for Ukraine’s economic recovery. That will be extremely expensive, because it is bankrupt, and will only work if both sides co-operate. The final part of any package could be the re-inclusion of Russia in the G8. We should remember that Ukraine is extremely rich in all kinds of resources including, ironically, vast resources of shale gas.

It is not beyond the wit of diplomats to find an interim status for Crimea as an independent entity, as some Crimean leaders themselves have suggested. It would be a superficially independent little nation, like many others that have sprung up in recent years. However, of course, while they talk about independence, they are all in fact completely interdependent in practice, as all small nations have to be nowadays and as Scotland would soon discover if it voted for the independence illusion—it no longer in practice exists.

[Lord Davies of Stamford]

I am grateful to the noble Lord for giving way. I am listening carefully to the possible package that he is outlining, which might be the basis for some agreement over Crimea. Some solution must of course at some point be achieved. Does he agree that an essential part of such a package is that if we recognise the right of Crimea to exercise self-determination and join Russia if it wishes to do so—if the procedures are democratic and so forth—equally the right of the people of the rest of Ukraine to self-determination should also be respected? If they choose in due time to join the European Union and NATO, they should be allowed to do so and that should be recognised by Russia.

[Lord Howell of Guildford]

I think that those would be the unfolding ideals. It is in the interests of Russia—although I am not sure that it fully understands this—to have a stable Ukraine that is confident and able to resolve its internal differences, with the Russian-speaking part and the Ukrainian-speaking part living together. However, even that is a ridiculous division, because many Ukrainian people speak Russian and many Russian people speak Ukrainian. Until recently—until the tensions rose and there was this polarisation—no one cared a damn what language they spoke in Ukraine. It is possible for these people to live together.

The kind of evolution for Crimea that I am talking about is possible. However, the fact is that the Crimean referendum has happened, with 96% or whatever it was voting in favour, and the previous unstable status quo cannot be magically restored. I agree that there is indeed a generalised separatist movement going on all round the world, which noble Lords have already referred to. It is not just in Russia—Nagorno-Karabakh is stirring again, we hear what they are saying down in Catalonia and we know what is being said on our own island in Scotland. However, this has more to do with local digital empowerment, which is growing everywhere, than specifically with Russian imperialism.

Eventually, if we keep our minds on the true goals and interests of this country, it should be clear that it is completely in our interests to have a prosperous, open, connected and stable Russia. Russia cannot just eventually become a pariah nation, if its rulers want to survive and be part of, for instance, the World Trade Organisation, as they are, and the global economic system.

Finally, some other lessons have emerged from this. First, the European Union collectively—and we can provide some help from London—should rethink the style of its approach to neighbouring states. The EU, as much as Russia, has, I am afraid, helped to polarise a nation that could have lived together and could still live together, with the language issues being put back in the box as being largely irrelevant.

Secondly, with most countries and peoples continuously connected nowadays with an intensity never before experienced in history, with the electronic empowerment of all kinds of groups, official and unofficial, and the consequent fragmentation in the whole pattern of state power in country after country, and with the rising influence and economic weight of the non-western world—the “rise of the rest”—the whole behaviour pattern of international affairs has started to shift. For America, as much as for Europe, and the UK within Europe, if we want to prosper in these new conditions it is time to shift our attitudes as well. Force and coercion alone can no longer settle borders, crush minorities or deliver clear-cut victories, as we have bitterly discovered in many theatres in recent times. Softer and smarter methods have to be deployed, and the sooner that is grasped in Moscow, Washington and, indeed, Brussels, the better.