EU-Ukraine Association Agreement

The Committee consisted of the following Members:

Chair: Miss Anne McIntosh 

Baron, Mr John (Basildon and Billericay) (Con) 

Davies, Geraint (Swansea West) (Lab/Co-op) 

Ellwood, Mr Tobias (Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs)  

Farrelly, Paul (Newcastle-under-Lyme) (Lab) 

Gapes, Mike (Ilford South) (Lab/Co-op) 

Heaton-Harris, Chris (Daventry) (Con) 

Horwood, Martin (Cheltenham) (LD) 

Jones, Susan Elan (Clwyd South) (Lab) 

McFadden, Mr Pat (Wolverhampton South East) (Lab) 

Milton, Anne (Lord Commissioner of Her Majesty's Treasury)  

Rutley, David (Macclesfield) (Con) 

Shannon, Jim (Strangford) (DUP) 

Watkinson, Dame Angela (Hornchurch and Upminster) (Con) 

Lloyd Owen, Oliver Coddington, Committee Clerks

† attended the Committee

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European Committee B 

Thursday 29 January 2015  

[Miss Anne McIntosh in the Chair] 

EU-Ukraine Association Agreement

[Relevant documents: European Union Documents Nos. 13519/14, 1351/2014 and 2014/933/CFSP.]  

11.30 am 

The Chair:  Does a member of the European Scrutiny Committee wish to make a brief statement? 

Chris Heaton-Harris (Daventry) (Con):  It is a pleasure to serve under your chairmanship, Miss McIntosh. 

It might be helpful to the Committee if I take a few moments to explain the reasons why the European Scrutiny Committee recommended these documents for debate. In many ways, the EU-Ukraine association agreement ignited the EU-Ukraine-Russia crisis last winter. The agreement, of which certain parts were signed last March and the remainder in June, includes a deep and comprehensive free trade area. Provisional application of the agreement has been authorised. The European Council decision in question delays the provisional application of the trade-related provisions until 31 December this year. That arose from trilateral consultations among the European Union, Ukraine and the Russian Federation on the implementation of the association agreement, including the deep and comprehensive free trade area. 

In voting to agree to that decision last September, the Minister for Europe overrode scrutiny. He noted that the decision reflected part of a wider, intense negotiation process aimed at de-escalating tensions on the ground in Ukraine. Although he apologised at the time, he none the less noted that it was “clearly a politically important” decision that he “would have liked” the Committee to have had an opportunity to scrutinise. 

That raises issues of EU competence. Given the lack thereof and the overall context, the European Scrutiny Committee recommended the Council decision for debate on the Floor of the House. We considered EU restrictive measures that subjected a further 24 individuals to asset-freeze and travel ban measures already in place, extended their effect for a further six months and expanded the pre-existing package of economic sanctions against Russia to be relevant to such a debate on the Floor of the House. The Committee also considered Council decisions on the status and authorisation of the launch of a new civilian common security and defence policy mission in Ukraine—EUAM-Ukraine, the EU advisory mission for civilian society sector reform Ukraine—to be relevant to the debate. 

The European Council has consistently said that it will not recognise the Russian annexation of Crimea, a position that the Government fully support. Trade and investment bans were introduced in June and July 2014, which prohibited the import of goods from Crimea, investment in infrastructure in transport, telecommunications and energy, and export of listed key technologies for use in those sectors. The most

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recent measures extended some of those restrictions and placed new prohibitions on acquiring real estate or providing services directly related to tourism in Crimea or Sevastopol. 

In the explanatory memorandum, the Minister recalled the Government’s view that the annexation of Crimea violates the UN charter and is illegal under international law. Although those views are widely held, they are not universally supported in the House or outside it; nor indeed is the EU’s overall approach to Ukraine and its relationship with Russia. The Committee therefore recommended the new measures for debate on the Floor of the House, alongside the EU-Ukraine association agreement. 

Finally, there are questions about the timing and place of this debate. Notwithstanding several subsequent exhortations from the European Scrutiny Committee, it has taken the Government since 15 October to arrange the debate. Most recently, the Committee again explained the basis of its original recommendation. A debate would finally give the House the opportunity—of which it has continued to be deprived since October—to debate on the Floor of the House the EU’s, and thus the Government’s, approach, in Government time and on the basis of a Government motion. The Minister today will not be surprised to learn that the Committee deplores the Government’s insistence on continuing to deprive the House of such an opportunity and rejects their argument that there has been a shortage of time. The House has adjourned early on several occasions recently. He will no doubt wish to explain that continuing discourtesy to the Committee. 

The Chair:  I call the Minister to make the opening statement. 

11.34 am 

The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr Tobias Ellwood):  It is a pleasure to serve under your chairmanship, Miss McIntosh. 

Let me begin by apologising for the absence of my right hon. Friend the Minister for Europe, who would normally respond to such a debate and the questions asked. He is in Brussels, attending the Foreign Affairs Council, along with my right hon. Friend the Foreign Secretary, to discuss this very issue—Ukraine and the sanctions currently being debated. 

I am grateful to the European Scrutiny Committee for calling this debate to discuss the provisional application of the association agreement, including the deep and comprehensive free trade area, between the EU, its member states and Ukraine, and the restrictive measures in response to the illegal annexation of Crimea and Sevastopol. I want to take the opportunity to brief this Committee on the latest situation in Ukraine. 

