The EU has now signed an association agreement with Ukraine promising co-operation and convergence over policy, legislation and regulation across a broad range of areas. Gradually and over time, therefore, the trade relationship between Ukraine and the EU—its second biggest trading partner after Russia and responsible for a third of Ukraine’s external trade—will be anchored in a market system that will insist on converging standards, both commercially and in terms of the values of the European Union such as democracy and the world of law. That pathway has started already. The EU loan was mentioned by the noble Baroness, Lady Falkner. I am very pleased that she initiated this debate, and I thank her for her insightful introduction. But in the long term, we should see economic stability in the country and the rule of law that the noble Viscount, Lord Colville, and my noble friend Lord Giddens talked about.

The EU has to act as one on the issue of Russia if it is to maintain any leverage. The energy vulnerability of the continent means that it can proceed only with extreme caution as 30% of its gas imports are from Russia. That is worth £60 billion to the Russian economy, so the EU has an important lever.

We do not need just to reset the energy market in the UK. We need to reset it in the EU as well. We have been talking about it for a long time. The initial energy debate in the EU started when Russia turned off the taps to Ukraine in the early 2000s. We have tinkered about with it, but we have not really taken the energy issue within Europe very seriously. This should be a call to action. However, we have to be very careful not to provoke Russia into isolation in Europe in the long term. Russia, understandably, does not want to feel hemmed in. That is why it is crucial that NATO desists from offering Ukraine full membership of the organisation. NATO promised Gorbachev, after German reunification, that there would be no future expansion to the east. That promise has been broken time and again. I am sure that many of the old Eastern bloc countries are quite pleased at the moment, especially those with Russian minorities, that that promise was

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broken, but we have to understand the importance of making sure that NATO does not welcome Ukraine as a full member.

In 2010, the Ukrainian Parliament voted to exclude the goal of,

“integration into Euro-Atlantic security and NATO membership”.

The two international organisations now need to show their mettle and their commitment to long-term stability in Europe in the forthcoming weeks. Yes, a strong message needs to be sent to Putin that tearing up international agreements and breaking international law is totally unacceptable and that there are and will be consequences, but we must be careful not to give any excuse for inflaming a situation that could lead to tragedy on our EU borders. If we manage that, we could end up with our ultimate goal: a democratic, open and liberal Ukraine, which is free from corruption and does not bully minorities, and a Russian neighbour that does not feel threatened by encirclement and will come to terms with the loss of empire. The Government continue to enjoy Labour support for the way they have handled this crisis so far.

5.46 pm

The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi) (Con): My Lords, I start by thanking my noble friend Lady Falkner for organising this debate and for the opportunity to update the House once again on the political situation in Ukraine. I also thank the noble Baroness, Lady Morgan, and the Benches opposite for their support in what has been an incredibly difficult time in terms of ensuring that diplomacy succeeds.

As noble Lords are aware, this House last debated the ongoing crisis in Ukraine and Russia’s illegal and wholly unacceptable annexation of Crimea on 18 March, and I updated the House on 25 March in replying to a Question. Her Majesty’s Government, working in close partnership with the European Union and an incredibly broad range of allies from across the international community, have continued to take incremental steps to ratchet up the pressure on the Russian Government in response to their continued violation of international law. As my right honourable friend the Prime Minister said last week, their actions are a direct challenge to the rule of law around the world and should be of concern to all nations.

A great deal has been said in our debates about Russia’s motivation for the rapid illegal annexation of Crimea, Putin’s motivation and his view of Russia’s place in the world. Those matters have been discussed today. The noble Lord, Lord Howell, rightly said in a previous debate that Russia’s strategy belongs to the 19th century, not the 21st century. It cannot—it will not—go unanswered. However, our actions must, of course, be of this century: they must be measured, proportionate and always mindful of the need to encourage peace and stability rather than conflict. Our fervent wish for Ukraine, and for Russia, is that their peoples can live in a peaceful, stable and secure environment. Russia’s actions are achieving the opposite. Putin would have us accept that a historical mistake has somehow been corrected with the illegal annexation

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of Crimea and that it is the will of the Crimean people. However, this is not the view of Her Majesty’s Government or, indeed, of most of the free world. It was a land grab, achieved via a sham referendum under the threat of Russia’s military might. We must commend the Ukrainian Government’s restraint under such pressure.

