Russia (Sanctions) (EU Exit) (Amendment) Regulations 2025

Considered in Grand Committee

17:53:00

Moved by

That the Grand Committee do consider the Russia (Sanctions) (EU Exit) (Amendment) Regulations 2025. Relevant document: 24th Report from the Secondary Legislation Scrutiny Committee

My Lords, these regulations amend the Russia (Sanctions) (EU Exit) Regulations 2019. This instrument was laid on 23 April under powers in the Sanctions and Anti-Money Laundering Act 2018. The measures in this instrument, subject to the “made affirmative” parliamentary procedure, entered into force on 24 April. Sanctions are a powerful tool in our armoury. They play an important part in promoting peace and security abroad, upholding international rules and norms, and protecting our citizens at home. Since coming to power, this Government have ramped up action with our partners. This includes leading the way on targeting Russia’s revenues, bearing down on its military-industrial complex, and deterring and disrupting Iran’s support to Russia. Just last Friday, the Prime Minister announced a major package of sanctions to target the decrepit and dangerous shadow fleet carrying Russian oil. This is the largest package of sanctions against the shadow fleet, with 110 targets. According to some estimates, sanctions have crippled 200 ships—almost half of Putin’s dedicated fleet. The Government’s support to Ukraine remains steadfast. Our total support for Ukraine now stands at £18 billion, including £3 billion a year of military aid, as well as our £2.26 billion contribution to the G7 extraordinary revenue acceleration loans scheme. Two-thirds of our extraordinary revenue acceleration scheme funding has now been disbursed and will support Ukraine to obtain vital military equipment. We are absolutely committed to securing a just and lasting peace in Ukraine, and maximising economic pressure on Russia is key to securing this. That is why we are continuing to introduce sanctions. The UK has now sanctioned over 2,400 entities and individuals under our Russia regime, and international sanctions have deprived Putin of $450 billion since the invasion began. UK sanctions have also frustrated Russian trade. Russian imports into the UK have fallen by more than 98% compared to pre-invasion levels, and UK exports to Russia are down by more than 80%. We will maintain this relentless pressure on Putin, alongside our allies, to force him to the table and ensure that he engages seriously in negotiations. We reiterate our call on Russia to accept a full, unconditional ceasefire in Ukraine to create space for talks on a just and lasting peace. We commend President Zelensky’s commitment to peace by expressing his openness to direct talks with Putin. That is why the Foreign Secretary is hosting the Weimar+ meeting in London with partners from across Europe at what is a key moment for Ukraine and the collective security of our continent. The time is now for Putin to come to the table and for Russia to show that it is serious about ending this war or face the consequences. The UK stands ready to ratchet up the pressure on Russia so that it ends its brutal war of aggression. This instrument allows us to go even further in our efforts to target Russia’s revenue streams and prevent the Kremlin from building its military and industrial capabilities. It introduces a package of over 150 new trade sanctions. This includes new, innovative measures that will prevent UK expertise being used in Russia’s defence and energy sectors. It will deny Russia sophisticated UK technology and software, and it will expand our prohibitions with the aim of further constraining Russia’s economic growth. I now turn to each measure in this instrument. First, the instrument introduces new export prohibitions on a wide range of goods, including chemicals, plastics, metals, machinery and electronics. These prohibitions will deny Russia the means to procure products that have military and industrial uses. Secondly, we are extending our prohibitions on the transfer of technology, applying the prohibitions to a broader set of technology related to goods that are important for Russia’s military-industrial sectors and for its economic development. Through these measures, we are removing UK expertise, whether that is contained in intellectual property, blueprints or industrial know-how, from critical supply chains. Thirdly, the instrument will ban the transfer of software relating to business enterprise, industrial design and oil and gas exploration and production. Putin relies on energy production and exports to fuel his war economy. Therefore, the aim of these sanctions is to make key sectors of the Russian economy less productive. Fourthly, we are banning the import of Russian synthetic diamonds that have been processed in third countries, and helium. These target future funding sources that Russia is developing, as well as potential circumvention routes. Finally, this instrument clarifies the enforcement responsibilities for a small number of trade sanctions on Russia. This will enable DBT’s Office of Trade Sanctions Implementation to enforce certain trade sanctions offences and refer serious offences to HMRC for criminal enforcement consideration. To conclude, the Government remain committed to European security, and committed to standing up for the values of democracy and the rule of law, values which continue to be attacked by Russia. Sanctions, including this trade package, are a key part of our efforts. I beg to move.

My Lords, I thank the Minister for outlining in clear turns what the Government are doing. We support these measures. The Government are rightly continuously moving to ensure that any previous omissions are corrected, as these instruments do, that new and emerging technologies are covered, as these instruments do, and to ensure that there is a watching brief on the circumvention and operation of third countries, as these instruments also do. I will ask the Minister a couple of questions, but I think we all hope that the diplomatic work being done at the moment will bring about a ceasefire on terms that benefit Ukraine, its integrity and sovereignty.