President Poroshenko described 2014 as the “most difficult” year for Ukraine in the last seven decades, since 1945. The Maidan protests led to nearly 100 people being killed in February, the illegal annexation of Crimea by Russia in March, the Russia-inspired crisis in eastern Ukraine and the tragic downing of Malaysian Airlines flight MH17, with the loss of 10 British lives. The crisis in east Ukraine has now led to more than 4,700 fatalities, 10,000 people being injured and more than 1.2 million people being displaced internally or taking refuge in

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neighbouring countries. The situation is indeed severe. Ukraine is also suffering economically. The International Monetary Fund forecast that Ukraine’s GDP would contract by at least 7% in 2014. Ukraine’s currency lost 57% of its value last year, and inflation is rising. Ukraine’s foreign currency reserves have fallen to $7.5 billion or five weeks-worth of import cover. The IMF recommends three months. 

There are, though, some specks of light at the end of the tunnel. Ukraine’s parliamentary elections on 26 October were viewed by international observers as largely meeting international standards. Ukraine has a pro-reform President, Government and Parliament. They have a lot to do. We understand that and we need to support them. The consequences of a failed state on the European Union’s borders would be disastrous for us all. 

We know that Ukraine needs support and we are committed to spending £10 million bilaterally this year and next on a range of technical assistance programmes to support reform in financial and economic governance, including tackling corruption. That includes providing £1.4 million in humanitarian assistance. We are also providing £9 million this year on a range of programmes funded by our conflict pool. That includes support for the Ukrainian armed forces and for the special monitoring mission of the Organisation for Security and Co-operation in Europe. Our programmes next year under the new conflict, stability and security fund will focus on defence and security reform, constitutional and public sector reform, organised crime and anti-corruption measures. 

A modern democracy is the vision for Ukraine, and the EU is committed to supporting Ukraine on that path, but a path to better democratic standards is fully possible only when Ukraine is at peace and has control of its sovereign borders. At the heart of the ceasefire process and the Minsk memorandum is the OSCE. The OSCE mission has already proved its worth through its negotiations for the successful release of hostages from all sides and through its crucial role in facilitating access to the MH17 crash site. Additionally, the trilateral contact group, facilitated by OSCE Special Representative Heidi Tagliavini, is the only forum in which direct talks between Ukraine, Russia and the Russia-backed separatists are taking place. 

The Minsk process is fragile. Russia continues to arm, equip and train the separatists and provides them with heavy weaponry, some of which was used to support the co-ordinated separatist attacks last weekend. The heinous attack on Mariupol on Saturday resulted in the loss of 30 civilian lives, with 100 more people wounded. Russia continues to maintain hundreds of Russian troops in Ukraine, including heavy armour and battle groups. Russia has 8,000 troops amassed on the Russian-Ukrainian border, and it continues to send so-called humanitarian convoys into Ukraine without the approval of the Ukrainian authorities. At every turn, Russia rips up the international rule book. Any improvement in the relationship and the lifting of sanctions are in Russia’s hands. 

Let me turn now to the EU association agreement with Ukraine, which my hon. Friend the Member for Daventry mentioned. The political provisions were signed on 21 March 2014. On 27 June, the European Union, member states and Ukraine’s President, Petro Poroshenko, signed the remaining chapters of the association agreement. On 29 September, the provisional application of the trade-related measures—title IV—and the related annexes

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and protocols was postponed until 1 January 2016. I should make it clear that provisional application of important areas such as the rule of law and the fight against crime and corruption, as well as intensified sectorial co-operation, contained in titles III, V, VI and VII, and of the related annexes and protocols, came into force on 1 November. The EU will therefore continue the application of autonomous trade measures for the benefit of Ukraine until the end of 2015, granting Ukrainian exporters continued preferential access to EU markets, without awaiting the entry into force of the trade provisions under the association agreement, which will happen the following year. 

The EU-Ukraine association agreement represents a clear public commitment by the EU and Ukraine to a deep relationship, close co-operation and the continuation of much-needed deep-rooted reforms. The proposal to delay, at the request of President Poroshenko, the provisional application of the deep and comprehensive free trade area in the association agreement until 1 January 2016 was made in the spirit of peace building, giving Ukraine and Russia time to discuss their economic relationship. The proposal offered a pragmatic solution to address Russia’s stated concerns about the DCFTA, while leaving the text unchanged. It gave Russia and Ukraine the freedom to try to resolve their issues. 

During the European Committee debate on the EU-Ukraine association agreement on 11 November 2013, my right hon. Friend the Minister for Europe highlighted the fact that we had achieved our objective of narrowing the scope of provisional application. We had secured exceptions to provisional application that preserved the current balance of competences. We had also secured a clear joint declaration setting out the limits of the EU’s scope to act. In addition, we had achieved UK objectives resulting in a change to the legal basis and a split of each original Council decision into two, covering justice and home affairs and non-JHA matters. 

Since that debate, my right hon. Friend has had to override scrutiny, in July 2014—my hon. Friend the Member for Daventry mentioned this—for the purposes of agreeing new Council decisions relating to the EU-Ukraine association agreement at the Foreign Affairs Council on 23 June. That enabled signature to go ahead at the European Council a few days later, on 27 June. I am afraid that there was a need to override scrutiny again, in September, to enable the UK to agree to the delay of the provisional application of the DCFTA at the General Affairs Council on 29 September. The UK ratification process for the association agreement has started, with the aim of ratification in April this year. I appreciate that the chronology can be a little confusing, but it is important to put on record what actually happened. 

