The UK has led the world in its support for Ukraine and its condemnation of Putin and his illegal war.
We were the first country to send our Prime Minister to Kyiv to meet with President Zelenskyy at the start of the war. We were at the forefront of providing military and humanitarian aid to the Ukrainian people.
When it mattered, the UK stepped up to the plate.
In turn, this support has been recognised by the Ukrainian people, who dubbed the UK ‘Ukraine’s best friend’.
However, since the very start, we have also recognised that we cannot rely on military force alone.
Time and again, history has shown us that when economies fail, so do tyrants.
That is why, together with our allies, we have imposed the most severe sanctions Russia has ever faced in its history…
…targeting more than 1,900 individuals and entities and 19 Russian banks with global assets of £940 billion.
…effectively weaponising the Ruble and providing the financial punch to send Putin and his ambitions reeling.
Sanctions are an important tool in our diplomatic arsenal that allow us to respond to global threats not just with words but backed up with actions.
We estimate that without combined sanctions Russia would have over $400 billion more to fund its war machine.
We’ve used them not only to weaken Putin’s war efforts, but also to showcase our unyielding support for Ukraine, to deter corrupt activity and cyber-attacks and to demonstrate our condemnation of international human rights violations and abuses.
We also want to make sure that we respond to wider HMG international priorities, such as the threat of climate change- we can’t do that without engaging with countries at events like COP28 – so our trade sanctions work must be consistent, clear and boundaried to make diplomatic relations on other fora as constructive as possible.
My department, DBT, has played a significant part in this work, developing trade sanctions that have had a £20 billion impact on the Russian economy…including by barring Russian businesses from benefitting from our world -renowned services sector.
Thanks to these measures, imports to the UK from Russia have fallen by 94% since the start of the conflict. While UK goods exports have plunged by 74% and services exports have fallen by 50%. Make no mistake these measures are working.
Step by step the sanctions imposed by the UK and its allies are destroying Russia’s ability to maintain, upgrade, and modernise its economy.
…placing a chokehold on investment and productivity – the building blocks of the war machine – which means while Ukraine’s military equipment is improving, Russia’s is degrading.
Of course, the UK has used sanctions before – but never on this scale or scope or with this level of urgency.
As a result, we’ve become ever swifter and more capable at imposing such measures.
But we know we can’t be complacent. We need to stay ahead of those who dream up tricks to swerve sanctions or create workarounds.
Having one of the most robust sanctions regimes in the world is not good enough if we cannot have absolute, unwavering confidence that our rules are being enforced and that no one is exploiting loopholes in the system.
That is why we recently carried out a cross-government review of how we implement and enforce sanctions, which highlighted areas where we can do more.
For instance, we need an expanded toolkit of enforcement powers for trade sanctions breaches – just as we have for financial sanctions.
These additional civil enforcement powers will complement HMRC’s existing – and continuing - powers to take forward criminal prosecutions.
That expanded enforcement toolkit will also be crucial to our efforts – working in lock-step with our international allies - to clamp down on trade via third countries to Russia. These powers will allow us to act where there is a UK national or a UK registered company involved.
And internationally, we are working closely with US and EU sanctions coordinators to liaise with several third party countries to highlight the risks of circumnavigating trade sanctions and together to support them to enforce sanctions effectively.
This has included joint diplomatic outreach to countries where we are seeing spikes in trade of sanctioned goods with Russia.
For example, in recent months, we have sent joint delegations to countries like Kazakhstan, UAE and Uzbekistan, to highlight these risks… I have personally recently been to Kazakhstan and Mongolia and seen for myself the challenges we face.
But our coordinated efforts are paying off. A number of countries – including Turkey, Kazakhstan and Armenia– have announced concrete measures to reduce the risk of sanctioned goods reaching Russia.
So, you can see how it is critical that we act.
Today I am proud to say that this is exactly what we are doing, with the creation of the Office of Trade Sanctions Implementation, or for short called OTSI.
The Office will build up our trade sanctions capability and make sure our sanctions regimes are as impactful as possible.
It will also crack down on companies that breach trade sanctions and so help to facilitate warmongers and tyrants to cling to power. Its remit will include the civil enforcement of trade sanctions, as well as providing guidance to business and supporting compliance.
We expect the Office to be ready to enforce trade sanctions next year once its new legal powers are in force.
Today’s announcement came from listening to business asking what more they need to know to get it right.
Most have been exemplary in their response to Russia’s invasion, experiencing the sometimes painful financial consequences of complying with these sanctions to stand up to Putin’s tyranny.
But we do recognise the scale and pace of sanctions-work has been challenging at times. The new office will do more to clarify our expectations and lend support to businesses, ensuring those who play by the rules won’t lose out to those companies that just don’t.
That is where OTSI will come into its own.
But we will also need business expertise, guidance and input to make sure the new unit is as effective and as impactful as possible.
In terms of its functions and responsibilities, OTSI will lead on the civil enforcement of trade sanctions. It will have a range of enforcement tools available including levying monetary penalties on those that break the rules and sanctions dodgers.
And while OTSI will sit within the Department for Business and Trade, its work will complement the work of other government departments and offices responsible for the implementation and enforcement of other sanctions regimes.
This includes the Treasury’s Office of Financial Sanctions Implementation, which remains responsible for financial sanctions.
The Department for Transport, which remains responsible for transport sanctions. And the Home Office which is responsible for immigration sanctions and for Modern Slavery.
In addition, overall leadership of sanctions policy will continue to sit with the Foreign, Commonwealth and Development Office.
OTSI is key in the Government’s delivery of its Economic Deterrence Initiative, announced by the Prime Minister earlier this year in the Integrated Review Refresh.
This Initiative is focused on strengthening our tools to deter potential aggressors and stop them in their tracks.
One of the key objectives of this Initiative is building expertise across government in the design, implementation, and enforcement of sanctions, as they achieve maximum impact.
The new office will better support the implementation and enforcement of all trade sanctions regimes – not just in terms of Russia but for rogue regimes right across the world.
In fact, Parliament will soon be considering the Government’s latest trade sanctions package, which includes further export and import bans and financial restrictions for Russia.
Crucially, this new package will also ban the export of a range of goods including the latest items Ukraine has encountered on the battlefield such as machine parts and chemicals, as well as products that raise revenue to fund Putin’s war machine.
In essence, once this legislation is passed only low-risk, humanitarian, food, and health exports to Russia will remain unsanctioned.
And there is more to come.
The UK remains committed to upholding the rule of law, which protects global security and human dignity in all parts of the world, especially the most vulnerable.
We are more united than ever in the pursuit of international peace, prosperity and sustainable development, and have strengthened our engagement with international partners beyond the G7
We’ve seen how well sanctions can work and we’re getting even better at using them.
That’s why I’ve no doubt that the Office of Trade and Sanctions Implementation will be a game-changer for the UK on the international stage, allowing us to move in lock-step with our allies on economic sanctions as they’re needed.
Sanctions are crafted to be targeted and focused to have maximum impact – we’ve used them to disrupt all avenues for Putin to pay for his illegal war.
OTSI will also be a game changer for British businesses at home where my department will help in building stronger international supply chains which are not dependent on malevolent foreign actors.
On Wednesday I’m hoping to launch my Critical Minerals imports supply chain paper to help businesses too.
In turn, this will translate into the prosperity and security that will benefit our citizens long into the future.
I’m really grateful to policy exchange for allowing me the moment today to launch OTSI, and I look forward to working with all of you especially if you’re a business so we can develop this work moving forward. Thank you so much.