22 September 2022

Jesse Norman, Minister of State, Foreign, Commonwealth and Development Office, moves additional sanctions designed to isolate Russia’s economy still further and target key industries that support President Putin’s illegal war in Ukraine.

The Minister of State, Foreign, Commonwealth and Development Office (Jesse Norman)

I beg to move,

That the Russia (Sanctions) (EU Exit) (Amendment) (No. 11) Regulations 2022 (SI, 2022, No. 792), a copy of which was laid before this House on 14 July, be approved.

Madam Deputy Speaker 

With this we shall consider the following motions:

That the Russia (Sanctions) (EU Exit) (Amendment) (No. 12) Regulations 2022 (SI, 2022, No. 801), dated 14 July 2022, a copy of which was laid before this House on 18 July, be approved.

That the Russia (Sanctions) (EU Exit) (Amendment) (No. 13) Regulations 2022 (SI, 2022, No. 814), dated 14 July 2022, a copy of which was laid before this House on 18 July, be approved.

That the Russia (Sanctions) (EU Exit) (Amendment) (No. 14) Regulations 2022 (SI, 2022, No. 850), dated 18 July 2022, a copy of which was laid before this House on 20 July, be approved.

Jesse Norman 

The instruments before us were laid between 14 and 20 July under powers provided by the Sanctions and Anti-Money Laundering Act 2018. They make amendments to the Russia (Sanctions) (EU Exit) Regulations 2019.

As the last debate demonstrated, this House stands absolutely resolute in its opposition to the illegal and aggressive invasion of Ukraine by Russia. In co-ordination with our allies, the United Kingdom continues to play a leading role in introducing the largest and most severe economic sanctions package that Russia has ever faced. The measures that we are debating are designed to isolate Russia’s economy still further and target key industries that support President Putin’s illegal war in Ukraine. The measures are somewhat technical, so I hope that the House will forgive me if I go through them in a little detail.

The No. 11 regulations ban the export of goods and technologies related to the defence, security and maritime sectors. They also prohibit the export of jet fuel, maritime goods and technologies, certain energy-related goods, and sterling and European Union banknotes. In addition, they ban the import of goods such as fertiliser, metals, chemicals and wood, depriving Russia of a key export market. Together, those markets were worth some £585 million last year.

The Joint Committee on Statutory Instruments concluded that three provisions in the Russia (Sanctions) (EU Exit) (Amendment) (No. 10) Regulations 2022 would not be inside the powers conferred by the Sanctions Act. His Majesty’s Government have resolved that by revoking the 10th amendment and replacing it with the 11th. I thank the Joint Committee on Statutory Instruments for its continued engagement as we introduce further secondary legislation rapidly in response to this abhorrent war.

The No. 12 regulations place fresh restrictions on investments and services in Russia. They are designed to hit revenue streams of critical important to the Russian economy. The new measures prohibit persons from being involved directly or indirectly in acquiring land and entities with a place of business in Russia, in establishing joint ventures with persons and entities connected with Russia, and in opening representative offices or establishing branches or subsidiaries in Russia. The measures also restrict the provision of investment services related to these activities. There are some exceptions to the provisions to prevent overlap with existing regulations as well as licensing and enforcement powers.

Bob Seely (Isle of Wight) (Con)

My right hon. Friend is talking about services. Will His Majesty’s Government take further action to prevent Russian state entities such as Gazprom and VTB Bank, and the legal firms that support them in this country, from continuing to use the UK courts? I have written to the Secretary of State for Justice about the matter, because there is a long list of cases that the Russian state and Russian proxy entities are taking in the UK courts, and that money ends up back in the coffers of the Russian Government.

Jesse Norman 

I am extremely grateful to my hon. Friend for his question, and the House recognises his great expertise in this area. He will understand that I am not going to comment on the future sanctions policy of this Government, but he can take it as read that we are looking extremely closely not just at ways of further extending this escalating programme of sanctions that has elaborated itself over the last few months, but at closing some of the loopholes. If he wishes, I will make certain that my officials have sight of the letter he has written and will write to him on the matter specifically.

I turn to the No. 13 regulations, which widen the definition of scope of activities for which a person can be designated. His Majesty’s Government have expanded the definition of destabilising, undermining or threatening Ukraine and supporting or obtaining a benefit from the Russian regime. This brings into scope many individuals and entities in the Russian Government, its agencies and its armed forces. The regulations make minor amendments to the definitions of being involved in, obtaining a benefit from or supporting the Government of Russia. These have the effect of broadening the interpretation of being associated with a designated person to include immediate family members who may, and often do, hold assets on their behalf. The regulations also provide an exception from trade sanctions for humanitarian assistance actively delivered in non-Government controlled areas of the Donetsk and Luhansk oblasts. Finally, they expand the definition of ownership in relation to ships and aircraft, and they correct errors and omissions in previous regulations.

