EU and Russia (EUC Report)

Lord Selsdon Excerpts

Tuesday 24th March 2015 Lords Chamber

[Lord Selsdon (Con)]

My Lords, my interest in Ukraine first began when I became secretary to the Parliamentary Space Committee, when I had no real idea of the strength of Ukraine in the space sector. Before that, I had been brought up with a Russian governess and knew that there was food all over the Soviet Union. I remind your Lordships that 25% of the total agricultural output of the former Soviet Union came from Ukraine, and 70% of the sugar from sugar beet. It was the fifth largest exporter of wheat and the third largest exporter of cotton, and had 25% of the workers in the agricultural sector. This information is historical but has become quite important to modern-day Russia.

Ukraine had a state company called Yuzhmash, which used to produce 6,700 tractors a year. It then went into the space business, first by employing German prisoners of war to construct a large military equipment factory at Dnipropetrovsk, which was Ukraine’s fourth largest city, and then developing into a major centre for nuclear arms production and space and ballistic missile design that employed 50,000 people. This interested me as secretary to the Parliamentary Space Committee, and I wanted to look at the missiles. They kindly arranged for me to go down there. I arrived at Kiev and was told that I would have to wait until the next day for a plane. I said, “Can’t I go down now?”. A chap came up—a pilot—and said, “Well, I’m on the way back with my plane. Would you like to come with me? You won’t mind the dog and the puppies”. So that is how I first got to Ukraine.

As I say, Yuzhmash was employing 70,000 people, but the main Soviet missile activity was in Hrunecheva in Russia, where they are now launching or preparing six new rockets, including one proton rocket. As well as that, Ukraine was a great shipbuilder. Being secretary of the House of Lords Yacht Club, that interested me as well, so I asked if I could have a look at the ships. My bank then set up a team to buy ships from Ukraine. The thought was that we would buy product tankers, general purpose vessels and reefers, which could be chartered out into the market and fully financed. I had not realised that before its independence Ukraine had supplied 60% to 70% of the Soviet Union’s ships, most of them for Russia. At the end of 1995 some 126 vessels, mainly product tankers, had been built at the Kherson shipyard alone. So Ukraine became a much broader country for me to look at. We asked whether they could build some ships for us. Then I heard about the Know-How Fund, so I wrote to it— I did a packet about how you build a ship and so on. The fund gave me £100,000 so we set out to see what we could do to develop demand for ships that the British marine sector could use. It seemed quite simple to build a ship. They built many ships extraordinarily quickly and very easily. We set up a shipbuilding company with them. We took a team of all our experts from the United Kingdom—we did not build ships anymore, which, as my family comes from the Clyde area, has always upset me—and placed an order for some ships, which were surprisingly cheap and economic. At the end of the day, the project failed for reasons of bureaucracy, but their shipbuilding knowledge was valuable.

Given its strength in the agricultural sector, with its 9,000 tractors, I thought that Yuzhmash would still be in business, but it has been closed down. That seems rather strange when it was a very good operation, but it seems effectively to have been alienated by the Soviet Union. My concern, therefore, is: what is going on? Surely Ukraine’s remarkable agricultural capability and ability to increase production has a cash flow value that could help the world and ourselves. If they can build ships—they still have the facilities there—and we could find orders for those ships, which are needed in the international market, there must be some opportunity.

When I have been to Kiev I have usually got into trouble because I ask too many questions. I wanted to know about religion, for example, and before I knew it I was locked up in some archives or some underground thing with a chap with an enormous long beard with weights on the end. I did not know that this was a very senior man of the church, that it is important that you should have a long beard to be respected and that in order to do that you put weights on the end of your beard to make it grow longer. This was some of the technology. I learnt from them all about how they had hibernated in these caverns during the war. Then, when they had nothing else to do with me, although I am completely tone deaf and have no idea about music—I could not even sing middle C at school—they sent me off to the opera for three or four days running, all as part of some propaganda exercise. Finally, they said, “Look, what can we do together?”. I checked with my colleagues from the bank and found that we could willingly finance things in Ukraine, but the politics were beyond my pay grade.

Ukraine is a country that I love. It was intriguing to be able to ask them questions such as, “Did you really send those rockets to Cuba?”—although maybe I should not be saying these sorts of things. I had been to Cuba quite often as well, and I asked the Cubans if Ukraine had sent the missiles. I never really knew the true story. It was said that the missiles had indeed been sent, but they had not necessarily arrived. So the Ukrainians had to send some more but, as there had been no reaction from the Cubans, the Ukrainians sent some photographs of the missiles on the cargo boat. When I went to Cuba, the Cubans said, “Yes of course, we know all about that”.

This lovely world of Ukraine has intrigued me for a long time. To some extent they are European. With those assets and that agriculture production, when we are short of food in the EU, maybe we could invite them to come along. The question is: who do you talk to there now? It seems to me that Putin is gradually concentrating control as much as he can within a small area around Moscow, and countries like Ukraine may be left out in the cold.

Ukraine is a country that I love and respect. If any of your Lordships would like a bit of fun, I would willingly take you down to look at the old missile factory, although it is not producing missiles anymore. The people there are still nice.