I would also like to update the Committee on the EU advisory mission for civilian security sector reform, which is in Ukraine. Officials and my right hon. Friend the Minister for Europe have worked hard to ensure that we are able to meet our scrutiny obligation to Parliament, which we consider to be of the utmost importance. Like my right hon. Friend, I have greatly appreciated the ability of different Committees to consider and clear decisions. 

The EUAM will form a key element of the EU’s wider response to the crisis in eastern Ukraine. During its two-year initial mandate, the civilian mission is expected

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to adopt a twin-track approach to addressing Ukraine’s urgent, as well as longer-term, stability-related needs by mentoring and advising Ukrainian bodies on the design and implementation of security sector reform strategies and co-ordinating EU support with parallel justice, defence and border management reforms. 

The Backbench Business debate on Ukraine and Russia, which was held not too long ago, on 11 December, provided a platform for general discussion about a broad range of areas, particularly UK Government policy on Russia. I certainly welcome the opportunity we now have to discuss the wider impact of the EU’s relationship with Ukraine and our role in that. 

The Chair:  We now have until 12.30 pm for questions to the Minister. May I remind Members that questions should be brief? It is open to a Member, subject to my discretion, to ask related supplementary questions. 

Mr Pat McFadden (Wolverhampton South East) (Lab):  It is a pleasure to serve under your chairmanship, Miss McIntosh. 

I have some questions for the Minister about the documents, which I will come to, but as he said, any debate on these matters must be placed in the context of what is happening in Ukraine right now. This is a tragedy unfolding in Europe. Only this week, Russian-backed rebels launched the attack on Mariupol that he mentioned and have continued offensives elsewhere. The aim of the attacks appears to be to form a land bridge between Russia and the annexed territory of Crimea and, furthermore, to make it impossible for the Ukrainian Government to reassert control over its own sovereign territory in the east of the country. EU Foreign Ministers issued a statement condemning the latest offences earlier this week. As the Minister said, there is a special Foreign Affairs Council today. I am grateful to the Minister for Europe for informing me earlier this week that he would be attending that and would therefore not be here today. 

My first question to the Minister today is: does he agree with me that we should not side with those voices in the EU who argue that this is the moment to end or ease sanctions? After the recent actions in Mariupol, what signal would such a decision send to Russia? Indeed, what signal would it send to Ukraine and every other country that fears similar aggression in its own territory? It is important at this moment for the European Union to remain determined to at least maintain the sanctions regime. If change is being discussed, it should be in the direction of toughness, not of weakness. 

The Minister is here and not at the Foreign Affairs Council, but can he tell us whether tougher sanctions are under consideration at that meeting and what they might include? As he said, the agreement reached in Minsk last September has failed to stop the bloodshed or stabilise the situation. The killing goes on and creates a severe crisis for Ukraine’s security, the safety of its people and its economy. 

The association agreement that we are discussing and the accompanying deep and comprehensive free trade agreement are important in themselves. However, it is also important to discuss the point initially raised by

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the hon. Member for Daventry about our alleged role in the current situation. Some have argued that reaching this agreement was an act of provocation by the European Union and that it somehow served to poke the Russian bear with a stick—the hon. Gentleman said as much in his opening remarks. 

The Chair:  Order. If the right hon. Gentleman will permit me to interrupt, I would be most grateful if we could we keep the questions brief at this stage, then we can expand on them in the second part. 

Mr McFadden:  I am grateful to the Chair for keeping me right. 

That argument about provocation was played out in the debate we had in December. I will only refer to the Minister for Europe’s point that negotiations on the association agreement go as far back as 2007, so the idea that it was some late rush by the European Union that prompted what has happened does not hold water. It is important for us to assert the fact that responsibility for aggression in Ukraine lies with those carrying out the aggression, not with the EU or, indeed, with Ukraine for pursuing an association agreement that it was entirely entitled to pursue as a sovereign state. 

The Chair:  Order. I am wondering whether this would be a good moment for the Minister to reply to the first batch of questions. The second batch can then be asked in a moment. 

Mr Ellwood:  I am grateful, Miss McIntosh. 

May I thank the shadow Minister for the tone he adopted in his questions and for the cross-party support that I hope he has engendered in this Committee? He is absolutely right that what we are seeing is a tragedy, but it is one that we cannot simply watch. He is also right that it would be simply wrong to drop the sanctions—to drop our entire strategy, which everyone can see is working. There is an impact on the Russian economy, and on Russia itself, but all that can change. It is all in the hands of Putin. Sanctions would be lifted were he to change his attitude to Ukraine, withdraw his troops, be more co-operative and allow Ukraine to take steps towards a more robust democracy. 

The right hon. Gentleman mentioned concerns about the land bridge. I visited Ukraine last year. I went down to Odessa, where there was huge concern about Russia’s possible desire to link up its areas of interest. That is on the agenda in Brussels, as is—I can confirm—the next layer of sanctions and what actions should be taken. What is clear is that we are not going to relent. The pressure will continue. This is not the way that countries should be acting, particularly in modern-day Europe, and the sanctions will remain in place until Russia’s attitude changes. 

