Russian Assets: Seizure

John Whittingdale Excerpts

Tuesday 14th March 2023 Commons Chamber

[Sir John Whittingdale (Maldon) (Con)]

I start by congratulating my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith), who raises very important issues. The truth is that we probably will not be able to implement what we are discussing until the Russian invasion is defeated, but it is absolutely right that we start to plan now for when—I hope and pray—that happens. It is also a pleasure to follow the right hon. Member for Birmingham, Hodge Hill (Liam Byrne), who raises matters that are of great concern right across the House. He does a service by doing so.

In December 2018, I visited the city of Mariupol. At that time, it was under blockade from the sea due to Russian enforcement preventing sea traffic arriving into the Sea of Azov. Nevertheless, it was a thriving port city. It is estimated that 90% of that city was either damaged or razed to the ground in the course of the sustained bombardment by Russian forces. Across Ukraine, an estimated 144,000 houses have been destroyed, and that number is increasing every day that we speak.

As has been pointed out, the estimated cost of reconstruction in Ukraine last year was around $750 billion. That figure is probably going to reach $1 trillion, and possibly rise even further. That is for reconstruction; on top of that, we have the question of compensation for those who have lost loved ones, the loss of economic infrastructure and jobs, and the damage to education and health. Those are huge sums, and it is only right that those responsible—the Russian state—should be made to pay.

Work has been done on this question, and I pay tribute to the New Lines Institute for Strategy and Policy and, in particular, Dr Azeem Ibrahim, who in conjunction with other international experts has been developing a plan for how we should go about seeking reparations from the Russian state. There are some legal precedents. Two have been identified, the first being the 1946 Paris agreement on reparation, which provided for the seizure of German public and private property in the aftermath of the second world war. As my hon. Friend the Member for Isle of Wight (Bob Seely) mentioned, a more recent precedent was the establishment of the Kuwait compensation fund under the UN compensation commission, which used the proceeds of the Iraqi oil industry to pay out compensation totalling something like $52 billion to 1.5 million claimants.

That was established with the agreement of the UN Security Council, and unless there is a change to the composition of the Security Council, it seems unlikely that it is going to agree in this case. However, we need to fashion international multilateral agreements, and as has already been demonstrated, there is a substantial majority in the United Nations General Assembly that would support not only condemnation of Russia for its aggression, but the payment of compensation in due course.

Legal processes are under way. The International Criminal Court is investigating war crimes and the individuals responsible, but as we know, the ICC is prevented from bringing prosecutions in absentia, and Heads of State enjoy immunity. We need a mechanism that will hold to account those ultimately responsible for this aggression: the Heads of the Government of the Russian Federation. For that reason, I am pleased that the UK Government are now working with others on the establishment of a special tribunal to bring a prosecution for the crime of aggression, and I join others in paying tribute to our friends, in particular Maria Mezentseva of the Rada, who have been touring around to persuade different supportive countries of the case for bringing a prosecution.

As has been pointed out, the funds available for the payment of reparation in the first instance belong to the Russian state; the estimated frozen funds of the Russian central bank total something like $300 billion. On top of that, the Russian state enjoys oil revenues, and it is possible to consider whether some kind of levy could be placed on that. There are then the assets of institutions associated with the Russian state, such as Gazprom, Rosneft and Rosatom, but things will need to go beyond that, and the debate so far has rightly focused on whether we can address those assets held by private individuals and oligarchs.

[Alex Sobel]

The right hon. Gentleman is just coming on to the point I was going to make. There is some contention about assets held by private individuals and about their getting caught up in a very long legal process, but that is not the case with state assets and the assets of state-owned companies that he has just talked about, which we can address now. He talked earlier about reconstruction, but we do not need to wait until the war is finished. Many liberated areas need reconstruction now, and many other projects need to be financed. That work needs to happen now, not after the war has finished.

[Sir John Whittingdale]

I completely agree with the hon. Gentleman. I think the legal process for seizing the assets of Russian state institutions will be complicated, but it is certainly more feasible than addressing those of private individuals. That is not to say that we do not need to move to do so, but it will be legally much more complex.

Many of the oligarchs hold immense wealth and assets in western countries, and they do so at the behest of the Russian Government. No oligarch is able to hold enormous sums of wealth and maintain their position in Russia, unless it is with the agreement of the Russian Government. A number of them are known as wallets, which means they are simply taking care of the wealth of Mr Putin and others at the senior levels of the Russian Government. It is right that we should address that, but we have to accept that this country has a proud history of respect for property rights and the rule of law, and we have also seen the extent to which lawyers will pursue cases on behalf of those individuals. The right hon. Member for Birmingham, Hodge Hill (Liam Byrne) mentioned strategic lawsuits against public participation, and we have already seen examples of that.

I do not in any way underestimate the complexity. This will be an unprecedented legal measure, but it is necessary because, as has already been said, the devastation wreaked in Ukraine has to be put right, and it is only proper that that should be done by those responsible, who are the Russian Government. I agree with my right hon. Friend the Member for Chingford and Woodford Green that that will need international agreement. It cannot be done by us alone, but it is right that we start to look now at seeking that multilateral agreement among all the countries where these assets are held and to prepare for the day when we can start to make Russia pay for what it has done.