Repurposing Russian Assets to Rebuild Ukraine

Catherine McKinnell Excerpts

Tuesday 27th June 2023 Commons Chamber

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

The illegal and unjust war that President Putin has waged in Ukraine has now lasted for 16 months, and it is likely to be some time before it comes to an end. As the shadow Foreign Secretary, my right hon. Friend the Member for Tottenham (Mr Lammy) outlined, Ukraine, a country of more than 40 million people, has been subject to devastation on an unimaginable level. The country’s critical infrastructure has been deliberately targeted by Russian attacks, with hospitals, roads, energy infrastructure and hundreds of thousands of homes callously destroyed. But Russia’s illegal invasion has broken neither the Ukrainian people’s spirit nor the resolve of NATO and allies to stand alongside them both now and once victory has been achieved, as Ukraine rebuilds from this inflicted disaster.

As hon. Members have outlined, the World Bank estimates a recovery cost of more than $400 billion; it may cost up to $1 trillion. It is hard to wrap our minds around those figures, but, whatever the cost, the Ukrainian people deserve to emerge stronger from the conflict, and Russia needs to see that Ukraine emerges stronger from it. It is therefore absolutely right that we are thinking about how we best support Ukraine now and into the future. We should plan for victory and what that means. While Ukraine’s future must be determined by the Ukrainian Government, we must be doing all we can to support and contribute to the international effort that is clearly required.

That brings us to Russian assets here in the UK and whether and how they should be used for that reconstruction. The UK’s commitment to Ukraine has been steadfast, and proudly so, yet on this question we seem to be lagging behind. Our allies in the US and the EU are already taking steps towards developing the legislation needed to repossess Russian state assets to contribute to mending the impact of this illegal war. We must clearly act within the law, but we cannot hide behind the law. It is for us as legislators to find the legal means necessary to maximise financial support for Ukraine.

For far too long, the UK—London in particular—has been a repository for Russian wealth. The London laundromat served as a haven to billions of pounds of Russian money. We have a moral duty to put things right. We also have a significant opportunity to do that, and the need to do that speaks for itself. It is a matter of justice. The Treasury’s commitment to producing a plan that will criminalise the non-disclosure of Russian assets is welcome, but we need to see it and know when it will be introduced. There is no time for delay.

We need to start planning now for investing in reconstruction projects and ensure that every dollar and pound possible reaches Ukraine. To that end, I absolutely welcome the clarification sought by my right hon. Friend the Member for Barking (Dame Margaret Hodge) for the Government to publish transparently where Russian assets are held, how much they are and who they have come from. We must also take steps to ensure that whatever money is transferred in whatever form and however it is spent—I appreciate that there was a debate about that, which could explain some of the delays—we minimise the risk of any corruption.

The Government must start turning their rhetoric into action. We have heard for months about the intention to ensure that Putin pays and that these assets will be used, but warm words will not help Ukraine. Ukraine needs to rebuild itself, and we need to create the legal mechanisms to give it support to do so.

Once Ukraine succeeds, it needs not only to recover but to thrive. Whether that costs $400 billion or $1 trillion, it is clear that Russia and Putin must contribute towards repairing the immense damage they have caused. We can support making that happen. We have the means to do so by ensuring that the proceeds of Russian state assets held here in the UK go towards building Ukraine’s future. We need to give Ukrainians back their future—a future that they deserve—in a stable, secure and democratic state, where they can rebuild their lives. Let us as a country continue leading on support for Ukraine, and let us lead on financial support, too. Let us see the Government put their money where their mouth is, support our motion and show how they will ensure that these frozen Russian state assets are repurposed to rebuild Ukraine.

--- Later in debate ---

[Leo Docherty]

I entirely agree with my hon. Friend. Last week was a remarkable show of the convening power of the UK, the tremendous resolve of our Ukrainian friends and the remarkable scale of global support, not just in military hard power but in global capital. When that global capital is mobilised to help Ukraine resurrect itself, that will, in tandem with the military effort, lead to a Ukraine that is sovereign and able to resist all potential future threats. Last week was a great success, but there is more work to do.

Finally, let me say to the hon. Member for Cardiff South and Penarth that I am grateful for his reflections on his visit to Ukraine. His insights into the scale of the destruction are very welcome. I am grateful also that he mentioned the HALO Trust, which does heroic work to expedite de-mining. It is 30 years of work, and we are proud to be putting some of our investment into that. It is money extremely well spent. It also speaks to the horrendous scale of environmental damage that has been wreaked right across the country. I am very grateful overall for the hon. Member’s constructive tones.

I should reassure the House that our sanctions have inflicted a severe cost up until this point on Putin for his outrageous imperialist ambitions. In collaboration with key partners, we have now sanctioned more than 1,600 individuals, including 130 oligarchs. We have frozen more than £18 billion-worth of assets in the UK and sanctioned more than £20 billion-worth of UK-Russia goods trade. We will stand with Ukraine for as long as it takes in that regard.

[Catherine McKinnell]

The Minister has set out the significant recovery of assets through sanctions, which rather brings us back to the point that the Government have not really been clear about: what is the delay on deciding how and whether those assets can be repurposed for reconstruction in Ukraine? Am I right in thinking that the Government responded to a parliamentary question back in July 2022—so almost a year ago—saying that they were considering all options on assets that have been seized, including whether they can contribute towards the reconstruction of Ukraine? Why is it taking so long? It does create the fear that the Government have considered it, but have not yet come up with the answer.

[Leo Docherty]

It is taking a long time because it is very complex. There is no straightforward legal route. No other nation has yet come up with a tested legal proposition despite legislative activity. We are therefore moving in tandem with our allies to expedite and find a route, but if it were very simple, we would have done it already.

Through the G7 leaders’ statements, we have been very clear that the perpetrator should pay. We have underlined our continued commitment to that objective by introducing new legislation to enable us to keep sanctions in place until Russia compensates Ukraine. Nothing is off the table, as I have already said today, and we continue to work with our international partners on the options for using sanctions for reconstruction purposes. However, of course, if it is not legal, it is not viable and therefore not useful.