Sanctions

Stephen Doughty Excerpts

Thursday 22nd September 2022 Commons Chamber

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

I welcome the new Minister to his place. I look forward to working with him on sanctions, as I have with his many predecessors. I welcome the opportunity to discuss sanctions on Russia again and I am pleased to see such a wide range of issues being covered in today’s measures, which are mainly amendments.

My first question is why so many amendments are needed. The Minister has answered some of that, as do the explanatory notes, but—I do not want this to be seen as a criticism of the officials, who work incredibly hard to put such regulations together—an extraordinary number of errors and omissions appear to have been made, as he just confirmed. That underlines the point that I have made in many previous sanctions debates about the resourcing and assistance that is being given to critical units in the Foreign, Commonwealth and Development Office and elsewhere, and whether that is enough. I know that it has been expanded and there are more officials, but we need to have the support in the system to ensure that we get such things right first time. Putin and his cronies will be—we know that they are—seeking every single loophole, omission and error to try to circumvent them. We must not allow them to do that. I will come to further comments about that in due course; I hope that the Minister will explain that in his closing remarks.

Obviously, in the last few weeks, we have seen remarkable progress by Ukrainian forces in the east and south of the country in an incredible counter-offensive. Indeed, Ukrainians have shown extraordinary courage, strength and ingenuity in the face of Russian aggression. Those efforts, thanks to our support and that of others, are thankfully bearing fruit. As we enter a new phase of the conflict, it is more important than ever to show our firm resolve to stand behind Ukraine in every way, not only in the military domain but politically, economically and diplomatically as well as, crucially, in the consequences that Putin and his cronies must face for their illegal and barbarous actions.

As I mentioned in the previous debate, I have just returned from a trip to Kyiv and the surrounding area. I refer again to my impending entry in the Register of Members’ Financial Interests as a guest of Yalta European Strategy. I was deeply moved by the spirit, courage and bravery shown by not only President Zelensky but all the Ministers, officials, Members of Parliament, members of civil society and Ukrainian citizens. I returned with a deep sense of urgency, a personal commitment and a solemn duty to do everything that we can to end President Putin’s egregious display of aggression, violence and cruelty, which we have sadly seen so brutally in the scenes from Izyum—the mass graves, the torture and the stories coming out of there. We heard in the previous debate about sexual violence. On our visit, we heard some truly horrific things and we saw with our own eyes the destruction of civilian infrastructure.

The former Minister, now Foreign Secretary, informed me in May that 150 individuals were working full time in the sanctions taskforce in the FCDO and that the Office of Financial Sanctions Implementation had at least doubled in size, but I have tried to get further clarity about the resourcing going in. I asked about that in the last two debates and I was promised a letter by the Minister. I have not had that and I hope that the new Minister can chase that up and get some answers. We support these sanctions and the measures, but it is only right that the Opposition can scrutinise and understand whether the Government are properly resourcing them. What extra financial resources have been given to those bodies? What conversations has the Minister had with the National Crime Agency to ensure the proper enforcement against those who breach the sanctions regime?

In the previous debate, I asked about the potential circumvention of sanctions. Numerous allegations have been put to me about a range of industries, such as the steel industry—we have discussed measures on those sorts of products and there are measures in these regulations—where Russia is attempting to use third countries potentially to export steel and other key products, some of which are ending up in the UK and countries across the west that are imposing sanctions. That is an absurd situation and I hope the Minister can provide more information about that and about what we are doing to close the loopholes that Russia is attempting to use. We can have the toughest regime on paper, but if Russia is in practice finding ways around it, that is not acceptable.

I was struck on the visit to Kyiv by the importance of ratcheting up the sanctions. Indeed, many of the measures proposed in these regulations are about expanding the sanctions, and that is a good thing. However, it is crucial that we work with some of the best minds around the world to look at other areas where we can bring pressure to bear. Indeed, McFaul, the former US ambassador to Russia, and others, including from the Ukrainian Government, have a working group looking at additional ways in which they can expand these sanctions and make them tougher. I was concerned to be told that there is apparently no UK representative on that group. Can the Minister clarify why that is the case? We need to have somebody on that group, because we need to be leading, with the United States and others, including our friends and allies in the European Union, to ensure that we have the toughest, broadest and deepest regime, and that we think about innovative ways in which we can really hit those people around Putin who are providing the backing financially and otherwise for his actions in Ukraine.

In the detail of the sanctions packages being announced today there are many welcome things—prohibiting the import of oil, coal and gold and the export to Russia of maritime equipment, oil refining technology, jet fuel and other materials. Those are absolutely critical and the Labour party obviously welcomes the Government’s movement on them. However, one area that did raise some concern for me was the prohibition of the export of goods which have

“potential use for internal oppression”.

Obviously, it is a good thing that that is included in this package, but I have to ask why there was any possibility that UK public or private bodies were ever providing Russia with materials that might be used for internal oppression in the first place. I hope that the Minister can explain to us what kind of exports have been going on. This matters, because this war did not start just seven months ago; it started in 2014 or far before that. We have known of Putin’s internal repression against democratic opposition and others for years, so I seriously hope that we have not been providing support to him that could have been used to quash internal opposition in Russia.