Kevin Hollinrake (Thirsk and Malton) (Con)

I welcome my right hon. Friend to his place. He mentions family members who are associated with sanctioned individuals. He will probably be aware of, but unable to comment on, the case of Alisher Usmanov, who is sanctioned by the UK, the EU and the US but has passed on some of his wealth—£2.1 billion, I think—to his sister, who is outside the scope of our current sanctions regimes. Will my right hon. Friend’s tightening up of sanctions, which I welcome, mean that we can go after people such as Alisher Usmanov’s sister and the assets she holds on his behalf?

Jesse Norman 

As my hon. Friend has brilliantly anticipated, I am not in a position to comment on any individual case, but I can say that these powers of designation as to travel bans and asset freezes now have a significantly wider scope to include family members. I take the point he has made in relation to that specific individual—I am sure my officials will have noted it—and I thank him for his intervention.

The fourth and final set of regulations are the No. 14 regulations, which introduce further trade sanctions. The regulations prohibit the export, supply, delivery and making available of a comprehensive list of critical goods, energy-related goods and related ancillary services—services that Russia had relied on G7 nations to supply. These goods had a combined market value to Russia of £365 million last year. The instrument also bans the import, acquisition, supply and delivery of Russian coal; that measure entered into force on 10 August.

That is on top of prohibitions on the import, acquisition, supply and delivery of Russian oil, which will come into force before the end of this year; and on the import of gold that directly or indirectly originates in Russia, which entered into force on 21 July. Ancillary products and services on coal, oil and gold exported from Russia are also prohibited. A further ban covers the provision of business and management consulting services, public relations and accounting services to persons connected with Russia.

These hard-hitting new measures continue the Government’s project of ratcheting up the pressure on Russia. We will continue to do this in close concert with our allies until Putin ends his illegal invasion of Ukraine. I commend these regulations to the House.


At the end of the 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.

Bob Seely 

Will the Minister give way?

Jesse Norman 

I would rather not, because I have not much time, but let me just say this. My hon. Friend talked about the extension of designation, and this makes the point about the evolving nature of the threat. It is important to get the sanctions in quickly, but as the response evolves, so we must evolve it, and that is what we have done. Being associated with a designated person now includes obtaining financial benefit or other material benefit, or being an immediate family member, which means a wife, a husband, a civil partner, a parent or step-parent, a child or stepchild, a sibling or step-sibling, a niece or nephew, an aunt or uncle, or a grandparent or a grandchild. That is an example of the response evolving as my hon. Friend would have wished.

The hon. Member for Stirling (Alyn Smith) rightly drew attention to the slippery nature of what we are dealing with. I have been highlighting that in my speech. He talked about the danger of laundering energy. There are technically difficult questions to address about how that is to be characterised, especially when, as it were, forms of energy are changed.

The hon. Gentleman talked about proper tracking through the overseas territories. He will be aware that these rules apply in the overseas territories by Order in Council, in the same way that we would apply them here. I think he erred slightly in talking about the legitimacy of sanctions in part depending on the assets seized; the legitimacy of sanctions lies in the fact that we are fighting an aggressive nation that is seeking to overturn our way of life and the foundations of liberal democracy, and I do not think any further legitimacy is required for that to be a worthwhile thing for us to do.

My hon. Friend the Member for Dewsbury (Mark Eastwood) raised the important issue of Alunet, in his constituency. I thank him for doing so, and I thank him for writing to me in advance with the details. I understand the sense of those at Alunet of the loss that they appear to have incurred, and also the concern that they are feeling. I will be writing to my hon. Friend specifically about that issue.

Let me now come to the questions raised by the hon. Member for Cardiff South and Penarth. He asked why so many changes and amendments were needed. It is, of course, because the first instinct in a war situation is to get sanctions on the books as quickly as possible. We know that they have been effective because the Treasury Committee has reminded us of that, and we have plenty of other evidence that it is the case. As I have said, however, as the situation evolves so we need to evolve the response, and as the concerns about the humanitarian impact and unfairness evolve, the sanctions picture inevitably becomes not merely more widespread and more expensive, but more complex—and it is right that that should be so.

The hon. Gentleman mentioned a letter that he had written. Obviously the process has been disturbed by the abeyance of Government and the funeral of Her Majesty, but I will ensure that that letter is sent. He also talked about resourcing. I have referred to the increase in the size of OFSI, and that is matched by the seriousness with which this issue is taken across Government. The hon. Gentleman raised a series of other, more technical issues, and I shall be happy to write to him about those in more detail.

I invite the House to support these motions.


Question put and agreed to.