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Lords Chamber

Volume 753: debated on Tuesday 18 March 2014

House of Lords

Tuesday, 18 March 2014.

Prayers—read by the Lord Bishop of Gloucester.

Finance: Interest Rates


Asked by

To ask Her Majesty’s Government whom they consider ultimately responsible for United Kingdom interest rates.

My Lords, the UK’s monetary policy framework, set out in the Bank of England Act 1998, gives operational responsibility for monetary policy to the independent Monetary Policy Committee. Decisions on setting the bank rate and the remuneration rate on reserves are for the judgment of the MPC. It uses its macroeconomic tools to aim to meet the inflation target of 2% in the medium term.

My Lords, the noble Lord did not quite answer my Question, about where the ultimate power rests. The Bank of England Act, which he cited, is worth quoting. Section 19(2), on reserve powers—as he knows, the Treasury never gives away old powers without some reserves—says:

“An order under this section may include such consequential modifications of the provisions of this Part relating to the Monetary Policy Committee as the Treasury think fit”.

In those circumstances, surely the noble Lord must accept that the real power rests with the Chancellor, who has power as he thinks fit. Will he be so kind as to tell us, first, why he normally never answers the question properly and, secondly, whether he now accepts that the Chancellor has the ultimate power, as my Question asked?

My Lords, interest rates are set by the Monetary Policy Committee. The noble Lord quoted rather selectively from the Act. If he had read Section 19(1) instead of Section 19(2), he would have found that the Treasury’s powers to which he referred are applicable only if they are,

“required in the public interest and by extreme economic circumstances”.

In the absence of “extreme economic circumstances”, the Treasury has no reserve powers.

My Lords, whoever is in charge, is it not time we had a monetary policy system that paid due regard to the rate of exchange? A trading nation cannot ignore the rate at which it exchanges its goods. Is it not time our policy embraced the effect of interest rates on the rate of exchange as well as on inflation?

No, my Lords, I do not think it is. You cannot control both. One of the interesting things about the large depreciation in the pound is that it did not have the impact on the balance of payments that people expected. The rate of exchange is only one of many variables that determine how competitive and successful exports are. All the evidence is that it is not quite as important a determinant as used to be thought.

My Lords, as background to this Question, we should remember that when we were debating the 1998 Act the Minister went to great lengths to emphasise that the activities of the Monetary Policy Committee would be scrutinised not only by other place but also by this House. Certainly, when I was chairman of the Economic Affairs Committee—a committee I invented, as the Minister is well aware—we used to see the Governor of the Bank of England regularly. All that is background to a very simple question: when was the last time that the Governor of the Bank of England went to the Economic Affairs Committee and was scrutinised by it?

My Lords, I am afraid that I do not read the papers of the Economic Affairs Committee as assiduously as I should, and I cannot quite remember. My recollection from reading them from time to time is that the governor still goes, although not as frequently as when the noble Lord set up the committee. The committee was established specifically to review the workings of the Monetary Policy Committee; it was not an Economic Affairs Committee—I had the honour of sitting on it with the noble Lord. Although the governor does not come to the committee as frequently as he used to, he still does come—but I shall write to the noble Lord to tell him when the last time was.

My Lords, does the Minister agree that the powers of the Monetary Policy Committee are even greater than are often thought? Does he further agree that the best example of this—if he were to read the minutes of the last meeting which have been published—is that the governor’s wish to include reference to the output gap in forward guidance was overruled by the Monetary Policy Committee, thereby indicating its power?

My Lords, one slightly surprising thing about the way in which the MPC has worked is the independence of its members vis-à-vis the governor. When it was established, I think that there was a view that it would be a poodle of the governor, because a significant number of members are other employees of the Bank of England. That has not proved to be the case, and governors have, if not regularly, then on a number of occasions been overruled by the rest of the committee over the years.

My Lords, I have two questions, the second being short. First, the Government used to say that low interest rates were a sign of the success of their policies. Now that rates are beginning to edge up somewhat, they are saying that it is a further sign of the success of their policies. How does the Minister resolve this contradiction? Could he answer a second question: how many women are on the Monetary Policy Committee?

On the latter question, I am sure that the noble Lord will join me in congratulating the woman who today has been the MPC’s latest appointment as deputy governor. On the first question, the success of the system was that it enabled the Monetary Policy Committee to “look through”—to use the technical phrase—a temporary peak in inflation, when it went up to 5% because of external factors, and keep interest rates low, which helped the recovery. I think that most people would agree that interest rates are at an unusually and historically low level and that, as the economy recovers, we would expect interest rates slowly to rise, although, as the governor said in the recent forward guidance, it is expected that any increase in interest rates will be very gradual and that the new equilibrium is unlikely to be as high as it was in the past.

North Korea


Asked by

To ask Her Majesty’s Government what assessment they have made of the findings of the United Nations commission of inquiry into human rights in North Korea.

My Lords, the commission of inquiry documented appalling reports of state-sanctioned human rights violations. While this is no surprise to those familiar with the DPRK, the full report, including the finding that there are reasonable grounds to establish that crimes against humanity have been committed, is a powerful indictment of the regime. The UK is working to ensure a strong UN Human Rights Council resolution that makes clear that there can be no impunity for human rights violations.

My Lords, I thank the Minister for that reply and for the strong statement made by Her Majesty’s Government yesterday in Geneva in response to the launch of the commission of inquiry report. What steps will now be taken, notwithstanding threats of the use of veto, to bring North Korea’s egregious and systematic violations of human rights to the UN Security Council and to seek a referral to the International Criminal Court or another appropriate tribunal? What other measures are we looking at to target those responsible for what the commission says are crimes against humanity without parallel—sui generis—anywhere in the world?

My Lords, I had an opportunity to read the report in some detail and it documents the most appalling human rights record—some of it taken from witness testimony. Of course, the noble Lord was involved when the commission visited the United Kingdom to take some of that testimony and speak to parliamentarians. There will be a report at the end of this month, on 28 or 29 March, at the Human Rights Council. We are trying to ensure that the resolution is as strong as possible and a practical one that will have a real impact on the ground, therefore focusing on things like the renewal of the special rapporteur’s mandate and the creation of a testimony collection mechanism. UN Security Council referral is an option, but it must be clear that there is some prospect of success there. Of course, noble Lords will be aware of the challenges of referral to the ICC when North Korea is not a state party.

My Lords, it is hard to conceive of a more terrible story than the one that the UN commission tells. I want to ask two practical questions: what is the force of sanctions against North Korea on goods made by forced labour, and what are Her Majesty’s Government doing to stop such goods coming into the United Kingdom?

There is very little trade between the United Kingdom and North Korea in any event and the sanctions are predominantly focused on the situation in relation to the nuclear programme. There has been some recent concern in relation to what could loosely be described as “blood minerals”, given reports of the use of slave labour in mining. We are open to evidence of that. The noble Lord will be aware that this must be an agreed sanctions regime. We always keep the matter under review.

My Lords, can the Minister confirm recent reports of the possible execution of 33 people for allegedly plotting to overthrow the regime by their association with the South Korean missionary, Kim Jung-wook? What efforts are being made to urge the North Korean authorities not to proceed with such executions and to respect freedom of religion?

We are aware of these terrible reports. Of course, this relates to the suspicion that these individuals were involved with the creation of an underground church under the support of Kim Jung-wook, a South Korean who was arrested by the DPRK last year. As noble Lords are aware, freedom of religion and belief is a key priority for the Foreign and Commonwealth Office and we make those views clear to the North Koreans. I am sure that the right reverend Prelate will accept that we have only so many mechanisms with which to make our opinions known on this matter.

My Lords, what conversations beyond the Human Rights Council have the Government had with the Government of China? We hear reports of China’s concerns about the ability of North Korea to destabilise the region entirely. It would be helpful if my noble friend told the House about bilateral conversations with China.

China is an important partner in these discussions. At the UK-China strategic dialogue in February, the Foreign Secretary raised the commission of inquiry report and issues including the forced repatriation of refugees with State Councillor Yang Jiechi. Of course, the Prime Minister in his meeting raised that issue as well. We have discussed the commission’s report with senior Chinese officials in Beijing.

My Lords, those who manage to flee North Korea of course mainly end up in the neighbouring countries of South Korea and China. Outside those countries, the UK, with its long history of providing refuge, has the largest concentration of refugees from North Korea. What engagement do Her Majesty's Government have with those refugees? Not only are they a source of information about the regime, but due to the education and so on that they receive here they are important contributors to change and many wish to return to North Korea, should the regime change.

FCO officials regularly engage with refugees from North Korea. Indeed, those refugees played an important role, when the commission of inquiry was held in the United Kingdom, in providing first-hand testimony and evidence of human rights abuses. We also engage with refugees from North Korea who are settled in South Korea as part of the English for the Future programme. A number of language training sessions, internships and Chevening scholarships are provided, which are another helpful integration mechanism for North Koreans into South Korea.

Did the noble Baroness notice in yesterday’s report references to the information blockade and news blackout which engulf North Korea? Given our obligations under Article 19 of the Universal Declaration of Human Rights to promote the free flow of news and information, will she or the Foreign Secretary host a round-table discussion with the BBC World Service, the All-Party Group on North Korea and others who wish to respond to the serious concerns expressed in the report regarding the information blockade?

This question comes up on a number of occasions in relation to North Korea; indeed, it was a question that I answered only last week in relation to the BBC’s role and editorial independence in commissioning services. Article 19 has to be interpreted in the light of Article 2 of the International Covenant on Civil and Political Rights. The covenant gives the UK an obligation in relation to UK nationals, so our obligation is to our nationals, not to North Korean nationals. The BBC question is under review, but it is a question for the BBC.

My Lords, does my noble friend accept that there is a strong read across between what the West does over the Ukraine and the leverage it carries in North Korea?

Noble Lords will have a five-hour debate on the issue of Ukraine starting very shortly, so we will be exploring that issue in some detail. It comes back to the international community’s responsibility and its clear stance on the issue of human rights.

Aviation: Fume Events


Asked by

To ask Her Majesty’s Government how air crew and passengers in commercial airlines without filtration or detection systems are warned, protected and informed in the event of a fume incident from contaminated bleed air.

My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I declare my interest as patron of the GCAQE.

My Lords, operators are required to include detailed instructions to crew on procedures to be followed when contamination of cabin air is present or suspected. Any passenger who became unwell would be given first aid by the crew and, if necessary, referred for further medical assessment and care after landing. There is no national or international legislation requiring air crew or passengers to be informed of fume events.

My Lords, it is almost 60 years since the danger of fumes seeping into cabin air was first reported. With the notable exception of the Boeing 787, virtually all passenger jets still have flawed and potentially dangerous bleed air systems, a design that leaks pyrolised oil into the air supply. Does the Minister agree that most shocking of all is the fact that airlines fail to inform passengers that they have been exposed, which—and I have chosen my words very carefully—must be a breach of passengers’ rights and casts a dark reflection on the aviation industry? What solutions does the Minister have?

My Lords, on most commercial aircraft the cabin air supply is provided by engine bleed air, which is drawn from the compressor stage of the engine. Contamination, known as a fume event, may occur when oil or hydraulic fluid is released into the bleed air—for example, as a result of an oil seal failure—resulting in the formation of a fleeting odour or mist in the aircraft cabin. Most fume events last less than a minute or two.

Many investigations have been carried out by the department, of which the noble Countess will be well aware. The committee on toxicity concluded that there was no evidence for pollutants occurring in cabin at levels exceeding available health and safety standards and guidelines and, as most levels observed were comparable to those typically experienced in domestic settings, there is appropriately no requirement for passengers to be informed. There are many steps to be taken if there is an assessment that there is any endangerment to any passengers or to the flight.

My Lords, is my noble friend aware of the work undertaken by the all-party parliamentary organophosphate group, of which the noble Countess and I were both members? Can she in particular tell us whether there is continuous monitoring of incidents and potential risks, following the Cranfield study some years ago? It is my impression that there is no continuing monitoring—I do not think that there has been any recent report on this—of incidence in a global sense, even if there is one for UK operators.

My Lords, as your Lordships will be aware, for six years the department carried out significant research into these issues, and quite appropriately so. That research led to four studies, the main one of which was the Cranfield study published in May 2011. All four reports were sent to the committee on toxicity, which also peer-reviewed other international data and came to the conclusion that I just discussed: that cabin air at levels exceeding available health and safety standards and guidelines was not evident in any of those studies. Going forward, I think it therefore becomes an international issue and it is a matter for the European Aviation Safety Agency or the International Civil Aviation Organisation to consider whether more research should be done. At this point, I am not aware of any concerns that they have for ongoing monitoring or further research.

But does the Minister not accept that there is genuine concern about the lack of information about concentrations of pollutants during major fume events? These have not been adequately collated or analysed and, given the Government’s responsibility in these matters, can she instigate some research that could try to get to the bottom of this?

My Lords, the studies which were carried out over a period of nearly six years—the investigations by the department, including the four independent research studies that I described a few moments ago—and the work of the committee on toxicity have led the department to conclude that there is no further direction to pursue in terms of research on this issue for UK aviation. If there is to be further research, it will be at international levels. As I say, there is no indication of a sufficient concern or basis for research being recognised by those international organisations.

Could my noble friend complete her answer to my noble friend Lord Tyler by telling us whether there is a requirement on airlines to report incidences when there has been a fume event exceeding the parameters which she has already described?

Incidents on aircraft flights, including any fume event which in the opinion of the airline, any member thereof or any passenger,

“endangers or which, if not corrected, would endanger an aircraft, its occupants or any other person”,

are required to be reported under the mandatory occurrence reporting scheme, known as MORS, which is run by the UK’s independent aviation regulator, the CAA. An investigation carried out by the operator would then typically follow. If the CAA was not satisfied with that investigation, it could ask for further work to be undertaken. It is a CAA responsibility to monitor for trends and unrecognised safety threats.

My Lords, I have some sympathy with the Minister as I have on occasions from that Dispatch Box also produced responses that did not satisfy the noble Countess, Lady Mar, nor many other Members of the House. I therefore ask the Minister this question. If she is able to give the degree of reassurance that she has given about the monitoring that we carry out, but if the issue is a great deal wider than that—she made no reference at all to how other countries attack this or to the European position in general—will the Government at least push the authorities into examining this matter further? The consequences of getting it wrong would be quite disastrous.

My Lords, the noble Lord will be very well aware that the CAA, which is responsible for monitoring and safety, keeps not just this issue but many others under review. I feel confident that if the CAA had sufficient concern that it felt that there needed to be urgent research, it would inform the department of that and would be pushing on those issues. As I said, there has been very substantial research in this country and in other countries which has led to firm conclusions. Given that, it is hard to see what direction additional research could possibly go in.

Mental Health: Funding


Asked by

To ask Her Majesty’s Government what steps they are taking to protect the provision of mental health beds and funding, in the light of their commitment to parity of esteem between physical and mental health.

My Lords, we are clear that acute beds must always be available for people who need them. Providers have a responsibility to listen to patients and to offer care in the community as well as in hospitals, when appropriate. The mandate to NHS England sets its specific objectives, including on mental health. It is for NHS England and clinical commissioning groups locally to determine how best to allocate funding in commissioning services to meet local need.

I thank my noble friend for that Answer. Before these cuts come in April the reality is that it is already very difficult to find an urgent mental health bed. Ten days ago in Kent, no emergency level 4 mental health beds were available. Given that the cuts in mental health services are 20% more than for hospital trusts and given David Nicholson’s statement last week that NHS England will not review them, what specifically can the Government do to remedy the situation?

My Lords, my honourable friend Norman Lamb has expressed his concern that the cuts to the mental health tariff have taken the form that they have. I can tell my noble friend that the department will be scrutinising the commissioning plans of clinical commissioning groups and the draft budgets of mental health trusts to make sure that they reflect the central importance, as set out in the Government’s mandate to the NHS, of making measurable progress towards parity of esteem. We know that there are regional differences in access and we are setting up a new national mental health intelligence network to provide comprehensive and up-to-date information about mental health and well-being.

My Lords, can the Minister confirm that, despite having very clear guidance and legislation in place, we still have an unacceptable number of 16 and 17 year-olds being admitted to psychiatric wards and that, worryingly, many children under the age of 16 are being placed on adult wards many miles from their families and homes? I am sure the Minister will agree that this is totally unacceptable and extremely harmful to the children concerned and their families. What plans do the Government have to put a complete stop to this harmful practice and provide the resources that are clearly needed for appropriate places for young children in mental health services? Does he have an approximation of the number of children we are talking about?

I do not have a figure to quote to the noble Lord, but our aim, as he says, must be to support children and young people with mental health problems wherever possible in the community in which they live. Admission to hospital should be a last resort for a young person. We have done a great deal to improve mental health services for young people in the community. We also recognise the difficulties for young people and their families if they are treated in hospitals some way from home, but the decision about where they are treated is bound to depend on what is available and what facilities are needed to meet their particular clinical needs.

My Lords, given that there should be parity of esteem not only between mental and physical health services but between people in the community and those in prison, and given that up to 70% of women in our prisons are mentally ill, what provision is now given under the Health and Social Care Act regime for the commissioning of those services for these women?

My Lords, the principle of parity of esteem applies in every clinical setting, including prisons. We have made it very clear in our document Closing the Gap that these matters are not only important in the wider community but also in prison. We will be monitoring the situation very closely, not least in women’s prisons.

My Lords, does the Minister accept that successive Governments have shown a remarkable lack of kindness in giving information concerning the apportionment of funds between physical and mental health matters? Does he accept that what is asked for is not a detailed breakdown under various headings, but a broad, ballpark figure that will allow the public to judge whether or not mental health has been less than equitably dealt with in this situation? The failure to give this information, which clearly must be shared by all departmental Ministers, will only add to that suspicion.

My Lords, the Government are committed to the principle of transparency in these areas. I can tell the noble Lord that last month NHS England published expenditure data from its programme budgeting data set for 2012-13 which show that expenditure on mental health in that year was £11.28 billion.

My Lords, the noble Earl cannot escape his own responsibility and that of his ministerial colleagues. He sets the mandate for NHS England. NHS England has specified that for the next financial year mental health trusts are to be discriminated against as compared to acute trusts. Ministers cannot evade their responsibilities. Why do they not intervene?

My Lords, we have intervened. I have already referred to the action my honourable friend Norman Lamb has taken, making it very clear that not only would there be ministerial oversight of clinical commissioning group plans but that we would ensure that every decision made by a clinical commissioning group with regard to its mental health patients could be justified.

My Lords, I welcome the Minister’s repetition of the parity issue but, in practice, many young people nowadays—one in four, perhaps, as has come out in recent surveys—are suffering from mental health problems. I have evidence, which I would be glad to give to the Minister for his intelligence network, that there is no parity when it comes to young people. For example, one GP said that it is a “DIY service”. There are major concerns about mental health across all ages, particularly young people. I would welcome a response from the Minister now but I would also like to give him some evidence to be looked into with regard to specific areas in this country.

I share my noble friend’s concern about this and would be happy to receive the information to which he refers.

Mesothelioma Lump Sum Payments (Conditions and Amounts) (Amendment) Regulations 2014

Pneumoconiosis etc. (Workers’ Compensation) (Payment of Claims) (Amendment) Regulations 2014

Diffuse Mesothelioma Payment Scheme Regulations 2014

Motions to Approve

Moved by

That the draft regulations laid before the House on 3 and 12 February be approved.

Relevant documents: 21st and 22nd Reports from the Joint Committee on Statutory Instruments, considered in Grand Committee on 17 March.

Motions agreed.

Defence Reform Bill

Order of Consideration Motion

Moved by

That the amendments for the Report stage be marshalled and considered in the following order:

Clauses 1 to 4, Schedule 1, Clauses 5 to 7, Schedule 2, Clauses 8 to 10, Schedule 3, Clauses 11 to 13, Schedule 4, Clauses 14 to 38, Schedule 5, Clauses 39 to 45, Schedule 6, Clause 46, Schedule 7, Clauses 47 to 51.

Motion agreed.

Deep Sea Mining Bill

Third Reading

Bill passed.

Gambling (Licensing and Advertising) Bill

Third Reading

Amendment 1

Moved by

1: After Clause 1, insert the following new Clause—

“Payment of Horserace Betting Levy by holders of remote operating licences

(1) The Secretary of State may by regulations made by statutory instrument make provision so as to secure that the bookmakers by whom the levy under section 27 of the Betting, Gaming and Lotteries Act 1963 is payable include bookmakers who are required to hold a remote operating licence (within the meaning given by the Gambling Act 2005).

(2) Regulations under subsection (1) may—

(a) confer a discretion on any person;(b) include provision amending, repealing, revoking or otherwise modifying any provision made by or under an enactment;(c) make different provision for different purposes;(d) include incidental, consequential, transitory, transitional or saving provision.(3) No regulations may be made under subsection (1) unless a draft of the statutory instrument containing them has been laid before and approved by a resolution of each House of Parliament.

(4) Nothing in this section is to be read as preventing—

(a) the bringing into force of Part 2 of the Horserace Betting and Olympic Lottery Act 2004, or(b) the exercise of any power under that Part.”

My Lords, I thank your Lordships for the helpful and constructive discussions that have taken place on the horserace betting levy. As I said on Report, these discussions have been very valuable and have helped to take us to where we stand today.

This amendment provides the Secretary of State with reserve powers to make regulations to secure extension of the liability to pay the horserace betting levy under Section 27 of the Betting, Gaming and Lotteries Act 1963 to all bookmakers who are required to hold a remote operating licence from the Gambling Commission under the Gambling Act 2005. That will include bookmakers who are based outside Great Britain and who will be required to obtain a remote gambling licence as a result of the Bill.

This amendment is fully in keeping with the context and purpose of this remote gambling Bill, which is about levelling the playing field for bookmakers engaging with British punters. Subsections (1) and (2) of the proposed new clause are broadly drafted to ensure that the Secretary of State has power to make all the changes that may be necessary to secure extension of the levy to offshore bookmakers. This clause ensures, for example, that the Secretary of State has the power to make changes to the levy scheme that may be necessary to secure extension compatible with the UK’s obligations under EU law.

Subsection (3) is essentially the same as the amendment tabled by my noble friend Lord Astor on Report. Secondary legislation brought forward under this amendment will be subject to the affirmative procedure in both Houses of Parliament. Subsection (4) expressly makes clear that existing provisions to abolish the levy once a suitable replacement has been found are unaffected by this amendment. The Government believe that any statutory levy should be fairly applied, but that does not mean that we are abandoning the search for a replacement that more appropriately reflects the modern betting and racing industries. The Government now intend to move forward quickly on two concurrent projects.

First, on extending the levy, we will seek to complete the necessary work in time for negotiations on the 55th levy scheme in 2015 to take place on the basis of extension. I must add that this timing will, of course, be subject to the outcomes of discussions with the European Commission that will begin this Friday. The timing will also be subject to the outcome of a consultation on the mechanics of implementing levy extension which will begin shortly. At the same time, we will develop wider levy reform options and consult on those later this year. This amendment is about collecting the horserace betting levy in a fair and consistent way. It is a reasonable amendment which I believe commands widespread support. I beg to move.

