Russia (Sanctions) (EU Exit) (Amendment) (No. 15) Regulations 2022

Lord Purvis of Tweed Excerpts

Monday 21st November 2022 Lords Chamber

[Lord Berkeley (Lab)]

My Lords, will the Minister comment on a report in the Sunday Times yesterday about the export of oil from Russia in a Russian ship from the Black Sea? It tied up against another ship somewhere in the Mediterranean and that oil was transferred over several days; the oil subsequently was delivered to Immingham. That, to me, is importing Russian oil. Are these regulations going to stop this, and how are they going to check it?

[Lord Purvis of Tweed (LD)]

My Lords, I have been in Ukraine in the winter, and that, combined with the indiscriminate barbarity of the Putin regime towards the people of Ukraine in what will be a very punishing season, means that we need to redouble our efforts to make sure that there is no impunity for the Russian regime. We therefore support these sanctions and, as the Minister knows, we have, from these Benches, been consistent supporters. However, with the news that was reported just last week by the Financial Times that Russia’s gross domestic product has fallen by only 4%—far less than had been anticipated—does the Minister agree that we need to consider further areas where there can be damage to the regime’s economy and how it operates it?

Notwithstanding the information that the Minister has provided in the past regarding the impact of these sanctions, the impact on the Russian economy is less than we had anticipated. One of the reasons for that is that Russia has been able to circumvent some of the sanctions, with trade increasing in energy especially. It is therefore welcome that there has been a shift of tone in the G20 from India and China, in addition to the other G20 countries, regarding their position on the Putin regime. Could the Minister outline areas where there are discussions on expanding the type of financial instruments that could be inflicted on the regime? If the Russian economy is falling by only 4%, which is only 1.5% more than the UK economy is anticipated to fall in this coming year, then this is not likely to bring about significant change in the type of aggression that Russia is waging on the people of Ukraine.

The Minister said that these regulations have been developed in co-ordination with our allies, but they come into effect after the EU sanctions. The Government themselves state that these have been brought forward

“to further align with the EU’s existing prohibitions

on

“oil refining technology and manufacturing products”.

On the expansion of the list of revenue-generating goods, which the Minister outlined, the Explanatory Memorandum says:

“The aim of this measure is to align with the EU to include two Russian product groups”.


Although we support the regulations, why has there been a delay in the UK bringing forward measures when they have already been put in place by the EU? If they are developed in co-ordination, surely it would be better to implement at the same time as our allies.

Have the Government assessed the effect of the prohibition on the import of gold with regard to trade with our allies in the Gulf? I have seen at first hand, on a visit to Africa, the illicit trade in gold, which is funnelled through our Gulf allies and then makes its way to Russia. What action are we taking with our allies and trading partners on the gold trade in the Gulf?

Could the Minister explain a minor point that is curious to me? Although we support the measures on those importing and acquiring gold jewellery that originates in Russia, the Explanatory Memorandum has, in brackets,

“(with an exception for personal use, which will also apply to the export of gold jewellery)”.

I cannot afford much gold jewellery but I think that quite a lot of gold jewellery is for personal use, so why are we putting in place measures to prohibit gold jewellery with an exception for “personal use”? That does not make much sense to me, so if the Minister could explain it, I would be grateful.

On the No. 16 regulations, I very much support prohibitions on the supply and delivery of certain ships, notwithstanding the very valid question asked of the Minister regarding circumventing these prohibitions. We also welcome the shift in tone from our friends in Delhi. But what further work is being done regarding the rupee-rouble swap arrangements for India’s purchasing of oil? I have raised this with the Minister on a number of occasions. He knows that there have been ways in which Russia has profited out of the sanctions on energy and oil. Can the Minister outline clearly that Russia is not profiting from our allies through its purchasing arrangements? What discussions are we having with India in particular regarding its purchase of Russian oil?

--- Later in debate ---

[Lord Purvis of Tweed (LD)]

I am grateful for that. One area that the EU is looking at is effectively a punitive exit tax: those who have assets in one area and seek to dispose of them in another will be penalised through taxation. Effectively, if the sanction does not get them at the start, it will get them at the end. That would be an absolutely critical area where there must be no difference across our allies. Will the Minister please consider that? It is an area where there cannot be any difference at all.

