Sanctions — House of Commons, 2022-02-22
Topic: International Affairs
Kevin Paul Hollinrake (Conservative, Centre-right): It is clear that Putin is not afraid to weaponise his foreign policy through his armed forces, and through oil and gas supplies. It is therefore only right that we look to weaponise our foreign policy in this regard using the City of London. It may well be that, as the Minister said, we will go further quickly, but so far we have not gone far enough. Of course it might not be in our financial interests to do this. Some financial interests—some of our domestic financial organisations—might suffer, but their financial interests cannot supersede the national interest. When we have looked at sanctions on Russia before, not least in 2015, following the invasion of Crimea, we did not go anywhere near far enough. We did not sanction Russia’s oil and gas supplies, which make up 70% of its exports. We sanctioned things such as exports of milk—clearly, that is never going to go far enough. While Russia has been reducing its dependency on our capital markets, because it saw something like this happening in the future, countries in the EU, in particular, have not being doing the same with their dependency on Russian oil and gas exports Lots of people have talked today about Nord Stream 2. Obviously, I welcome the fact that there will be a sanction on that, in terms of preventing it from ever—at this point in time—pumping gas. However, we should not forget that no gas is travelling down Nord Stream 2 now and that all the gas comes into Germany on Nord Stream 1. Again, those oil and gas exports will continue into Germany and other nations. Clearly, there is a huge economic need for that gas going into Germany, but it is incumbent on us and on every nation across Europe—every peace-loving nation—to reduce our dependency on Russia in every economic area Russia is not a large economy—its economy is smaller than that of Italy—so there are many things we can do to put further pressure on Russia through sanctions. These are things we have not done today—we have not discussed the potential for them today at all. People have talked about the SWIFT payment system. Clearly, Russia has other opportunities and can use other communications systems, but none the less addressing this would help. Preventing Russia from trading in sovereign debt has been mentioned, but what has not been mentioned is access to clearing banks. It would be catastrophic for Russia if we prevented its access to our clearing banks. Instead, we have sanctioned five very small banks. There may be good reason for that; there may be more provisions we need to put in place before we can apply further sanctions to the larger banks, and clearly there is interdependency between Russian banks and banks around the rest of the world The banks that we should be looking at are: VEB, which is the Russian development bank; the Russian Direct Investment Fund, which is the sovereign wealth fund; and, as a few Members have mentioned, Russia’s retail banks. SberBank has roughly 36% of SME—small and medium-sized enterprise—lending in Russia, with VTB having 20% of consumer loans. Clearly, we have to do this carefully and it may well be that we act in concert with other parties, not least the US, the EU and others. If we simply put sanctions on today, that could mean that Russian banks avoid having to settle debts to UK banks and banks in different parts of the world. Although we do not want to do anything that would cause systemic risk to UK financial markets, we are talking in the billions of dollars here rather than in the trillions, and there are other ways of shoring up our system to prevent that happening. However, what is important now is that there is no doubt that we need to go much, much further than we have done already.