Not a single fine has been levied by the UK against Russia-linked individuals or firms for breaching sanctions, following Russia’s full-scale invasion of Ukraine in 2022, correspondence from the Foreign, Commonwealth and Development Office (FCDO) has revealed.

Minister of State at the FCDO, Anne-Marie Trevelyan, has told MPs she expects the first Government investigations into potential breaches of the UK’s financial sanctions imposed on Russian individuals and organisations since the war to "come to fruition in 2024", possibly resulting in further monetary penalties. It is nearly 800 days since Russia invaded Ukraine.

The letter published on Friday suggests that none of the ten fines imposed to date by the Office of Financial Sanctions Implementation (OFSI) since 2017 for non-compliance with the UK’s sanctions regime relate to the Russia-Ukraine conflict.

The fines before 2022, total £22 million, but the vast majority – more than £20 million – appears to relate to a penalty against a single bank in 2020.

Trevelyan told the Commons' Foreign Affairs committee that since Russia launched its attack on 24 February 2022, OFSI has recorded £22.7 billion in frozen assets - as of October 2023 - relating to that country, and that there have been hundreds of suspected breaches of sanctions. 

Appearing to defend the lack of fines or enforcement action, the minister claimed that some breaches are found to be “relatively minor”. “In these cases, OFSI will not necessarily impose a penalty, as it may be more appropriate to deal with the case in a different way such as a warning letter or referring the matter to a regulator,” she said. 

But the scale of the suspected violations – 473 suspected breaches of financial sanctions (excluding oil price cap and counter-terrorism breaches) in 2022-2023 is a major increase on the 147 cases recorded in 2021-2022. “This increase was expected given the scale of increased Russia  sanctions, and OFSI has increased its enforcement capacity in response,” Trevelyan added. 

Dame Margaret Hodge MP, Chair of the All Party Parliamentary Group on Anti-Corruption & Responsible Tax, told Byline Times: “We already know that our sanctions regime is not as tough as that used by the USA and the EU. Our regime lacks ambition and has too many loopholes. 

“So it is all the more shocking that we are not enforcing the sanctions already in place. The Government must properly enforce existing measures, and close any remaining loopholes immediately. Only then can we be confident that we are doing all we can to support Ukraine in its barbaric conflict with Putin’s Russia.”

Tom Keatinge​​​​, Director of the Centre for Finance and Security at the Royal United Services Institute think tank, explained that fines and relations actions are "key tools" for Governments to set their expectations and the fact "we’ve yet to see material enforcement action means that the UK is not doing all it could do to ensure sanctions are implemented as effectively as they must be".

"2024 must be the year of enforcement if the UK is to be taken seriously. Other countries in Europe such as the Netherlands are leading the way. The UK must catch up," he added to Byline Times.

The minister’s letter also discusses allowances for sanctioned individuals from their frozen funds, saying that OFSI believes the net UK median wage of £28,000 – before tax – should normally fulfil individuals’ “basic needs”.

Licences for sanctioned individuals to receive these allowances don't usually enable a designated person to continue the lifestyle or business activities they had before they were designated.

It's unclear from the Government’s letter how many licences OFSI has granted to sanctioned Russian oligarchs that provide them with allowances far exceeding UK average wages.

Chair of the Foreign Affairs Committee, Alicia Kearns MP, said: “For too long the UK has been complacent, allowing wealthy Russians to wash their dirty money in the laundromat of London. Russia’s renewed invasion of Ukraine must be a wake-up call for the West. Clamping down on the illicit funds of high-net-worth Russians is an opportunity to deal a heavy blow to those who support Putin’s war machine.”

She added that while the number of asset freezes under UK sanctions has grown significantly, “if this is not soon reflected in the number of enforcement actions, we will have to ask difficult questions about the efficacy of OFSI’s enforcement capacity".

"Investigations into non-compliance are complex but must be prioritised and undertaken at pace; we need to send a clear message that illicit finance has no home in the UK,” the Conservative MP added. 

While the sanctions regulator usually says the ‘basic needs’ of sanction-hit individuals in the UK can be met by the median wage of £28,000 per annum, it has been reported that some wealthy Russians under investigation had access to more than double that as recently as 2022. 

“It isn’t enough to say that privacy concerns prevent the FCDO and Treasury from providing this information when these figures could be anonymised,” Kearns added. 

This correspondence follows an evidence session held on 12 March on the UK’s sanctions regime against Russia and the abduction of Ukrainian children. The Committee published a report in 2022, 'The Cost of Complacency: illicit finance and the war in Ukraine', calling on the Government to tackle illicit finance flowing through the UK. 

The Treasury did not wish to comment further.