My Lords, I thank my noble friend for bringing forth this amendment instead of the amendment that I moved on Report; this amendment in lieu is better drafted than mine. I am very grateful for the support that both he and the Minister for Sport in another place, Helen Grant, have given on this issue. The amendment has been widely welcomed by the racing industry and by the majority of the betting industry. Of course, the hard work of looking forward to a replacement of the levy now begins, which will require a great deal of movement from all those parties involved in racing to come to a conclusion that will work and is a commercial agreement. In the mean time, I thank my noble friend for bringing forward this amendment.

My Lords, I am aware that the House is keen to get on to the important debate that we will hold on the Ukraine this afternoon, so I will not detain it longer than I have to.

I start from a position that may not be widely shared in this House—I do not know—which is that I am against the levy, and I have been for years. When I started off being against it I was in a minority of one, but now a large number of people have come round to the view that it is not desirable. The two Members of the House of Commons who have most knowledge of these matters—Mr Philip Davies and Mr Laurence Robertson, who chairs the Racing and Bloodstock Industries All-Party Group—are both anti-levy. On their good days the Government are anti-levy, since they have explained that they want a replacement of the levy. I hope that it will be a commercial replacement that comes along.

I am against the levy for two reasons. First, for my sins I am by training an economist and, like all economists, I believe that subsidies, ceteris paribus, are a bad thing. They distort markets and interfere with the generally beneficial results in industry of free competition. The statutory levy on horseracing betting is an exemplar of this; it means that racing spends much of its time lobbying for more levy instead of putting its house in order and modernising the sport. It leads to bigger prizes, which in turn lead to inflated prices for the best bloodstock and then demands for even bigger prizes, so that that investment in inflated-priced bloodstock pays a dividend. Supernormal profits are made by some participants in the sport, including successful trainers, but I observe that little of that money trickles down to stablehands.

Secondly, I am against the levy because, as a socialist— I am sorry if that word shocks some noble Lords—I believe in greater equality. What we have in the levy is a statutory mechanism that redistributes wealth from the less well-off to the rich. The poor punter in the betting shop subsidises the agreeable hobby of the rich racehorse owner. You never meet a poor racehorse owner, unless you meet one who has shown an excessive belief that his pride and joy is going to win the next race and has invested accordingly with the bookmakers.

So I should like to live in a levy-free world. If in such a world the betting industry and horseracing industry decide that it is in both their interests to have a commercial arrangement whereby betting provides money for horseracing, that is all well and good. I have no desire to interfere in a free contract. Indeed, quite a lot of that has been happening, because media rights for covering horseracing have been rising quite rapidly. You do not read that when you hear racing’s pleas for more and more levy. Even more significantly, we have been edging towards a commercial agreement on support from one industry to another, and the last levy settlement reflected that. As Parliament clamps down, as I am sure that it will, on FOBTs in betting shops, so the betting industry will need horseracing more and will have to pay to get the product that it requires. There is nothing wrong with any of that.

As an anti-levy person who is glad to see the signs that it may be fading away, where does that leave me on the amendment? I can see the Minister’s argument that, if you are going to have a levy, it is better to have a fair one than to have an unfair one—so I am not necessarily opposed to doing what the amendment would do to make the levy payable on bets with overseas operators. It is the level playing field argument, and who can be against a level playing field? However, a fairer levy is not at all the same thing as a larger levy. It is a quite different question to how much should be raised in a levy. So I would ask the Minister when he replies for the reassurance that behind this amendment does not lie any intention to signal that the Government believe that the yield of the levy should be in future higher than it is now. That is a position on which the Government should be strictly and studiously neutral.

Will the amendment bring a levy-free world closer or less close? I note that William Hill, the bookmakers, made a comment in the Racing Post, to the effect that altering the levy in this way might mean that the whole scheme was declared illegal as a state aid by the European Union. In reaching this conclusion, it analysed the recent decision of the Commission in the French case, allowing a scheme in some ways analogous to that which the Government propose here. It pointed out, first, that that decision is being appealed by the Remote Gambling Association and its members and, secondly, that an aid that might not be regarded as distorting competition in a market such as that of France, which is essentially non-competitive, might not be allowed in Britain, where the market is highly competitive. So it is a glimmer of hope. The Government might go down that path but, with any luck, the Commission might use it as an opportunity to get rid of the levy anyway.

William Hill also points out—and I think that this is an even better point to rest on—that, although the Commission may allow the levy not to be state aid, that may depend on how it is spent. If it is spent in deprived areas, supporting racecourses that would otherwise close down, that is one thing, but if it is used just to stack up larger and larger prizes for owners, that is another. Therefore, we may get not only a fairer but a better levy as a result of the unplanned consequences of this amendment and any regulations under it. The Commission took precisely that view of the proceeds from the sale of the Tote. As noble Lords know, some money was retained from those proceeds for racing, but it had to be spent in certain ways, and not necessarily in the ways racing would have preferred.

However, none of these desirable consequences can be relied on, so I want to press the Minister on one absolutely central point. When he announced the bringing forward of this amendment, he argued that the Government were taking these powers without prejudice to their long-lasting, though slow-moving, efforts to find the holy grail—a levy replacement which did not involve government in fixing the flow of funds from one industry to another. I ask the Minister to give those assurances again today in the strongest possible terms and then to go off with his colleagues and betting and horseracing representatives to find a system which does not involve a state-enforced transfer from poor punters to fat-cat owners.

My Lords, having spoken at all stages of this Bill in favour of the amendment of my noble friend Lord Astor, I add my thanks to those he gave to the Minister. I certainly wish him and his colleagues well in their discussions with the European Commission. I very much hope that he will avoid the dire consequences predicted by the noble Lord, Lord Lipsey, or, indeed, those whom he cites.

I take this opportunity to thank the Minister, with one exception, for his courtesy and the care that he took over the Bill throughout its proceedings. He gave many assurances, which I am sure we will all follow up in due course. I only hope that his discussions with the casinos are proceeding apace and that that anomaly will be ironed out in due course. Given good will on all sides—I know that the Minister has that good will—I am sure that we will find a suitable solution. It may not be the optimum one but it will be a solution.

My Lords, I, too, rise briefly to add my support to this amendment and to pay great tribute to the noble Viscount, Lord Astor, and, indeed, to his noble friend the Minister. I must declare an interest in having a son who trains horses and I have an interest in his yard at Newmarket. I congratulate the Government on taking this on board so very seriously.

My Lords, I rise merely to register a sadness in that, in moving Amendment 1, the Minister is abandoning his long-standing opposition to any amendment to the Bill. I am concerned that the one amendment to which he has agreed provides regulation-making powers that will help the industry, but he has not introduced a balancing amendment to help with consumer protection and to help the vulnerable.

I was pleased that the noble Baroness, Lady Jolly, said at a meeting with Sky Bet and me that the Government were at least considering backing up their voluntary approach to FTB with regulations, and I am disappointed that the opportunity to insert them in the Bill has now been lost. I very much hope that the Government will put this right in the consumer protection Bill because consumer protection is also very important.

My Lords, other Members may remember a similar discussion in this House in the early 1990s when the Duke of Devonshire said in terms—I cannot remember exactly what he said—that in his view any well brought up young man should have a mistress, a yacht and a racehorse; and that, if he could not afford any one of them, he jolly well should not have them. I am inclined to agree with him.

My Lords, I am not sure how I can follow that remark but I shall try my best.

I should like to add my thanks to the Minister for taking on board the principles contained in the amendment tabled by the noble Viscount, Lord Astor, to which I added my name. There is, I think, true cross-party support for this amendment and this move. There may not necessarily be support for it on my own side but that is another matter.

However, this change will undoubtedly lead to a healthier sport, more investment, growth and jobs. Where I certainly share the opinions of my noble friend Lord Lipsey, is my belief that any such extension should lead to the extension of work that the levy supports on training, education and employment. I, too, welcome the Minister’s commitment that the two work streams of levy extension and wider levy reform will run concurrently. I do so because neither process can be used as an excuse to hold up the other—again I share the views of my noble friend. It is really good that the Bill team have given that commitment. I share the view that has been expressed that there is a need for a more modern and commercial framework for the levy. I know that that is supported not only by the racing industry but by everyone who works in it. That is where I should like to add my voice.

Action has long been required. I congratulate the Minister and the Bill team, who have done excellent work on the Bill, on not allowing the opportunity for primary legislation to pass without this action. However, I want to make one point, which reflects my noble friend’s point, too. The Minister should begin consultation on levy reform options as soon as possible, and on this side we would also like this to include the option for a horseracing right.

My Lords, I am delighted that the Bill is finally going through. I have one question. Does the Minister agree that without the Maktoum family, we would have absolutely no media coverage of racing? I, for one, would very much regret that. We should somehow show our gratitude to those who make it possible for a much wider public to enjoy racing. I congratulate again those who have produced the Bill.

I thank your Lordships once again for the fascinating contributions to this short debate. We have gone into some interesting country already, and I particularly thank my noble friend Lord Astor, who has assisted so much in reaching a reasonable and fair result. I am mindful of what my noble friend Lord Clement-Jones said. I am sorry that I was unable to satisfy him on all points, but we have endeavoured at every turn in this honest adventure to get things as right as possible. I certainly know that the noble Lord, Lord Palmer, has a strong interest in racing. I am not sure what more could be said about my noble friend Lord Wade’s contribution, other than it was powerful.

I also wanted to say to the noble Baroness, Lady Howe, that we have had some very good discussions. I should like to reassure her and I will say so in the next group. Those discussions have been constructive, and the reason the Government feel that this provision is a natural extension to the Bill is that it is in a natural sequence of what is intended in the Bill as regards remote gambling.

My noble friend Lady Trumpington is a great champion of racing, and I endorse what she said because I do not see racing, or indeed life, as being about divisions of people. Whether one is a stable lad or a racehorse owner, we all enjoy the racing and we love the horses. That is what I see as the unity in the racing crowd and the people involved. I know many of them from all parts of the country and racing is a very important part of our economy.

I also agree with what the noble Lord, Lord Collins of Highbury, said in support of racing: it is very important that the work of the levy is constructive. The noble Lord outlined some of the levy’s extra work, and I am pleased that the concurrent work on both the extension and the wider reform has been well received. It is something on which we very much want to make progress.

I want to refer to the two questions raised by the noble Lord, Lord Lipsey. I very much hope that my opening remarks provided some of the reassurance that he seeks. We are absolutely not abandoning our efforts to find a suitable alternative to the levy. I reiterate that we believe that any statutory levy should be fairly applied, but it does not mean that we are putting aside the work on the wider levy reform that is expected later this year. I am sure that many of your Lordships will wish to engage in the consultation on that. Obviously there have been pitfalls in the work that has gone on over the years but let us see how we do with this particular activity.

The noble Lord also made a point about future levy yields. I have looked at the amount of money received in the past from the levy and it seems to have gone up and down. First and foremost, this amendment is designed to provide a level playing field and a fairer levy, as the noble Lord acknowledged. However, the rates of an extended levy will be a matter for the independent statutory Horserace Betting Levy Board. I underline “independent”—we obviously have independent bodies to work with the betting and racing industries, as is currently the case. I very much hope that this will be a success.

Amendment 1 agreed.

Clause 5: Extent, commencement and short title

Amendment 2

Moved by

2: Clause 5, page 3, line 33, at end insert—

“(5A) An order under subsection (5) relating to the commencement of section 2 may not be made until the Secretary of State has reported to Parliament on the outcome of any reviews into advertising of gambling in Britain that they have commissioned in the six months before the day on which this Act is passed.”

My Lords, I have always been very concerned that the Bill seeks to regulate online gambling providers based outside the United Kingdom through advertising. It proposes that providers across the world should be told that if they obtain a UK Gambling Commission licence, they will be able to advertise in the United Kingdom. I have argued that it is better to secure compliance through proper enforcement—the stick of financial transaction-blocking rather than the carrot of the offer of being able to advertise in the United Kingdom.

To date, I have contended for that primarily on the basis that, for reasons that I will not repeat now, the offer of advertising is not a robust enforcement mechanism, rather than on the basis of the impact of this approach on the scale of gambling advertising. My reason has been that I assumed that increased gambling advertising was something to which the coalition Government were deeply committed because of the nature of this Bill.

The Bill radically changes the law regarding advertising. At present, it is legal for providers based only in the European Economic Area and white-listed jurisdictions to advertise in the United Kingdom. The Gambling Bill, however, changes this radically, proposing that any provider based in any jurisdiction in the world should be able to advertise in the United Kingdom so long as they obtain a UK Gambling Commission licence. This means that we will move from a place where providers in just 31 jurisdictions outside the UK can advertise in the UK to a place where providers in any of the 196 or so jurisdictions in the world can advertise if they obtain a Gambling Commission licence. This widens the jurisdictional scope for advertising online gambling in the UK by more than sixfold. That is a radical change, a change which I thought was as a result of the fact that the coalition Government not only want better regulation, in the sense that they want more companies to get Gambling Commission licences, but also want, or at least are relaxed about getting, much more advertising for online gambling. I thought that they could not have allowed such a Bill to go to Parliament if that was not the case.

Imagine my shock when on 2 March 2014, I read in the Sunday Times the Secretary of State for Culture, Media and Sport, state:

“I also think we need to look again at the regulation of gambling advertising across the UK. In particular, I ask myself if the seemingly constant gambling adverts on television are appropriate. Ofcom figures show a 600% increase in television gambling advertising between 2006 and 2012. This concerns me and I think many people feel uneasy about the high levels. For this reason I have asked the Advertising Standards Authority to review the codes for gambling advertising to see whether change is needed. The outcome of the review could see significant changes in the way gambling is advertised in Britain, ensuring children and the vulnerable are better protected”.

While I am pleased and delighted by that statement, I am at a loss to know how the Secretary of State can make this assertion on the one hand, yet on the other be taking through Parliament a Bill that widens the scope for online gambling providers to advertise in the United Kingdom from 31 jurisdictions to providers in every jurisdiction in the world, so long as they obtain a UK Gambling Commission licence. The Secretary of State is rightly concerned about a 600% increase in television gambling advertising between 2006 and 2012 but she should also be very concerned about the 600% increase in jurisdictions hosting online gambling providers that she says should be able to advertise in the UK if they get a Gambling Commission licence.

I know that at this point some may be tempted to say, “Don’t worry, all these providers will only get the opportunity to advertise because they also come under our regulation”. The implication is that regulated advertising is okay. However, the scale of advertising to which the Secretary of State referred, like the 600% increase in television advertising, is legal and regulated but that does not make it unproblematic. Britain’s primary problem is not the scale of illegal, unregulated advertising but rather, as the Secretary of State’s comments make plain, the scale of legal, regulated advertising which this Bill proposes further to increase.

Today, as the Secretary of State rightly pointed out, we have a problem about the scale of gambling advertising following the 2005 Act. Yet the truth is that we are about to sanction the 2014 Act, which will, if you are concerned about the scale of advertising, make matters much worse, dramatically widening the scope for regulated gambling advertising. It seems to me that the only logical response to the concerns expressed by the Secretary of State about the scale of regulated gambling advertising in the United Kingdom is to narrow the scope for such advertising, not dramatically widen it as this Bill does. In that context, rather than sanctioning Clause 2, arguably the more sensible thing to do would be to delete it. I have, however, opted for a much more modest approach of delaying its implementation.

My amendment states that an,

“order under subsection (5) relating to the commencement of section 2 may not be made until the Secretary of State has reported to Parliament on the outcome of any reviews into advertising of gambling in Britain that they have commissioned in the six months before the day on which this Act is passed”.

Given the significant contradiction—a kinder phraseology would be tension—in the Government’s position and the scale of public concern about what they are proposing, the very least that the Government should do is to delay commencing Section 2 until after the Government have reported to Parliament on the four initiatives that the Minister outlined in his response to Amendment 3 tabled by the noble Baroness, Lady Jones, on Report on 4 March.

In that context, I have two questions for the Minister. First, there seems to be some confusion about the timings of the reports to which the Minister and the Secretary of State committed themselves last week. Will the Minister clarify the timetable? I hope that he can tell us that all reports will be made to Parliament within six months. Secondly, and much more importantly, what assurances can he give Parliament about the future of advertising regulations, especially under the Bill? His response to this question is important.

If we are to be generous to the Government, the only way that they can introduce the Bill and for its advertising implications not to contradict the thrust of what the Secretary of State said about the scale of regulated gambling advertising on 2 March—especially the 600% increase in TV advertising—would be to do the following: first, significantly to tighten up regulation of the gambling advertising that is currently permitted before the Bill takes effect, such that the scale of advertising is significantly reduced; and, secondly, for the regulations governing the operators that will, courtesy of the Bill before us today, be allowed to advertise in the United Kingdom from abroad to be applied very tightly from day one.

If the current level of advertising is significantly reduced, there may be space for a small increase in advertising from online providers from abroad without that increasing the scale of gambling advertising. This strategy of significantly tightening current advertising and then allowing new advertising through the Bill only on a limited basis is the only possible way in which the Secretary of State’s expression of concern about the scale of gambling advertising—I note again the 600% increase in TV advertising—can possibly be reconciled with the Bill.

To that end, I very much hope that the Minister will provide the strongest possible assurance that the Government intend to embrace the amendment. In this regard, I note with great concern that Section 328 of the Gambling Act 2005 allows the Secretary of State to make regulations controlling the advertising of gambling, but the Explanatory Notes to the current Bill say that no regulations have been made under Section 328 to regulate advertising. I suggest that that needs to change. What does the Secretary of State intend to do with her order-making powers?

Mindful of the importance of the Secretary of State’s expression of concern about the scale of regulated gambling advertising and the fact that the Bill dramatically widens the scope for such advertising throughout the United Kingdom, it is only proper that the advertising provisions in the Bill do not come into effect until the advertising review process has been completed and the findings presented to Parliament. I beg to move.

My Lords, I fully associate myself with the comments made by the noble Lord, Lord Browne of Belmont. I shall not repeat what he said, but merely underline that he is absolutely right to highlight the contradiction between the impact of the Bill on advertising and the statement of the Secretary of State expressing concerns about the current level of advertising, even before this law has taken effect. It is vital that we insist that Parliament should be given time to respond to the gambling advertising review promised on Report—it is, I would stress, a response to the Secretary of State’s concern about the current scope for gambling advertising which this Bill will dramatically widen—before Clause 2 of this Bill is commenced.

The truth is that because of this Bill the Government hope that we will sanction online gambling providers right across the world, including countries such as China, Korea, Brazil and Argentina, which for the first time will be able to advertise in the UK if they get a Gambling Commission licence. This seems, as the noble Lord, Lord Browne, has said, a strange way of responding to the significant and legitimate concerns expressed by the Secretary of State on 2 March. There are other ways of regulating that do not mean that any increase in regulation must result in an increase in advertising, as financial transaction blocking demonstrates so very plainly.

I look forward to what the Minister has to say because, as I failed to point out when I spoke earlier, he has definitely been a listening Minister and has tried his best to meet our concerns. However, I am sad to say it does not look as if this issue has been met.

My Lords, we are slightly surprised to be revisiting this issue today. Although it is very important, it was discussed in some detail on Report, so we have to be impressed by the way the noble Lord, Lord Browne of Belmont, has convinced the Public Bill Office that it was right that he should be allowed to do so. He is clearly someone we shall have to listen to in the future if we want to have our evil way. However, as he has just said, there was a fair amount of confusion at the time, with letters from the Minister crossing with interviews and public statements by the Secretary of State. It is obviously important therefore to use this opportunity to try to tease out the issues that are in play here, and in particular what dates we are actually talking about.

The fact that the issue is coming back to the House at this stage says something important about our concerns about the way our “gambling culture” is developing and its potential to impoverish and cause irreparable social damage to the most vulnerable people in the country. The noble Baroness, Lady Howe, raised the question of why the Bill does not deal with the ills caused by gambling in her intervention on the first amendment, and she has just spoken again on the same point. I agree with her that this is something that we might have to look at again when we consider the Consumer Rights Bill, which is due to come to this House in June.

While gambling may not bring down dilettante Dukes, it certainly does affect others. Your Lordships’ House heard in Committee from several noble Lords who had been most grievously affected in this regard. The noble Lord, Lord Browne, sponsored a meeting at which ordinary people who had been addicted to gambling spoke movingly about their experiences and the need for the Government to take action in regard to their concerns. As we have heard, there was a report on the specific point about the watershed for gambling advertising and the spread of gambling more generally, including advertising for bingo, mentioned by my noble friend Lady Jones. I understand the position to be as follows, and I would be grateful if the Minister, when he comes to respond, could confirm it.

The relaxation of restrictions on gambling advertising that followed the implementation of the Gambling Act 2005 has led to a significantly greater volume of gambling advertising on TV and in other media. In addition, the gambling industry has been innovative and the existing voluntary codes that govern gambling advertising are now applied across a much changed gambling landscape. These technological developments have led to intense competition in remote gambling advertising which has coincided with an increase in complaints and concerns, as I have already mentioned. On Report, the Minister explained that the Government have been monitoring the impact of these developments and considering whether the current controls remain adequate across remote gambling advertising and other forms of online gaming activity, including online bingo.

The Minister went on to say that the Government have asked four bodies to do further work. First, the Remote Gambling Association will co-ordinate an industry-led review of the voluntary gambling codes and will come forward with any proposed revisions by the summer of this year. Secondly, the Committee of Advertising Practice and the Broadcast Committee of Advertising Practice have committed to evaluate the findings of a new report by the Responsible Gambling Trust this month, and will examine the available evidence on gambling advertising and its relationship with problem gambling. We are told that the committees will publish their findings on completion of this work, which could lead to changes in the principal codes controlling gambling advertising, this time by autumn. Thirdly, the Advertising Standards Authority will undertake a review of enforcement action under the gambling rules, taking into account internal intelligence, complaints statistics and trends, to ensure that it is enforcing the rules proportionately and consistently. The ASA, we are told, will communicate the outcome by autumn this year. Finally, the Gambling Commission will consider what revisions might be necessary to the licence conditions and codes of practice to ensure that all gambling advertising continues to comply with the licensing objectives of the Gambling Act. Although this work is principally focused on ensuring that free bets and bonus offers are marketed in a fair and open way in the gambling industry, it will cover a wider range. I note that the last item had no date specified for its completion, and would be grateful if the Minister could specify in his reply when he expects the Gambling Commission to report on its review.

This is a complicated field, with lots of cross-cutting and interesting work going on, and the timings are slightly out of sync. It is therefore right that the noble Lord should press the Minister to come up with a clear statement about where exactly these timings are. When the Minister does that, perhaps he can also comment on a point that he made in the previous debate, when he said:

“The terms of reference for the reviews are currently being defined and will be made public by the spring”.

A shaft of sunlight just illuminated our gloomy surroundings here, so I gather that spring is on the way. But when exactly is spring, and could we please have these statements so that we can look at them?

On the question of dates and times, the Minister said:

“Any statutory regulations would be preceded by consultation”,

which is good. He also said that the Government,

“will consider the findings of the review before determining what further action may be necessary”—

I would be surprised if they did not—and,

“will confirm their position by the end of the year”,

which is perhaps another variation on “autumn” and “towards Christmas”. He said that he,

“will arrange for a summary of the findings of the reviews and the Government’s response to be placed in the Libraries of both Houses as soon as they are available but definitely by the end of this year”.—[Official Report, 4/3/14; col. 1297.]