Mike Gapes (Ilford South) (Lab/Co-op):  I want to ask the Minister two questions initially. First, does he agree that the position taken by Russia is not simply to do with Ukraine? Does he recognise that the Putin regime has had an agenda of establishing a Eurasian union? In September 2013, Armenia—which was more advanced in discussions on an association agreement with the European Union—was preparing for a meeting

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to be held in November 2013 in Lithuania, where the signing of the agreement would have happened. Suddenly, over a weekend in September 2013, President Sargsyan of Armenia was summoned to Moscow and given an offer he could not refuse, in the form of money for the Armenian economy and secret agreements concerning strategic relations with Russia—a Russian military base, and, I guess, issues concerning the dispute over Nagorno-Karabakh with Azerbaijan. 

Suddenly, over a weekend, Armenia’s position changed, and President Sargsyan, without consulting either his Parliament or his Government, changed the Armenian position on the EU association agreement. Putin, having done that with Armenia, thought he could get the same type of result by putting pressure on the Ukrainians, but Yanukovych had more domestic opposition, which led to the Maidan. The hon. Member for Daventry said it was not a view universally held in the House that the Russian occupation of Crimea was illegal. Actually, under the terms of the Budapest agreement of 1994, Russia gave undertakings about the territorial integrity of Ukraine, which it has torn up, and would do the same with regard to other states as well. 

My second question relates to the point that my right hon. Friend the Member for Wolverhampton South East made about the issue of a corridor. Is there not a concern that what is happening in Ukraine might also have serious implications in Moldova, given the problem of the divided, frozen conflict in Transnistria and the fact that people cannot get from Russia to Transnistria unless they go through Ukraine? Is there not an argument that there might be an agenda to create a corridor from Russia, via Crimea, through the southern part of Ukraine to Transnistria to create a Greater Russia? What is the Foreign Office’s assessment of the long-term aim of Putin? Is it realistic to think that a policy of sanctions will change the strategic approach of trying to create a Greater Russia, which seems to be the agenda of Putin and the people around him? 

Mr Ellwood:  The hon. Gentleman describes the leadership style of President Putin very well indeed. If he has any idea of President Putin’s long-term aim, I would be grateful to know about it, because that is a significant question; we simply do not know where he wants to go. We do not understand his philosophy and agenda, particularly after the unfreezing of the relationship following the cold war. These are retrograde steps from Russia. 

I answered, as much as I could, the question about the landlocked countries and the corridor. It is of huge concern. The hon. Gentleman is right to imply that the situation is not about simply Russia and Ukraine alone, but about strategic territorial influence. To some degree, it is about overshadowing Putin’s domestic challenges by having an international issue that he is able apparently to look strong with. That is what we saw in Georgia as well. 

The hon. Gentleman mentioned the Budapest memorandum, which was the original document that was supposed to give Crimea a guarantee for the future. We wanted to engage with Russia to discuss that document, but so far it has refused to do so. It is not only that document that Russia is breaching; its intervention in Ukraine, as an illegal annexation of Crimea, is a flagrant violation of a number of other international commitments,

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not least the UN charter, the OSCE Helsinki final act and the 1997 partition treaty. That gives us the legal grounds to impose those sanctions, which will not relent. 

Martin Horwood (Cheltenham) (LD):  I want to ask two questions. The first is in the context of the chronology that the Minister gave during his helpful introduction. The trilateral discussions between Ukraine, the Russian Federation and the European Union are the basis of the Council documents that we are discussing. We are looking at the extent to which, and the process by which, the European Union upholds our end of the three-way bargain. Will he comment on the extent to which Russia is upholding its part of the outcomes of those trilateral discussions? 

My second, and not unrelated, question is: given the fact that in the past 24 hours a number of Ukrainian soldiers have been killed in action—more have been wounded—and there are regular Russian battle groups, heavy artillery and armour on the territory of Ukraine, would the Minister characterise the situation as a war between the Russian Federation and Ukraine or as an invasion of Ukraine? Whatever characterisation he would give it, should that impact on our consideration of these documents? As is rather inevitable with these European Committees, matters have moved on to such an extent that we are in an almost unrecognisably more serious situation now than when the documents were first prepared and produced. 

Mr Ellwood:  If my hon. Friend will allow me, I will not get into the lexicon of describing the wording of the incursion, as I will call it, because that might inflate the matter even further. Equipment, troops and training have moved not simply from the border, but into eastern Ukraine. He highlighted the fact that, almost every day, this leads to fatalities and to many people being caught up who simply do not want to be part of the conflict. We certainly condemn all the violence that is taking place in eastern Ukraine. 

With regard to the documents themselves, we are waiting for Russia to acknowledge its role and what it can do. Britain stands ready to work and do its part within the EU, and we want Russia to come to the table. That is exactly what will be discussed in Brussels today. 

Dame Angela Watkinson (Hornchurch and Upminster) (Con):  May I ask my hon. Friend what role, if any, he thinks might be played by the Council of Europe, of which Ukraine and Russia are both members? When this situation arose, we decided that we could not remain members of the European Democrat Group—to which part of the UK delegation, including myself, belongs—alongside Russia, which had a very large delegation and held the chairmanship at the time. We first sought the expulsion of Russia from the Council of Europe, but after much deliberation it was decided that Russia’s voting rights should be suspended. The Russians voluntarily withdrew and have not attended since, but they are technically still members and that line of communication is still open, which is possibly slightly more helpful than having them expelled altogether. However, as we have heard this morning, the situation is escalating. I wonder whether my hon. Friend can foresee any way in which the Council of Europe could be more helpful in trying to make progress. 