Got a political story or tip? Email josiah@bylinetimes.com

I’ve posted a few times over the years about a trip I made with my partner to Leipzig in East Germany back in 1984, and I confess that the now-defunct country retains a kind of fascination for me. My rather banal judgement then and now is that the country, though marked by annoying shortages and inefficiencies, had a standard of living sufficient to give people an acceptable life in material terms, but that its lack of freedom, political repression, retention of its population by coercion were all unacceptable. I recently revisited an exchange I had with Tyler Cowen, 17 years ago, and I still think I was basically right and find it ironic that it was me, the leftist, championing freedom against the “libertarian” fixated on living standards.

I’ve just read Katja Hoyer’s wonderful Beyond the Wall: East Germany 1949-1990, which I would recommend to just about anyone. She traces the DDR from its origins to the fall of the Berlin Wall. The people who initially led the country were, of course, communists. But Hoyer reminds us that they were communists of a particular kind: the exiles who were left after Stalin had murdered most of them (he killed more of the German communist leadership than Hitler did). As such, they were cautious and conformist to a fault, and unlikely to strike out independently. They were also leading a ruined society, occupied by Soviet troops, with few natural resources and where, in contrast to the West, the victorious occupying power indulged in reparatory plunder rather than development aid. It was also a society initially seen as provisional, pending unification, and Hoyer argues convicingly that Stalin’s offer of a neutral unified Germany in 1952 as a means of preventing a NATO-aligned West Germany was sincere (though unlikely to succeed).

Obviously, the great stain on the country was the Wall and the militarized frontier, together with the murders of those who tried to escape and the system of extensive surveillance ran by the Stasi under Mielke (very much a state within a state). But Hoyer makes the case that once the option of emigration was blocked, people basically got on with building their lives and made a society that worked, where things gradually got better and where there was a surprising degree of pluralism and disagreement for what was effectively (though not officially) a one-party dominated state. Most people, after the upheaval of WW1, Weimar and Nazi tyranny, weren’t that keen on politics as a solution to their problems, and though the extreme exploitation of labour during reconstruction in the 1950s led to revolt and repression, things eased from the 1960s onwards.

One of the things that Tyler Cowen and I both noticed about 1980s East Germany was that the shelves in the shops were empty. We both drew the conclusion that this was a permanent feature of the system. But Hoyer argues that it was, rather, a symptom of the particular crisis of the 1980s. Of course, things were never good in consumer terms compared to the neighbouring West Germany, where many East Germans had relatives. Paradoxically, greater liberalisaton and exposure to Western culture also gave people a taste for what they were missing and fuelled dissatisfaction. Particularly interesting is the great Coffee Crisis of the 1970s, where an absence of foreign exchange made it hard to supply the real thing and the state tried to enforce consumption of a ersatz-adulterated alternative. Such was the disgust provoked that the East Germans engaged in one of the most successful programmes of development aid in history, creating the Vietnamese coffee industry from scratch (the world’s second-largest producer) in order to satisfy domestic consumption. Sadly for the DDR, the coffee plants only became mature from 1990. Too late, too late.

Hoyer also explores the dynamics of East Germany’s relations with its two most important external partners: the Soviet Union and West Germany. To put it simply: West Germany had money and cultural proximity; the Soviets had tanks and the ability to remove East German leaders they got tired of (such as Walter Ulbricht, sidelined on the pretext he was two old when younger than Joe Biden is now). The East German leaders, navigating this tension, increasingly tried to steer their own course, with limited success. Then, as now, energy dependence on Russia was an issue, with the alternative being the environmentally disastrous brown coal. (Much too in the book on music, fashion, and the rest.)

As I said, I stick by my judgement that it is the lack of freedom (including freedom of movement) that ultimately condems East Germany as a society rather than its constricted living standards (its citizens were still richer than most people on the planet). On living standards, it is worth remembering that the country was competing with the West during a period when Western societies were undergoing an amazing expansion in the amount and variety of consumer goods. Things look somewhat different today as the UK, France, Italy (to name but three) have been stuck at the same level for nearly two decades. The DDR did not succeed in providing its population with a cornucopia of consumption, but it did deliver the ability for people to get decent housing, to start a family, to have affordable childcare, for women to participate in the workforce to a degree that West Germany could not achieve. (Many things got better with reunification, the relative position of women got worse.) Societies like the UK and France today are not improving materially, young people cannot get decent jobs, find homes in which to bring up families, cannot afford childcare and our health services are creaking. To get anywhere, people have to engage in anxiety-producing competition in higher education to get the available good jobs (where success might depend on family money getting you past an unpaid “internship”). Moreover, we’re going backwards on the dimension of freedom with regression on democracy, rights to protest, human rights and a dramatic increase in state surveillance of the population, made possible by the internet. I’m not saying that the East German communists were right (they were not!) but the comparison to the West looks quite different in 2024 than it did in 1989.