The trope that is coming through is “by the end of the year”. We assume that is this year, although it would be helpful if we could have some clarity on that.

The noble Baroness, Lady Jones of Whitchurch, in her response to the debate on Report, welcomed the change in mood and position from the Secretary of State and the Minister over the past couple of months, welcomed the detail that the Minister had spelt out and, with some reservations, welcomed the commitments that the Minister gave in that debate. However, when she withdrew her amendment, she warned the Minister that,

“we will pursue the Government as regards the work that is taking place over the coming months and try to hold them to account for the commitments that they have given”.—[Official Report, 4/3/14; col.1298.]

He has been warned. I can sympathise with the wish of the noble Lord, Lord Browne, to see this all tightened up and nailed down. I hope the Minister can repeat the commitments he gave on Report and confirm that his understanding is that we will have action on this troubling issue by the end of this year, 2014, at the latest.

As this is the last time I shall speak on this Bill, I take the opportunity to thank the Minister and the noble Baroness, Lady Jolly, for the constructive and positive way in which we have been able to make improvements to this Bill during its time in your Lordships’ House. We also got a great deal of support from the Bill team. I thank them for their support, which has been of great assistance.

As I said at Second Reading, I suspect that this is not the last time we will need to turn our attention to gambling, not least because the gambling industry is changing so rapidly, but also because of growing concerns about problem gambling, which I have already mentioned. In addition, I think the noble Baroness, Lady Heyhoe Flint, and the noble Lord, Lord Moynihan, who were both in their places a moment ago, made the point that we need to get a proper law in this country about match fixing. The Bills that we are talking about are about preventing problems in gambling and do not really go to the heart of one of the issues that is growing in importance across the country. There is evidence that match fixing is going on with a view to gain, which is something that we must act on. The laws that we currently have do not deal with this problem. We were not able to make changes in this rather tightly drawn Bill, but I think and hope that the arguments have been heard. If we do come back to it, it will at least be on the basis of a very much better understanding of the issues, which we have gained in our very good debates in recent months.

My Lords, I am grateful to the noble Lord, Lord Browne, for discussing his amendment with me earlier today, which I certainly found helpful. As the noble Lord said, this amendment seeks to delay the commencement of the repeal of Section 331 of the Gambling Act 2005 until the Government have reported to Parliament on the outcome of ongoing reviews into gambling.

First, I will be very clear about this. Clause 2 of the Bill is not about liberalisation of remote gambling advertising. It is a regulatory measure, and I will explain to your Lordships why I believe it is very necessary. The effect of Clause 2 is that, for the first time, remote gambling operators based in EEA or white-list states will be able to advertise and offer remote gambling to British consumers only if they are regulated by the Gambling Commission. At present, remote gambling operators based in EEA or white-list countries may advertise and offer remote gambling to British consumers without the need for a remote operating licence from the Gambling Commission, regardless of the quality of their home regulation.

The noble Lord, Lord Browne, has expressed concern about a potential increase in the overall volume of gambling advertising as a result of the Bill. I reassure noble Lords that the existing television scheduling restrictions will significantly limit the potential for any increase in the volume of advertising. As a consequence of the Bill, all gambling advertising will be subject to the regulatory rigour of the Gambling Commission and the Advertising Standards Authority, ensuring consistent standards across the piece. This is a significant development that will extend regulatory control over the type of advertising that may be shown in Great Britain.

As a result of the Bill, new gambling operators that wish to advertise in Britain will need to comply with the advertising codes of practice. These codes put in place strict controls in relation to gambling advertising and children: for example, advertisements must not appeal to, or include, children and young people and they must not glamorise gambling or suggest it as a solution to financial concerns. Advertisements that breach the code have to be amended or withdrawn. In addition, the Gambling Commission’s code of practice provides that operators must adhere to the advertising codes and ensure that all gambling advertising is undertaken in a socially responsible manner. Failure to take account of this can be used as evidence in criminal or civil proceedings, and may be taken into account by the commission in a review of the operator’s licence.

Indeed, earlier this month, the Advertising Standards Authority used powers under the advertising codes to take interim action against an operator following an unprecedented number of complaints. In this case, the Advertising Standards Authority judged that the advertisement may have been seriously prejudicial to the general public on the ground of the likely serious offence it may have caused. However, because the operator concerned is based outside Great Britain, the Advertising Standards Authority could apply its ruling only to national print media and not the operator’s website. Once operators are licensed under the new arrangements, regulatory action could be taken by the Gambling Commission.

To postpone commencement of the Bill until the end of this year, when the Government will be reporting on the outcome of ongoing advertising work, would delay the considerable benefits to consumers that the Bill will bring. It would undermine the achievement of the consumer protection purposes of the Bill, not just in respect of advertising but more widely. The noble Lords, Lord Browne and Lord Stevenson, and the noble Baroness, Lady Howe, raised, quite rightly, the aspect of vulnerable people. The Bill requires operators to comply with Gambling Commission licence conditions specifically protecting children and vulnerable adults; for example, in relation to self-exclusion and other requirements to support consumers who experience problems. Having looked at this very thoroughly since my meeting with the noble Lord this morning, on reflection I believe that delay is simply not in the interests of British-based consumers.

I made it clear on Report, in reply to the amendment in the name of the noble Baroness, Lady Jones, about the Government’s intent, that the review of the existing advertising arrangements is under way. The noble Lord, Lord Stevenson, referred rightly to the changing landscape that we have seen following the Gambling Act 2005. I confirm that the findings will be available in the autumn. This work will be taken forward by the Gambling Commission, the Advertising Standards Authority, the committees of advertising practice and the Remote Gambling Association. Clearly, it would be wrong to prejudge the outcome of the reviews, but I can assure noble Lords that they will be comprehensive and will seek to determine what changes might be necessary to ensure adequate protection.

I can also confirm that there will be opportunities for interested parties to make representations as the reviews progress. The Advertising Standards Authority is open to hearing from interested parties about any aspect of its regulatory work and will take into account any relevant representations it receives as it undertakes its review, the full terms of reference for which are being developed and will be published in the spring—I am led to believe that spring in this case means April.

The noble Lords, Lord Browne and Lord Stevenson, spoke about the timing. It is absolutely right that noble Lords should put the fire where it is intended, which is on the point that we want progress. The four reports are due in the autumn. The reason for the Government saying that we will confirm our position by the end of the year is that we want to have a thorough look at what the reviews come forward with, so that we can consider the appropriate response to them. That is why there is no ducking and weaving; this is about doing a proper job on this matter, and it is why we will confirm our position by the end of the year. We will deposit in the Libraries the summary of the findings and the Government’s response.

I do not believe that we should delay commencement of this Bill, because there are important benefits for the consumer. As I have said, this Bill is not about liberalisation of remote gambling advertising; it is about making sure that everyone has the due protection that we think they should have. It is for those reasons that I ask the noble Lord to withdraw his amendment.

As we have, I think, reached the final stage of the Bill—I do not think that the officials would like me to say the final fence or the finishing post, but perhaps I can as it is the Year of the Horse—I want to thank your Lordships for the work that we have undertaken together. From all parts of the House, we have had many opportunities to discuss matters of concern and interest relating to gambling. We have covered much ground. I hope that my noble friend Lady Jolly and I have been of assistance to your Lordships. We have listened—I was very grateful for what the noble Baroness, Lady Howe, said about listening—and I hope that we have set out the Government’s response as to the action that we will take to address the concerns that have been raised in this House. My particular thanks, however, must go to the officials, who have guided us both through the intricacies of the Bill and, more generally, on gambling. I have learnt a great deal from them and from your Lordships. The officials’ professionalism has been outstanding and, for that, I am most grateful.

I hope that the noble Lord will withdraw his amendment.

My Lords, I am grateful to all noble Lords who have participated in this debate, and I am pleased that the Public Bill Office gave me the opportunity to raise this amendment.

I have listened carefully to everything that the Minister has had to say. I would first stress that I fully understand that this Bill does not extend the freedom to advertise to all jurisdictions on the basis of the current arrangement with the EEA and white-listed jurisdictions. Under the new proposals, all providers will be required to get a Gambling Commission licence, which I welcome. My point is that, because the Government have selected an approach that uses the offer of advertising to extend regulation, the extension of regulation must also bring an extension of advertising—advertising for a form of gambling with a higher problem-prevalence figure than gambling generally.

I am also slightly concerned by the implication that the Minister does not think the new Bill will necessarily result in an increase in the advertising of online gambling. Of course, I understand that there are not online gambling providers in every jurisdiction in the world who want to access the UK market, just as there are not online gambling providers in every EEA jurisdiction that wish to access it under current arrangements. However, given the current realities of the global gambling market, it seems that the only way the Bill could not result in a significant increase in advertising would be on the basis of providers accessing the UK market without a licence. That is frightening and demonstrates very clearly why the noble Baroness, Lady Howe, was absolutely right to press for financial transaction blocking.

I am disappointed that the Minister did not commit to ensure that the regulatory regime with respect to current advertising and new advertising resulting from this Bill will be deployed more actively, in order significantly to reduce the former and to limit the latter, so that the combined effect of both the continuation of advertising in the current context plus the new advertising facilitated by this Bill does not have the effect of introducing a net increase in the amount of gambling. I believe that he should have either undertaken to accept my amendment or committed to tighten the regulatory framework significantly. Without having taken either of those steps, the comments of the Secretary of State on 2 March are at odds with the impact of the Bill.

However, today I sought to put down a marker and possibly highlight a contradiction in the Government’s position. I look forward to the four independent reports and I am sure that I will make submissions to those. I hope that that they will come along with my way of thinking. I beg leave to withdraw my amendment.

Amendment 2 withdrawn.

Bill passed and returned to the Commons with an amendment.


Motion to Take Note

Moved by

My Lords, these are momentous times in Ukraine, where ordinary citizens have made a stand against a corrupt regime that sought to trample on their aspirations for a European future. That future is threatened by the cynical and artificial stimulation of ethnic-based tensions as a cover for an illegal attempt to undermine the sovereignty of Ukraine. Our national interest is clear in Ukraine being able to make its own decisions, the upholding of international law and the UN charter, and the prevention of further violations of the sovereignty of independent European states in this way.

Noble Lords will recall that massive demonstrations began in Kiev in November in response to the unexpected announcement of the then President, Viktor Yanukovych, that he would not sign the EU association agreement. After various attempts to disperse the demonstrations, Yanukovych resorted to extreme measures in the week beginning 17 February, when more than 80 people were killed and more than 600 injured. In the wake of such bloodshed, the EU brokered a deal between Mr Yanukovych and the opposition to end the violence on 21 February. However, that same night Mr Yanukovych fled Kiev, thus neglecting his very first responsibility under the deal: to sign within 48 hours a law to return to the 2004 constitution. We are clear that under the extraordinary circumstances of a President abandoning his post, the Ukrainian parliament—the Rada—had the right to appoint an interim President and Government, as laid down in Ukrainian constitutional law.

The majority of the international community, including the UK, resolved to put all efforts into helping to quickly stabilise Ukraine, but unfortunately others sought to exploit the situation for their own ends. On 1 March, Russia’s parliament approved President Vladimir Putin’s request to use Russian forces in Ukraine. Within days, Russian troops besieged Ukrainian forces in Crimea. The Government continue to make clear their utter condemnation of Russia’s invasion, the violation of the territorial integrity of Ukraine and the cynical campaign of misinformation Russia conducted as a cover for its illegal actions in Crimea. Two days after Russian forces took control, Crimea’s parliament asked to join Russia and announced that the matter would be put to a referendum just 10 days later.

On Friday, my right honourable friend the Foreign Secretary met US Secretary of State John Kerry and Russian Foreign Minister Lavrov before their bilateral talks in London. Russia was presented with a series of proposals to de-escalate the crisis and to address the situation in Crimea. After six hours of talks, Russia rebuffed those efforts. On Saturday 15 March, the UN Security Council voted on a resolution condemning the referendum as unconstitutional and illegitimate, which was co-sponsored by 42 nations. Russia was completely isolated in vetoing the text, while 13 members of the Security Council voted in favour and China abstained.

The Crimean referendum was indeed held on Sunday 16 March. The UK condemns the fact that the referendum has taken place in breach of the Ukrainian constitution and in defiance of calls by the international community for restraint. In common with the majority of the international community, we recognise neither the referendum nor its outcome. The referendum was clearly illegal under the Ukrainian constitution, which states that the autonomous republic of Crimea is an integral constituent part of Ukraine, that issues related to its authority must be resolved within the provisions of the constitution and that only the Ukrainian parliament has the right to call such a referendum.

Nor can the vote be considered to be free or fair. Crimea is occupied by an estimated 30,000 Russian troops and the meeting of the Crimean parliament that announced the referendum was itself controlled by unidentified armed gunmen and took place behind locked doors. The referendum took place at 10 days’ notice without the leaders of Ukraine being able to visit Crimea and without meeting any of the OSCE standards for democratic elections. Furthermore, the ballot paper asks the people of Crimea to decide either to become part of the Russian Federation or to revert to the highly ambiguous 1992 constitution, which would give the Crimean parliament the power to decide to join Russia. There was no option on the ballot paper for those who support the status quo and want Crimea to stay as it is—an autonomous region of Ukraine. The House should be in no doubt that this was a mockery of democratic practice.

The Government have played an active role in seeking a peaceful resolution to the crisis that respects the aspirations of the majority of the Ukrainian people. Along with major partners such as the EU and the US, we have sought to address the political and economic crisis in Ukraine. At the same time, we are working intensively to build international consensus that there must be consequences for Russia if it continues its flagrant disregard for international law.

I apologise to the noble Baroness for intervening, but perhaps we can clarify something at the beginning of this debate. She keeps referring to breaches of international law, but in the Kosovo case, the president of the International Court of Justice, Hisashi Owada, said that international law contains,

“no prohibition on declarations of independence”.

The court also said that while the declaration may not have been illegal, the issue of recognition was a political one. Why is that case so different from the case that we are examining today?

My Lords, I will have an opportunity to consider that specific question and will make sure that it is answered during this debate if we have that information.

On 6 March, an extraordinary meeting of the European Council in which the Prime Minister played a pivotal role agreed a three-phase approach to stand up to Russia’s illegal behaviour: first, immediate steps to respond to what Russia has done; secondly, urgent work on a set of measures to follow if Russia refuses to enter dialogue with the Ukrainian Government; and, thirdly, a set of further, far-reaching consequences should Russia take further steps to destabilise the situation in Ukraine.

I am sure that your Lordships would appreciate more detail on each of those steps, and I will take them in turn. First, as a response to what Russia has already done, immediate steps have already been taken. We have suspended preparations for the G8 summit in Sochi indefinitely. We have withdrawn royal and ministerial visits to the Sochi Paralympic Games. Work on a comprehensive new agreement on relations between Russia and the European Union has ceased, and the EU has suspended discussions on a more liberal visa regime in the Schengen area—a long-standing goal of Russian policy.

In the second phase, and in company with other allies, we have worked to persuade Russia to negotiate with the Government of Ukraine about their concerns rather than resorting to illegal measures. We have pushed for the creation of a contact group, first proposed by the Prime Minister back in January. The European Council agreed that such talks should start within a matter of days or further measures would be adopted—the so-called second phase. Yesterday, on 17 March, the Foreign Affairs Council agreed additional measures including asset freezes and travel bans against 21 individuals responsible for actions which undermine or threaten the territorial integrity, sovereignty and independence of Ukraine. These measures are in addition to those already agreed against Yanukovych and his circle.

Has the Minister noted President Putin’s contemptuous remarks about those sanctions this morning? Did she also note that yesterday the Russian stock market rose by more than 5% in one day with relief that the sanctions were so weak and shallow? In effect, have these sanctions not been so derisory as to ensure that the Russians feel that there is hardly any cost at all to them in taking over Crimea, which has a great psychological as well as a strategic significance for them? It was really cheap at the price that we have set.

My Lords, I did notice the specific comments to which the noble Lord refers. We fundamentally believe that the issue of sanctions will work; indeed, it has worked in a number of scenarios in relation to other foreign policy matters. These sanctions are currently being kept under review and the situation as it develops will be responded to with further measures, including further sanctions.

Thirdly and most significantly, the Council agreed that if further steps were taken by Russia to destabilise Ukraine there would be “additional and far-reaching consequences” for the relationship between Russia and the EU, including,

“in a broad range of economic areas”.

The Prime Minister played a leading role in helping to reach this agreement, including through convening a meeting with fellow leaders from France, Germany, Italy and Poland on the morning of the Council. Such sanctions would have consequences for many EU member states, including Britain, but the Government believe that the costs of not standing up to aggression are far greater.

Finally, the Council sent a clear message of support to Ukraine by agreeing to accelerate the signature of the political part of the EU’s association agreement with Ukraine and by unilaterally lowering trade tariffs. The EU has now frozen the assets of 18 people linked to the former regime, and Britain has deployed a team to Kiev from our National Crime Agency to help the new Ukrainian Government track down misappropriated funds. Ukraine also needs support for its economy. My right honourable friend the Foreign Secretary has been at the forefront of efforts to co-ordinate an international package of support for Ukraine, drawing principally on IMF and EU funds.

The Prime Minister announced last week that we would review all UK bilateral military co-operation with Russia. Today, my right honourable friend the Foreign Secretary has announced that we have suspended all such co-operation, including the signing of the military technical co-operation agreement, along with the cancellation of this year’s France-Russia-US-UK naval exercise and the suspension of a proposed Royal Navy ship visit to St Petersburg and of all senior military visits. We believe that under current circumstances, there is a compelling case for EU member states to suspend export licensing for military and dual-use items destined for units of the Russian armed forces or other state agencies which could be, or are being, deployed against Ukraine. The UK has now, with immediate effect, suspended all licence and application processing for licences for direct export to Russia. We will also suspended licences for exports to a third country for incorporation into equipment for export to Russia where there is a clear risk that the end product could and will be used against Ukraine.

A major focus for the interim Government in Ukraine and the international community is to ensure that the pre-term presidential elections called for 25 May are properly conducted, enabling all Ukrainians, including Russian speakers and minorities, to choose their leaders freely. Britain is providing technical assistance to support these elections and to assist with reforms on public finance management, debt management and energy pricing.

Europe is facing a grave challenge to the peace and security that we have worked so hard to build since the end of the Second World War. That security has hinged on respecting the territorial integrity of our neighbours. History has taught us many hard lessons about the dangers of turning a blind eye when the rights of fellow Europeans are being threatened. I am sure noble Lords will agree with the Prime Minister’s recent statement that we must stand up to aggression, uphold international law and support the Ukrainian Government and the Ukrainian people. They surely have the right to make their own choices about their own future. That is right for Europe, right for Ukraine and right for Britain.

The reality on the ground in Ukraine has constantly changed over the past few weeks and, regrettably, will continue to do so. I have sought to keep the House regularly informed through debates and Questions and have benefited from the expertise and knowledge of noble Lords from all sides of the House. Today’s debate is another timely opportunity to update noble Lords and to take note of the interventions, suggestions and views of the House.

My Lords, I thank the Minister for setting out the history of this crisis and the Government’s response so far. In my judgment, the Government have acted thus far in a very sure-footed way in a continuing, fast-moving crisis. I hope that the Minister will recognise the importance of the European Union as an instrument of our policy, and that we will be ready to use that instrument far more than in the past.

We are clearly witnessing the most important and severe crisis in East-West relations since the fall of the Berlin Wall. I shall not go back to 1945, because we have had the invasion of Hungary, the Cuban missile crisis and the attack on Czechoslovakia. What is clear is that Russia is about to annex Crimea. It is a fait accompli. Russia is creating another frozen conflict in Europe, joining Abkhazia, South Ossetia and Transnistria in Moldova, which is probably the most vulnerable of all the neighbouring countries. It is uncertain whether Russia will follow a similar course with east Ukraine, and possibly with other neighbouring countries. Perhaps the nearest precedent is that of Sudetenland in 1938, when the Nazis—the Russians will clearly not like this precedent—invaded in response to calls from their compatriots in the then Czechoslovakia. We have to ask: when will President Putin stop? It is also uncertain whether each move by Russia has been planned in advance like a sophisticated game of chess, even over the referendum. Perhaps one could plausibly ask: if there is a referendum in Crimea, why not a referendum in Chechnya, in Dagestan or in other parts of the Caucasus?

This crisis is an opportunity to learn more about Russia and perhaps to shed some of our illusions about contemporary Russia. It is also an opportunity to learn more about ourselves in the democratic West and whether the main priorities of our foreign policy are based on commerce or on wider strategic principles. Of particular interest is the robust response of an awakened Germany. I contrast the response of Chancellor Schroeder, who joined Nord Stream shortly after he left office, with the response of Chancellor Merkel. Germany now seems prepared to give far greater prominence to longer-term strategic interests over short-term commercial considerations. I certainly welcome this new assertiveness of a democratic Germany.

Our starting point is surely recognising that Russia has important interests of history, geography and ethnicity in Ukraine. Thus, the immediate response of Kiev, which was soon rescinded, in relation to the Russian language was most unwise. These clear interests of Russia could, with good will, have been accommodated, for example, through international guarantees for the Russian minority, including on the status of the Russian language, more autonomy and a voluntary renunciation of joining military alliances—that is, neutrality. However, the agenda of President Putin was clearly wider than that.

Since the early 1990s, we in the West have treated Russia on a basis that we now think of as an illusion, in the vain hope that Russia was firmly on the path to democracy. There was some evidence of that during the time of President Yeltsin, however chaotic. We have been prepared to overlook serious failings, ignoring the almost Stalinist monolith of so many Russian parliamentary responses, culminating in the unanimous vote in the Russian Parliament in respect of military intervention in Ukraine. It was unanimous: there was not one dissident in that parliament—no one prepared to say, “Don’t count me in on that”.

We have accepted on the way, after a short-lived process, the Litvinenko affair, Magnitsky, the invasion and continued occupation of 20% of Georgia since 2008, and the Russian failure to comply with the ceasefire agreement over Georgia in that year. Russia has ignored international agreements such as that in Budapest, and a guarantor power of the Budapest agreement is now the aggressor, undermining the territorial integrity of the country it purported to guarantee. The fact that Russia was prepared to lie so blatantly—for example, on the presence of Russian troops in Crimea, outside its military bases—is bound to shake confidence in Russia in the short and medium term.

Again, what does the crisis tell us about the firmness of the West so far? The response, I concede, has been weak. “Great things we shall do”, but, as my noble friend has said, we have done very little thus far. Let us accept that a step-by-step process is relevant, important interests are involved and one country should not be expected to bear a disproportionate burden of the pain. President Putin clearly relies on disarray on the western side. Will there be business as usual with Russia after a short interval? No, our illusions should be over. We should have a far more realistic policy towards Russia.

What should be our appropriate response? First, we should assist Ukraine economically, financially and politically, for example, in democracy-building. Secondly, we should recognise that the diplomatic track is unlikely to lead anywhere, seek to contain and isolate Russia at the United Nations and elsewhere, and make clear to Russians privately that there are indeed red lines. We should give reassurances, particularly to our Baltic allies, who are very concerned at the moment. Is it too optimistic to see the beginning of a stronger European foreign policy emerging from this crisis?