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Mr Ellwood:  The Council of Europe is an underutilised forum. Even for many parliamentarians, its label gets it confused with the EU. The Council of Europe is a wider organisation and has been around a lot longer than the EU. It includes many more countries and has slightly different responsibilities, not least to do with judicial processes right across Europe. There is a role for it to play. 

I understand that my hon. Friend is a member of the delegation. I will perhaps invite the Minister for Europe to hold discussions in order to see what more formal role can be played by the Council of Europe. Any form of persuasion from a number of angles to encourage Russia and those around President Putin that this direction of travel should not be pursued would, I think, be welcome. 

The Chair:  If no further Members wish to ask questions, we will proceed to debate the motion. 

Motion made, and Question proposed,  

That the Committee takes note of European Documents No. 13519/14, a Council Decision on the signing, on behalf of the European Union, and provisional application of the Association Agreement between the European Union and the European Atomic Energy Community and their Member States, of the one part, and Ukraine, of the other part, as regards Title III (with the exception of the provisions relating to the treatment of third-country nationals legally employed as workers in the territory of the other Party) and Titles IV, V, VI and VII thereof, as well as the related Annexes and Protocols, No. 1351/2014, Council Regulation (EU) of 18 December 2014 amending Regulation (EU) No. 692/2014 concerning restrictive measures in response to the illegal annexation of Crimea and Sevastopol, and No. 2014/933/CFSP, Council Decision of 18 December 2014 amending Decision 2014/386/CFSP concerning restrictive measures in response to the illegal annexation of Crimea and Sevastopol; supports the Government’s aim of demonstrating flexibility on timing of the provisional application of parts of the EU-Ukraine Association Agreement, as part of an intense wider effort to deescalate tensions on the ground in Ukraine; encourages the use of the Association Agreement between the EU, its Member States and Ukraine to embed sustainable reform, security and prosperity in Ukraine and the eastern neighbourhood; and supports the Government’s aim of fully implementing its policy of non-recognition of the illegal annexation of Crimea and Sevastopol.—(Tobias Ellwood.)  

12.3 pm 

Mr McFadden:  The Minister kindly set out the rather complex process of decision on this matter, which involves agreement, signature and then further revisions before putting it into practice. The important thing is the aim of this process, which is to allow Ukraine to make a decision to reach an association agreement that has at its heart the opening up of the economy to trade, accompanied by conditions and reforms in governance. That is very important for Ukraine. Although the crisis in the news is the unfolding situation in the east, there are also severe economic and governance problems in the country. 

I wonder whether the Minister could tell us where we are on the economic aid to Ukraine—what the package is, what the British contribution is and what the governance reforms are. There was some correspondence between his colleague the Minister for Europe and the European Scrutiny Committee about the civilian mission being put into Ukraine to carry out planning for defence purposes, among others. That is important. The UK, under Governments of different colours, has a good record on advising countries on governance reforms,

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particularly in newer democracies. Will the Minister say a little more about what this country has offered and what the EU is offering in terms of governance reforms? 

The end point of the association agreement, which has been a bone of contention, is really about Ukraine’s sovereign choice. It is their choice to pursue this path if they wish. The irony of the Russian aggression, which was perhaps used as a pretext—Russia had no real reason for it—is that it forced Ukraine more than ever down the European path, which is what it was intended to prevent. The legacy of the agreement should be that countries to the east of the current European Union borders can pursue these issues, but for that to work there needs to be economic and governance help, as well as the pursuit of the Minsk agreement to put an end to the conflict. I would be grateful if the Minister updated us on those points. 

12.6 pm 

Martin Horwood:  I should have said earlier that it is a pleasure to serve under your chairmanship, Miss McIntosh. 

I am quite happy to support the motion, but I do have some reservations. The motion and the Commission documents relate simply to the annexation of Crimea and Sevastopol, but events have moved on to such an extent that the trilateral discussions that led to this outcome have been overtaken completely. While it is important that the European Union commits to the association agreement with Ukraine as a statement of political support for Ukraine as a free and independent European nation that is able to conduct its international relations without intimidation, the outcome of those discussions also included concessions to Russia—specifically, the delay in the provisional application of the deep and comprehensive free trade area, although the full text of the association agreement was left unchanged. 

No matter what words the Minister used in reply to my earlier question, what has happened since those discussions is an invasion of Ukraine by Russia, with full battle groups of large numbers of troops, albeit posing as rebels—I think Mr Putin’s phrase is “volunteers assisting the rebels.” It is therefore quite ludicrous to think that we have anything other than a full-scale war in Ukraine now. While I support the motion, I regret that our scrutiny and political processes do not seem to be fast-footed enough to respond to the current situation. Instead, we are really discussing something that was negotiated in the rather hypothetical context of de-escalation and trying to reduce tension in a situation that has since moved on completely. With that reservation, I am happy to support the motion. 

12.8 pm 

Mike Gapes:  I want to make three points. First, I agree that we should support the motion, but I share the concerns of the hon. Member for Cheltenham. Events have moved on. In that context, I hope the Minister will tell us a little in his response about the implications of the current political developments in Europe for future European Union sanctions policies. 