I hear what the noble Baroness, Lady Morgan, said about Russia and isolation, but isolation in the global community is one of the levers that the international community has. The international community not recognising the illegal annexation of Crimea is a first step. A recent resolution at the United Nations General Assembly saw 100 nations affirm their commitment to Ukraine’s territorial integrity. Only a handful of nations voted with the Russian Federation against the resolution, including Zimbabwe, Cuba and the Democratic People’s Republic of Korea. I fear that Russian intransigence means that we must prepare for the long haul on this issue. We must show the strength of our convictions as a country, and with our allies, by maintaining our position and our actions. To this end, the Foreign Secretary met the Ukrainian Foreign Minister on 1 April to demonstrate UK support for Ukraine.

The European Council on 20 and 21 March announced further sanctions, bringing the total of those facing asset freezes and travel bans to 33. At the same Council meeting, the European Union, member states and Ukraine signed the political chapters of the association agreement, which again have been referred to today. That represents a very visible commitment on the part of the Ukrainian Government to a closer relationship with the EU, and to EU norms and values. For their part, the EU and member states’ signature of the association agreement represents their commitment to assist Ukrainian reform to make these aspirations a reality. To that end a proposal on a package of support potentially worth $14 billion to $18 billion will soon go to the IMF board.

NATO and Ukrainian Foreign Ministers met on 1 April in a further demonstration of international support for Ukraine. They agreed to suspend indefinitely all civilian and military NATO-Russia Council activity, except ambassadorial level dialogue and above. At this time of crisis it is absolutely right for us to step up activities that provide reassurance and confidence for NATO allies without provocation. NATO has worked hard to build a constructive relationship with Russia but Russia, through its actions in Ukraine, has forced us to step back from our previous level of engagement. As the Prime Minister made clear, it would be wrong for the G8 summit to go ahead in Sochi in June. G7 leaders will instead meet in June in Brussels, without Russia present. This demonstrates further the cost to Russia of its policy on Crimea.

It is tragic that Russia, so close culturally and ethnically to Ukraine and with whom it has shared so much history, should impinge on Ukraine’s sovereignty. We once more urge Russia, as we have done, to seek urgent ways to de-escalate the critical situation in Ukraine and to engage with the Ukrainian Government to address their concerns. We are concerned about the visit to Crimea by the Russian Prime Minister on 31 March, which was particularly unhelpful in relation

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to de-escalation. Solutions imposed at the point of a gun have no hope of resolving a crisis which can and should be resolved by diplomatic means. We are resolute in our determination to support the right of the Ukrainian people to make their—

Lord Skidelsky: Is the Minister really saying that the annexation of Crimea was against the wishes of the Crimean people and that, had they been free to do so, they would have overwhelmingly rejected it?

Baroness Warsi: What we have said consistently and in direct reply to that is that we cannot accept any referendum held with no preparation and down the barrel of a gun, without really an answer on that ballot paper to vote “no”, which were the two options given. If, in due course, there was a referendum appropriately held with the necessary constitutional backing in the right way that referendums are held, I do not think that anybody would dispute people having their right to self-determination. We are resolute in our determination to support the right of the Ukrainian people to make their democratic choices about the future of their own country. I think we would all agree that the way it was done was not acceptable.

Key questions to which noble Lords quite rightly returned are how we now frame our relationship with Russia and how to address Russia’s concerns about the intentions of the West. The crisis in Ukraine is the most serious test of European security so far this century. Russia’s actions cast a menacing shadow across the continent of Europe. Without swift and significant steps by Russia to de-escalate the situation, the Government remain resolute in determining that our relationship with Russia can be seen only through the prism of an illegal and ill-judged incursion into Ukrainian territory.

The actions we and our allies have taken are proportionate and it is clear that their impact is already being felt. Indeed, the noble Lord, Lord Skidelsky, asked about sanctions. The European Union has adopted unprecedented sanctions against Russia, including asset freezes and travel bans. Preparatory work is already under way for more far-reaching European Union sanctions, including economic and trade measures. These sanctions are a message and a warning to the Russian Government. We want Russia to enter direct talks with Ukraine and we will continue to work with our international partners to find a diplomatic solution to this crisis. These sanctions are a part of that.