The explanatory note refers to micro-organisms and toxins. Again, I want to understand what assessment has been made of the volumes of any such materials that have made their way from the UK to Russia, and why that change had not been brought to the House sooner. These are very serious matters and—particularly given Russia’s record of using weapons of mass destruction, including in this country—I seriously hope that no UK company has been exporting any materials that have got to Russia in this way. The designations in SI No. 792 are welcome, but I come back to the issue of swiftness and responsiveness, and why—seven months into this phase of the war—we are only debating such a designation today.

I ask the Minister, and I have asked this in all the previous debates on sanctions, whether he has any further specific proposals not only to freeze assets, but to confiscate and sequester those assets—not least because of the huge costs involved in continuing to support Ukraine, which we absolutely must do, but also because of the clear costs there will be in reconstruction and making sure that Ukraine can develop and survive after this war is over. Indeed, this request was made to us by many of those in the Ukrainian Government, other officials and Members of Parliament from many parties while we were in Kyiv just weeks ago. They want to see that done. It has been done in a number of countries, and other countries are looking at how they can sequester and use assets. I know that it is not straightforward and that it might require further legislative change, but can the Minister provide some clarification?

We have had the issue raised of travel by individuals designated under these sanctions regimes, whether the issuing of tourist visas to Russians should be allowed—I certainly do not think it should be—and of designating Putin’s United Russia party as a state sponsor of terrorism or as a terrorist organisation, just as we have Hezbollah, Hamas and other parties in other locations that are sponsoring terrible and heinous acts of aggression and crimes against humanity. What are the Government’s thoughts on those proposals?

The scope of these sanctions measures is of course wide, and I think it shows the resolve we have to tackle those who are backing Putin, but we must deal with the wider ecosystem around those who are backing him. I know that the Economic Crime and Corporate Transparency Bill has been published today, but we have to tackle the whole ecosystem of the London laundromat and all those individuals who have been backing and sustaining his regime. I certainly hope that in debates to come we will see tough action taken in that regard.

Overall, Labour wholeheartedly supports the measures outlined today, and I hope the Minister will answer some of my detailed questions. Our sanctions regime is integral to Britain’s role in supporting Ukraine and holding Putin’s regime accountable for the acts of violence that it continues to perpetrate against civilians across Ukraine. This winter, the people of Ukraine will weather the even more difficult storm of the brutal, egregious and unconscionable war of aggression that they face, and we must back their bravery by being brave and bold with sanctions, and by not providing succour for any of those who are supporting such aggression.

--- Later in debate ---

[Jesse Norman]

I thank all hon. Members who have spoken in this very interesting debate. It is a testament to the intense interest and passion that the Russian invasion of Ukraine has raised in this House that, even on topics as apparently technical as this one, we could have such a vigorous and energetic debate.

Let me pick up as many as I can of the points that have been raised. My hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) spoke truly about how highly effective sanctions have been so far, as evidenced by the Treasury Committee. I would say that it is more like turning off a light, but the danger is that the dimmer switch may be activated the other way. That is one thing that we are constantly dealing with. I will say a little about it more generally, partly in response to the shadow Minister, the hon. Member for Cardiff South and Penarth (Stephen Doughty), because this is an evolving situation.

My hon. Friend the Member for Thirsk and Malton mentioned Bill Browder, a very interesting and brilliant man whom I have met. The idea about opening books is a very interesting one. We have a lot of interesting ideas in this House; one of the strengths of the open parliamentary debate that makes our system so much stronger than the Russian alternative is that we are willing rapidly to evolve our response to public opinion and to such suggestions, for which I thank my hon. Friend.

My hon. Friend also made a point about crypto that I think was right. It is important to say that crypto-assets are treated in exactly the same way as any financial asset. We therefore expect these measures to be as widely respected by entities, even if enforcement proves to require further work.

[Stephen Doughty]

I have just received notice that on 11 October we will be debating another set of amending regulations on sanctions—not only against Russia, but against a whole bunch of regimes—to deal with the very fact that crypto-assets are not treated in the same way as other financial assets for the purposes of sanctions. In fact, there appear to be a whole series of loopholes that the Government are only getting around to dealing with on 11 October. We really need to move a lot faster. We need to be up to speed with what is actually happening and with how people are using these markets.

[Jesse Norman]

If I may say so, I do not think that it is possible to move faster than having a debate within two days—in fact, a day and a half—of Parliament’s resumption after the interval following the unfortunate passing of Her late Majesty the Queen. The rules apply. As a further rebuttal to the shadow Minister’s point, my reply to the suggestion that something can somehow be made perfect, as though it were set in stone forever, is “Of course not.” This is a rapidly evolving situation.

My hon. Friend the Member for Isle of Wight (Bob Seely) talked about lawfare. He is exactly right that some very well-heeled and well-resourced individuals are using all their resources, as corporates and as individuals, to try to thwart us. That is why the response must continue to evolve, and it will.

On the point raised by the hon. Member for Tiverton and Honiton (Richard Foord), the Office of Financial Sanctions Implementation in the Treasury has more than doubled in this financial year. The response that is being made is being taken very seriously, and there is a continuous effort to build sanctions capability across Government.

I take the point that the hon. Gentleman made about advice for the higher education sector. I can also tell him that a very effective team in the Department for International Trade is helping businesses in this country to deal with this issue, which, again, we take extremely seriously.

My hon. Friend the Member for Isle of Wight, when referring to lawfare, mentioned Freshfields. I was sorry to hear the name mentioned, given the respect in which that firm is held across the country. I wish it were not true, if it is—I hope it is not—but it was interesting that my hon. Friend mentioned it.