My Lords, I am grateful to the two noble Lords and the noble Baroness who spoke in this insightful and, if I may say so, timely discussion. I will do my very best to address the important questions that they asked. There were a lot of them; I am sure noble Lords will forgive me if I have to read Hansard carefully and come back to them on some of the specific points.
I will try to deal with the points in order, if I may, so I will start with the questions asked of me by my noble friend Lady McIntosh. I talked about the errors, so she was quite right to pick me up on them. All I can say at this precise moment is that, as noble Lords will
be aware, all the recent sanctions legislation has involved policy and drafting work at significant pace. The team here looks quite bright-eyed and bushy-tailed relative to some of the officials I have seen involved in this legislation. So there are some minor drafting errors, as far as I know, but we are waiting for the JCSI to report; we will come back when we have more information, if that is acceptable.
With specific regard to supply chains and so on, obviously the Government have considered critical supply chains and continue to monitor the impact closely. Of course, we understand that there will be an impact; noble Lords were right to reference the imported inflation that we will suffer. However, as the noble Lord, Lord Collins, pointed out, we believe that the risk of not taking action against Russia would be far greater. The overall impact on the UK economy will be limited, and there is a package of measures in place to support UK businesses. The Government continue to monitor closely developments in the channels that may have an impact on the UK economy. The precise impact will depend on the size and persistence of any shocks to trade, the financial markets, energy markets and so on, which are of course highly uncertain. However, Russia is not among the UK’s critical trading partners, although it is the largest trading partner that we have ever sanctioned. So although some UK firms will be more exposed to the disruption in Russian trade and in the financial markets, these ties are not systemically important to the UK economy.
Russia’s role as a major oil and gas producer is, of course, the most likely channel through which an escalation in Ukraine could have an impact on the UK economy. None the less, we remain confident in the security of our supply, although the price is dependent on the world markets. I take very seriously the points made by my noble friend and noble Lords about imported inflation and its impact, particularly on rural fuel bills, but it would be foolish of me to pre-empt anything that the Chancellor may have to say on that subject in the not-too-distant future.
My noble friend Lady McIntosh asked about unintended consequences and EU engagement. The Government seek to ensure that the sanctions measures are carefully targeted to avoid unintended consequences. Our sanctions are part of a concerted strike against the Putin regime and discussions with all partners are ongoing. This aligns with what others are doing; as I say, our sanctions are strategically co-ordinated with those of our allies, including the EU, the US, Australia, Canada and so on. We will continue to go further.
I come to the questions from the noble Lord, Lord Purvis, who raised a point about why we were a bit slow in certain areas—but we were also faster in certain areas than the EU, in particular. We imposed measures on aircraft and shipping before the EU moved. I accept that these things are complex, but there are genuine reasons for that. I hope that he will understand that it is not a game of relative speed—it is not a game at all.
The noble Lord also asked me about the war crimes situation. I can only repeat what I have heard my noble friend Lord Ahmad say. He has spoken to the rapporteur—I think that is the right description—on
war crimes in The Hague about what is happening. I have no further information, but I am sure that my noble friend Lord Ahmad will come back to the House on that as soon as he possibly can.
The noble Lord, Lord Purvis, made some excellent points about hybrid warfare. We are engaged in a hybrid war, and of course it is an article of Russian military doctrine to fight this sort of thing. Hybrid warfare is not just about sanctions, of course. It is also about a wide variety of other actions that destabilise, and we should be very aware of those.
I come to the noble Lord’s specific questions about Belarus. Yes, the sanctions will be replicated. I can update noble Lords a little on what sanctions have been applied. On 1 March we announced a first tranche of sanctions against Belarusian individuals and organisations in response to the role the country is playing in Russia’s invasion of Ukraine. Four senior defence officials and two military enterprises have been sanctioned with immediate effect under the UK sanctions regime. Individuals will be unable to travel to the UK, and any UK-based assets will be frozen. These designations are in addition to the wide-ranging measures we have already imposed on Belarus under our Belarus sanctions regime, which include sanctions on President Lukashenko and 117 other individuals and entities, as well as trade, financial and aviation sanctions. The Foreign Secretary has committed to going further. As I have just said, our intention is to extend recent Russia sanctions to Belarus in due course. I cannot be more specific on time than that. The Lukashenko regime will be made to feel the economic consequences of its support for Putin.