Putin and his supporters are clearly active. They are trying to buy off and undermine European Union solidarity on many issues. One way they are doing that is through their propaganda channel, RT—those of us who use Freeview and want to get biased news coverage

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and propaganda will know well what I am talking about—which is well funded and cleverly put together. They are also financing political parties. They are giving millions of euros to the National Front in France and, at the same time, they are organising conferences. One of Putin’s acolytes, Dugin, a man with neo-fascist connections, has been organising groupings of various far-right groups in Moscow and elsewhere. 

There is another worrying development. Although I have every sympathy with the democratic choice of the Greek people, I was concerned yesterday to read press reports that one of the first acts of the Syriza Government was to object to statements by the European Union in relation to future sanctions against Russia. Not only are there people in the new Greek coalition Government from Maoist, Trotskyist or Stalinist political backgrounds; there is a coalition with a small right-wing group of so-called independents who are avowed homophobes, anti-Semites and racists. Of course, Putin’s own Parliament contains people with similar, strident views on various issues, so there will be soul mates in the new Greek political establishment for Putin and his agenda. That raises concerns for all of us for the future. 

My final point relates to the not very well-founded belief that the sanctions regime will change the behaviour of Russia. If the position being taken by Putin and the people around him is an ideological position, how far would the sanctions regime and the collapse of the Russian economy have to go before they changed their behaviour? Even with world oil and gas prices plummeting, and even with the exchequer problems that they potentially have with their existing commitments, they are nevertheless prepared to have a revanchist, almost imperialistic foreign policy. There is no sign yet of any modification in Russia’s attitude, its rhetoric, or, more importantly, the way in which its irregular, unofficial, un-uniformed Russian special forces are behaving in Ukraine. 

We have also seen incursions into the airspace of other European Union/NATO partners. The Baltic states, where there are Russian-speaking populations, are very concerned about what might happen. The Russian regime’s ideological position is that any Russian-speaking person, or anybody of Russian culture or linguistic history, is somehow the responsibility of the Russian state. If we follow that logic, we will have wars between Hungary and Romania and between Italy and Austria. We will have wars in the Netherlands and Belgium, and we could end up with the Balkanisation of the peaceful Europe that the European Union has helped to contribute to over the past 50 years. We need to challenge that directly. The territorial integrity of Ukraine—yes, with autonomy, decentralisation, respect for minorities and everything else—is fundamental. The European Union and our country cannot—must not—concede that Russia has a right to intervene in neighbouring countries if it feels that people who speak Russian are somehow under threat, because if that is conceded in Ukraine, it will then follow on in the Baltic states and elsewhere. That is a fundamental issue. 

There is no sign yet that sanctions are able to change behaviour. The record of sanctions, historically, is a patchy one. They may sometimes get countries to change how they behave in words, but do they really change in practice? The question of Iran and its nuclear aspirations is still open. Sanctions did not lead Saddam Hussein to change his behaviour; more forceful action was required

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to deal with that regime—although I will not go into that, because we are going to discuss the Chilcot report in the Chamber later. 

We need to review and reassess UK, European Union and NATO approaches to Russia. It cannot be business as usual. We cannot go back to saying, “If it behaves slightly less aggressively in Ukraine, we will somehow recognise Russia’s annexation of Ukrainian territory.” That is not acceptable. We must fundamentally challenge how Russia is behaving internationally. 

12.16 pm 

Chris Heaton-Harris:  As I said before, it is a pleasure to serve under your chairmanship, Miss McIntosh. I want to make a handful of short comments that follow on from the speeches that have already been made. 

As a proper Eurosceptic who really does not like the European institutions and how they act in many different ways, it has been a pleasure and a surprise to see how strongly Europe has held together over the sanctions. I echo the concern expressed by the hon. Member for Ilford South about the new Greek Government—a NATO ally at this point in time—and the direction of travel along which the debate within European institutions might be taken in the coming weeks and months. The hon. Gentleman outlined the composition of that Government and its first ventures into relevant matters, so I need not repeat them, but it is a massive cause for concern when all countries in Europe have held so strong on the sanctions for a good period of time, including those suffering repercussions from the sanctions. 

Although I understand what the hon. Gentleman said about sanctions sometimes working and sometimes not, and that we can never benchmark how they work, they are an important statement to send to Russia. Europe holding together with the United States and the complete force of NATO is as strong a statement as the world is ever likely to send to Putin over his actions in Ukraine and Crimea. However, that is not reflected in public debate—if there is such a thing—in Russia itself. God only knows whether a poll is ever conducted fairly in Russia, but if anyone cares to look, it seems that Putin has a massive amount of support among the people of Russia, with the limited information that they might receive from the west. Even among the intelligentsia and the unofficial opposition, there is very little opposition to the actions in Ukraine. Although sanctions undoubtedly hit individuals and make the political statement, it seems that they are not changing the debate in Russia. Nevertheless, they must be maintained. 