One thing that made me a bit reluctant to read Hoyer’s book is her propensity to write for right-wing British outlets like the Telegraph, Spectator and Unherd (to be fair, she also writes for the Guardian). But the book is remarkably objective, balanced and unideological. One thing I’ve noticed with people who come from the former East is that they can be surprisingly hard to fit into a conventional left-right spectrum. Perhaps that isn’t surprising given their experiences and those of their families. Anyway, if you are a leftist (as most CT readers probably are), don’t be put off: this is a magificent piece of work.

In Industrial Policy in Turkey: Rise, Retreat and Return, Mina Toksoz, Mustafa Kutlay and William Hale analyse Turkey’s industrial policy over the past century, highlighting the interplay of global paradigms, macroeconomic stability and domestic institutional contexts. The book offers a timely analyses of industrial policy’s past and possible future trajectories, though it stops short of interrogating exactly how cultural, social, political and economic factors shape state-business relations and bureaucracy, writes M Kerem Coban.

Industrial Policy in Turkey: Rise, Retreat and Return. Edinburgh University Press. 2023. 

Is industrial policy back? The Biden administration’s Inflation Reduction Act and the CHIPS and Science Act, or the 2016 UK industrial policy are only two contemporary examples. These policies seek to address value chain bottlenecks, as well as the question of how to “take back control” in manufacturing and key sectors, along with concerns about gaining or sustaining economic edge and autonomy

In this context, the Turkish experience is illustrative for making sense of the trajectory of industrial policy in a major developing country. Mina Toksoz, Mustafa Kutlay and William Hale examine the evolution of industrial policy in Turkey. They present an accessible, detailed account of the trajectory and evolution of the policy since the establishment of the Republic, which argues that we had better study “the conditions under which state intervention works, rather than whether the state should intervene in the economy” (26, emphasis in original).

[The authors] suggest that effective industrial policy is the outcome of the interaction between global development policy paradigms, macroeconomic (in)stability, and the domestic institutional context.

The book is divided into five chapters. Chapter One discusses the political economy of industrial policy and sets out an analytical framework. The authors assert that analyses should go beyond dichotomies (eg, horizontal vs. vertical policies; export-led vs. import-substituting industrialisation) and that a broader understanding requires identifying the factors and conditions of effective industrial policy. They suggest that effective industrial policy is the outcome of the interaction between global development policy paradigms, macroeconomic (in)stability, and the domestic institutional context. Global development policy paradigms evolved from étatism of the 1930s, import-substituting industrialisation in the 1960s and the 1970s, neoliberalism of the 1980s, and the return of industrial policy after the 2008 Financial Crisis. Macroeconomic (in)stability drives (un)certainty regarding economic policies and instruments and the trajectory of economy, which, in turn, regulates investment decisions. Finally, the domestic institutional context concerns how state-society, or state-business, relations are structured, whether the state capacity is sufficient to resolve conflicts, discipline and coordinate actor behaviour, and whether bureaucracy has capabilities to formulate and implement policies. Figure 1 seeks to summarise the main argument of the book.

Figure 1: Flow chart summarising the book’s main argument. Source: M Kerem Coban.

Chapter Two focuses on the longue durée between 1923 and 1980. From the ashes of incessant wars that ruined the already unsophisticated infrastructure and demographic challenge, the new Republic had to build a new nation. Yet the rise of the state interventionist era in the 1930s drove policymakers towards the first industrialisation plan and the opening of many industrial sites across the country. When the Democrat Party assumed power, the interventionist, planning-based industrial policy was scrutinised for liberalisation that even included state-owned enterprises to be released to set up their own prices (73).

At the same time, business was encouraged to invest. For example, the fruits of these included Otosan or BOSSA (75). Between 1960 and 1980, the authors underline the second planning period with the establishment of the State Planning Organisation (SPO). SPO boosted bureaucratic and planning capacity and capabilities for disciplined, systematic industrial policy during the era of import-substitution.