18:00:00

In many respects, the ball is in President Putin’s hands. He has a remarkable combination of being brutally restrictive on the rights and sovereignty of others and having the ability to not make clear decisions and prevaricating which, at the moment, is quite interesting. We would not wish to see a ceasefire which simply allows him to regroup, restock and exploit the situation for supporting the recovery of the Russian war economy. But we do want there to be a longer-term agreement for the benefit of Ukraine.

It is clear that Russia’s operation of a war economy has, as the Explanatory Notes and the instrument itself say, gone to elaborate lengths to circumvent those sanctions. But it is also restructuring its monetary policy to potentially allow Russia to continue for some time in these areas. There is cross-party support for tackling Russia’s war economy, and it is of vital importance, therefore these measures are very welcome.

My first question is regarding the reference in the Explanatory Memorandum to sanctions against

“third country suppliers of military and dual-use goods, including but not limited to Iranian drone manufacturers”.

Can the Minister either say more today or write to me about the actions the Government are taking on third countries which are facilitating the circumvention of UK and other sanctions? The Minister and the noble Lord, Lord Collins, have heard me reference this before. We have not implemented secondary sanctions on other countries. The Government’s position is that they are still seeking to use diplomatic tools for other countries that are supporting the Russian war economy, either directly or indirectly.

However, we are in the complex situation of having just made an agreement with India, which has had a rouble-rupee swap. We will potentially be offering market access to the very commercial enterprises that have been facilitating a lot of trade, especially in fuel and other critical goods. The reassurance we will be needing in Parliament is that the India agreement will not allow there to be further exploitation of circumventing sanctions to benefit the Russian economy. The same will apply for some of the discussions with the GCC. What the Government are doing with third countries is very important.

The reason it is important is that we still see regular reports that sanctioned components are being found on the battlefield that are being deployed by Russia. Therefore, what is the view of His Majesty’s Government on the means by which they are still being used by Russia? What work are we doing with the United States and the EU in particular to ensure that this is halted fully? Sanctioning through legislation is one welcome part; enforcement is another. I hear what the Minister said about the decline in imports and exports—that is welcome—but how are we ensuring that our officials, who are tasked with enforcing our sanctions, are working closely with those from other countries? Do we have an integrated taskforce for the implementation of sanctions restrictions?

I know that they are not included in these regulations, and no doubt we will be getting them soon, but the Minister will not be surprised that we welcome what has been announced recently about moving on the shadow fleet. My colleague in the House of Commons, Helen Maguire MP, has been raising concerns that, when there has been analysis of the sanctioned fleet by the US, the UK and the EU, there are some areas where there is not overlap. There is only one shadow fleet, and the UK is of critical importance in global shipping. Can the Minister reassure us that we will have a fully integrated UK, US and EU effort on the shadow fleet? Russia has exploited gaps for years, and it cannot be allowed to do so any more.

I do not expect the Minister to reply today to my final point, but if she is able to write to me, I would welcome it. On enforcement, there is a reference—which I readily admit I did not entirely understand—to the interaction between the OTSI and HMRC when it comes to powers that the OTSI has for civil enforcement responsibilities and HMRC’s criminal enforcement responsibilities. I understand that these instruments clarify the relationship between the two, but I am interested as to how this operates in practice. I do not expect the Minister to explain that today. During the previous Administration, the noble Lord, Lord Ahmad, facilitated a good briefing with OTSI and Treasury officials on how the sanctions are being implemented—I cannot remember if the Minister was with us, although the noble Lord, Lord Collins, was present. It was extremely useful, and perhaps there would be time for that in the future.

Overall, we support these measures. This is a critical time for Ukraine, given the diplomatic efforts—a time when we do not let up but send very clear signals that we understand that the Russian regime responds to clarity and strength, and will continue to test resolve and unity. We need to show that there is resolve and unity, and these measures, with cross-party support in the UK, are one element of that.