I want to echo—on behalf of the European Scrutiny Committee to a certain extent—what the hon. Member for Cheltenham said about how we in this place can scrutinise items of such an important nature that move so quickly. This matter has actually been a really bad example of how we scrutinise things, because of the delays, and I know that, in the meantime, there have been plenty of other debates and statements about Ukraine. I do not expect the Minister to respond, but I want him to take away from the debate the idea that we need a better method of scrutinising such matters, because I feel that in future there will unfortunately be a need for Parliament and its various Committees to scrutinise similar subjects. We will need to do it quickly and in great detail to ensure that we maintain our role

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as a Parliament checking the Executive and do the right thing by the British people by making the right decisions in the long term. 

12.20 pm 

Mr Ellwood:  I thank right hon. and hon. Members for their contributions. I will end with the shadow spokesman, but begin with the hon. Member for Ilford South. The right hon. Member— 

Mike Gapes:  Not yet. 

Mr Ellwood:  It is only a matter of time: Whips note. 

The hon. Gentleman spoke about Russian aggression elsewhere. I read the papers this morning and I have received messages from Bournemouth East constituents who were slightly concerned about Typhoons flying off the coast there, because the latest incursion of British controlled airspace by Bear planes took place on the south coast. That is an unusual development because we normally see that in the north of the country. The D-day landings were rehearsed on Bournemouth beaches, so Bournemouth is ready for anything, whatever is thrown at us. 

On a more serious note, those aircraft were flying without transponders turned on and were not squawking. They did not present a flight plan and it caused a lot of stress for air traffic control in a congested bit of airspace. Typhoons were launched yesterday after the aircraft were identified as Russian and flying in international airspace close to the UK. 

The Russian planes were escorted by the RAF until they were out of what is called the UK area of interest. At no time did Russian aircraft cross into our sovereign airspace. Again we ask ourselves whether that is the sort of behaviour we expect from a fellow European nation. The situation is going in the wrong direction and no doubt the subject will come up in Brussels. 

The hon. Gentleman also spoke of the important role Russia plays in tackling other international issues. He alluded to Iran and the P5+1 discussion on nuclear talks there. There are other spheres of influence, including Syria. There is a responsible role that we want Russia to play. To some extent it was doing so, and we want that to continue. 

My hon. Friend the Member for Daventry gave his views on the European Union. There is a worthy role it can play in co-ordinating views across Europe and unifying opinion. It can also leverage influence by getting countries together to agree sanctions that can work, which will in turn affect behaviour. The EU is doing the right thing in taking a firm lead. 

The Government would always hesitate to delay any debate. When a recommendation from the European Scrutiny Committee comes forward, we use our best endeavours to reschedule debates in a timely manner. However, we regret that the pressure of the wider business of the House means that that is not always possible, and we must bear that in mind. 

I come finally to the questions put by the Opposition spokesman on Ukraine’s economic situation. We are deeply concerned about the economic situation in Ukraine.

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Support from the international community represents the best hope of stabilising that economy. In return, the new Ukrainian Government must get on with the reform processes to which they have committed under the association agreement and the IMF programme. We will continue to support Ukraine in that endeavour. 

To put the economic situation into perspective, the World Bank estimates that Ukraine’s economy contracted by 8.2% last year and forecasts that it will shrink by a further 2.3% in 2015. Public debt has risen to 41% of GDP, and is almost certain to be above 70% when official figures are released at the end of the month. The 2015 state budget, approved on 29 December, forecast a fiscal deficit of 3.7% of GDP; I expect that that will be revised after discussions with the IMF.

I believe that the current international programme is insufficient. The IMF has identified a $15 billion financial gap that is not covered by the existing programme—that is a big challenge. The European Commission has proposed a new macro-financial assistance programme of €1.8 billion, in addition to the €1.61 billion previously committed. The US has committed another $2 billion, and Ukraine has now requested from the IMF an extended fund facility—a longer programme of up to four years. It is unlikely that the IMF will announce its decision on that or any new financing until its staff conclude their ongoing review early next month. From a British perspective, the UK is providing £10 million in technical assistance to support economic and governance reforms in Ukraine, as well as to provide humanitarian assistance, as I mentioned earlier. 

I thank right hon. and hon. Members for their engagement in this scrutiny debate. As I outlined in my opening speech, we take very seriously the responsibility of keeping these Committees informed on issues of political importance. The association agreement with Ukraine is important. The majority of the people of Ukraine desire a future that is integrated into Europe. A closer political and economic relationship like that is possible only with the conditionality provided by an association agreement. We have discussed the EU’s role in forging a closer relationship, and I hope that Members have received the relevant assurances that it is a process in which we are closely involved and for which EU competence is not exclusive. 

In my opening statement I explained the need to override scrutiny in July and September 2014—which, of course, we regret—and discussed the launch of the EUAM. I thank the Committee again for its understanding of the issues, and want to explain the rationale behind the decisions that have been made. The September 2014 decision to delay the provisional application of the deep and comprehensive free trade area provisions of the association agreement between Ukraine and the EU was a means to bring about progress in the situation in the east and to reduce tensions by working with Russian concerns about the DCFTA. Some might say that it has made no difference at all—that, if anything, tensions have only got worse—and that we should be mindful of entering into any type of agreement whatever with Russia, given its track record of ignoring internationally agreed rules and behaviour. However, it was an important step to take: the EU has established a window for Russia and Ukraine to discuss their future economic relationship. That still needs to happen. 