We should also consider the position of Russia in those international organisations of which it is a member which deal with human rights. We think, for example, of the OSCE, which came into being after the Helsinki agreements of 1975, and the basket containing human rights that are so massively infringed by Russia. We think of the Council of Europe, the main human rights organisation in Europe, with its 48 countries. I note that the Conservative group has withdrawn from the family group in the parliamentary assembly which contained Russia, the EDG. Is it too much to ask that the Conservatives should consider joining the mainstream right-wing family, the EPP? Or is that a joining too far?

Finally, on sanctions, the travel bans and asset freezes are relatively easy. Economic and financial sanctions must be calibrated and, I accept, further down the track; but they are likely to be the most effective. I think of South Africa in 1986. The real blow to the apartheid regime came when the Chase Manhattan bank refused to roll over certain loans in respect of South Africa.

Russia must be forced to pay a heavy price, but let us also accept that we will have to pay a price, economically and commercially, because of the shock to the world economy. We need to reduce our dependence on Russian oil and gas. The world is now awash with oil. I anticipate that the noble Lord, Lord Howell, may have a few well chosen words to say on that theme later when he comes to speak.

Already, after the failure of the Kerry-Lavrov talks, billions of dollars have been repatriated from the West by Russians, yields on Russian government 10-year bonds have risen sharply, and the rouble has fallen to a record low. Yes, there has been a slight upturn in the Russian stock exchange, but I judge that that will be short-lived as further sanctions take place along the road.

Russia is already paying a heavy price, and all this before effective sanctions. The next few weeks will be a clear test for the West: a test of our international credibility. Many friends—those who are currently apprehensive in the world, including many of Russia’s neighbours—will be watching our reaction very closely.

My Lords, I, too, thank my noble friend for setting out the Government’s action so far on the Ukrainian crisis.

Notwithstanding the fraudulent and bogus events surrounding the illegal referendum in Crimea at the weekend, one event stands out as particularly sinister. On the 13 March, the Times carried reports that two prominent Ukrainian community leaders in Crimea were seized by police. When challenged as to their whereabouts, the newly appointed Crimean Minister for Information declared that they never existed. Dmitri Polonsky said:

“There is no Ukrainian community in the Crimea, and so there are no missing community leaders”,

using the logic of Orwell’s thought police, which I am sure noble Lords will remember. As the Times commented, this Orwellian logic allowed Polonsky an answer for everything, from human rights abuses, to prejudice, to the legality of the referendum. According to Polonsky, accounts of Crimean Tatars having their passports confiscated by bogus election commission teams were a distraction. As the Minister of Information said:

“Yes, we know about these events … The actions were carried out by Tartars against themselves, as provocations against the authorities”.

As for the gunfire from pro-Russian militias to block access from Organisation for Security and Co-operation in Europe—OSCE—observers into Crimea, that was just an,

“expression of disappointment by local people”,

who were irritated by the “interference”. Polonsky had no concerns over the legitimacy of Crimea’s new parliament, or that its leader came from a political party that achieved just 4% in the previous parliamentary elections in Crimea.

The referendum result has, of course, effectively guaranteed Crimea’s secession from Ukraine, despite being conducted in an atmosphere of militarist repression, enforced, as the Minister said, by more than 80,000 Russian troops, some 270 tanks and 140 combat aircraft, and despite being deemed illegal by the OSCE, of which Russia is a member.

President Putin singularly declared that the result of the Crimean referendum was entirely legal and binding and essential to protect the population that is ethnically Russian or had Russian citizenship. He blandly ignored the fact that the UN Security Council, as the Minister mentioned, had decided overwhelmingly that it was not legal—yet another example of Orwellian “misinformation”, particularly if it is to be a precursor to justifying an expansionist annexation policy across eastern Europe and Asia.

Should we be surprised? Certainly my own parliamentary interactions with Russian politicians over the past decade would indicate that no, we should not, for a variety of reasons. Meeting the Russian defence committee in Moscow a few years ago, for example, was anything but diplomatic. Their members, all generals in full uniform, faced us across a long table with open hostility. Mind you, that was shortly after NATO had destroyed the government buildings in Belgrade with precision bombing—although as we subsequently discovered when visiting the city, the Serbs viewed that event far more pragmatically than their Russian supporters.

I recall asking the chairman of the committee—mainly in the hope of deflecting the mounting hostility—where they hoped to see Russia in 10 years’ time. The outpouring of emotion was overwhelming, and best summed up as a universal and fervent wish for Russia to be returned to the great power she had been under communism. Thereby, I believe, lies the rub.

A similar meeting with the foreign relations committee of the Duma, which I think that the noble Lord, Lord Anderson, was leading at that time, proved equally hostile, with no attempt to follow the courtesies of diplomacy. Their chairman began by loudly shouting and berating the UK for not supporting Russia in its dispute with Estonia over plans to move a memorial in the centre of Tallinn which commemorated Russian soldiers who died fighting the Nazis in World War II. According to the Russian chairman, this was the most important issue in foreign policy dividing Russia and the west. It gave me a good insight into how politics was conducted in Russia at that time.

At a meeting in Moscow around 2005 with the Russian state economics committee, I believe it was—I did not quite catch the full title—we were lectured by a senior economist who, from his demeanour, appeared to be a survivor from the communist era of centrally planned economics. He pointed out that our North Sea oil and gas reserves were forecast to be exhausted within the next 40 years. In contrast, Russia’s reserves could supply the west indefinitely, with the implication that this was dependent on maintaining friendly and, presumably, agreeable, relations. This was close to a decade ago. There seemed to be no awareness that in the capitalist, democratic, free world, with full flexibility in supply and demand, market forces determined these outcomes rather than political dogma.

If we take Putin’s justification for annexing Crimea—that is, protection of émigré Russians, either by ethnicity or by citizenship, justifies invasion of other sovereign territory—to its logical conclusion, as the noble Lord, Lord Anderson, has already said, we start to move towards the territory of the annexation of Sudetenland in the 1930s. On this basis, we will find a number of smaller countries, previously part of the Soviet empire, at risk—not just in the Balkans but in Central Asia, where the Ukrainian crisis has put a number of leaders in a quandary. For example, while nervous over Moscow’s military show of power in Crimea, they are also anxious to downplay that end in the toppling of corrupt leaders of independent states under Russia’s influence. Leaders in Tajikistan and Kyrgyzstan are now more aware of the risks entailed in hosting military facilities that belong to Russia. The largest military land base outside Russia, the 201st Motorised Rifle Division, is in Tajikistan, while Kazakhstan shares a common border of nearly 7,000 kilometres with Russia and has the second largest ethnic Russian population after Ukraine at nearly 25%.

The Baltic states of Estonia, Latvia and Lithuania also present risks of tension between native populations and Russian migrants. Stalin’s brutal policies of the transportation of tens of thousands from the Baltic states to Siberia, leading to mass deaths through starvation and cold and replacement with Russian workers, servicemen and their families, is a well documented part of history. In consequence, in Estonia, 38% of Tallinn’s population is ethnically Russian and 56% speak Russian as their mother tongue. In the north-eastern cities of Estonia, as many as 82% of the population are ethnically Russian. This legacy of Russianisation spreads throughout the old Soviet empire.

There is no credible evidence of threats against Russian citizens, or of an armed attack, or even a planned attack against Russian military assets. Western leaders have repeatedly called for Russia to abide by the terms of the 1994 Budapest memorandum, where Russia, the United Kingdom and America reaffirmed their obligation to,

“refrain from the threat or use of force against the territorial integrity or political independence of Ukraine, and that none of their weapons will ever be used against Ukraine except in self-defence or otherwise in accordance with the Charter of the UN”.

Clearly, such treaties mean little in Putin’s thinking. If the aggressive approach of the Russian Duma’s parliamentary committees in meetings with counterparts is any guide, it seems that positive action is the only sensible response to the invasion of Crimea.

Without delay, our Government should follow the recommendations set out in the letter of 21 February from Transparency International UK to the Chancellor to prevent the transfer of suspicious financial transactions to the UK from Ukraine, placing money laundering officers on alert, and taking proactive action to prevent money laundering from Ukraine. Following the Chancellor’s positive response to that letter and that request from TIUK, the Government should provide regular reports to this House, setting out actions taken and the results achieved.

Ukraine has already lost the equivalent of almost half its GDP to outflows into offshore accounts over the past three years. Some of these funds have been laundered through the UK, or through UK-linked jurisdictions, with the help of UK bankers, accountants and lawyers. These assets must be identified and returned without delay. The Government must take preventive measures to stop this happening again.

Russian participation in the G8 should be cancelled, its OSCE membership should be reviewed and trade negotiations suspended. Russian membership of European institutions, such as the Parliamentary Assembly of the Council of Europe should be revoked and visas and passes issued to Russian participants withdrawn.

In the medium term, the European Union should consider alternatives to the South Stream pipeline supplying Ukraine. The EU should consult with the Norwegian Government, western companies and liquid natural gas suppliers in the region to move forward with creating strategic gas reserves for Ukraine and east and central European countries. The EU should focus initial assistance to Ukraine on clearing its gas debt to Gazprom to reduce its leverage. The EU’s competition case against Gazprom should be accelerated.

The EU and the UK should begin discussions with the USA on changes to the latter’s domestic law to enable oil, gas, LNG, and shale gas and oil to be freely exported. The UK should review its energy policy as a matter of priority to exploit the opportunities offered by the reserves of shale gas and oil, and should be guided by science, not just opinion.

Finally, we should also be aware that the reaction within Russia is far from totally supportive of Putin. The opposition party, Yabloko, states that the position and actions of the powers that be in Russia in respect of Ukraine are a reckless political adventure and that it is unacceptable even to contemplate using Russian troops in Ukraine, while separation of Crimea from Ukraine and its annexation is an error at the highest level. It is calling for the immediate convening of an international conference on political, legal and military issues related to Ukraine and, in particular, the Crimean issues. The prime aims of the conference should be to restore the underlying legal framework in international relations and security, guarantee the integrity and maintain the viability of the Ukrainian state within the parliamentary framework and restore the rule of law in Crimea, observing the interests of Crimea’s population as a whole, with all its component groups, free from repression by political opponents.

My Lords, the noble Baroness opening the debate rightly condemned Russian aggression in Crimea and MPs expressed similar disapproval earlier this afternoon. However, in the light of history, I am not sure that we could have done much about it.

I am a strong advocate of European enlargement, and it is undeniable that the acceptance of new applicants from eastern Europe and the Balkans has contributed to peace and stability there. However, as the EU nudges further east, we have to be especially careful not to upset and antagonise the Russian minority in Ukraine, or to risk that country becoming further divided. The noble Lord, Lord Chidgey, rightly referred to the innumerable instances of minorities all over Europe. The stealing back of Crimea makes eastern Ukraine the next target of Russian resentment and today’s attack on a Ukrainian garrison is ominous and another gross violation of international law.

The phrase “western allies” can be misleading. The EU cannot make a strong historical case for an alliance with Ukraine. As Kievan Rus, the first Slavic state converted to orthodox Christianity, Ukraine has been closely linked to Russia since its heyday in the 10th and 11th centuries. The country was subsequently ruled by both Lithuania and Poland, and its borders were never clearly drawn.

Crimea, too, has had a chequered history. The Crimean Tatars were dominant for more than three centuries until they were cruelly deported in large numbers by Stalin, and later unfairly discredited as Nazi sympathisers. Yet it was to prevent Russia from entering the Mediterranean that we fought alongside the Ottoman Empire in the Crimean War, but that policy obviously did not work.

I visited Yalta in 1964 and it never occurred to me then whether it was Russian or Ukrainian. Everything came under the USSR umbrella. I remember standing on the terrace overlooking the Black Sea where, in February 1945, the leaders of the US, UK and Russia had signed a historic agreement to divide Germany into three. Russia broke its promises then and it has broken them again now. The Cold War was still to come and nearly seven decades later we are wondering whether it has yet gone.

I do not expect war to break out over Ukraine. I prefer to think of the present crisis as a bad dream interrupting the course of history. It cannot and should not develop into hostilities. We have done with war in Europe, and I find the references to Sudetenland exaggerated and quite disturbing. All three Yalta powers should be honouring the 1994 Budapest agreement guaranteeing Ukraine’s territorial integrity. Instead, Putin is repeating his performance in Georgia in 2008 by first threatening and then virtually annexing sovereign territories in the name of defending Russian citizens.

What are President Putin’s motives? This has been the subject of great speculation, but it seems that the strongest motive is simply Mother Russia. This could be seen as imperialism and expansion in Crimea and eastern Ukraine but Crimea is inescapably part of Russian influence and naval domination of the Black Sea. Kiev, already central to the Rus legend, became the third city of the Soviet Union after Moscow and Leningrad. So we should not be too surprised that Ukraine is still on the Russian doorstep or that Russians have a great hankering after former glory.

While we, the US and individual states should complain to Russia through warnings and sanctions—as we would in any country where human rights and international law are aggressively violated—the EU should not make too many assumptions about Ukraine’s position as an ally. Ever since the Berlin Wall came down, Europe has faced east, looking beyond the boundaries of enlargement into new member states. It may be that the EU has been looking too enthusiastically at arrangements with countries directly bordering Russia. Since the Orange Revolution in Ukraine there has been a flurry of diplomatic visits to Kiev under the neighbourhood policy, as though Ukraine were already eligible for membership of the EU and NATO. In 2010, as we know, President Yanukovych excluded Euro-Atlantic security and NATO membership from Ukraine’s national security strategy, but the concepts of European integration and co-operation with NATO have remained and it is likely that Yulia Tymoshenko, if she is re-elected, will want to return to the previous strategy and risk further Russian hostility, reminiscent of former President Saakashvili in Georgia.

Let us not forget the bigger picture in which Russia has to live up to its international responsibilities. The Syrian uprising this week has entered its fourth year unresolved, and the parties still have to come to the table. The Iran negotiations are still delicate. We need the Russians if we are to make progress in these areas. I do not agree with previous speakers that we should detach them from the G8 altogether. The action in Crimea was illegal but there is little we can do about it now. The question asked by the noble Lord, Lord Campbell-Savours, on Kosovo is pertinent. Although the noble Lord is no longer in his place, I hope the Minister will spend a little time on that. It is of course President Putin’s own argument, and we must be careful in making the comparison, because the situation in Kosovo was, at a time of civil war, completely different.

In the mean time, while the interim Government of Ukraine wait for the May elections, every effort must be made—preferably through the OSCE and the new contact group which is being proposed—to support it and contain both Russian and Ukrainian battalions within their own borders. However, the more effective weapons are economic. Chancellor Merkel has taken a surprisingly tough line, accusing the Kremlin of following the law of the jungle and Mr Putin of living “in another world”. She is strongly insisting on new sanctions in the face of, it seems, at least two-thirds of Germans, who have serious doubts about their effectiveness.

While Germany remains the powerhouse of Europe, German companies will continue to trade with Russia and oligarchs will continue to visit their dachas in Baden Baden. France and Italy, not least as arms suppliers, are likely to make the same argument. Therefore, it is going to be a slow process. Sanctions will be pushed mainly by the United States, but Europe will more likely follow the market and select sanctions, which will only puncture its relationship—at least, that is my prediction. After all, Russia’s trade with Europe is more than 10 times that of the US, and the EU is unlikely to throw that away.

London has already lost a lot of Russian business in the scramble to anticipate sanctions. Would this not be an ideal time to review our dubious reputation as a money-laundering capital, as the noble Lord, Lord Chidgey, has already said, and identify the banks and companies that are living off illegal Russian investments and the laundered billions stashed away by Yanukovych and his family? Can the Minister please explain why this money could not be returned to Ukraine to support much-needed structural reforms alongside the new loans, or can the Government produce any other financial package for this purpose? What can the Government do through legislation to strengthen anti-money-laundering controls through the Financial Conduct Authority and other City watchdogs? Have any suspicious transactions in relation to Ukraine been reported to the FCA hitherto, and how can these be further investigated?

However the political and military crisis develops, what the latest power struggle comes down to in the end is, of course, aid and debt, and whether the EU and the IMF can afford to make up loans to Ukraine originally promised by Russia. If Russia turns down the energy tap, Germany and others must consider alternative gas supplies, which may not be immediately available from the US but they will be elsewhere. Ukraine at least has enough reserves of gas to get through to the elections.

Once our frantic diplomatic activity has achieved a stalemate, and perhaps, with luck, OSCE observers are in place, as usual it will be the markets that decide the future.

My Lords, I am grateful to the noble Baroness for this debate and for her helpful setting out of the situation. We have heard some fascinating background regarding the very complex history behind the situation. My comments will focus on the religious dimension, which has not been drawn out very fully so far.

To illustrate that, another aspect of what has been going on this past weekend is that Crimea is of extraordinary significance as a holy place for the Russian nation, for Russian orthodoxy and for the Russian sensibility or psyche. Legend links St Andrew with the place—it was believed that he lived there. The Emperor Trajan sent Pope Clement into exile in Crimea, giving it a direct link with early Christianity. Although Prince Vladimir was converted from paganism to Christianity in 988 and baptised in Kiev, it was actually the Russians—the Moscow Patriarchate—who built a shrine in Chersonesos, claiming it as the site of this very significant baptism. Because of this heritage, the Russian Orthodox Church has been building monasteries in Crimea and has restored many of its holy places. It has been encouraging large numbers of pilgrims to go there, describing it as Russia’s Mount Athos. That is how it sees the place. It has huge significance in many other dimensions as well as the historic ones.

There is no reason why noble Lords will know about the long and painful ecclesiastical history in Ukraine. However, for many years, there has been deep-rooted mistrust and division between the western-facing Ukrainian Orthodox Church of the Kiev Patriarchate and the eastern-facing Ukrainian Orthodox Church of the Moscow Patriarchate. They overlap in their jurisdictions. What perhaps is surprising is the extent to which all Ukraine’s churches have found common purpose in recent months. In September 2013, when President Yanukovych was openly talking about signing an association agreement with the EU, the All-Ukrainian Council of Churches and Religious Organisations supported the move and called on people not to oppose a new trajectory for Ukraine because of their traditional relations with Russia.

As the Maidan uprising turned violent, churches in Kiev, including Christ Church, the Anglican church in the city, acted as field hospitals for people wounded in the uprising. St Michael’s Golden-Domed Monastery became the main field hospital. A team of doctors were aided by priests from the monastery who distributed food and, of course, led prayers. From the very start, Ukraine’s religious communities have been extremely supportive of the political aspirations of the demonstrators. Many of Ukraine’s churches are members of the Conference of European Churches, while many Muslim organisations in Ukraine have long and active links with co-religionists in the EU, not least with the Federation of Islamic Organisations in Europe.

From a religious perspective, Maidan was a uniquely ecumenical and interfaith phenomenon. As churches responded to the new political reality, the barriers of mistrust started to erode. Some religious leaders actually started talking to one another. The synod of the Ukrainian Orthodox Church of the Kiev Patriarchate has even gone so far as to suggest to the Ukrainian Orthodox Church of the Moscow Patriarchate that perhaps it is time to reconcile differences and unite in one church.

It is early days but, given that Ukraine is the second-largest orthodox country after Russia, a united Ukrainian church would redraw the map of orthodoxy. The critical distance that has already emerged between the Ukrainian Orthodox Church and the Russian Orthodox Church in Moscow is significant. President Putin, of course, belongs to the Russian Orthodox Church. State and church are extremely closely linked. Indeed, Metropolitan Kirill called on orthodox believers to vote for President Putin in the last election. He also flew to Kiev in 2010 to bless President Yanukovych’s presidency. Metropolitan Kirill has the ear of President Putin but, rather than acting as a brake on him—he is one of the people who probably could do something—it would appear that he is supportive of the Russian state’s ambitions.

If Russia were to manufacture further social unrest to justify moving beyond the Crimean peninsular, and if such a move was legitimised by Metropolitan Kirill, there is a very real danger that the Russian Orthodox Church will alienate Ukraine’s orthodox Christians permanently. Ukrainian churches are already taking steps to secure additional chaplains to help provide for the pastoral care and support of those who serve in the Ukrainian armed forces.

I turn now to the various media reports that have circulated in recent weeks suggesting that the Maidan had a dark, neo-fascist underbelly, and that Ukraine’s Jewish community was subject to attack and harassment. These reports have been dismissed as Russian propaganda by Rabbi Moshe Reuven Azman, the Chabad Chief Rabbi of Kiev and Ukraine, who reported that Maidan self-defence units provided security for the synagogue in Kiev. Ten days ago, the Ukrainian Jewish Congress reported that there had been no reports of anti-Semitism since the uprising.

Sadly, the decision to demonise protesters as fascists has been deliberately used to stoke up deep-rooted and historic fears in Crimea as well as in eastern and southern parts of Ukraine. Priests in Sevastopol have faced harassment and abduction. Many have already evacuated their wives and children to the mainland. Given this climate of fear and intimidation, it is hard not to see the referendum as an exercise in annexation—a divorce at gunpoint rather than self-determination.

The situation in Crimea remains tense and uncertain. His Holiness the Patriarch of Kiev has expressed concern that the Ukrainian Orthodox Church of the Kiev Patriarchate will be outlawed in Crimea for its support of the Maidan, while other churches will be subordinated directly to the Most Holy Governing Synod of the Russian Orthodox Church in Moscow.

Similar fears and anxieties face the Crimean Tatars. They, too, were supportive of the uprising and now face an uncertain future. For many in this Sunni Muslim community, Russia is linked indelibly with Stalin’s mass deportation of Tatars to central Asia in 1944. Their communal leaders urged them to boycott the referendum, saying that the idea of holding a vote while Crimea is occupied by Russian troops was a “farce”.

Noble Lords will recall that last August the national minorities unit of the Organisation for Security and Co-operation in Europe published a report warning that:

“Crimea faces a volatile mixture of acrimonious political competition, socioeconomic exclusion, inter- and intra-religious strife and a general atmosphere of increasing intolerance”.

The referendum will have done nothing to have diminished the risk of inter-ethnic violence.

Against this uncertain and volatile background, the Christian churches of Europe, through the Conference of European Churches, have been in contact with the All Ukrainian Council of Churches and Religious Organisations, a body that includes Jewish and Muslim representatives as well as Christian churches. A letter signed by the present CEC president, known to many Members of your Lordships’ House as the recently retired Bishop of Guildford, expresses solidarity and support, urges an end to further polarisation in Ukrainian society and assures them that churches elsewhere in Europe are urging a democratic and diplomatic solution to the problems facing Ukraine. I know that Bishop Christopher Hill will be talking later this week to other European church leaders about how this solidarity and support can be given more tangible shape through the Conference of European Churches.

Even if this crisis has cast a Cold War shadow over Europe, it is important that we remain in dialogue with the Russian Orthodox Church. That is not always an easy task given the Russian orthodox world view. I am encouraged that only last month the right reverend Prelate the Bishop of London met representatives of the Russian Orthodox Church to discuss the theological education of students from the Russian Orthodox Church here in the UK. However this crisis plays out, and I pray as I am sure many of us do for a speedy and peaceful resolution, it is important that we do not sanction measures that put such dialogue at risk.

