Financial Assistance to Ukraine Bill

Debate between Richard Fuller and Alex Sobel

Committee of the whole House
Wednesday 18th December 2024 Commons Chamber

[Richard Fuller (North Bedfordshire) (Con)]

I thank the Minister for opening the debate. The Conservative Government were a vociferous advocate for mobilising Russia’s frozen sovereign assets to support Ukraine. We drove G7 and European partners to try to coalesce around the most ambitious solution possible to achieve that outcome. The announcement on 22 October marked progress on that journey and is a step in the right direction. We understand that the Government’s position is that the United Kingdom’s contribution should be earmarked for supporting Ukraine’s military expenditure, including on air defence, artillery and other equipment. The Opposition would support that. We need to persevere with our efforts to put Ukraine in the strongest possible position to counter Russia’s unprovoked and illegal invasion.

Matters since Second Reading have been fast moving, so let me pose some questions to the Minister. Since Second Reading, the United States has given Ukraine $20 billion, funded by the profits of frozen Russian assets. That economic support forms a significant part of the overall $50 billion package agreed by G7 member nations and announced in June. The US Treasury said that it had transferred the $20 billion to a World Bank fund, where it will be available for Ukraine to draw. Money handled by the World Bank cannot be used for military purposes.

The US Administration had initially hoped to dedicate half the money to military aid, but that would have required approval from Congress, which the President did not seek. Perhaps the Minister can update the House on what discussions the UK Government have had with the US Administration, Canada and the European Union about the use of funds provided for military purposes. Are any strings attached to the funds that will be provided by the UK? As the US has already provided its share of moneys anticipated in the G7 package, can the Minister advise the House on the timing of the UK’s contribution? I think it was made clear on Second Reading, but it would be helpful to have an update, given the move by the US since then.

As the Minister and the Government have advised, the loans that the UK will pay will form part of the extraordinary revenue acceleration loan agreement by the G7. The loans that the UK will provide will be repaid by the Ukraine loan co-operation mechanism, established by the European Union under regulation 2024/2773 on 24 October. The ability of the UK to have its loans repaid depends in large part on a decision by the European Union to maintain its freeze on Russian assets. The EU renews Russian sanctions every six months, and efforts to extend that to a three-year review cycle were rebuffed by Hungary earlier this year. Will the Minister confirm that there is a risk, in the event that the EU does not extend its sanctions on Russia, that the costs of the loan will be borne by UK taxpayers, and what mitigations he might consider if that situation arises?

Finally, the EU controls more than two thirds of Russia’s $300 billion of sovereign assets that have been frozen by western allies following Russia’s full-scale invasion of Ukraine. Of those EU-held frozen assets, 90% are held by the Belgian-based financial services company Euroclear. The profits from the EU-held assets, estimated to be between $2.6 billion and $3.2 billion per year, have been used to arm Ukraine and finance its post-war reconstruction. We understand that the EU’s top diplomat, Kaja Kallas, said in an interview with The Guardian on 12 December that the European Union should use the billions in frozen state assets to aid Ukraine. She emphasised that Ukraine had a legitimate claim for compensation, and described the Russian assets held in the EU as

“a tool to pressure Russia.”

The Minister responded to earlier interventions, but can he confirm the UK Government’s position? Has he discussed the matter with the EU and Belgium, and does he have any plans for the UK to go further on the use of those assets?

[Alex Sobel (Leeds Central and Headingley) (Lab/Co-op)]

I want to speak to new clause 1, which I have signed, but I first want to reiterate my support for the Government and the Bill. As I said on Second Reading, it is absolutely right and proper that Russia pays for the damage it has done to Ukraine and its people. The Bill is an important first step in providing that financial assistance from Russian assets to Ukraine. Echoing the comments from around the Chamber, we need to move with allies towards a position of seizing Russian assets, but it is a positive first step that we are using the proceeds of the interest on those assets to support Ukraine.

On Second Reading, I mentioned that

“Canada has passed the Special Economic Measures (Russia) Regulations, which collects data on Russian assets, freezes them and publishes the value, which currently stands at 135 billion Canadian dollars”.—[Official Report, 20 November 2024; Vol. 757, c. 312.]

I asked if the Government could disclose Russian assets held in the UK in the same way. New clause 1 goes a long way to providing that. It would ask the Government to lay a copy of a report before Parliament showing under the Act, as it will hopefully become,

“monies provided by the United Kingdom to Ukraine”

to the following level of disclosure:

“the United Kingdom’s share of the principal loan amount and interest accrued under the scheme”

and

“receipts of extraordinary profits from the Russian immobilised sovereign assets under the scheme.”

It would to an extent mirror what our close ally Canada has done. Although I do not expect to divide on new clause 1, I would appreciate it if the Minister would comment on how he will report progress to the House, disclose the level of Russian state assets that are here, and state how much of the interest accrued from those assets has been mobilised to support Ukraine in its war efforts.