Between 1980 and 2000 […] Turkey shifted to export-led growth and liberalised trade and financial flows. These shifts had profound implications for bureaucracy

The third chapter examines demoted industrial policy between 1980 and 2000 when Turkey shifted to export-led growth and liberalised trade and financial flows. These shifts had profound implications for bureaucracy: SPO was sidelined, parallel bureaucratic networks of Ozal were implanted with the opening of new offices or agencies. Consequently, the role of state became less coherent, as political uncertainty driven by unstable coalitions eroded the market-shaping role of the state. The financial sector did not help industrial policy, since banks were dominantly financing chronic budget deficits during a period of high inflation (111). What is more, business, including Islamic conservative SMEs in Anatolia, reduced or ignored investments in manufacturing given the clientelist state-business relations that incentivised construction, real-estate development (115), emphasis in original). Finally, the external conditions were not disciplinary: accession to the Customs Union with the European Union and the World Trade Organization ruled out export support and import restricting measures, among other trade regulatory instruments.

The fourth chapter claims that industrial policy retreated between 2001 and 2009. The first years of this period was marked by political instability and a local systemic banking crisis and its resolution, and Justice and Development Party (AKP in Turkish) assumed power. During this period, industrial policy was dominated by institutionalisation of the regulatory state and  the privatisation of state-owned enterprises, the establishment of autonomous regulatory agencies and are structured banking sector. While the regulatory capacity of the state increased, privatisation and the regulation of the market were highly politicised. For example, “a major cycle of gas privatisation saw ‘politically connected persons’ winning fifteen out of nineteen metropolitan centres and serving 76 percent of the population” (161). In such a politically compromised setting, which was accompanied by the institutionalisation of the capital inflow-dependent credit-led growth model that prioritised “rent-thick” sectors, industrial policy could not flourish.

While the regulatory capacity of the state increased, privatisation and the regulation of the market were highly politicised.

The fifth chapter locates the policy within the global ideational and political economic context that marks the return of industrial policy in various forms. In line with policy documents such as the 11th Development Plan, horizontal measures, private and public R&D spending on high-tech initiatives, electric vehicle manufacturing attempt, and most notably the advancements in defence sector have constituted the revival of industrial policy. At the same time, the authors point to several challenges such as eroded academic research and quality and a lack of investment in ICT skills. Additionally, R&D subsidies or other industrial policy measures require thorough performance criteria and measurement to discipline actor behaviour and regulate the incentive structures.

Industrial Policy in Turkey is a timely contribution to the current debate. Its historical account and analysis of current policies, instruments, and the potential trajectory of industrial policy are its main strengths. Still, there are several caveats. First, the book’s framework is not systematic, which causes some confusion. For example, the book does not demonstrate a convincing link between the role and impact of autonomous agencies on industrial policy. Second, the book leaves the reader with more questions than answers, one of which relates to the effect of bureaucratic fragmentation in shaping industrial policy. Another is around the implications of state-business for bureaucracy, and consequently, industrial policy.

The book leaves the reader with more questions than answers, one of which relates to the effect of bureaucratic fragmentation in shaping industrial policy.

Third, the trajectory of industrial policy cannot be considered independently from the shifts in growth models. Yet the fact these shifts occur because the country depends on hard currency earnings for capital accumulation and to finance consumption and investments: Turkey either relies on capital flows or export earnings, in addition to tourism and (un)recorded (illicit) flows. Pendulums between these channels imply that the country cannot design and implement disciplined, systematic industrial policy. Put differently, there are macroeconomic and financial structural impediments against generating hard currency earnings. Industrial policy is one of the remedies, however, the macroeconomic and structural transformative consequences of the latest episode of emphasis on industrial policy and the export-driven growth experiment in Turkey are yet to be seen.

Finally, and perhaps most importantly, the book tends to relegate a core problem of coordination, long-term policy design and implementation to “governance issues”. Deeper cultural, social, political and economic factors determine the clientelist state-business relations and their effect on bureaucracy and bureaucratic autonomy. Such deeper ties have been masked by instrumentalised “democratisation reforms” or higher economic growth rates in the previous years. In this context, is the more critical problem the purposefully immobilised or challenged infrastructural power to coordinate societal actors? If that is true, then should we make interdisciplinary attempts to identify this problem’s core determinants?

Note: This interview gives the views of the author, and not the position of the LSE Review of Books blog, or of the London School of Economics and Political Science.

Image credit: Chongsiri Chaitongngam on Shutterstock.

Conservative MPs Miriam Cates and Ranil Jayawardena attended the European Congress of Families conference (ECF) which ran from 15-17 September 2023 in Croatia, as speakers in a programme that included members of far-right parties, organisations designated by the Southern Poverty Law Center (SPLC) as hate groups, and several of those named in a European Parliament report into the funding of religious extremism with dark money from the US radical right and Russia.

Both Cates and Jayawardena were outliers at the ECF for not having publicly called for a rolling back of sexuality and reproductive rights, and they have distanced themselves from the more strident positions of the recently rebranded and Russian-funded World Congress of Families.