My Lords, I feel that in a dangerous situation of this kind the first duty is to escape from hyperbole. This is not a renewal of the Cold War and the 20th-century ideological conflict, which has passed into history. It is certainly not the greatest crisis in Europe since 1945—that is an absurd exaggeration—let alone a repeat of the horrors of Sudetenland. If anything, it is the old 19th-century struggle involving unending tensions in the eternally disputed lands between Russia and Europe and the always unanswered question of where Europe ends, whether Russia is part of it and in whose sphere the regions and the lands in between should lie.

But there is a huge difference. In the 21st century, conditions internationally have totally changed. The world is now hyper-connected at every level, from schoolchildren in their schools, to universities, to business, to science, to major corporations and every conceivable interest in between. We are wound together in ways that not even some of our policymakers have fully grasped. Even in the past five years there has been a total transformation of the international landscape and huge shifts of power, with which some people in Moscow, and perhaps some even in the West, seem not to have caught up.

Of course there should be no appeasement of rough methods and treaty breaches, but nor should there be any hysteria. I have in mind the primitive outpourings in the New York Times and the ridiculous over-the-top piece in yesterday’s Financial Times saying that this was going to be the end of democracy in our time. Nor should we be driven by demands on the White House to show more machismo—“See off the Russkies”, and so on—and we certainly should not buy into the “weak Obama” story being spread about, although I must say that I think he made a huge mistake yesterday in using the word “never” about Crimea’s changing status. Rule 1 is never to use the word “never”. When I hear speeches of the sabre-rattling kind, I share the view of Bismarck, who said:

“The only thing we learn from history is that we learn nothing”.

He went on to say:

“The secret of politics? Make a good treaty with Russia”.

But of course he was sacked after that.

I believe that we should view the current crisis in two perspectives, which are not totally separate but which comprise two distinct areas. For the medium term, I fully support making Vladimir Putin and the cronies in his circle count the full and very painful cost of trying to use force in the rest of Ukraine, should they be so stupid as to do so. Not only will force not work in an age of street empowerment, as former President Yanukovych found out all too rapidly, but it will ruin Russia even while it certainly will hurt us as well. My noble friend Lady Warsi rightly referred to that.

However, our leverage is far greater in the medium term than many people realise. The financial screws can bring down the weak Russian financial system, while the vital gas and oil revenues, on which the whole of Putin’s Russia and certainly his inner clique float, can be drained away in due course. That is his jugular vein. Russia today is living on the hopes of high gas and oil prices; I believe that the budget can be balanced if the price is $119 a barrel. That can easily be undermined and removed. It could take time, because of course the idea that USA shale gas can come to the immediate rescue is a fantasy. It has been a fantastic story—shale gas provided 3% of US needs four years ago and provides 30% to 35% today—but just at the moment US gas inventories are extremely low and the gas export terminals are not yet completed.

None the less, gradually and in due course Europe can live without Russian gas, or it will acquire the customer power to beat down the price substantially, thus removing Gazprom’s monopoly position in the central European customer countries—as long as it is not stopped by misplaced green zealotry, which of course could undermine even that. Piped gas can come from Norway and from Azerbaijan in the Caspian region, while LNG can come from just about everywhere in growing quantities. Eventually, shale gas will indeed change everything, as I kept warning my colleagues in the Foreign and Commonwealth Office during my time there, but it will not be tomorrow. That is the medium term, where we are actually in a very strong position. We should have the confidence to develop it and set it out quite clearly to Mr Putin and his advisers.

It is on the immediate Crimean vote where we really need a sense of proportion and a lot of creative diplomacy. To let the Crimean situation escalate into an East-West military confrontation with total Russian isolation—if that was possible, which in fact it is not—would be to abort world recovery and to create massive worldwide suffering and probably political turmoil all round, on an impossible scale. To say that there should, instead, be a search for a deal is not appeasement; it is common sense. If there is to be a search for a deal, it should include urging Russia to wait until there is a fully elected Government in Kiev—Russia of course completely rejects the current interim Government—before rushing to complete the 100% annexation of Crimea, although it looks very late in the day from Mr Putin’s speech this morning, and to work with and talk to the new Government in Kiev when they are elected.

Ironically, taking Crimea away from Ukraine makes a Europe-inclined Government much more likely. This is a curious twist of the situation, because it would return a majority in favour of those looking west rather than east. In exchange, there could be a lifting of the targeted sanctions that we have now put in place and joint agreement in the proposed contact group, which both sides have agreed on, to work for Ukraine’s economic recovery. That will be extremely expensive, because it is bankrupt, and will only work if both sides co-operate. The final part of any package could be the re-inclusion of Russia in the G8. We should remember that Ukraine is extremely rich in all kinds of resources including, ironically, vast resources of shale gas.

It is not beyond the wit of diplomats to find an interim status for Crimea as an independent entity, as some Crimean leaders themselves have suggested. It would be a superficially independent little nation, like many others that have sprung up in recent years. However, of course, while they talk about independence, they are all in fact completely interdependent in practice, as all small nations have to be nowadays and as Scotland would soon discover if it voted for the independence illusion—it no longer in practice exists.

I am grateful to the noble Lord for giving way. I am listening carefully to the possible package that he is outlining, which might be the basis for some agreement over Crimea. Some solution must of course at some point be achieved. Does he agree that an essential part of such a package is that if we recognise the right of Crimea to exercise self-determination and join Russia if it wishes to do so—if the procedures are democratic and so forth—equally the right of the people of the rest of Ukraine to self-determination should also be respected? If they choose in due time to join the European Union and NATO, they should be allowed to do so and that should be recognised by Russia.

I think that those would be the unfolding ideals. It is in the interests of Russia—although I am not sure that it fully understands this—to have a stable Ukraine that is confident and able to resolve its internal differences, with the Russian-speaking part and the Ukrainian-speaking part living together. However, even that is a ridiculous division, because many Ukrainian people speak Russian and many Russian people speak Ukrainian. Until recently—until the tensions rose and there was this polarisation—no one cared a damn what language they spoke in Ukraine. It is possible for these people to live together.

The kind of evolution for Crimea that I am talking about is possible. However, the fact is that the Crimean referendum has happened, with 96% or whatever it was voting in favour, and the previous unstable status quo cannot be magically restored. I agree that there is indeed a generalised separatist movement going on all round the world, which noble Lords have already referred to. It is not just in Russia—Nagorno-Karabakh is stirring again, we hear what they are saying down in Catalonia and we know what is being said on our own island in Scotland. However, this has more to do with local digital empowerment, which is growing everywhere, than specifically with Russian imperialism.

Eventually, if we keep our minds on the true goals and interests of this country, it should be clear that it is completely in our interests to have a prosperous, open, connected and stable Russia. Russia cannot just eventually become a pariah nation, if its rulers want to survive and be part of, for instance, the World Trade Organisation, as they are, and the global economic system.

Finally, some other lessons have emerged from this. First, the European Union collectively—and we can provide some help from London—should rethink the style of its approach to neighbouring states. The EU, as much as Russia, has, I am afraid, helped to polarise a nation that could have lived together and could still live together, with the language issues being put back in the box as being largely irrelevant.

Secondly, with most countries and peoples continuously connected nowadays with an intensity never before experienced in history, with the electronic empowerment of all kinds of groups, official and unofficial, and the consequent fragmentation in the whole pattern of state power in country after country, and with the rising influence and economic weight of the non-western world—the “rise of the rest”—the whole behaviour pattern of international affairs has started to shift. For America, as much as for Europe, and the UK within Europe, if we want to prosper in these new conditions it is time to shift our attitudes as well. Force and coercion alone can no longer settle borders, crush minorities or deliver clear-cut victories, as we have bitterly discovered in many theatres in recent times. Softer and smarter methods have to be deployed, and the sooner that is grasped in Moscow, Washington and, indeed, Brussels, the better.

I fear I start from a rather more depressing position than many Members of this House. I agree with the concluding remarks of the noble Lord, Lord Howell. There is a lot in what he said and I think that there was mishandling by the European Union and NATO of a number of the east European states.

I start from the position of trying to understand the Russian position. I have spent some time not only reading the speeches and comments of President Putin, which are liberally sent to me by the embassy—for which, many thanks—but I have talked to the Russian ambassador, who is a very civilised and thoughtful man. If you look at what President Putin has been saying and doing, you recognise that there is a pattern to that behaviour which is trying to reassert control over areas of which he has lost control.

I can understand that in historical terms. Russia did lose out when the Soviet Union collapsed. More importantly, although Russia has a proud history in terms of what it has achieved scientifically, culturally and in other ways, it had a truly tragic history in the 20th century: two world wars, a revolution that failed disastrously and led to millions of people dying from famine or being uprooted and deported, and of course the gulags and all that followed from that. It is a tragic history and Russians feel it very strongly. They feel equally strongly that Ukraine not only should be under their influence but needs to be because of the “fascist threat”, as they play that card. President Putin plays it but many Russians believe it, and the reason they believe it is not hard to find: a lot of Ukrainians fought for the Nazis and were particularly brutal. The reverse is also true: many Ukrainians fought for the Communists and Stalin and were also very brutal. The whole of Ukraine was brutalised throughout the Second World War period.

We can understand all that, but the basic line on this is that you do not just throw over international agreements that you have signed—and Russia did sign, as the noble Lord pointed out, the 1994 declaration which removed the nuclear weapons from Ukraine in return for a guarantee of its borders from the five permanent members of the Security Council: Britain, France, China, Russia and the United States. That is what Russia has broken, because it feels passionately that Crimea should be part of Russia. Actually, that could have been achieved. It would not be an unreasonable thing to develop.

It is a guarantee that force would not be used to change the borders of Ukraine. In return, Ukraine would give up the nuclear weapons on its territory.

In any event, even if my noble friend were right, which I do not think he is, and even if Putin were right to do what he has done, it would be disastrous, because—and I would put this very high on my list of concerns about President Putin—he plays the nationalist card. If you play the card which says, “The Russians in those territories call for my intervention to protect them”, where does that stop? The reason that people refer to Munich is not because they compare Putin to Hitler, or Russia to Nazi Germany—they do not; there is no similarity—but because there is a recognition, which plays very powerfully in the east European countries, that the Germans played the card of coming in to defend the German population and now Putin is using that argument for the Russian population, and that, once you play that card, it is very difficult to control it.

That is why I find this situation depressing. Even if President Putin says to people, “I do not want you to use the nationalist card in east Ukraine”, he has no guarantee that people will not. If they feel strongly that there is a real chance that Russia will regain the territories that it lost and that they will again come under the Russian state, which many of them would like, then you would lose control of it. We have to say, and everybody else in the world is saying, “Well, if you don’t do something about Crimea, and we didn’t do anything about Georgia and South Ossetia, then where does this stop?”. The problem is that, if you play the nationalist card, there are east European states which have real reason to be fearful, particularly the Baltic states—and they are members of NATO.

Please let us take a very hard look at this. I am not intending today to make any suggestions to the Government about the way forward. I agree that it must be a diplomatic way forward, but when people say, as they have been saying quite recently, “Nobody wants a war about this”, I simply remind them that in 1913 people were also going around saying, “Nobody wants a war”. The real danger of this situation is that someone will lose control of it. It is not controllable particularly when you play that nationalist card, so you get all sorts of unintended consequences. I understand the feelings of my noble friend Lord Campbell-Savours about this, but, frankly, you have to face up to the fact that, if you do not stop it somewhere, you cannot control it and it is right outside your control. We have been round this track before; it is a dangerous track.

The great thing about Russia is, as the noble Lord, Lord Howell, indicated, that many things are happening there that are very encouraging and exciting. You can see it moving back towards the more open and free society that we all want it to be. But I simply say that there have been three or four occasions in the past 100-odd years when Russia was doing that and, each time, it tripped over and failed. That is its tragedy, and none of us should underestimate the strength of feeling in Russia about being surrounded and invaded, and about its own inability to be the top power.

The other thing that stands out, particularly in Putin’s comments and speeches on this, is his anger and frustration that the United States is seen as the dominant power and that he is not seen as its equal, which is why he tries to rubbish some of the west European powers such as ourselves and others and why he tries to set himself up on an equal basis with the United States. As the noble Baroness, Lady Warsi, will know, I have been saying for the past two years that you will not get Assad to the table on Syria until President Putin makes him go there. Now that we have just seen the latest military advances of Assad’s armies in Syria, you know that that is right. Putin does not have an interest in settling the Syrian dispute other than under President Assad’s control. That is another one that we have probably lost. We have probably lost Crimea, although, as I have said, you can make a case for that. The tragedy is that it would have been perfectly possible, had Russian diplomacy been up to it, to say, “Look, we want a settlement along that border area that includes Crimea coming back to Russia”. That would have had to be with guarantees for the minorities there, because if I was a Tatar or one of the others in the Crimean peninsula, I would be deeply worried.

I have just a couple of concluding remarks. First, it would be naive in the extreme to think that this will stop here. My worry is that it will continue. We need to face up to that reality. Secondly, and very importantly, the European Union must get real about a foreign policy and a defence policy. One reason we misplayed our hand in east Europe is because we did not have clear policies. I take my hat off to my noble friend Lady Ashton who did a great job on Iran and a range of other things, but we do not have in Europe a foreign policy or a proper defence policy. We still have to rely on the United States. We are in a situation now where there is a leader in Russia determined to assert his authority over the areas formerly controlled by the Soviet Union as it then was. He wants to control those and we have a weak and divided Europe. Where have we heard that before?

My Lords, I start by apologising sincerely to the House for my late arrival to the debate this afternoon. In particular, I apologise to my noble friend the Minister.

The debate this afternoon has illustrated just what a complex, difficult and rapidly developing issue this is. As someone who has studied, lived in and worked in Russia over many years since the late 1980s, I will limit myself this afternoon to issues surrounding the context of recent events. That context is extremely important in setting out why western rhetoric following these deeply dangerous events is not always matched by reality. Clearly, Sunday’s referendum was not legitimate. It had a heavily rigged set of questions and was carried out in a true Putin-esque spirit of “managed democracy”. None the less, the scale of the result illustrates all too clearly the problem in Crimea.

Last week, Henry Kissinger wrote an interesting article on Ukraine in the Washington Post. He stated that:

“The test of policy is how it ends, not how it begins”.

Whatever our individual views about what is happening in Ukraine, I believe all noble Lords agree that we want a democratic, open and liberal Ukraine. We all want to see a Ukrainian Government who allow free speech, work to fight against corruption and speak for all Ukrainians—Ukrainian and Russian speakers, Tatars, Muslims and other minorities. However, we cannot successfully achieve such a Ukraine by forcing it artificially to decide between Russia and the West. To do so risks splitting the country and aggravating even moderate Russians.

As many noble Lords have already remarked, the situation in Ukraine is highly complex. There are families of Ukrainian origin living in Russia and Russian-speaking Ukrainians living in Ukraine. After over 70 years of the Soviet Union, the two countries are inextricably linked. For many Russians—including many liberal, anti-Putin Russians—Ukraine is not just any other neighbouring country. As several noble Lords have already remarked today, Kievan Rus is at the heart of Russian history. We should recall that Crimea was Russian as recently as 1954—in the lifetime of many Russians and Ukrainians. There remain many emotional and family ties, as well as, of course, the Black Sea fleet in Sevastopol.

One of the side effects of the end of the Cold War is that fewer people have studied Russia, its language, politics and history. It has been seen as less of a priority. As we have seen more and more Russians shopping in Bond Street and buying properties in Hampstead, we have tended to assume that it was all “getting better over there”. Sadly, the EU’s eastern dimension policy has not been as united or successful as it should have been. Our approach has been overly based on bilateral financial and energy deals rather than achieving a successful, united and holistic approach to Russia and its near neighbours. In particular, we have failed to deal effectively with the increasingly authoritarian Mr Putin with one clear and united voice. He has carefully exploited those divisions. We have such great financial, economic and, especially, energy interests with Russia that all too often over the past decade we have turned a convenient blind eye to some of Mr Putin’s increasingly authoritarian behaviour.

The situation in Ukraine is undoubtedly complex, but it is in the West’s best interest to have a stable, democratic Ukraine. That should not involve it having to become either Moscow’s or the West’s buffer zone against the other side. Ukraine must not become an excuse for hawks on either side to reignite the Cold War. Indeed, Ukraine could serve as an effective bridge from western Europe to Russia.

I believe that some errors were made in the early stages of this crisis. As a result, there is a risk of increasingly dangerous extremism on both sides of the political divide in Ukraine. For example, it was deeply insensitive and unwise of the interim Ukrainian Government to demote the Russian language immediately after taking power. From the start, they should have emphasised that they sought to represent all Ukrainians, including Russian speakers, Tatars and other minorities. That policy has now been reversed, but the damage has already been done in Crimea and eastern Ukraine. It has provided Mr Putin with the excuse that he needed.

Moscow, for its part, has clearly breached international law through trying to annex Crimea. Mr Putin has used the mostly non-existent threat against Russian speakers in Ukraine as an excuse for his actions. There can be little doubt that in the short term, this has given a boost to popularity back at home, although it should be noted—as my noble friend Lord Chidgey already has—that liberals, particularly Yabloko, in both Moscow and St Petersburg have expressed deep concern at Mr Putin’s response. Accepting the transfer of Crimea to Russia would set a very dangerous precedent—not least for the countries of the former Soviet Union and, in particular, Moldova.

I believe that we should concentrate all diplomatic efforts now on getting all parties, including Russia, focused on electing a democratically legitimate Government in Kiev on 25 May. Those elections must proceed on that date as agreed and they must be fair, free and properly and fully observed. Any attempts to postpone those elections should be resisted. Ukraine must be allowed to decide its own future. Work should also continue on providing economic assistance and support to fighting the, sadly, currently endemic levels of corruption and promoting judicial, political and economic reform in Ukraine.

There is no doubt that these will be challenging weeks ahead but when we look at how we want this policy to end we have to ensure that, at the end of this process, Moscow understands that if it wants to be a respected player on the world stage it has to put its Cold War-style behaviour in the past where it belongs. The EU, for its part, should work to build a genuinely coherent eastern dimension policy, one which works to improve democracy and could serve as a bridge from the EU to Russia and beyond.

My Lords, it is a pleasure to follow a speaker who has much long experience in Moscow. I well remember the Soviet invasions of Hungary and Czechoslovakia and the threats that were made in the last years of the old Soviet Union to what have now become the Baltic states. Nevertheless, in today’s situation, I suggest that we need to be calm and firm. We should work to prevent ill judged adventures which could have very serious consequences.

Ukraine is no banana republic, but rather a country with a population estimated in 2012 to exceed 45 million. It has, alas, suffered poor leadership and much corruption. Looking from the Russian point of view, one can understand their historic connection with Kievan Rus and with the adoption of the Christian faith. The victory at Poltava in Ukraine in the early 18th century marked the end of a major threat from Sweden. Today, many Russians have a strong sense of the near abroad and value having a base at Sevastopol for their Black Sea fleet. None of that, however, justifies attempts to dictate to their nearest neighbour, which has a clear idea of its own identity and, indeed, sought to establish independence between 1917 and 1920. As the noble Lords, Lord Chidgey and Lord Soley, have already mentioned, in 1994 the Budapest memorandum gave Ukraine full recognition and guaranteed its independence. In return, Ukraine gave up any ambition to be armed with nuclear weapons and indeed surrendered its Soviet arsenal. Three years earlier, Crimea had become an autonomous republic within Ukraine. In 2005, that autonomy was modified to provide a permanent share of power for the distinctive Crimean Tatars, who had suffered so heavily under Stalin.

In the present situation, I suggest that we have to find ways for Russia to come back from rash adventures and leave aside any coercion while avoiding loss of face. I believe that the OSCE provides the ideal mechanism. This organisation and its companion, the Office for Democratic Institutions and Human Rights, stem from the Helsinki agreements of the mid-1970s. It is an intergovernmental body but not a military organisation. It is worth noting that its membership is far larger than that of the European Union. In the past the OSCE did good work in the Baltic states where, as we know, there are sizeable Russian minorities. It tried hard over many years after the civil war in Moldova, where alas things were not helped by having too many mediators.

What was shown in that case, however, was that a mediated peace process was fully compatible with a simultaneous analytical conflict-resolution process. The same combination could happen again in today’s circumstances—if possible, before they become too embittered. NGOs and local government could also help to implement any new agreements that could be reached. The OSCE has the great advantage that it already has observers on the ground in Ukraine, though they have not been allowed to enter Crimea. Seventeen member states are taking part in the monitoring mission. It is also fortunate that the current chairman-in-office of the OSCE is Swiss. I am glad to learn that he has already spoken directly with President Putin.

What would be an acceptable result? First, there should be a democratic Ukraine, able to negotiate its own relations with Russia and the EU. This might include special arrangements: for example, on dual nationality for Russian people in the eastern provinces, as indeed happens in Northern Ireland, and for the Russian language. Secondly, Crimea should be enabled to determine its own future, whether that might be independence or an agreed linkage with either Russia or Ukraine. A velvet divorce, on the lines of the agreed separation of the Czech and Slovak republics, would be a possible way forward. This is something quite different and distinct from the rushed referendum of last Sunday. It is essential to have sufficient time for any popular consultation. The issues must be fully explained, while the voters need time for thought before giving a considered verdict. All military or paramilitary pressure should be excluded. Independent observers should verify the process before, during and after the voting.

There are two well known principles in international law: the territorial integrity of states and the right to self-determination of peoples. Quite often those principles conflict and the art is to reconcile them without resort to violence. Here, religious leaders and other people of good will can help the politicians. Above all, the OSCE holds the key to the peaceful resolution of problems involving national identity and country.

I am a direct descendant of someone who survived the charge of the Light Brigade. That was not a good way to solve things. Do Her Majesty’s Government agree that the Geneva declaration of 2006, which was signed by 42 states, is still relevant? It argued against armed violence and on behalf of human security. In that spirit, will the Government use their best efforts to achieve agreed political solutions?

My Lords, I imagine the noble Lord, Lord Hylton, is not a relation of the sergeant who got back at the end of the charge of the Light Brigade and asked his commanding officer, “Same again, Sir?”.

I shall be very brief. The West’s response to the outrageous annexation of Crimea by Russia has been twofold. The first has been to suggest—in fact now, to implement—some punishments, including the removal of trade in certain goods and today we have had mention of the closing down of some negotiations that have been going on on military matters between the West and the former Soviet Union. Secondly, there has been the call for more negotiations. I shall spend a bit of time on the negotiations point without further ado.

However, I want to mention one anecdote about the punishments. I was in Saint Petersburg two or three months ago, and I bumped into a British admiral who was rather irate, which admirals are allowed to be. I discovered why he was irate. He was the commander of the NATO naval force and was there with other NATO officers to negotiate a deal on British and NATO help with saving submarines, because the Russians had that disaster a few years before and we have the technology to help with saving submarines. On his arrival that day, he had been called by, I think, Putin’s office, but certainly by a very high person in the Russian Government, to say that the meeting was off. I am not quite sure who was punishing whom at that point because it was Putin’s office that closed down that negotiation. I pass that on as an anecdote.

On negotiations, clearly it is true that jaw-jaw is better than war-war, but what the noble Lord, Lord Solely, said is also true: unless it is done very sensitively and astutely, it could simply open up a Pandora’s box of further Russian activity. It is true that one does not have to believe in “peace in our time” to know that negotiations can be dangerous. If one is always on the back foot in negotiations and is always responding to the other side in a negative way, it can look defeatist and send wrong signals to rogue states, such as North Korea, Iran and so on. So there is a problem here.

