Summary of conclusions and recommendations
Introduction
1.In general terms we welcome and commend the responses to Russia’s aggression by the Government and by the EU and its Member States. Insofar as our report includes recommendations for policy, these are designed to strengthen these responses and make them more effective. (Paragraph 16)
Cooperation on sanctions
2.Arrangements for cooperation between the UK, the EU and other partners on the imposition of sanctions since the Russian invasion of Ukraine have been effective overall. These should be considered as a model for pragmatic cooperation between the UK and the EU that could be replicated in other areas of the UK-EU relationship. (Paragraph 31)
3.We recognise that the UK’s independent sanctions regime is still a work in progress, but it appears, on balance, to have been effective overall in the context of the sanctions introduced following the Russian invasion of Ukraine. Without the need for agreement on unanimity, the UK can be nimbler and swifter in imposing sanctions. (Paragraph 41)
4.Nevertheless, some witnesses expressed doubts about aspects of the UK’s post-Brexit sanctions regime including a lack of detail in listing individuals but not the companies they control and questions about the efficacy of enforcement through the work conducted by the National Crime Agency and the Office of Financial Sanctions Implementation. We ask the Government to respond to these specific concerns in its response to this report, addressing in particular the robustness with which breaches of UK sanctions are investigated and enforced. (Paragraph 42)
5.We note that the current sanctions mechanism in the UK does not include a sanctions review mechanism akin to the EU’s sanctions review system. We ask the Government to explain in its response to this report why that is the case and whether it is considering further changes to the current regime as it reviews how it functions in response to Russia’s invasion of Ukraine. (Paragraph 43)
6.We have received evidence indicating that some minor differences between UK and EU sanctions regimes have been justified in the context of the sanctions introduced since the Russian invasion of Ukraine. We note that, as a country outside the EU, the UK has the freedom to align its sanctions policy with the US, which can sometimes be more hawkish on sanctions than the EU.(Paragraph 54)
7.Nevertheless, we received persuasive evidence that sanctions are most effective when imposed and enforced by as wide a coalition of countries as possible. Divergence between sanctions regimes results in gaps and loopholes, which weakens their overall effectiveness. This, in turn, reduces the impact that the imposition of sanctions seeks to achieve. We therefore call on the Government to work with its international partners to ensure that divergence on the imposition and enforcement of sanctions regimes is as limited as possible. We ask the Government to set out what steps it is taking to avoid the negative impact of divergence in its response to this report. (Paragraph 55)
8.The UK’s expertise in developing and implementing sanctions regimes is an asset which should be used more actively to support the capabilities of other countries, both EU and non-EU. The aim of sharing the UK’s experience should be to ensure more effective implementation of sanctions by a wider range of countries. In its response to this report the Government should provide details of what support it is currently providing to other countries. (Paragraph 77)
9.We are concerned about growing evidence that Russia has been able to circumvent sanctions through third states and uninsured shadow tanker fleets. We welcome the Government’s efforts to address this, in cooperation with our partners and allies, and in the current format of cooperation between envoys. Since the lifting of sanctions on Russia appears to be a distant prospect, circumvention will remain a challenge requiring ongoing cooperation. We urge the Government, when replying to this report, to list the measures already taken in response to circumvention; and to set out their plans for more effective enforcement, including through closer and more effective cooperation with the EU and its Member States. (Paragraph 78)
10.It is disturbing that the weight of evidence we received suggests that the UK has not so far been as effective as it could be at enforcing the sanctions that have been introduced. We note in this regard REDRESS’s assessment of the UK’s performance as “weak” and Spotlight on Corruption’s evidence that investigation of sanctions evasion had experienced “serious setbacks”. Effective sanctions regimes must be enforced. We therefore ask the Government to address this concern in its response and to set out specific examples of robust action taken by the Government and its agencies to enforce UK sanctions regimes. (Paragraph 79)
11.The Government should work closely with the EU and other partners to explore possible options to make use of sanctioned assets (or their proceeds) to support the reconstruction of Ukraine. However, any mechanism to make use of Russian assets must be consistent with international law and must not damage the international financial system. We noted that the Foreign Secretary suggested to us that there is a legal route to achieve that. The Government should outline what action it is taking on finding a legal route, including any discussions that it has had with the EU and other partners in its response to this report. (Paragraph 92)
