European Council

Lord Davies of Stamford Excerpts

Monday 10th March 2014 Lords Chamber

[Lord Hill of Oareford]

My Lords, I understand the sense of historical perspective and the points made by the noble Baroness about Russian history going back a very long time. Having said that, I do not think it excuses or detracts from the fundamental point that we cannot stand by if international agreements upheld by a range of countries are defied. I know that she was not saying that.

On her specific point, I agree that the more we are able, without deviating from the fundamental need to defend the rule of law, to demonstrate that the Ukrainians are sensitive to Russian concerns, the better. I take that point. The noble Baroness will therefore be encouraged by the action taken by the acting Ukrainian President to veto the introduction of the kind of language law to which she referred which played exactly into those prejudices. That is an encouraging step to have taken. As I said earlier, the Ukrainians have been quite remarkable in the restraint that they have shown in recent weeks and months in the face of often quite direct provocation.

[Lord Davies of Stamford (Lab)]

My Lords, I am quite concerned about a number of aspects of the Statement. First, I regret the distinction being made between the phase 2 and phase 3 sanctions. The implication seems to be that, if Russia limits itself to annexing the Crimea without attacking the rest of Ukraine, the cost will be limited to the phase 1 to the phase 2 sanctions, which are not very onerous. I fear that, given the psychological and strategic importance of the Crimea, Mr Putin might think that the acquisition was rather a good deal on that basis.

Secondly, I am dubious about the idea of announcing asset seizures on a contingent basis in advance. If we need to seize these assets, by the time we get around to doing so they may have been removed from our jurisdiction. Would it not be more sensible to seize the assets in the first place and then negotiate the basis on which that seizure could be lifted?

Thirdly, has the Minister given consideration to, as a major sanction, the possibility of freezing Russian banks out of the interbank market? I am not going to ask whether or not that will happen or whether it was agreed in the EU Council for the obvious reason I have just mentioned in another context, but I would be grateful for his assurance that this matter has been or will be carefully considered. It amounts to instructing European and North American banks, when swaps and deposits with Russian banks mature, not to renew them.

[Lord Hill of Oareford]

I can confirm to the noble Lord that the Government and their allies will consider a range of possible sanctions which may well include the kind of measures to which the noble Lord has referred. When that work goes on, I am sure that people will think about those kinds of issues.

On the issue of phasing, as the noble Lord will know, it is difficult to be too precise in every respect at this stage about what measures will be taken precisely and in what circumstances. It will depend on what steps the various players take. It is a situation in flux. The Government and their allies, overall, were attempting not to box people in too early but to give people routes out and to have phased and gradated responses. However, we want to be clear in the final calculation that if, despite our best endeavours, Russia persists in this course of action, there will be serious consequences.