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As my right hon. Friend the Minister for Europe made clear in the Backbench Business debate on the Floor of the House on 11 December, the principal obstacle in reducing tensions in Ukraine is Russia’s complicit support for the separatists, its military presence in eastern Ukraine, and its illegal annexation of Crimea. Russia made commitments at Minsk, but to date its implementation of them has been woefully disappointing to say the least, to the extent of simply stalling, ignoring and then forgetting the very agreements it signed up to. 

As has been outlined today, the association agreement is not the reason for Russia’s behaviour in Ukraine; the EU has been in discussion with Ukraine on the issue for the past eight years. Russia has no valid justification for attributing blame for the current situation in Ukraine anywhere else. Peace will come to Ukraine only when Russia stops destabilising it. If Ukraine wishes for a closer social, economic and political relationship with the EU, that is for the people of Ukraine to decide, not Russia. If Russia wishes to continue on the path of further destabilisation, that will be met by further sanctions. Russia has available a way forward for progress to be made on its relationship with Ukraine; the provisional delay of the DCFTA has helped encourage that. 

Ukraine has a difficult path ahead. As I have outlined, 2015 will possibly be one of the most challenging years that it will face. Economic stabilisation is a priority. Peace in the east and progress with Minsk is a priority. A united coalition Government driving through extensive reform is also a priority. Reform is a conditional process with the association agreement, as well as with the IMF stabilisation package. It is what the majority of Ukrainians want, and it is reflected in the parties that they voted for in October. With the EU we will be supporting them: entrenching the rule of law; rooting out corruption; reforming the energy sector; and reforming public administration. Many measures will not be easy, but, as the history of Ukraine’s western neighbours shows, they provide a clear road map for success.

The EU has an important part to play in stabilising the Ukrainian economy. The IMF predicts additional support of around $15 billion, as I mentioned earlier. We agree with the IMF that the EU and other partners should provide assistance to address Ukraine’s urgent financial needs. The consequences of an economic collapse are simply too great to list here, but any financial assistance must be accompanied by reforms and by progress with the reforms. 

The EU does not and will not recognise the illegal annexation of Crimea by Russia. Russia’s intervention in Ukraine and the illegal annexation of Crimea is a flagrant violation of a number of Russia’s international commitments, which I listed earlier. The EU is determined to take a range of measures to give practical effect to its policy of non-recognition of the annexation. It has already sanctioned a number of companies expropriated by Russia, and Russian companies that benefit from the annexation. 

The EU has also imposed a ban on investment and trade in key sectors in Crimea. The aim of the so-called Crimea consequences measures is to make it more difficult for Russia to integrate the Crimean economy and to develop it rapidly into a showcase for its policies in Ukraine and the annexation. 

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Finally, on 23 December, the Ukrainian Parliament voted to revoke Ukraine’s so-called non-bloc status. There is a misconception, fuelled by Russian propaganda, that NATO membership automatically follows. That is not correct. It does not mean that Ukraine will become a member of NATO. It is right that all European democracies can pursue NATO membership, but it is also the case that decisions on NATO enlargement are taken by NATO allies, based on a country’s ability to undertake the commitments and obligations of NATO membership. For Ukraine that would be a long way off, if ever. 

The majority of people in Ukraine have made their choice for a future integrated with the EU. The Ukrainian parliamentary elections on 26 October 2014 proved that. Now Ukraine faces a period of uncertainty as it embarks on a process of institutional reform that will change the country for ever, bringing its governance and its rule of law, over time, to an EU standard. We welcome that and we will support it. The association agreement and the DCFTA are critical components of that change process, but we cannot ignore Ukraine’s historical relationship with Russia, either. 

The EU has an important role to play with Ukraine and Russia through diplomatic engagement on matters of territorial integrity, peace and security and their economic relationship. Reform and economic liberalisation, financial stability, and prosperity and peace should not be a threat to Russia. 

The conditionality of the association agreement will be difficult, and Ukraine will have a long way to go in reaching that level of ambition, but that process and that path is one that we and the EU need to support to reassure Russia that a prosperous and peaceful Ukraine poses no threat to Russia at all. 

Question put and agreed to.  


That the Committee takes note of European Documents No. 13519/14, a Council Decision on the signing, on behalf of the European Union, and provisional application of the Association Agreement between the European Union and the European Atomic Energy Community and their Member States, of the one part, and Ukraine, of the other part, as regards Title III (with the exception of the provisions relating to the treatment of third-country nationals legally employed as workers in the territory of the other Party) and Titles IV, V, VI and VII thereof, as well as the related Annexes and Protocols, No. 1351/2014, Council Regulation (EU) of 18 December 2014 amending Regulation (EU) No. 692/2014 concerning restrictive measures in response to the illegal annexation of Crimea and Sevastopol, and No. 2014/933/CFSP, Council Decision of 18 December 2014 amending Decision 2014/386/CFSP concerning restrictive measures in response to the illegal annexation of Crimea and Sevastopol; supports the Government’s aim of demonstrating flexibility on timing of the provisional application of parts of the EU-Ukraine Association Agreement, as part of an intense wider effort to deescalate tensions on the ground in Ukraine; encourages the use of the Association Agreement between the EU, its Member States and Ukraine to embed sustainable reform, security and prosperity in Ukraine and the eastern neighbourhood; and supports the Government’s aim of fully implementing its policy of non-recognition of the illegal annexation of Crimea and Sevastopol. 

12.34 pm 

Committee rose.  

Prepared 30th January 2015