12.In contrast to the UK, the EU periodically reviews its individual sanctions regimes. This issue is linked to the creation of arrangements for sanctions to be lifted. In our view, the Government should consider introducing a process for periodic review of sanctions in force, which could provide a mechanism for the eventual removal of sanctions, in coordination with EU and other partners. We recommend that the Government should in the meantime consult with the EU on the design of any “off-ramp” arrangement through which sanctioned entities could be removed from the sanctions list if certain conditions are met, such as providing support for reconstruction of Ukraine. (Paragraph 93)
13.We find it incomprehensible that the Government have not yet resolved the problems around the promised use of frozen assets from Chelsea FC’s sale to support Ukraine. The unfulfilled promise made by Mr Abramovich at the time of the sale of Chelsea FC reflects poorly on him and the Government for not pushing for a more binding commitment. We urge the Government to use all available legal levers to solve this impasse rapidly so that Ukraine can receive much needed, promised, and long overdue relief. All of the funds should be spent in territories controlled by the Ukrainian government. (Paragraph 94)
14.The evidence that we have considered, including from the Foreign Secretary, suggests that the arrangements for cooperation between the UK, the EU and other allies on sanctions that have been established over the past two years have been effective in responding to the crisis in Ukraine. (Paragraph 104)
15.Looking beyond the current crisis to the longer-term, we consider that the objective should be to ensure that lessons learned from this intensive phase of international cooperation on sanctions are retained and applied in other contexts, including where there may not be the same level of unity among Western countries. To achieve that, we see value in a regular working arrangement between the UK and the EU on sanctions policy, covering other regimes as well as Russia and Belarus. There are different ways in which this could be achieved. It need not be an elaborate mechanism and could build on the working practices established over the past two years. One option, which we have recommended previously, would be for the Government to seek to agree a memorandum of understanding with the EU on sanctions cooperation. (Paragraph 105)
16.Although the Cold War-era Coordinating Committee for Multilateral Export Controls cannot simply be replicated in current circumstances, it established a precedent for an efficient and effective cooperation mechanism that operated successfully for almost 45 years. We ask the Government to set out its view in response to this report on how best to achieve the objective of sustaining cooperation between the UK, EU, US and other like-minded democracies in implementation and enforcement of sanctions regimes in future. (Paragraph 106)
The UK-EU defence relationship
17.We welcome the leadership shown by the United Kingdom as the second largest supplier of military support for Ukraine, after the United States, and the encouragement this has provided to other European countries to supply. The Government should continue to work with its European partners and allies in providing military aid to Ukraine for as long as it takes to reverse Russian aggression. (Paragraph 125)
18.Cooperation between the UK, the EU, the US and other international partners, including European members of NATO, on military support for Ukraine has been more effective than previous experience would have suggested. We are however concerned about the challenges of sustaining current levels of support in the medium and longer term, given its ad hoc nature so far. It is of utmost importance that the Government works with its allies to ensure continued supply of sufficient military support for Ukraine. Close UK-EU cooperation would be of particular importance in the case of a change of policy by a future US administration. (Paragraph 126)
19.We are concerned at the delay of over a year to the UK’s proposed participation in the PESCO Military Mobility project, which we previously identified as representative of a more pragmatic approach towards defence cooperation with the EU. We ask the Government, in its response to this report, to provide an explanation for the delay and the steps being taken to overcome it. (Paragraph 140)
20.In line with previous conclusions by this Committee, we recommend that the UK should consider seeking third-country participation in additional PESCO projects, including capability development projects, where this would be in the UK’s interests. Russia’s invasion of Ukraine has inevitably increased the EU’s ambitions for PESCO which, in turn, will have had an impact on the factors that the Government weighs when considering UK participation. We therefore ask the Government to provide us with its latest evaluation of the many PESCO projects currently envisaged by the EU and whether it considers participation in any of them to be in the UK’s interests. (Paragraph 141)
21.Given that the EU’s intention seems to be to expand the use of the European Defence Fund for defence procurement, it is a matter of regret that the current rules are a major obstacle to third-country participation, even when UK-EU strategic objectives are so closely aligned. Protectionism is not the way to build an efficient defence industry. (Paragraph 159)
22. While we welcome bilateral and minilateral defence initiatives involving the UK and European partners, such as the Global Combat Air Programme, in our view the Government should also reinforce its efforts to engage with procurement projects linked to the European Defence Fund. We urge the Government to press the case with the EU for changes to third-party rules that would facilitate greater UK engagement. We ask the Government to provide us with an update on the steps that it has taken to address this issue in its response to this report. (Paragraph 160)