I shall suggest one way in which we can overcome these problems and the difficulties we have in negotiations. Clearly, if we are going to negotiate, we want to do it properly. There are two principles in negotiation that need to be stuck with. The first is that we must be realistic. We have to accept that certain countries are within the Russian sphere of influence, and Ukraine is one of those countries. It is a buffer between the West and the East. We cannot describe it any other way. It is a divided country, and Crimea, as has already been said in this debate, has on the whole been part of Russia. These are facts of life that we have to accept in any negotiations. We have to be realistic.

The second, and much the most important, point is that we have to be on the front foot in these negotiations. We cannot just respond to other people’s actions and proposals; we have to have our own proposals. This is extremely important, because otherwise we will always be on the back foot and will be defeatist and retreating backwards from other people’s propositions.

One of the really interesting things about the debate so far is that a number of proposals have come forward. There is my noble friend Lord Howell’s proposal for a democratic and stable Government in Kiev. There is another proposal for trying to get some stability in Crimea. My own view, for what it is worth, is that we will have to have a much more devolved Ukraine. I cannot see how the present Ukraine can carry on in a stable way. It has got to be more devolved and possibly even split. The West is going to have to take a view about this. It will be terribly important for those Governments to have a view in order to sit down and negotiate. We cannot just go in hoping for something to come out of the negotiations and retreat backwards the whole time in the way that has largely been the case up to now.

I say strongly to our Front Bench that it must work out what we want out of these negotiations. There have been all sorts of suggestions coming out of this debate, which has been very fruitful. I hope that the Government will start taking up some of these views and coming forward with their own propositions in these negotiations so that we are not on the back foot, looking defeatist and having the kind of repercussions that the noble Lord, Lord Solely, wisely warned the House could come about.

My Lords, the State Duma in Moscow has just cancelled a delegation from our All-Party Parliamentary Russia Group a month from now. It so happens that I chaired the previous meeting here. Before we started the agenda, the formidable lady chair of the Duma asked me point blank, “Do you think we are a European country?”. I thought for a second and said, “Well, of course: Chekov, Tolstoy, Pushkin, Shostakovich, Stravinsky”—you know, just to show how cultured I was. However, I wondered whether I should add, “Actually, no, you are not. Why are all eight of you from the United Russia party? You are not a normal European country, because we have multi-party democracy”.

The schizophrenia in Russia is very general. Putin himself wants to be acknowledged on the world stage, such as at the G8—the Olympics is an example par excellence—and not to be a pariah. There are multi- national economic facts of life—energy, whatever—and the huge role of shipping across the northern sea route from the Far East to Europe, et cetera. That internationalism is in sharp antithesis to the other half of his brain, which is demotic nationalism.

We have to try. Somebody mentioned having regard to people’s sensitivities. That is a very wise thing to say. A number of the points of the Minister, the noble Baroness, Lady Warsi, have great validity. Some other key points and perspectives had certainly not been made until the debate got under way. It is time to try to be constructive, as many people have said; it might sound facile. The noble Lord, Lord Anderson, asked, “Why not have guarantees for the Russian minority as part of the solution?”. Yes, but we both made mistakes, did we not? It was only recently that the new Government did exactly the opposite on the question, which was highly provocative.

I say to the noble Lord, Lord Hylton, that this is not the time that Russia should be thrown out of the OSCE. The Secretary-General of the United Nations could not chair a meeting at the moment because he is defending the territorial integrity of member states. However, that is highly nuanced in the case of Crimea, and I will add my two pennies on that.

I very much agreed with the noble Baroness, Lady Suttie—I am sorry if I pronounce her name wrong. Yesterday’s proposals by the Russian Foreign Minister were rejected out of hand on the grounds that we would absolutely never accept the idea that Crimea could be either independent or part of Russia, because it must be part of the territorial integrity of Ukraine.

I also very much agreed with the noble Lord, Lord Howell, who made an excellent speech. I will qualify two points from my understanding of it. I very much agreed when he said, “Never use the word ‘never’”, but I will pick up the question of elections. I have now raised three times in the House the unsustainability of the constitution of Ukraine, which it has had for a long time. It is 50:50, a bit like the two sides in Northern Ireland, which I have mentioned. In that situation you cannot have elections in which the winner takes it all—51:49—and you certainly do not then arrest and imprison the leader of the Opposition on charges of treason. We do not want later this month—is it in May?—those sort of elections. The cart is being put before the horse as regards constitution-making.

On the talks in Northern Ireland, I am not saying that Dublin equals Moscow or anything but religion defines the situation. The right reverend Prelate the Bishop of St Albans spoke about the two types of Orthodox in the east and the west. We can also look at a bit of history. Many noble Lords have mentioned history, but I will add one point. Churchill agreed with Stalin and Roosevelt at Yalta—aptly enough—in 1945 that the Ukrainian, Belarusian and Russian SSRs would become members of the United Nations, but that was rather illusory until after Gorbachev, perestroika and the collapse of the USSR. However, what was done in Yalta was to shift Poland to the west, to the Oder-Neisse line, and to shift Ukraine’s western border to the left-hand side—to the west—which has created the exact balance which we now inherit. Galicia—which also had a Roman Catholic element, going back to the Austro-Hungarian empire—became part of Ukraine because of the shift after Yalta in 1945. We therefore have a country which I will not say is slightly artificial, as that would be a very bad thing to say. However, in historical terms, as we have historical memories, it is a relatively recent country. Perhaps that is why people are all so hypersensitive.

Crimea is in a very special position. I remember hiring a car not so long ago in Simferopol, staying in Yalta and going to Balaklava. I got to the esplanade in the middle of Sevastopol and got in a launch. I paid someone some roubles and he showed me around the Russian Black Sea fleet. Only 50 yards away is the Ukrainian Black Sea fleet. You see monuments all around for all the wars that Russia fought—three major ones in defence of Sevastopol. Tolstoy was wounded there, and much of War and Peace, in terms of what it is like to fight, is from Sevastopol in 1855. That novel is based on Sevastopol in that sense; it is almost learnt by heart, although that might be difficult, by every Russian schoolchild. The heroic defence happened not only in the 19th and early 20th century but as recently as 1941 and 1942.

In the centre of Sevastopol by the esplanade is an administrative building with a Russian flag on top of it. That has been true for a long time. As I understand it, the deal implicitly is in the treaty to have the sovereign bases, just as we have in Cyprus—that is, the naval bases in Sevastopol. But that treaty runs out in 2018, and I think that Putin has that in mind. All the Ukrainians whom we met in Kiev said, “Of course they’ll have to hand them back to Ukrainian control—we’re not going to renew that treaty”. Well, I do not need to teach anyone to suck eggs about the problem of access through the Dardanelles. Of course, Russia could build another base further along to the east, but I think that it is very committed to Sevastopol, almost as much as to the memory of Stalingrad in recent times.

Finally, I echo what the right reverend Prelate the Bishop of St Albans said, that the Greek Orthodox missionaries first landed in Sevastopol—I think that I am picking up the point correctly—and, incidentally, brought the Cyrillic alphabet. Anyone who goes to Athens and gets the hang of the Cyrillic alphabet does not have too much problem trying to understand the road signs in Crimea, and it is true of the whole of the ex-USSR; everyone understands Cyrillic. So this history is terribly important.

What we have to do now is to put a lot of eggs in the basket of how a new constitution would actually work. We have to find a form of words that does not say “Never” about Ukraine but tries to acknowledge that there have been mistakes on both sides—and I have mentioned a couple of them. We have to find a constitutional formula where there is buy-in from both main parties in the ethnic or religious sense. I do not dissent from everything that the Government and the West are doing at the moment, but my instinctive reaction, for what it is worth—and I would be interested to hear the Minister’s comment on this—is that we have to do what we can to give Putin an excuse not to do something stupid in the Donbas.

We must not be too provocative. Although people may be killed in a very tragic situation—take my analogy with Northern Ireland—it does not change what you then try to do. We must recognise the rights of the two sides to be part of a united Ukraine, even with a question mark over Crimea, and ensure that Russia comes to the table. I think that Putin is now looking for that. I may be wrong but that is my instinct.

My Lords, I want to speak briefly on this occasion and to concentrate on Crimea. We need to study the past of Crimea as well as its recent features.

Crimea has been an important Russian district ever since the great Queen Catherine secured it in the latter half of the 18th century. In the 1860s, as we all know, a Russian army was fighting attacks by the British and French armies in Crimea. After that, Crimea remained an important part of Russia. Crimea gathered important places—think of Simferopol, Sevastopol, Balaklava and Yalta, all of them full of Russian people and often Russian buildings. Yalta was, and is, a very special city. For example, it was for several years the home of Chekhov, the greatest Russian author of his day, and was the summer home of the Russian tsars until Tsar Nicholas II and his wife and children were taken away and murdered by the Bolsheviks. In 1944, Stalin secured in Yalta a conference with Roosevelt and Churchill to plan the end of the war against the Germans. None of this was part of Ukraine. Crimea was not treated as part of Ukraine until 1960. At that time, Russia, Ukraine and Crimea were parts of the Soviet Union. It was, I believe, at that time assumed that the Soviet Union would continue to be permanently in charge of Russia and Ukraine.

It was not until some years later, in about 1992, that the Soviet Union ceased to exist. Crimea remained in Ukraine. I believe that this was a mistake and that Crimea should have been made either an independent state or a section of Russia. I do not want the people of Crimea to be forced into abiding by the decisions of the inhabitants of the rest of Ukraine because they are very different. That being so, I believe that we should not do anything to restore Crimea to membership of Ukraine. The Crimean people should not be forced back into Ukraine. Crimea and Ukraine are different and should be recognised as separate places. I agree that there should continue to be Ukraine areas, except in Crimea. The majority of Ukraine and the majority of the citizens of Crimea should be kept separate. If that happens, things will go better, as they should. What we have seen in the past few weeks is very serious and we have to be careful about how we handle it. We need to recognise that what is done now in Ukraine is not necessarily the same as what should be done in Crimea.

My Lords, my noble friend Lord Goodhart makes his points persuasively and briefly, and I do not disagree with much of what he said. However, at the same time, no one can condone the manner in which recent events have been conducted by the Government of Russia.

Nevertheless, I would like to set my remarks in a personal context, if your Lordships will forgive me. I sit here on this Bench every day and look up at the Barons of Magna Carta—we will be celebrating them next year—and I think of how long it took from 1215 for us in this country to have a fully-fledged democracy. I also look up at the armorial bearings on one of those windows, on which the words, “Be mindful”, stand out. We need to be mindful of the history of the post-war world.

When I was first elected to the other place in 1970, the Soviet Union was a tyranny that dominated the whole of eastern Europe. I well remember my noble friend Lord Janner of Braunstone—I deliberately call him my noble friend—coming to me and persuading me to take on the chairmanship of the campaign for the release of Soviet Jewry. We worked hard, sometimes unavailingly, for those people who did at least have a door marked “Exit” if they could be given a visa to get out. I remember an instance when my noble friend and I tried to send a prayer book to a young man who was celebrating his bar mitzvah. We had it signed by Mr Wilson—as he then was—Prime Minister Heath, and some 300 Members of the House of Commons. It came back; not only was it not admitted, not only did the young man then know nothing about it, but my noble friend Lord Janner and I, and the other members of the committee, including my noble friend Lord Dykes, were not allowed to have visas to go to the Soviet Union. We were emphatically personae non gratae.

I had the great privilege, 20 years later, of taking part in an Epiphany communion service conducted by Father Ted Hesburgh, who had been the chairman of President Kennedy’s Civil Rights Commission, in the hotel in the Kremlin which had always previously been given over to visiting Soviet-bloc country delegations —Prime Ministers of East Germany and so on. During that visit, Mr Gorbachev’s chef de cabinet received from us a Bible that was symbolic of a million that he had agreed to accept to be distributed around the Soviet Union.

I relate those two separate anecdotes to show the progress that was made while it was still the Soviet Union after the coming to power of Mr Gorbachev—the man with whom Mrs Thatcher famously said she could do business, and did. There is no democratic infrastructure or democratic history of what we now call Russia. The Soviet Union was of course dismembered within a couple of years of our giving those Bibles. A superpower ceased to be and the Russian Federation was created. The Baltic states, Poland and Hungary—it was the situation in Hungary in 1956 that brought me into politics—all became independent nations and Czechoslovakia then split into two.

That was extraordinary progress and it had one effect in Russia. People who had been part of a superpower no longer felt themselves to be part of a great nation. We have to recognise that, for all his recent behaviour, Mr Putin gave back to the people of Russia a degree of self-respect. That is something that we should not set aside. I am not here to act as an apologist for Mr Putin or to justify the way in which recent events have been conducted, but I would say to your Lordships that we in the West, for all our tradition of developing democracy, have not always got it right. We have done things internationally, even in recent years, which have been questioned, and we should bear that in mind. We also have to bear in mind that a peaceful and prosperous Russia is essential to a peaceful and stable Europe. We must also remember that in recent history—I go back no more than a couple of hundred years—the concept of the sphere of influence has been recognised in international diplomacy. One has only to think of the famous Monroe doctrine of 1823.

It is against that sort of background that we should be careful. I am not saying that we should not apply certain sanctions but I am saying that, frankly, we have got off on the wrong foot here. We could have seen this coming—as a lot of us did—and a message should have been conveyed that it was crucial that the sovereign independence of Ukraine should be recognised, but it should also be acknowledged that Russia had its own legitimate interests in that part of the world.

The noble Lord, Lord Soley, in a very perceptive, persuasive and interesting speech, referred to the tragedy of Russian history. You have only to go to Moscow and see the monuments to where the German tanks were stopped to realise what the Russians went through. Yes, of course, they inflicted terrible things on others afterwards, for which they were rightly condemned, and we all rejoiced when the ghastly Berlin Wall came down and when the nations that I mentioned became free. I said a moment ago that it was Hungary in 1956 that brought me into politics, and it was. I shall never forget the issue of Picture Post which had on its cover the words “Cry Hungary!”. It was full of terrible photographs of what the phosphorus shells fired into Budapest by the Russians had done. We all remember what happened to Imre Nagy, the brave man who tried to stand up, just as we remember—and I had the privilege of meeting him—Alexander Dubcek, who 12 years later in Czechoslovakia tried to stand up.

Much progress has been made since then. We have, for all its imperfections, a free Europe. Many of the countries that were subjected to Soviet domination and tyranny are now members of the European Union—which is why I rejoice at the Union and will fight and fight to keep it—and most are members of NATO. I understand why there is a certain degree of concern and diffidence about seeing Ukraine become a member of the European Union and of NATO. Although I would like to see it allied to both, we have to recognise that it is not just a simple matter. Most of all, we have to recognise that we have a duty not to escalate the situation. We have a great responsibility resting on us for what we say in this Chamber today. I would hate to think that anything said here today encouraged a mindless bellicosity that could be only inimical to true freedom, peace and stability afterwards.

Yes, there has to be mutual recognition. I hope that there can be a pause, that the elections on 25 May can be properly supervised, and that the Government elected—it is only an interim Government at the moment—in Ukraine will be fully recognised. I hope also that there will be a role for Ban Ki-moon. We pay lip service—very often, it is only lip service—to the United Nations but if ever there was a case for the Secretary-General of the United Nations to seek to call together those who are at odds, this is it.

We must be under no delusions. The Baltic states are members of NATO. An attack on one member of NATO is an attack on all members of NATO. History does not repeat itself but it teaches us lessons and we should be mindful of what happened 100 years ago when people did not want to go to war. For corroboration of that, one should read Professor Margaret MacMillan’s recently published brilliant book, The War that Ended Peace. Although it sounds unthinkable, it is not utterly impossible that we could drift into a situation where the brinkmanship that took us almost to war in 1962 over Cuba could place us in a very parlous position.

I beg my noble friends on the Front Bench and, through them, the Prime Minister and the Foreign Secretary to do everything possible to establish a constructive dialogue and to recognise that the world cannot be a safe and secure place if there is continuing animosity and even cold hostility, as there was during the Cold War, between Russia and the nations of the West. To connive, however unwittingly, in the creation of that sort of situation in a world that is going to be increasingly dominated by the great power blocs of China and India as the 21st century progresses would be a disservice to our own continent and nation, and to the civilisation of which I hope we are all proud to be members.

There should be firmness but also caution and calmness. Let us remember that Mr Putin, for all his faults—we all have plenty of those—is not the devil incarnate. We must not strive to try to make him appear an isolated figure who becomes the devil incarnate.

My Lords, I begin with a tribute to the speech made by the Minister, which I found extremely informative. I thank her for maintaining her tradition of keeping the House well informed as this crisis develops. I also agree with many of the things she said, particularly what she said about the role of the Prime Minister at the European Council 10 days ago. The constructive role he played was greatly appreciated, particularly in Poland.

I cannot claim any particular expertise on Ukraine. It is a very long time since I lived in Russia. I lived in Moscow many years before the noble Baroness, Lady Suttie, lived in Russia and probably many years before she was anything more than a gleam in her father’s eye, but I knew Kiev and Crimea quite well back in the 1960s. I know Kiev a little more recently, but there are many noble Lords in the House with more expertise than me. I will therefore approach the issue by trying to devise some principles.

The first principle that I think the British Government are acting on—it is very important to keep it in mind—is that the aim of policy should not be to punish Russia but to help Ukraine. Although helping Ukraine does of course mean direct support and assistance, it also means deterring Russia from continuing down its present course. I do not think that that amounts to reckless bellicosity. Provided we ensure that all our policies are designed to assist Ukraine, we will not go far wrong.

There are three traps that policy needs to avoid, and I think British government policy is avoiding them. The first is the pipeline heresy, which was well exploded in an excellent speech by the noble Lord, Lord Howell of Guildford. Pipelines mean that one has tied suppliers. The Russians, by choosing to invest in pipelines rather than LNG, have ensured that we have leverage over them. In the medium term, we, as the noble Lord, Lord Howell, said, can buy more Norwegian or Algerian pipeline gas. We can get LNG that is freely available, at a price that will go down, from Nigeria and the Gulf because there is no market in America any more thanks to fracking. If Gazprom cannot sell its gas to us, it cannot sell it anywhere because it has no other market to supply, so Europe has no need to cringe because of its energy deficit.

It must of course work to correct that energy deficit: the noble Lord, Lord Howell, was right again. To some extent, it has done so, compared with the 2008 crisis. Slovakia, Hungary and Poland are less exposed now than they were because the pipelines previously flowed in only one direction and they now have reverse flow from west to east. We need be less inhibited than we were at the time of the Georgia crisis in 2008.

In the long term, there is no doubt that fracking means that the United States will be exporting LNG. There is clearly a need for many more gasification plants. It is particularly astonishing that Germany does not have one yet. However, in the medium term this is not a big problem, and in the short term we have had a warm winter in Europe and stocks are high.

Coal is phenomenally cheap because Appalachian coal has been driven out of the American power generation market by natural gas. Therefore, it can underprice Russian coal. Forty per cent of coal in this country still comes from Russia, but it does not have to. We could, if we wanted, reopen those contracts. I am not saying that we should do these things: my point is simply that the pipeline heresy is a heresy. We do not need to feel that Gazprom controls the EU’s policy.

The second heresy is to believe that EU sanctions set a ceiling on what we, the French, the Germans or the Poles could do or threaten to do to help Kiev. They do not set a ceiling; they set a floor. A convoy does not need to move at the speed of the slowest ship and only as far as that ship will go. There is an argument that the UK and France should think about going further and faster because we are signatories to the 1994 Budapest memorandum, which has been described and discussed already. However, I will make the point that in 1994, Ukraine’s nuclear arsenal was the third largest in the world. It was bigger than those of the next three, the French, the British and the Chinese, put together. All that was removed as a result of the Budapest memorandum, so I do not think that our policy in the present crisis should be determined only by the need to support and help our friends in Ukraine. We need also to think about how to sustain the policy we have had for many years on non-proliferation. It will be harder to persuade the near-nuclear powers not to go for warhead and missile development and weaponisation in the future if it is seen that the guarantees that the Ukrainians certainly think they got in 1994 are worth nothing.

The third heresy is the shoulder shrug which says that Ukraine is a basket case and nothing can be done. Ukraine is still the world’s second largest grain exporter. The country is phenomenally rich in minerals and in largely unexploited hydrocarbons. It is, as I think the noble Lord, Lord Howell, also said, natural fracking country. No one is doing it yet because no one invests in Ukraine. That is because Ukraine has had the bad luck to have five successive corrupt kleptocracies. Twenty years ago, the per capita wealth of Ukraine was on a par with that of Poland. Today, Poland’s per capita income is four times that of Ukraine. It is a rich country that has been very badly governed, and of course it is bankrupt. Some 30% of its budget is spent on debt service, so no wonder it cannot pay its bills. However, with a good Government that could change very quickly, which would be in everyone’s interest, including Russia’s.

What should we do? I have four thoughts about this. First, it is obvious that generous emergency aid should be made available now. It should come from the IMF, the EU and bilaterally from the Americans. I see that there is a Bill in Congress for $1 billion; I hope it gets through. That is needed to get the country through the six months that will see the parliamentary and presidential elections, the new constitution and a new Government. In my view, we are talking not only about capital aid—much of which can be loan money because we are lending to a country that is potentially rich and will repay—but about technical assistance, particularly in the area of juridical, legal and constitutional reform on issues of governance, where I think there is a particular role for this country to play.

Secondly, the Russians must be deterred from disrupting the six-month process that the Ukrainians have set themselves. As the noble Baroness, Lady Suttie, said, Kiev must continue to be statesmanlike and conciliatory about language laws and minority rights, and not make the terrible mistake that arose briefly on the language laws. The world’s eyes and ears need to be on Donetsk, Kharkiv and Odessa. It was easy for the Russians to create facts on the ground in Crimea because the world was not watching and the OSCE monitors were not let in. The Kiev Government want them in now, so we, the EU, the OSCE and all those who are concerned for the future of Ukraine should be responding to that. We need observers on the ground to make sure that false facts are not created.

Thirdly, there is a need for a dialogue with Moscow about whether its current zero-sum game approach, as shown in Putin’s speech today, is really in its interests. I strongly believe that, as the noble Lord, Lord Howell, said, a prosperous Ukraine is in the Russians’ interest. I do not think it is in their interest that their near-abroad—the Kazakhstans, Turkmenistans, Azerbaijans, Armenias, Georgias and Moldovas—should see Moscow as threatening and overbearing. However, that is how Moscow is seen today as a result of what has just happened in Crimea, particularly in the Muslim republics. The reactions of the Tatars in Crimea were predictable, and their fate is of concern to their coreligionists.

The Russians also need their EU markets, so the points I made earlier about sanctions are relevant. They need the inward investment that their action in Crimea will certainly now deter. We need to encourage them not to believe their own propaganda: Ukraine is not about to join NATO and the US is not about to deploy missiles on the Russian border. In fact, NATO membership is not on offer and has not been on offer for a considerable time. It was US policy for a time to offer it, but the European allies did not agree. As far as I know, no British Government have agreed, and it is not British policy now that Ukraine should be invited to join NATO—I hope the Minister will confirm that. The Russians maintain that it is. It would be a great pity if it was, and it would be a mistaken policy, for reasons that have been mentioned in this debate. However, I do not think it is the case, and that needs to be made clear.