The noble Lord, Lord Judd, spoke about the need for dialogue with Russia. We absolutely agree with that. The noble Lord is right: dialogue with Russia is key. We continue to engage with Russia to try to find a solution to the current crisis. My noble friend Lord Dykes said that we need to work towards a positive outcome. A positive outcome is an increase in democracy in both Russia and Ukraine. We are doing what we can to support that in Ukraine.

We continue to choose our actions with a long-term strategy in mind. As members of the EU, we have enjoyed the longest period of peace and stability in European history. Our NATO alliance has stood the test of time to become the most successful military alliance ever.

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To echo the words of my right honourable friend the Foreign Secretary, we are not asking Ukraine to choose between Russia and the West. We are saying that Ukraine should be free to choose to strengthen links with either, both or neither, but only Ukrainians themselves can decide their future. However, we can give Ukraine the support that it requires. My noble friend Lady Falkner asked what conversations we had already had in relation to IMF assistance, for example. Ukraine and the IMF reached a staff-level agreement last week on a two-year standby arrangement, supported by the international community. That will potentially unlock $27 billion. The IMF contribution will be between $14 billion and $18 billion, depending on other bilateral and multilateral contributions. As I said earlier, the agreement is expected to go to the IMF board—the executive board—next week.

I think that the noble Lord, Lord Giddens, asked how IMF payments will be managed. I am sorry; I cannot read my own writing. We recognise that there will be pain in complying with the IMF conditions for assistance, including the need to increase domestic gas tariffs. The Government of Ukraine inherited a country in dire need of economic and political reform. The Government of Ukraine have committed to making this difficult reform and the UK and our international partners stand to assist in this. Of course, the conditionality of the IMF agreement is important because we know how many IMF programmes have in the past failed in Ukraine. Therefore, reform in relation to gas tariffs, governance and the financial sector are part of that package.

The noble Viscount, Lord Colville, asked about the role of DfID. The initial UK package of £10 million, which was announced a few weeks ago, is being put forward in co-ordination with DfID. We are working closely with international donors to see where expertise can best add value. DfID anti-corruption work is being done, in addition to the work being done by technical teams in Kiev, to identify where the UK can support energy and social reform sectors.

My noble friend Lady Falkner asked about arrangements for elections. The OSCE will monitor

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the Ukrainian elections which are due to take place on 25 May. About 100 long-term election observers are already in Ukraine. Short-term election observers will follow. The UK is contributing to the monitoring mission and is urging the Ukrainian Government to do all they can to ensure that the elections are free, fair and carried out in accordance with international norms.

The noble Lord, Lord Giddens, asked about devolution and Russian federalism. As I said, the future of Ukraine is for Ukrainians to decide. Russia should respect Ukraine’s sovereignty and not seek to impose systems of governance on it which are not agreeable to the Ukrainian people. I agree with the comments of my noble friend Lord Chidgey regarding work in relation to the energy sector. The Government are, of course, discussing plans on the exploitation of shale gas in the UK as we speak.

I agree with the noble Baroness, Lady Morgan, on the need for wider EU action. We task the European Commission to prepare measures which will bring far-reaching economic consequences if Russia takes any further steps to destabilise Ukraine and, by June, to produce a comprehensive plan to reduce Europe’s dependency on energy from Russia. However, I agree that more needs to be done, and it needs to be done quickly. My noble friend Lord Chidgey also spoke about corruption and tackling assets which could potentially pass through London. I have a comprehensive answer on that but, in light of the time, I will write to him giving a detailed response.

In conclusion, Russia does have a choice to make: to take the path of de-escalation or face increasing isolation and tighter sanctions. President Putin should take notice of the clear, united and resounding message emanating from every democratic Parliament, including, of course, the mother of all Parliaments here. I am grateful to noble Lords for their contributions in reinforcing that message today. Every diplomatic channel remains open. Nothing that has been done cannot be undone. We and our allies continue to urge Russia to show its strength in ending this crisis.

Committee adjourned at 6 pm.