23.We welcome the UK’s ongoing collaboration on defence matters with EU Member States, individually and severally. Based on the evidence that we have considered we believe that, on balance, there would be benefits to the UK seeking to complement existing collaboration through an administrative arrangement with the European Defence Agency, similar to those reached between the EDA and other third countries such as Norway and the United State of America. Such an agreement would not impede existing cooperation, and would impose few obligations on the UK. But it could be a useful step towards wider cooperation with the EU on defence, based on the principle of reciprocity. (Paragraph 172)
24.NATO remains the leading organisation for defending Europe and setting standards to facilitate military interoperability between European allies. The UK should take advantage of its prominent role in NATO to take the lead on a plan to give operational effect to the call in the EU-NATO Joint Declaration for the “fullest involvement of non-EU NATO allies in the strategic partnership between the EU and NATO”. This plan could potentially include proposing revisions to the terms on which NATO members participate in EU-based defence initiatives. (Paragraph 181)
Reconstruction of Ukraine
25.The reconstruction of Ukraine will be a colossal undertaking, regardless of the ultimate outcome of the conflict. Although Ukraine’s economy has underlying strengths and considerable future potential, the extent of the damage Russia’s full-scale invasion has inflicted on Ukraine means that a huge programme of international assistance will be required over an extended period of time. (Paragraph 191)
26.Reconstruction cannot wait until the war has finished. Much of Ukraine is in urgent need of international support for rebuilding. There is also potential to promote investment into parts of Ukraine that have been less impacted by the conflict. (Paragraph 192)
27.It is imperative that governments and international organisations, including the UK and the EU, cooperate closely throughout the reconstruction process. This will prevent duplication and ensure that all international partners are working on the basis of a coherent programme that best meets Ukraine’s needs. (Paragraph 193)
28.We welcome the UK’s close involvement in planning for reconstruction up to this point, including hosting the successful Ukraine Recovery Conference in London in June 2023. The URC should continue to be an annual international event and we note that the next meeting will be in Berlin later this year. We therefore look forward to considering, in its response to this report, the Government’s ambitions and priorities for this event, including any additional spending commitments in relation to reconstruction of Ukraine and/or specific projects to which the UK is committed. (Paragraph 204)
29.The London-based European Bank for Reconstruction and Development was set up to help Central and Eastern European countries from the former Soviet bloc to restructure and reform. It has the required expertise and experience necessary to support the reconstruction of Ukraine. It should be given a prominent role. (Paragraph 205)
30.We welcome the establishment of the Multi-Donor Cooperation Platform for Ukraine, and that the UK has seconded an official to this body. The MDCP can be expected to perform a pivotal role as a forum for cooperation among supporters of reconstruction in Ukraine, including the UK and the EU. We urge the Government to remain closely involved in its work over the coming years. We ask the Government to commit to updating the Committee periodically on the work of the MDCP. (Paragraph 206)
31.The UK has a strong reputation in Ukraine with expertise to offer in several sectors that will have an important role in reconstruction. The Government should take full advantage of this and aim to perform a leading role, working closely with the EU and other partners, in areas such as encouraging private sector investment and engaging with the insurance industry. (Paragraph 213)
32.The UK has been a strong and reliable supporter of Ukraine throughout the conflict. It is essential that the Government continues to prioritise support for Ukraine in the future, including after the fighting has ended. The Government should also continue to use all mechanisms available to it to encourage allies, including the EU and EU Member States, to remain focused on support for Ukraine. (Paragraph 214)
33.Reconstruction will be closely linked to Ukraine’s candidacy for EU membership. The drive to meet the criteria for EU membership is likely to serve as a lever for reforms to Ukraine’s economy and public institutions. (Paragraph 221)
34.The Government should therefore work closely with the EU and Ukraine to ensure that assistance provided to Kyiv serves the shared objective of bringing Ukraine into western institutions. This should include providing support for Ukraine in implementation of the reforms needed to meet EU accession criteria. (Paragraph 222)
35.The Government should take a leading role with the EU and other international partners to support Ukraine in its efforts to tackle corruption and strengthen its public institutions. Effective action in this area will be vital to creating an environment in which both public and private sector donors have confidence to invest in Ukraine and provide support for reconstruction. (Paragraph 231)
36.Close coordination between the UK, EU and other allies on reconstruction, as we have recommended elsewhere in this Chapter, will contribute to minimising the risk that reconstruction funds are lost to corruption. (Paragraph 232)