On 9 March, the EU announced that three Belarusian banks—I will not even attempt to pronounce them—will be removed from the global SWIFT network; I will come back to SWIFT in a second. From 20 March, those three banks are no longer able to use SWIFT to transact with banks domestically or in any country, regardless of whether that country has imposed sanctions on Belarus.
The noble Lord, Lord Purvis, also asked about the general licence in regard to the central bank of Russia and whether this will in effect weaken the sanctions. I will go into this in some detail, because it is incredibly relevant and a very good question. General licences simply allow for transactions, in this case mostly repos and derivatives, and allow relevant parties to undertake specified activities that would otherwise be prohibited by sanctions for a specific period. Similarly to the Biden Administration and OFAC, through GL 10, we think it is appropriate to allow the orderly wind-down of contracts.
The next question ought to be: will this wind-down financially benefit the CBR? These transactions are unlikely to be of any particular value to the CBR. In fact, they are likely to be value-neutral. The transactions that this licence covers are those in which UK banks and the CBR lent each other assets secured against each other. However, were these transactions not to terminate in an orderly way or the UK counterparty be forced to default because it could not return assets, the CBR would be able to take a cut or turn a profit. Therefore, by our not issuing a licence the CBR could
stand to benefit. This would be not only bad for global markets but contrary to the intentions of the sanctions. Obviously, any transition period is related to the duration of the assets and the contracts in question. The wind-down period is in the interests of the UK and its allies. Without it, UK firms would need to resort to challenging workarounds, with potential for disruption to the UK financial sector. I hope that answers the question. I have probably provoked far more questions that I cannot answer, and I will live to regret it.
The noble Lord also brought up the subject of cryptocurrencies. UK financial sanctions cover funds and economic resources of every type, including crypto assets, as set out in OFSI’s general guidance. As such, they are captured by UK sanctions regulations and attempting to circumvent sanctions through crypto assets is still prohibited in the same way that it would be for traditional fiat currency, and enforcement action by OFSI can still be taken. The Treasury’s latest monetary penalties for financial sanctions breaches were levied against firms from the fintech sector, showing that compliance with financial sanctions is for every UK entity and not just traditional financial institutions. I will take the suggestion of a meeting before the next Bill is presented, as I think it is a very sensible one.
The noble Lord also illustrated the problem with some travel restrictions by explaining his experience in Doha. I obviously cannot comment on that; I do not know what is happening with regards to Doha, but I will look into it. If I can find out anything particularly pertinent or useful, I will definitely come back to the noble Lord,
Regarding the visa scheme, again, the noble Lord will not be surprised to know that I cannot answer or account for the 71 questions. But I heard my noble friend Lord Harrington point out last week that he is working very hard on simplifying this issue and making it more straightforward. I respectfully suggest that I address that question to my noble friend Lord Harrington on his behalf and ask him to update the House in due course on changes made.
I also thank the noble Lord for his suggestions regarding other organisations and other types of legislation that might be used. I have read a good deal about some of the groups he mentioned—the Wagner Group in particular—and I am pretty sure that some of the sanctioned individuals have connections to that group. The noble Lord makes a very good point about wider application, and these people need to be looked at very carefully. Some of their activities do not make for very pleasant reading, as the noble Lord knows.
I will move to the questions asked by the noble Lord, Lord Collins. He asked how many are individuals, but I do not have an answer at the moment—I am sorry.
The noble Lord asked about Usmanov and trusts and whether I had seen the stories. To be honest, I had not seen those stories this morning. I do not have information to hand on the details of the actions that we can take against trusts; obviously, they are complex legal contracts as well. If I may, I will come back to him on that subject—hopefully with a much better answer.
On why we would not sanction the whole of Putin’s inner circle, which is another question that was asked in relation to what the EU did, I reassure the noble Lord that we will be continuing to sanction individuals close to Putin. There will be nowhere left to hide.
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