Being slightly daring now, I should like to go a little further and make what is perhaps a more constructive suggestion. Some recent statements from Moscow, including one yesterday, seem to imply that Russia would like a status for Ukraine comparable to that achieved by Austria with the state treaty in 1955. If that were genuinely what a freely elected Ukrainian Parliament wanted—I have no idea whether it is or might be—and if the Russians would genuinely back off, as they did in Austria in 1955, and could convince Ukraine that they would respect a Ukrainian state treaty, just as Russia respected the Austrian state treaty and not as it treated the Budapest memorandum, then it seems to me that a very interesting negotiation is possible. Of course, it all hangs on what the Ukrainians want. They cannot have access to the alliance but they could have some other form of collective security guarantee, perhaps more binding than the Budapest memorandum has come to be.

Lastly, we need to remember our other friends in the region that are now feeling threatened. For Moldova, the parallel between Crimea and Transnistria is disturbingly close—the Russians have 2,000 troops on the ground in Transnistria, and the illegal referendum has already happened. It happened in Gagauzia on 2 February and, astonishingly enough, produced a majority in favour of closer links with Moscow and no move towards the European Union. Russian Deputy Prime Minister Rogozin has already warned that Moldova will lose Transnistria if it continues to move towards the EU. So far, Moldova’s nerve holds, but where are our observers? Where is our presence on the ground in Moldova?

What about the Baltic states? When they suffered, in 1940, precisely the same fate that has now befallen Crimea, the United Kingdom, greatly to its credit, never recognised their incorporation into the USSR. Most other countries did, but we have never recognised it. We maintained the embassies of the three independent republics in London right through until the collapse of the Soviet Union. Now they are our allies and are in NATO. They have a deep bond with this country because we did not let them down the way everybody else did. It is really quite important that we should be seen to be standing by them again lest President Putin mistakenly think that Article 5 of the Washington treaty is a dead letter. Foreign Minister Steinmeier was in the three Baltic capitals 10 days ago. I hope that we will follow.

The noble Lord, Lord Cormack, spoke of the Monroe doctrine. Alas, the Brezhnev doctrine is probably more relevant. I do not like it at all. I do not believe in spheres of influence. I do believe that democracy and self-determination must take precedence. That is why I think our policy should rest on the central pivot of: what can we do to help Kiev and others who currently feel threatened?

My Lords, I begin by recording my interest as a three-time election observer in Ukraine, as well as visiting on a number of occasions and heading up a programme run by the European Parliament Former Members Association called EP to Campus, which sends former Members to universities. We have sent quite a few to universities in Ukraine, particularly in Kiev and Donetsk.

The noble Lord, Lord Anderson, is not in his place. I reflected at one point that sometimes pleasant consequences come out of tragic situations. If the Conservative group ended up in the EPP, I would regard that as being an extremely good solution to us not having anywhere to go at the moment, but we will see about that in due course.

As I mentioned, I have visited Ukraine, including Crimea, on many occasions. It has always been very clear to me that there have always been huge tensions within the different communities in Ukraine and Crimea. Seven or eight years ago in Crimea, when I spoke to Crimean parliamentarians in the autonomous parliament, a number of them, even at that time, expressed great regret that they were in Ukraine at all. The idea of joining Russia has not come up in the past few months; it has simmered away ever since, as one parliamentarian put it to me, the unexpected and somewhat cavalier act of Nikita Khrushchev in removing Crimea from Russia.

What we have to look at going forward, without in any way accepting last Sunday’s referendum as being fair, rational or giving proper opportunities for debate, is a way for the people of Ukraine to express a preference for where they want to be. We must also realise that we have our press in this country but my son, who is living in Moscow at the moment, describes it as Russia trying to stir up tensions in order to create a pretext for further involvement in eastern Ukraine, with the Russian media operating as an anti-western, anti-Ukraine propaganda machine. In other words, they are building up the fires. But there has also been some building up of fires in Washington and in places somewhat closer to home.

The referendum was certainly not conducted in a satisfactory way, but I do not think it becomes a Parliament that is about to give an independence vote to Scotland to say that we cannot devise a formula whereby the people of Ukraine can express their preference for where they would wish their Government ultimately to be based. As the noble Lord, Lord Howell, said, there are many possible solutions on offer. Our job is to look forward and to try to be a facilitator of those negotiations, not to be partisan but more to follow the line of recent statements by the former German Chancellor, Gerhard Schroeder. He said that the EU has to take some responsibility for the current situation in Ukraine because we have rather polarised it. It is either an association agreement or a customs agreement with Russia. We have to come to a solution which is somewhere in between those two. Moving forward has to be done in a both-ways scenario, as our colleague Mr Schroeder says.

I counsel us to be cautious in the way that we deal with all our relations with Russia. To the people of Russia, what happened in the 1990s was not exactly the triumph that we see here. Many people in Russia do not look on either Mr Gorbachev or Mr Yeltsin as great figures; many of them look on those two people as being less-than-perfect defenders of what they regarded as their pride and their interests. We need to keep that in mind at all times when dealing with Russia.

We also need to look at money-laundering, which was mentioned by the noble Earl, Lord Sandwich. We cannot be unaware of the huge amount of eastern European money that is in London. When I think of my late mother-in-law in her late 80s trudging down to the bank with her passport to show that she was not money-laundering and I then look at the huge amount of money coming into this country, into flats and property, and basically depriving Londoners of the ability to have somewhere to live, I wonder whether we are concentrating on the wrong end of that particular spectrum. In some people’s view—and it would not be far from mine—we have also aided the plundering of the wealth of eastern Europe, which has come in here, has done marvels for our balance of payments but has impoverished a lot of people in eastern Europe.

One final problem that I want to deal with is that of corruption in Ukraine. As the noble Lord, Lord Kerr, mentioned, it has existed under the past five Governments, and it is sad and endemic. I have a number of people whom I would count as friends in Ukraine. Most of them are in what we could call the middle classes: they are doctors and professionals, many of them working in the public sector. The Ukraine Government know that their public servants cannot live on the wages they are paid. A Russian word which is widely used in Ukraine—I hope the noble Baroness, Lady Suttie, will forgive me, because my pronunciation is probably awful—is blagodarnost, which means a payment in gratitude; in other words, a bribe. One of my friends who is a doctor would say that she could not live on the salary paid to her by the state. She operates a public clinic for one and a half days a week, and for the other three and a half days, with the open connivance of the Ukrainian state under a variety of Governments, she accepts under-the-counter payments for priority. She runs a sort of Nuffield health service in the Ukrainian medical service. This is not unique; it is a problem which the Ukrainian authorities have got to overcome, because until they do so there will not be investment. While a judge can be bribed to deliver a corrupt decision that will take all your investment away—and there are plenty of examples of people’s investments being corruptly confiscated by court decisions—and until you can get a rule of law that guarantees the sanctity of investment, people will not invest. This is a major problem that Ukraine has to tackle, and it is a problem that goes right back to the Kuchma Government. We can say that the President just out of office, Yanukovych, was corrupt, but he was only following a long pattern. After all, Mrs Tymoshenko was known locally as the “gas queen”. This problem has to be tackled.

That is why we must have a certain amount of humility. One of the things about this debate has been the number of times that the European Union has been mentioned. If anyone believes there would be any future for Britain outside the European Union in influencing Europe, let them read through this debate. I do not think that a single noble Lord even intimated that we would have the same amount of influence outside the European Union. Let us join with our EU partners in trying to mediate between the legitimate interests of a lot of disparate players. We have a role to play as part of a wider European polity. I hope the noble Lord who replies to the debate will be able to assure us that we will fulfil that role.

My Lords, my noble friend the Minister had to leave for a few minutes and just spoke to me. Even in her absence, I want to pay tribute to her opening speech, which was extremely helpful and certainly laid down the approach that the Government are understandably taking.

Many other noble Lords in this debate have pointed out that what the President of Russia is doing is at worst illegal but certainly running roughshod over the wishes of people and the security and stability of the wider region. I would not add very much to the debate if I simply repeated those kinds of sentiments. Instead, I will take a different approach but I want to make very clear in doing so that, while I seek to understand some of the mistakes that we have made in the West and some of the understandings that Mr Putin and his colleagues have in the East, I do it not in any sense to excuse what he is doing but because, if we do not understand it a little better, we may continue to make even worse misjudgments than we have done to date. I rather suspect that some noble Lords will find some of the things I say uncomfortable and maybe even disagreeable, including colleagues on my own Benches.

First, it is extremely important for us to be clear about the difference between tactics and strategy. We are debating the question of Ukraine and the particular situation with Crimea. This is about a tactic of Mr Putin’s, not a strategy. The strategy is a wider issue. I have not heard much being said—except perhaps by the noble Lord, Lord Soley—about the wider approach that Mr Putin is taking and what drives him. I will come back to that in a minute.

On the tactical question of Ukraine and Crimea, we need to be very honest with ourselves. For example, when noble Lords say that it is for the people of Ukraine to decide their future democratically, it is manifestly clear that the people of Ukraine are not of one mind. The problem is that they are absolutely split down the middle, so democracy as we talk about it simply will not work. That is part of the reason we have this problem. It is not going to work, so let us not use phrases like that, which might be very reassuring in this Chamber but are meaningless in the real world outside. One of my noble friends talked about how important it is to be responsible in this Chamber because things that are said here might do damage outside. There might be some element of truth there but, frankly, I do not think many people in Russia listen to this Chamber. It has very little relevance to most of them and the way they see things. The influence it has is modest in our own country and even more modest more widely.

I heard a lot said—very sensibly, rationally and thoughtfully—about the economic issues and the energy drivers. Those are not the things that drive people in situations of conflict—otherwise we would never get into wars. In wars, everybody loses: economically, socially and in every other way. Wars do not come about because of some kind of weighing up of the calculus of economic benefit. When I listened to a number of things said about energy, trade and economic sanctions, my first thought was that that will not make any difference to Mr Putin and his colleagues because they do not make judgments on that basis. They make judgments on the basis that they believe that their great country has been humiliated and set aside by the West for a long period and they are trying—successfully —to fight back against that. That is the driver, not the economy.

The speech by the noble Lord, Lord Howell of Guildford, was, as always, excellent. One thing that he pointed out was the interconnectedness of everything. He has often rightly drawn our attention to that. That makes it very difficult to make economic sanctions work, because there are always ways around them, especially if you have an enormous country and other countries, including other members of the Security Council, prepared to play ball with you.

Let us look at the attitude of Mr Putin. It is always important to know your enemy to understand what you are dealing with. When we talk about the war in Afghanistan, we think about our intervention when we were there—at least, the most recent one. Russians think of the previous Afghanistan war, the one in which we backed the mujaheddin, sending huge amounts of weapons and materiel—and backing Osama bin Laden, of course—in order to get them out, one of the last great humiliations at the end of the Cold War. I may be wrong, but I perceive that Mr Putin is riding on the back of a nationalist tiger and saying, “We’re going to put this right in various places”. I could see it in the quartet dealing with the Israel-Palestinian problem when, for all the loud talk coming from the UN, the EU and the United States about who would talk to whom, Russia was happily talking to Hamas and Hezbollah all the way through. They just ignored what the other three said.

When we came to Syria, particularly after the intervention in Libya, it was absolutely clear from the beginning that Mr Putin was saying, “This is my red line. And, by the way, I am going to stick with mine. Now let us see what you do with yours”. What did we do? We drew lines in the sand, which is very convenient because you can always draw more lines in the sand and rub the other one out with your foot. The same mistake has been made with regard to Crimea: saying that this or that will never happen. I do not think it will be much reassurance to say that we stuck to our view in regard to the Baltic states and, three generations later, they got their freedom. That will not be much reassurance either to people in the Baltics now or to anyone else who might reasonably be fearful. Why? Because now we do not make much of a difference.

I come to the European Union. I am a strong supporter of the European Union, but I remember many arguments with some of my Liberal colleagues over the question of widening or deepening the Union. In my view, you could either deepen it and make it a real political Union—at that stage, I was very keen to do that and have a Europe of the regions rather than a Europe of nation states, and I still think that it may well have been possible—or you could widen it and make it in effect a glorified free trade area. My belief was that if you tried to do both, you would make for disaster, and I think that that is what has happened. We will not talk about the economic aspects of it, but the political aspects are that we have allowed the further widening of the European Union and encouraged others to join it because we saw it as a democratisation of the east and of the south of Europe and beyond, but at the same time many of us who supported that were talking about the importance of developing a foreign and security policy and a defence posture. How on earth could that have been seen by Russia as anything other than bringing forward military, foreign and security policy closer and closer to its borders? Was it ever going to be accepted?

I am most grateful to the noble Lord for giving way, but if you take the case of Serbia and Kosovo—and it is true of many countries, surely—the Copenhagen criteria and other criteria, including the economic criteria for joining the EU, have been prized and highly sought after. That is not just skin deep; that is strategic—to use the noble Lord’s word—thinking. I ask the noble Lord to reflect on this idea that widening has had no real impact and not been a proper function of the European Union. I disagreed with Jacques Delors on this very point: I believe that widening and deepening have actually gone together.

My Lords, that is precisely the problem which I am identifying. If we try to widen it out to states that Russia sees as being within its purview and at the same time insist that what we want is not merely a trading bloc but a political union with a common foreign and security policy, and with defence implications down the line, how could Russia see that other than as more than an economic free-trade and democratic area? It could only be perceived as a threat. We are reaping some of the problems of that approach.

We are at a dangerous place if we become more aggressive and at a dangerous place if we do not. I am reminded a little of the problem that I perceive in the policy that some of my noble friends on these Benches have espoused regarding nuclear weapons. The approach that is recommended by some says, “We won’t actually send out submarines with weapons on them unless there is a threat. We’ll keep them going out and end our continuous at-sea deterrence”. So if we find a situation now where these submarines are supposedly out and there is a threat—in a few months’ time there might be a greater threat, possibly on the Baltics or possibly somewhere else—at what point do we judge that the danger is sufficient to bring them back and put in the weapons? Is it now? Is it in a month’s time? Are we already too late? If you do that, would it not increase the militarisation of a problem that we already believe we should be de-escalating? We are in a serious problem and there is no easy answer to the dilemma that we are in.

However, I am persuaded that we need to look seriously at our strategic defence posture. I do not believe that what we have at the moment, which was largely defined on budgetary issues after the last election, is serving the purpose of seriously understanding how we deal with the chaos in the wider Middle East, across the north of Africa and below it and, increasingly, in eastern Europe. These are questions which this Chamber needs to come back and explore fully and thoughtfully because they are strategic threats, which we can ignore until the time when they come back to haunt us. Some of our friends, brothers and sisters closer to Russia, are already finding the past coming back to haunt them.

My Lords, I have no special knowledge of Ukraine but none the less, I felt compelled to speak in this debate. I, too, pay tribute to the noble Baroness, Lady Warsi, for introducing it so compellingly.

For someone like me, it is of great concern not to be able to pick through the propaganda war that is being perpetrated. There is the question of who to believe, given the anonymised militias and the civilian thugs we see on our televisions. There is a breakdown of trust; there is disinformation. Of course, we all would like peace and tranquillity in Ukraine but there are historical fault-lines of language and political affinities, plus of course those industrial assets, military facilities and key infrastructure—gas pipelines, for instance—which are of enormous importance to the Russian Federation. I follow the point made by the noble Lord, Lord Cormack: in a sense, we need to recognise this. I approach all this with a degree of humility and caution because, like the noble Lord, Lord Alderdice, if for different reasons, I believe that we have good reason to show humility.

I do not know how best we can help Ukraine work things out for itself, come to an internal social accord and find accommodation with Russia on the one hand and the rest of Europe on the other. Certainly immediate financial assistance is necessary, and we can perhaps particularly help by advocating the rule of law and sound economic principles, the ingredients that generate trust, commercial confidence and prosperity and which are in the end a bastion against corruption and external meddling, but these are very long-term aims. They are based on essential truths rather than short-term political fixes.

In recent weeks, we have seen on our television screens demonstrations and barricades in Kiev and elsewhere. It seemed to me that Ukrainians were to a degree united, if one can use that term, over the evils of extortion, corporate raiding, corruption and abuses by civil servants and law enforcers from the ousted President downwards, not forgetting his family and cronies. The sums are eye-watering: some $37 billion-worth of loans misappropriated and $70 billion transferred to offshore accounts in the past three years from a country of 45 million people where GDP per capita is around $3,900. This is brigandry and theft on a grand scale, perhaps matched only by the sheer vulgarity of the ousted President’s principal residence. His hurried departure, the bungled disposal of documents in the Dnieper river and their subsequent retrieval identified the further extent of the theft of state money.

I add to the comments made by the noble Lord, Lord Chidgey and Lord Balfe, and my noble friend Lord Sandwich on this because we now know quite a lot about the theft of state assets, in part thanks to the courage and, sadly, untimely death of Sergei Magnitsky, who has been mentioned in this House and another place on previous occasions. Noble Lords will recall that he was beaten to death in a Russian jail by the very people he had exposed. Hermitage Capital Management, which commissioned him to investigate the corruption, suffered the sequestration of its assets and subsidiaries and the fraudulent use of company identities. About two weeks ago, Hermitage’s chief executive officer, Mr William Browder, talked to the All-Party Parliamentary Group on Anti-Corruption, and I met him subsequently. Hermitage made a dossier available and has been instrumental in persuading a number of jurisdictions to take significant action against those responsible for these thefts. I cannot help thinking that that was partly responsible for the passing in late 2012 of the Magnitsky law in the United States. Other jurisdictions have followed in the seizure of assets and the freezing of accounts, but one jurisdiction appears to be notable for its apparent inaction, and it is the UK.

Despite receiving the same information in 2012, all that has been received are bland platitudes, excuses about needing to proceed carefully and about not upsetting people, and claims of taxpayer and company confidentiality. This was raised in an adjournment debate in another place in January 2012 and on 7 March 2012 the Commons unanimously approved a Motion calling for action. Later the same year, the honourable Member for Esher and Walton, Dominic Raab, raised the issues in correspondence with the same agencies that received the initial letter from Hermitage’s lawyers. Why is this? Why such inaction?

It is safe to say that UK intelligence sources must have known a great deal about what was going on and where money was coming from. Are we satisfied that none of this money somehow found its way, directly or indirectly, into UK Treasury bonds? Can the Minister tell the House what audit has been carried out into this?

My point is this: the UK is a place where it is pleasant to live, to have property, to educate children and to invest money. It is the financial capital of the world and when things hit trouble around the globe, people look to a safe jurisdiction where one might assume that the rule of law, good order and sound public administration prevail. It is not a place where one would wish suspect money to be laundered, especially when we have some of the most sophisticated anti-corruption and company laws in the world. But that is the accusation that Mr Browder is levelling against this country. He told the all-party parliamentary group that Britain has some of the most porous and least diligent supervision of any jurisdiction that he knows about. He went on to say that the UK, and London in particular, is all too often the destination for this booty. To the extent that there is knowledge but no action, that would, if true, make this country complicit in the very theft that it claims to abhor and stand against. Worse still—again, if this is true—when British businesses and individuals are pursued by our authorities for relatively minor infractions or inadvertent mistakes, one might reasonably add hypocrisy to the charge sheet.

The Magnitsky trail identified several UK-registered firms; they have been mentioned in another place and I shall not do so again. The documents recovered from the Dnieper attest to a network of UK shell companies; three, in particular are linked to the alleged Yanukovych properties in Ukraine. This information is all in the public domain. Some of the transactions may of course be innocent but the fact is that a very great deal of Ukraine’s money has gone missing and that is politically and economically destabilising.

It is obviously a matter of some considerable cost to pursue miscreants through the courts. But a cheaper approach, advocated by Mr Browder, is to name, shame and deny entry visas to those implicated and deprive them, their families and associates of rights to come to this country, where many of them like coming. The EU Council decision on freezing assets is welcome, and the detention of Dmytro Firtash is a creditable start, particularly in Austria, which does not have the greatest record of dealing with these things. The UK’s pre-eminence as a financial centre gives it a unique lever in its own right. So what are we, the UK, doing to assist Ukraine in this respect, to discover where money is going and how it can be repatriated?

I agree that seizure of assets and entry restrictions will send the right message, but only if they are targeted to suspect criminal parties, not if they are used simply to express a distaste of geopolitical adventurism, which is quite a different matter and should be clearly distinguished. Objective identification of criminality should therefore not be blunted by political considerations. There is a need for a principled stand. We should enforce corporate and financial laws consistently. This is the bedrock of trust, cohesion and stability, and a demonstration that the rule of law matters and has both social and economic value.

Finally, there are of course enormous assets that should be unearthed and returned. I would like to know what action the UK Government are taking to identify and return money stolen from the people of Ukraine.

My Lords, with your Lordships’ permission I will make a brief intervention at this point. I apologise to your Lordships for not having put down my name on the list in the normal manner.

I start by saying that my knowledge of our relations with the Soviet Union, as it then was, and eastern Europe stems from a very short time as a junior Minister in the Foreign Office responsible for those matters—frankly, I was a very junior Minister. I was instructed by the late Sir Michael Palliser, Sir Rodric Braithwaite and Sir Christopher Mallaby—great people whom I am sure the noble Lord, Lord Kerr, will know well. Sadly, my training in those matters was brought to a premature halt by the Argentinians in April 1982, which is the reason for any shortcomings that I shall no doubt now reveal.

My preference in these matters is for a diplomatic solution above all. I suggest that the sort of diplomacy that we want is not megaphone diplomacy, which we hear so often these days, not least from across the Atlantic. My noble friend Lord Carrington turned the phrase “megaphone diplomacy” in some other connection. Progress in this regard will not be easily achieved by the kind of shouting at each other that we so often hear at present. One has to have a certain sympathy with the Russian position, but no sympathy at all for any contravention of international law or the norms of international behaviour, which I fear we have witnessed in recent times.

I will make a simple suggestion to the Minister, which I hope will be a partial way forward, if that can be identified. I refer to the possibility of leasing Crimea to the Russians while the Ukrainians retain sovereignty. We have some experience of this matter. Hong Kong, of course, was leased for a 99-year period, which ended successfully and peacefully a few years ago, and we have a sort of lease for the so-called sovereign bases in Cyprus, Akrotiri and Episkopi. I do not know whether a formula of that kind could be a partial solution to the problem, but I suggest that it is worth exploring and I invite the Minister to consider it. Perhaps it has already been considered, in which case I would be happy to hear that. However, in the mean time, if we could stop shouting at each other through megaphones, that would be a way forward.

My Lords, with the leave of the House I will speak in the gap.

I place on record my strong dissent from the position taken by the European Union, the British Government and the Government of the United States in their treatment of this issue. We meddle at our peril in a part of eastern Europe that we little understand.

I will clarify the position on the Budapest memorandum, which has been oft-quoted in the press and during this debate. The Budapest memorandum was determined on the basis of a need to reduce nuclear weapons deployment in eastern Europe in the early 1990s. It was never seen as a settlement of boundaries in that part of eastern Europe. It does not guarantee frontiers and it is not a treaty, but it reaffirms an obligation to refrain from the threat or use of force against the territorial integrity of Ukraine. Russia is perfectly entitled to challenge the territorial integrity of Ukraine as long as it does not use force and it has been so challenging since 1994. Anyone who follows the debate that has been going on over the years in eastern Europe will know that there has been a constant discussion over that matter, which is unsettled business as far as the Russians are concerned.