37.Recent post-war reconstruction efforts in Europe, notably in the Western Balkans, have a mixed record in terms of achieving their longer-term objectives. The UK, the EU and other participants in the reconstruction of Ukraine should reflect on what lessons can be learned from this experience, including the effectiveness of mechanisms intended to incentivise reforms. We ask the Government to provide us with its assessment of lessons that can be learned from previous experience in supporting post-war reconstruction and how these can be applied to Ukraine in response to this report. (Paragraph 238)
38.The UK has an important role to play in providing the naval support to Ukraine necessary to facilitate trade through the Black Sea corridor. The Government should continue to prioritise this as it will be essential to facilitating Ukraine’s economic recovery in the short-to-medium term. (Paragraph 247)
39.Reconstruction cannot be successful in the long-term unless investors feel confident about Ukraine’s long-term security. We therefore welcome the UK-Ukraine Agreement on Security Co-operation that was concluded in January 2024. Security guarantees will be most credible if they are provided by NATO. The Government should set out in its response to this Report its policy on providing interim security guarantees for Ukraine. (Paragraph 248)
Long-term implications for the UK-EU foreign policy and security relationship
40.In response to the immediate threat to its security posed by the Russian invasion of Ukraine, the EU has made a concerted effort to take on a more “geopolitical” role, as envisaged in the Strategic Compass published in 2022. (Paragraph 263)
41.It remains to be seen whether these developments represent a durable change in the EU’s geopolitical role. For example, the EU has not achieved a clear and united response to the conflict in Israel, Gaza and the wider Middle East, reflecting greater divisions between EU Member States than was the case in response to the Russian invasion of Ukraine. (Paragraph 264)
42.Given the EU’s size and its geographical proximity to the UK, any change in the EU’s approach to foreign and security policy will be bound to have implications for UK national security. The Government should therefore continue to monitor closely the evolution of the EU’s external policies when considering British foreign and security policy. (Paragraph 265)
43.The respective approaches of the UK and EU to long-term strategic challenges such as relations with China and developing the European pillar of NATO are broadly similar. We consider that there would be considerable mutual benefits to enhancing cooperation between the UK and EU on such issues. (Paragraph 266)
44.The EU’s strategic autonomy agenda is focused increasingly on economic security and resilience since the Russian invasion of Ukraine. The Government should monitor developments in EU policy in these areas closely and consider what contribution the UK might be able to make to strengthening the resilience of Europe as a whole. (Paragraph 276)
45.Any future reduction in US support for Ukraine, and for wider European security, has the potential to leave Europe badly exposed. The EU, EU Member States and other European partners, including the UK, should ensure that they are prepared for a scenario in which they may need to take on a greater share of the burden, despite all the difficulties. (Paragraph 277)
46.The UK is no longer a member of the EU and will have no direct influence on the next round of EU enlargement. But the EU’s overall objective in pursuing enlargement (greater stability and security in Europe) is clearly in the UK’s national interest as well. There is therefore a strong case for using the UK’s experience and expertise in reform and capacity building to support candidate countries during the enlargement process. In Ukraine, that would fit naturally with the UK’s contribution to reconstruction and tackling corruption. (Paragraph 291)
47.Potential enlargement has prompted a renewed debate about institutional reform within the EU. Should such reform happen, it could present both opportunities and risks for UK-EU cooperation. The Government should monitor any developments closely and report to Parliament on their implications for UK-EU relations. (Paragraph 292)
48.We welcome the Foreign Secretary’s confirmation to us that the current ad hoc arrangements for cooperation with the EU on Ukraine have worked well. This reinforces the evidence we heard that the Russian invasion of Ukraine has created a new context for UK-EU engagement on foreign and security policy that was absent when the Trade and Cooperation Agreement was negotiated. (Paragraph 301)
49.The nature and scope of the five-year review of the TCA remains unclear. Nevertheless, given the change in context, the Government and the EU should consider which of the informal arrangements (operating outside the structures of the TCA) established to facilitate the UK and EU’s response to the Russian invasion of Ukraine have been of particular benefit to both parties and merit being made permanent. (Paragraph 302)
50.While acknowledging the Foreign Secretary’s point that flexibility can sometimes be an advantage in responding to specific situations, we continue to believe that there would be considerable value in more structured arrangements for forward-looking cooperation between the UK and the EU in relation to longer-term challenges such as policy towards China. This would build on the successful experience of reactive cooperation with the EU since the Russian invasion of Ukraine, and it would complement relations with individual Member States and groups of them. To facilitate this, the Government should approach the EU with a view to establishing more regular, forward-looking formats for cooperation on major foreign and security policy issues. (Paragraph 303)