[Lord Ahmad of Wimbledon (Con)]

My Lords, I certainly take that on board. On this issue we are absolutely at one, and the real benefit of your Lordships’ House is that, where there are areas that are identified, I of course welcome practical suggestions for how we can target quite specifically—and, as I said, we will certainly take those forward with the EU and our other allies.

I turn very briefly to asset seizures. My noble friend Lord Empey raised the issue of previous situations that arose on Libyan assets. I assure the noble Lords, Lord Purvis and Lord Empey, that we are considering all options for seizing Russian-linked assets that could be used to support the people of Ukraine, including to fund humanitarian efforts and reconstruction. Law enforcement agencies are currently able to seize UK-based foreign assets with links to criminality or unlawful conduct by making use of powers under the Proceeds of Crime Act 2002. My department is working closely with other government departments and law enforcement agencies to identify all possible options for seizing Russian-linked assets in the UK that could also be used to pay for reconstruction in Ukraine. Our international partners that we are co-ordinating with have also frozen a significant volume of assets but, like the UK, are yet to fully test the lawfulness of the asset-seizure regime. I assure noble Lords that we will continue to explore all possible options for seizing Russian-linked assets to pay for reconstruction costs in Ukraine. Of course, we have to respect our legal obligations and responsibilities. As the details emerge, I will of course be happy to share them with noble Lords.

The noble Lord, Lord Collins, raised the important issue of export bans coming into force from January 2023. That is when the import ban on Russian liquefied natural gas takes effect, and the legislation will mean that the export bans take place at the same time. That is purely to ensure that we get everything in place so that the application of those sanctions can have full impact. As I said in my opening remarks, we believe that the delay caused by that will not have a major impact in any shape or form. I might add that, earlier this year, the Government pledged to ban Russian oil this year, and liquefied natural gas as soon as possible thereafter. That is why we set the date on 1 January.

The noble Lord, Lord Purvis, raised the issue of gold. He mentioned that it is not something that he is normally adorned with. As someone with heritage from south Asia, I assure him that gold is a significant area of interest to many people across the world, particularly in the heritage that I have. Our intention is to look at organisations but not necessarily to penalise individuals with the impact of this measure. We have imported minimal gold jewellery from Russia, and Russian gold imports to the UK have already been prohibited by the initial measure. This measure seeks to reinforce the existing ban, aligns its scope with the bans that our allies have also imposed and prevents a potential loophole from being exploited. I will look further into the specifics of what the noble Lord raised, but I will share with him the statistic that in 2021 imports of Russian gold to the UK were worth £11.1 billion and accounted for 61% of our total exports from Russia. As a result of the Government’s actions and the decision of the London Bullion Market Association, that trade has already ceased, depriving Russia of that specific amount of export revenue.

Also on the issue of gold, we are trying to target Russian businesses trading in gold, as I said earlier, not individuals who possess gold. I will take away the noble Lord’s earlier point about selling an asset in another area or sector, but, on this aspect, I come back to the earlier point I made; we are seeking to target businesses while minimising the impact on ordinary Russian citizens.

The noble Lord, Lord Purvis, also raised the issue of Russian revenues. I assure noble Lords that, while I am not going to go into specific figures, within the G7 and in the G20 recently we have been working through solutions that can apply universally with partners and also to lessen the impact on particular vulnerable countries and economies. That is the right way to approach our sanctions policy, beyond just the immediate area we have looked at on ensuring that humanitarian causes, and channels, remain open.

These measures continue our wave of sanctions that is having damaging consequences on Mr Putin’s regime. I assure noble Lords that we are committed to going further. I welcome practical suggestions and insights that can be brought to this debate and discussion. In doing so, we work very much with our key allies. We stand firm and resolute with the people of Ukraine, and we will continue to support them and the Ukrainian Government until, ultimately, we see Russia withdraw from Ukraine. The sanctions are but one example of the UK’s continued support. Therefore, I am proud to say that we continue in a very unified sense in ensuring, ultimately, that Ukraine can prevail.