Furthermore, there is no evidence that force was used prior to this referendum. Yes, there has been lots of reporting of the alleged use of force, but I have not seen evidence of it. At the end of all this—no doubt there will be some kind of inquiry—I feel confident that we will find that force was not used. The use of force has not led to celebration and jubilation on the streets throughout Crimea, particularly on the back of a 96% vote on an 83% turnout. That does not suggest to me that those people have been intimidated into the way they have voted; they have simply voted for what they want, and they can now have it.

The truth is that Crimea is Russian and it is an accident of history, following the collapse of the former Soviet Union, that it has ended up in Ukraine. A historical mistake is now being corrected and in my opinion we are overreacting. We have repeatedly humiliated Russia over the past 20 years; it was particularly humiliated over the break-up of Yugoslavia. Indeed, the Russians now quote the precedent of Kosovo. They pray in aid the 2010 ruling by the International Court of Justice, when it states that international law contains,

“no prohibition on declarations of independence”.

We cannot ignore these precedents. Throughout the world, people are referring to the precedent of Kosovo. It is very interesting that, during this debate, there has been very little reference to what has happened in Kosovo. Indeed, when I intervened on the Minister at the beginning of the debate, she did not respond.

We need dialogue with the Russians, not sanctions. These sanctions will turn us into a laughing stock. It is out of dialogue that we can avoid these problems in future. The course that we are on is going nowhere and we will be humiliated when we back down.

I thank the Minister for her initial presentation and other noble Lords for their interesting contributions this afternoon.

Both Russia and the West have found themselves trapped in a position that I believe neither of them wanted to be in. The trick now is to find a way of containing the situation, de-escalating an extremely serious situation in Ukraine and sending a clear and unequivocal message to Russia that annexation in this manner is unacceptable. In this, the Government have our full support.

The question that we need to ask ourselves is how we got into this situation, and why Russia is behaving in a way that will clearly have consequences for it in the international community. Many commentators have argued that we should not be too surprised by Putin’s approach to events in Ukraine; after all, he established his political position in his 2007 Munich speech, when he called the dissolution of the Soviet Union the greatest catastrophe of the 20th century. Russia is still coming to terms with the loss of the USSR—the old Russian empire, as the noble Lord, Lord Cormack, said. The potential development of a free-market, democratic Ukraine, especially one integrated into western economic and security structures, is perceived as a real threat. Many Russians have never accepted that Ukraine is truly separate from Russia.

“Ukraine is not even a state”,

Putin told George Bush in 2008. He said that part of its territories were,

“in Eastern Europe, but the greater part is gift from us”.

Russia has reacted aggressively to the demands of the Ukrainian people, who set their face against a Russian plan to develop a Eurasian union in favour of a trade relationship with the EU, effectively killing Putin’s plan for a new trade area. Russia was concerned that rapprochement with Europe would mean, ultimately, that Ukraine would join NATO, and has always been keen to maintain a buffer zone of sympathetic countries on its borders. As the noble Lord, Lord Kerr, indicated, that offer to join NATO was never on the table. Let us not forget that the Kremlin was also concerned about losing its military base in Crimea, and that a successful revolution on its border might encourage opposition groups within Russia itself, particularly after the protests witnessed there in 2012. It has proved to be a very popular move within Russia, with 70% support for its actions in the Crimea.

We should not lose sight of the economic situation facing Russia at this time. Russia’s economy is already in a de facto recession with a drop in investment, a rapid decline in consumer demand and a real terms decrease in incomes. The economy has already shrunk for two consecutive quarters. The rouble is weakening, causing expectations of growth in inflation. Russia’s Ministry of Economic Development has revised downwards its short-term forecasts on an almost monthly basis, so Russia was, and is, in a touch of economic trouble and could be looking for an outside distraction. This strategy worked well for Putin during the upheaval in Chechnya, which boosted his popularity in Russia. However, Russia should be extremely careful in the risks it is taking and the West needs to send a strong message to Moscow that there will be costs and consequences to Russia for this action.

Despite all this, it is right to acknowledge that the crisis did not start because of President Putin. Russia is responding to the situation in Ukraine rather than having a master plan that provoked the current crisis. However, it is also true to say that, rather than helping to resolve the crisis, Russia has sought to exploit and inflame existing ethnic, linguistic and geographic fault lines within Ukrainian society.

The West’s response has been cautious despite Russia’s actions having broken a whole raft of international treaties. The massive increase in the number of troops in Ukraine violates the charter of the UN, the Helsinki Final Act, the Budapest memorandum of 1994 and the Russia-Ukraine agreement on military bases.

Ultimately, however, we need a stable situation on the border of the EU and nobody wants to see a military solution to this situation. It is, however, in our interest to ensure that stable, free democratic countries flourish in Europe. Russia, through its actions, has now entirely isolated itself from the international community on this issue. I particularly welcome the abstention by China from the UN vote on the illegitimacy of the referendum in Crimea at the weekend. This really demonstrates to Russia that it is friendless in pursuit of its policies in Crimea. However, an isolated Russia in the long term is in nobody’s interest. We have a moral responsibility to help Ukraine. It is worth heeding the words of Ukraine’s Prime Minister, Arseniy Yatsenyuk, even if, as my noble friend indicated, some of the guarantees are perceived rather than real. Arseniy Yatsenyuk said:

“A country which willingly gave up its nuclear arsenal … and received guarantees from the world’s leading countries, finds itself unprotected, one-on-one with a country which is armed to its teeth. If you do not uphold these guarantees … then explain how you will convince Iran and North Korea to give up their nuclear status”.

Events in eastern Ukraine over the past couple of days are potentially more dangerous than the situation in Crimea. In Crimea, Russian troops are present under a long-standing agreement, although they have gone way beyond the agreed remit. However, if Russian forces keep pushing into eastern Ukraine, it becomes unambiguously an invasion. The killing of a Ukrainian officer in an attack on a base in Crimea, reported this afternoon, is an ominous step in the wrong direction.

We need to support a graduated hierarchy of diplomatic and economic measures against Russia. Already, as we have heard, the EU has agreed to suspend the Russian visa liberalisation programme and has pulled out of Sochi G8 preparation meetings. European Union member states have agreed the wording of sanctions on Russia, including travel restrictions and asset freezes against those responsible for violating the sovereignty of Ukraine—but, disappointingly, only 21 of them. We need to know from the Government whether, at the EU Council on Thursday and Friday of this week, the UK Government will urge the cancellation of the EU-Russia summit scheduled for June. I ask the Minister for clarification on whether the Government are looking to suspend Russia from the G8 group.

Russia now really understands that it is an integrated part of the world market and cannot isolate itself from the rest of the world. This should have been heard loud and clear in Moscow on 3 March when Russia’s stock market plummeted by 12% and the rouble fell by 1.9% against the dollar, in spite of massive intervention by Russia’s central bank—although they have risen since. There will inevitably be a knock-on effect in terms of a decline in investment due to both the increased cost of borrowing in Russia and the further alienation of investors.

Russia needs Europe. Exporting natural gas to Europe is big money for Russia; it accounts for a fifth of its total earnings, some £60 billion a year. Sanctions on that will hurt. Nobody is suggesting that Europe can switch gas suppliers overnight but, over the medium to long term, the EU simply cannot risk more than 30% of its supplies coming from such a politically unstable source. For a decade, Europe has been aware of this vulnerable overdependence on Russia but has not moved fast enough to look to alternative markets. To be fair, the alternative options were not evident before, but shale gas from the US could provide a medium-term solution to Europe and cause a problem to the Russians. It cannot happen overnight but the Russians must be aware that they are playing a dangerous game with their largest customers, and the US must be prepared to open its gas market to the world if it is serious about helping Europe in response to the Russian situation.

There will be a cost to Europe as well, and Britain and the West will need to decide whether we are serious about standing up to this bully and whether we are prepared to take the economic hit to make our point. I regret that, to date, the EU’s unity in condemning Russia’s military aggression has not been matched by a shared resolve to act more decisively in extracting costs and consequences for this action. I hope that the European Council next week will consider expanding the list of Ukrainian and Russian officials who will be subject to targeted measures if Russia does not indicate a change of course. President Putin may believe that sanctions will not last, as was the case after the Georgian war of 2008, but the West needs to send a clear message that needs to be sustained over the long term. Russia is faced with two alternative futures: greater integration within, or greater isolation from, the existing international order.

However, a strong signal needs to be sent to Ukraine as well. The Ukrainian military needs to be commended on its calm response to the situation so far. Despite considerable efforts to provoke a reaction with increasingly aggressive behaviour in the east of Ukraine by Russian supporters, the military of Ukraine has so far not been provoked into action. Minorities in Ukraine need to be given assurances that they will be protected and that Russian speakers will not suffer discrimination. Legitimate elections need to be overseen by the international community to give credibility to Ukrainian leaders. We need to see an end to rampant corruption in the country and a loosening of the stranglehold that some of the oligarchs have on the place. If Ukraine changes, the West will need to help with technical assistance and significant financial support.

Last weekend’s referendum in Crimea needs to be seen for what it is—an artificial and unfair political construct that has no legitimacy. No campaigning was allowed by Ukrainian supporters, there were no voter lists and, shortly after the referendum was called, Ukrainian TV channels were removed from both terrestrial broadcasts and cable networks in Crimea. Some of them were replaced by Russian stations.

We are in a crisis situation. Russia shows no signs of being cowed by the sanctions that the West has imposed so far. The answer to this problem can clearly not be a military one, but it is in all our interests to try to de-escalate the situation while remaining robust and ensuring that the international community responds together to this frightening situation on our continent. The international community must now do more to encourage Russia to engage in a constructive dialogue, while simultaneously applying greater pressure if President Putin refuses to change course. A combination of deft diplomacy, shared resolve and a unified response are the best ways in which we can de-escalate this dangerous crisis, ultimately reaffirm Ukrainian sovereignty and preserve European security. The Government will have our support in helping to achieve this desired outcome.

My Lords, I thank, in particular, the Opposition Front Bench for that very constructive and helpful speech. This is a take note debate, and I cannot, and would not wish to, announce the definitive policy of Her Majesty’s Government in response to the Ukraine crisis because it is still under way. As the noble Baroness, Lady Suttie, said, the important question is not where we are but where it ends. As the noble Lord, Lord Soley, wisely said, it would be naive to consider that it will stop here. There is some way to go and we have some influence over where it will end, and the Government are fully engaged in trying to bring to bear the influence that they have.

Yesterday, my right honourable friend and colleague the Foreign Secretary was at a meeting of the Foreign Affairs Council, where a number of decisions were taken. On Thursday and Friday, the Prime Minister will be at the European Council, at which a number of further decisions may be taken, and we will continue from there. We do not yet know how far President Putin will go. So far as we can see, this is very much a matter of what President Putin wants. I am not even sure that it is very valuable at present to talk to the Russian Foreign Minister—I am not sure that he always entirely knows what President Putin wants to do. Whether or not the Russians will continue to complete the annexation of Crimea within the next week is clearly one of the matters that we will have to take into consideration. We will do our best to help and will put pressure to bear so that that does not happen, but it may. Therefore, there is a great deal to play for and we will have to come back to further discussions in both Houses of Parliament and, of course, to continuing discussions with our allies and partners in the European Union and NATO and more widely within the UN. Her Majesty’s Government are extremely hard at work in co-operation with all our allies and friends.

A great deal has been said in this debate about interpretations of history—about Russian motivations, Putin’s motivation and the Russian view of their place in the world and their post-imperial angst. This country is not entirely without its post-imperial angst. The rest of the world does not always pay that much attention to us. We go into great paroxysms over why the Europeans are not nicer to us and why they do not give us what we want when we wish to have a bit of this, a bit of that and not too much of the other, but we sometimes have to accept that the rest of the world does not see the world as we wish to see it. That is also true of Russia today.

The noble Lord, Lord Howell, rightly said that what we have in Russia is a 19th-century approach to a 21st-century world—one in which it thinks that hard power is all that counts, with no truck with the soft power, on which the noble Lord, Lord Howell, is such an expert. There is an expectation of easy access to the open societies of the West without a reciprocal impact on Russian society and the Russian economy. I think it was the noble Baroness, Lady Morgan, who talked about whether Russia had a choice between integration and isolation. My understanding of one of the many themes of Russian history is that modernising efforts in Russia have always been an attempt to take the technical advances from the West without accepting the social and political implications. That was true of Peter the Great, it was true of the 19th century and I think that it is exactly true of where Putin is now. That is part of the problem. They think that they can pick and choose. Incidentally, there are those in this country who think they can pick and choose the quality of our relations with our major partners and are now discovering that they cannot. The Russians may also be discovering that they cannot, but certainly the mindset of Putin and those around him is that Russia can pick and choose and have the advantages of access to the open economy and open society of the West without allowing those influences to contaminate the autocracy of Russia.

Other countries also cherish nationalist memories and myths of their own, which we do not always wish to accommodate. After all, it was the myth that Kosovo was the birthplace of the Serbian nation that persuaded Milosevic and others to cling on to Kosovo in spite of the fact that there were no longer many Serbs living there. There are Muslims across the Middle East who believe that the reconstruction of Islamic caliphate is a vital part in reconstructing their myth of history. I dare say that the noble Lord, Lord Campbell-Savours, does not share that view. Perhaps I may say to the right reverend Prelate the Bishop of St Albans that the Russian Orthodox Church in the high point of the Tsarist Empire collaborated in the idea that Moscow had become the third Rome and, as the third Rome, was entitled to reconquer the second Rome so that Constantinople logically should belong to Russia. That is not something which we accepted and, indeed, part of why we fought the Crimean War was to prevent the Russians from expanding to take over Constantinople.

All those things are a matter of how one views history and, as we all know, there are different ways in which to view it. Crimea is Russian today; it was Tatar yesterday; it has been a matter between many different nations. As I was writing this today from my limited knowledge of Ukraine, I was thinking that, within the lifetime of the majority of Members of this House, the people of Ukraine have been through the most incredible amount of suffering, changing of boundaries and one thing after another. My colleagues in the Foreign Office have always tried to get me to read a number of different books. I have read Timothy Snyder’s Bloodlands, which is entirely about how the lands between Germany and Russia suffered from the 1930s through to the 1940s. Famine in Ukraine was followed by the German invasion and then by the Soviet counterinvasion, which left the Ukrainians deeply divided, confused and mistrustful of each other and of all government.

We are working very hard on how to respond to Russian interventions. We have suspended indefinitely preparations for the G8 meeting in Sochi in June. It would be wrong for the G8 summit to go ahead in the current circumstances. We are considering what other measures to take. Of course, we recognise that we need to continue to talk to the Russian Government and, even more, to Russian society about a whole range of issues. But normal diplomatic relations cannot continue on the privileged basis which Russia felt that it would have.

The noble Lord, Lord Campbell-Savours, said that a historical mistake is now being corrected—we could spend a lot of time talking about what historical mistakes are—and suggested that there was no evidence of force. The evidence we have is that there are now 30,000 Russian soldiers in Crimea and that the Crimean parliament’s vote on unification with Russia took place with armed troops of Russian origin in the building.

Is the figure of 30,000 in excess of what was possible under the agreement that existed prior to this crisis?

There is considerable evidence that a large number of Russian troops have arrived in Crimea in the past two to three weeks. My clear understanding is that it is not within the agreement. If I am wrong, I will write to the noble Lord. As a matter of interest, a number of troops, including troops from within the North Caucasus, were engaged in—one might put it gently—holding down Chechnya. We recognise that Russia’s rational interests lie in a prosperous and stable Ukraine, as a number of noble Lords have said. We also recognise that international politics is not entirely rational. The First World War would not have broken out if international politics had been entirely rational.

I say to the noble Lord, Lord Cormack, that of course the UK will do everything possible to maintain a constructive dialogue but it has to be a dialogue in which both sides listen and search for agreement on shared principles. We cannot accept that Russia has one set of principles but expects us to observe another. The noble Lord, Lord Chidgey, talked of stand-up arguments with Duma deputies. A lot of us have had that. I seem to remember having such an argument when I was leading a delegation that included the noble Lord, Lord Howell. I rather enjoyed the exchanges.

We have to tell the truth to our Russian partners and recognise that those within the elite demand the rest of the world to accept the special character of the Russian state, which we are not prepared to accept. Russian suggestions that we should move towards a federal and loose Ukraine while maintaining a centralised and authoritarian Russia are a good example of how proposals are being made that would be irrational to accept, but it is attempting to impose them.

It is deeply regretful that the current Russian regime appears to need weak and divided neighbours in order to feel secure. One worry is that a weak Crimea will join an occupied South Ossetia, Abkhazia and Transnistria and others as a means of weakening the states around Russia.

I am sure that the Minister is not misrepresenting the Russian position. However, equally, many of us have argued that no matter whether it is federal, devo-max or so on, you cannot go on with a unitary state with the sort of election results of 51% and 49%—and then winner takes all and you have arrested the leader of the Opposition. That is why I mentioned Northern Ireland. There is a caricature going on here.

There are all sorts of questions in the noble Lord's remarks and I could respond in a number of ways, but at this time of night I hesitate to do that.

The noble Lord, Lord Trefgarne, suggested that we might have a sort of sale and lease back with the Russians. The Ukrainian constitution makes it clear that any alteration of the territory of Ukraine must be resolved by an all-Ukrainian referendum. Article 134 of the constitution sets out that the autonomous Republic of Crimea is an integral constituent part of Ukraine and can only resolve issues related to the authority within the provisions set out by the Ukrainian constitution.

One could have negotiated this. The Government consider the referendum in Crimea to be illegal because it has been rushed through under the presence of a large number of Russian troops without updating the inaccuracy of the electoral register, with OSCE observers being refused entry. It is therefore not in any way acceptable to international standards.

The UN Security Council resolution was clear and strong on all of this. I say to the noble Lord, Lord Cormack, that of course there is a role for the UN Secretary-General and the UN. The Chinese abstention was a silent acknowledgement that some fundamental principles of international law and international sovereignty are at stake in this crisis.

A number of noble Lords suggested that we have to include Russia in all future discussions with Ukraine. Of course we do. We still make every effort we can to maintain a dialogue with Russia. We continue to urge Russia not to take any further action towards annexation of Ukraine. The UK remains supportive of the EU-Ukraine Association Agreement and it is now likely that the political and foreign policy aspects of the association agreement will be signed at the meeting of the European Council this week.

The Minister referred to the fact that OSCE monitors have been denied access. I understand that the Russians are claiming that something like 100 international monitors went in. Is that true or are they misleading us? If it is true, do we know where those monitors came from in the world community?

My Lords, before the Minister replies to that, will he say something about the OSCE in the sense that it may well provide an opportunity for achieving consensus for de-escalating the situation and for the giving up of extreme positions?

My Lords, I do not have any information on the question put by the noble Lord, Lord Campbell-Savours. I am aware of Russian reports that observers are there. They are certainly not under any international or umbrella organisation, the Council of Europe or the OSCE. We hope to discover more. The OSCE does have a role to play and a number of OSCE missions of one sort or another are currently either in Ukraine or in prospect, and members of those missions are British. The OSCE is an entirely appropriate framework to work with for this development.

Russia, as noble Lords know, has not always been the most constructive member of the OSCE in recent years. A number of noble Lords suggested that we may have contributed to that, and perhaps have even provoked Russia. Bill Cash MP was indeed interviewed on “Russia Today” last Thursday suggesting that it was really all the EU’s fault. I am not entirely sure that I share that view. Comparisons are also made between Kosovo and Crimea, to which I would simply say that our action in Kosovo was a response to a humanitarian situation in which there was clear evidence of ethnic cleansing and that a large number of people had been killed. It was a slow process in which we recognised that the situation was slipping out of control. None of that has happened in Crimea. The interim Government in Kiev bear no comparison with Belgrade under Milosevic and we took action in Kosovo only after years of diplomatic effort, whereas in Crimea Russia has chosen the military option first and rushed through what appears to be likely annexation.

I turn to the situation within Ukraine. My noble friend Lord Alderdice suggested that Ukraine is split down the middle. To that I would say that it is more confused, fractured, misgoverned and mistrustful. There is some evidence that many Russian speakers in eastern Ukraine are more mistrustful of Russia now than they were even a year or two ago, with some justification. The extent to which we understand what is happening inside Ukraine is something that I suspect we need to be cautious about.

The biggest question is this: can the West’s soft power defeat Russia’s hard power? It did not in 1913-14. The suggestion of the noble Lord, Lord Davies of Stamford—who I regret to see has not remained in his place having intervened earlier—was that Russia would just shrug economic sanctions off. However, a number of noble Lords talked about the long-term costs in terms of shifting away from energy imports. Of course we are talking to other countries, including the Norwegians, about future energy supplies. The costs to Russia in terms of a deterioration in foreign investment and of its other openings are likely to be quite damaging in the long term. The question here is how long is the long term, and what damage under its current regime can Russia do first?

Let me try to cover one or two other points before I finish. I can confirm to the noble Lord, Lord Kerr, that it is not British policy that Ukraine should join NATO. Many of us felt that the attempt by the Bush Administration at the Bucharest summit in 2008 to push NATO enlargement as far as Georgia and Ukraine was a mistake. The Foreign Secretary has said on a number of occasions that we are not asking Ukraine to choose between Russia and the West, but I should also remind noble Lords that the EU’s approach to enlargement was not a great push by the Union. As I discovered when I first started going around eastern Europe in the 1990s, it was a reluctant response to insistent demands from our eastern European partners to gain access to our legal framework, to our economy and to our security provisions. The Estonians and others were particularly strong on that. There is a monument in Tallinn to the British squadron which preserved the independence of Estonia from the Russians in 1919, and the country still remembers that. The Poles, who have a lot of influence in this area, are also conscious that they contributed a great deal to the British effort in the Second World War, something which UKIP has now happily scrubbed out of our historical memory. The largest number of non-British pilots in the Battle of Britain were Polish, so we are not dealing with an area with which we have no historical concern or very little historical connection.

I am conscious of the time. A number of noble Lords spoke about money-laundering. We have sent a group from the National Crime Agency, the Metropolitan Police and the Crown Prosecution Service to help the Ukrainians in their efforts to investigate the stolen funds and we are working with them on that. The noble Earl, Lord Lytton, raised some very specific questions about the Magnitsky case, which it may be appropriate for me to write to him about.

We have to reassure our east European allies. We are working with our friends and colleagues and will continue to do so as well as we can. We are in mid-crisis and do not know how or when this crisis will end, but Her Majesty’s Government will continue to work with our European and NATO partners and, more broadly, within and through the UN. There are fundamental principles of international law and sovereignty at stake, so we will return to this issue in both Houses of Parliament as we proceed. We will of course attempt to maintain a dialogue with the Russians, difficult though that is likely to be, and to pursue a reasoned and reasonable outcome. We will offer all the technical and financial assistance we can to Ukraine, together with our partners. As in so many international crises, there is no easy solution to be found, and we have to bend our efforts to promote an outcome that may be acceptable to all.

Motion agreed.

House adjourned at 7.51 pm.