My Lords, it will come as no surprise to the Minister to know that we on these Benches continue to support strong, targeted sanctions in response to Russia’s illegal and brutal invasion of Ukraine. Since 2022, the UK, alongside our allies, has imposed an unprecedented range of sanctions to weaken Russia’s war machine. There are clearly some concerns; we would like to see further action taken, with regard to enforcement and the shadow fleet, et cetera—I agree with the previous speaker. Despite these efforts, Russia has continued its aggression, often working through third countries and illicit networks to bypass existing sanctions. The persistence of these efforts underlines the importance of closing loopholes, keeping sanctions up to date and aligning with our international partners. As the Minister set out, these provisions aim to tighten and expand the existing sanctions framework. One key element is the expansion of export-related goods, including chemicals, plastics, metals, machinery and electronics. It is clear that these have potential military applications, and we support their inclusion. Notably, even items such as video game controllers are now being restricted, due to their reported use in piloting drones. I suspect Russia probably will not have difficulty in obtaining those from other sources, but nevertheless it is important to make the effort. Can the Minister clarify how these additions were identified? How often is the department reviewing product categories to ensure that sanctions keep pace with technological adaptation? The instrument also brings in new restrictions on the transfer of software and technology, not only physically, but through intangible means such as downloads and cloud access. This is an important evolution of the regime, particularly as cloud-based platforms become more central to global business and infrastructure. However, it does again prompt the question of how we are going to enforce such sanctions when there is no physical movement of goods. Does the Minister have confidence that our enforcement bodies have the technical capacity to monitor compliance with these intangible software restrictions? Are businesses being given clear guidance on what is now prohibited? On import bans, we note the Government’s decision to sanction synthetic diamonds processed in third countries, building on the ban already in place for natural stones. While I suspect that Russia is not a major producer of synthetic diamonds, this appears aimed at closing a circumvention route. What evidence does the Government have that synthetic diamonds are being used to sidestep the existing sanctions on natural stones? How are we working with allies to enforce traceability and verification? We also note the inclusion of helium and helium-3 in the list of banned imports. This, too, is framed as a pre-emptive step, anticipating the growth of helium as a potential revenue stream for Russia in future. Will the Minister please confirm whether there is current evidence of Russia scaling up helium exports, or is this purely a precautionary measure? There are also some important technical clarifications in the SI, including the correction of omitted offences and clearer enforcement responsibilities across government departments. Although these may seem fairly minor, such details are vital to effective enforcement. Will the Minister please confirm whether further regulatory gaps are under review, particularly given the pace at which circumvention technology is evolving? With those few questions, we support the intent behind these measures. They reflect an ongoing commitment to tightening the UK’s sanctions regime and maintaining pressure on the Russian Government. But sanctions can be only as effective as the enforcement and adaptation measures. As Russia continues to develop complex workarounds—from third-country trade to its unregulated shadow fleet—we, the sanctioning countries, have to be equally agile. That includes reviewing measures regularly, ensuring that departments have the capacity to act and strengthening international co-operation. In that spirit, will the Minister please say more about how the Government are assessing the real-world impact of sanctions—not just in terms of goods restricted but in terms of their broader economic and strategic effect on Russia’s capacity to wage war? We believe that these regulations are a step in the right direction, but they must be part of a broader, joined-up and rigorously enforced sanctions strategy.

My Lords, I thank both noble Lords for their contributions and broad support for these measures. The measures introduced by this instrument show how the UK continues to use its powers to apply further pressure on Putin, to help secure an enduring peace and to show that we remain fully behind Ukraine. This instrument is one part of a broader cross-government effort on sanctions. We are leading the way on sanctioning Russia’s shadow fleet and continue to target Russia’s military suppliers and kleptocrats. We are going after those who support Russia in circumventing UK and partner sanctions, using all the tools in our arsenal to stop the supply of critical military equipment to Russia. This has included designating bad actors re-exporting sanctioned Western goods to Russia and working with our allies to crack down on the illicit trade of advanced machine tools. We will continue to engage with our financial institutions and businesses so that they have the information they need to comply with our sanctions. The Government are committed to ensuring robust sanctions enforcement. To this end, with the support of ministerial colleagues, we launched a cross-government review of sanctions at the first small ministerial group on enforcement in October. The review concluded in April and—I think this will be of interest to noble Lords opposite—Parliament will shortly be updated on the review conclusions, alongside publication. I think that will involve a Statement to Parliament; I am not completely sure but, if it does, perhaps we could get into those issues a bit more at that point. On the issue of the OTSI and HMRC, and how that operates in practice, I am very happy to organise another briefing for any noble Lords who are interested; that is a really good suggestion. I expect that it will be quite in-depth and technical; I know the noble Lord would like nothing better than that, so we will make sure that it happens as soon as we can arrange it. We work very closely with partners on the shadow fleet. The noble Lord alluded to diplomatic efforts. We raise these issues constantly; I myself have raised them with partners who have had vessels involved in this, and they have taken action as a consequence of that. Sanctions are an important tool that we have, but they are far from the only tool. Both noble Lords were quite right to remind us how important enforcement is. Although we do not comment on future designations, clearly, we keep all of this under review. We are looking at any regulatory gaps that there may be, and we will continue to take further measures as and when we need to; I do not anticipate that this is the last time we will stand here introducing these sorts of measures. I thank both noble Lords for their consistent support on these issues. I agree with what the noble Lord, Lord Purvis, said on the issues of the ceasefire and the behaviour of Putin. I thought that his remarks about Zelensky were well made, and I agree with them. The UK has transformed its use of sanctions. The Government are committed to continuing to strengthen the effectiveness of our sanctions regimes, their implementation and enforcement; and to reviewing their ongoing appropriateness in changing foreign policy contexts. We will continue to put pressure on Russia, as it is now time for Putin to come to the table and for Russia to show that it is serious about ending the war—or face the consequences. Once again, I thank noble Lords for their contributions and for the continued cross-party support for the sanctions regimes.

Motion agreed.