However, Cates' speeches at other conferences and the manifesto of her New Social Covenant initiative include some of the same motifs used by the anti-gender movement.

In the Background: a Hundred Million Dollar Network

Tip Of The Iceberg (TOTI), a report published in 2021 by the European Parliamentary Forum for Sexual and Reproductive Rights, assembled financial data between 2009 to 2018 to detail how more than $707million was funnelled into a network of more than 50 anti-gender actors operating in Europe with the intention of rolling back human rights in sexuality and reproduction under the guise of supporting the traditional family.          

A key organisation in this network bridging the US and Russia is the World Congress of Families (WCF) which rebranded in 2016 with its umbrella organisation the International Organization for the Family (IOF). One of ECF’s headline speakers was the IOF's chairman Brian Brown, other speakers included IOF members Keith Mason and Allan C Carlson, WCF founder and International Secretary.

Brian Brown, who is also on the board of another key organisation, CitizenGO, is on TOTI’s list of the thirteen most influential individuals in the anti-gender network. TOTI’s section on Russian “laundromats” covers Brown’s involvement with WCF board member Alexey Komov.

Komov serves as the External Relations Representative of the Russian Orthodox Church , is a board member of CitizenGO and is the focal point for international projects at the St. Basil the Great Charitable Foundation, since its founder, the oligarch Konstantin Malofeev, was banned from Europe and much of the West due to sanctions after the annexation of Crimea. US intelligence services considered Malofeev to be “Putin’s right arm for operations of political interference in Europe”.

In total the report identifies $186,400,000 of Russian funding for anti-gender activities with $77,300,000 from the St. Basil the Great Charitable Foundation.

Demonstrating its close ties to Putin’s regime, in 2014 the WCF was due to gather in Moscow, inside the Kremlin Palace, but because of international sanctions, the WCF rebranded the event as the “Large Families and the Future of Humanity Forum”, while keeping the same location, date, speakers and participants.

The largest European funder of anti-gender activities is the Jerome Lejeune Foundation (JLF) which spent $120,167,509 in the time period covered by the report. David G Lejeune who established the foundation’s US chapter, and was its President from March 2017 to February 2023, was a speaker at the ECF conference.

Another ECF speaker, David Ibáñez, represented Political Network for Values (PNfV), an ultra-conservative platform that connects far-right politicians and activists from Europe, Latin America, US and Africa, and is yet another influential organisation named in TOTI, receiving funding from the JLF.

PNfV has hosted events sponsored by organisations designated as anti-LGBTQ+ hate groups by the SPLC, according to an analysis by Ipas, an international organisation working to advance sexual and reproductive rights. Among the groups are Family Watch International, Alliance Defending Freedom (ADF), The Center for Family and Human Rights and the IOF. ADF provided $23,300,000 in funding to the network identified by TOTI.

Sharon Slater, the head of Family Watch International and a PNfV board member, was revealed by openDemocracy to have been deeply involved in the political organising behind the infamous Uganda law that criminalises LGBTQ+ people.

PNfV has close links to Hungarian politics, having previously been chaired by a former minister and member of the country’s parliament, Katalin Novák, who left her position with the organisation in 2022 to be sworn in as Hungary’s President. In 2020 the Hungarian Government provided $140,000 to PNfV and the next PNfV Trans-Atlantic Summit in November 2021 was held in the Hungarian Parliament.

Another speaker, Nicola Speranza, is Secretary General of the Federation of Catholic Family Associations, which is listed by TOTI as an anti-gender organisation and has produced joint reports with the European Christian Political Movement (ECPM). The ECPM has hosted events against abortion, surrogacy and in support of “reintegrative therapy”, a rebranded version of gay conversion therapy.

Diego von Stauffenberg, founding member of Crossroads Pro-Life, was at the ECF conference representing Rivada Networks, a US-based communications technology business financially backed by Peter Thiel.

Right Wing Connections

The ECF conference featured numerous European politicians from the hard and far-right: Margarita De La Pisa Carrión, Victor González Coello de Portugal and Hermann Tertsch are all members of the Spanish far-right Vox Party which is named by TOTI as a beneficiary of anti-gender funding and is described as the “political expression” of CitizenGO and HazteOir, “one of the most important organisations on the far-right political spectrum” due to its extensive social media activity.

Three members of Georgio Meloni’s Fratelli d’Italia party, Eugenia Maria Roccella Minister for Family, Natality and Equal Opportunities, Nicola Procaccini MEP, and Cinzia Pellegrino of the Italian Senate also spoke at the event. 

Croatian MP Ladislav Ilčić, whose party openly advocates for a ban on abortion and artificial reproduction, was also a speaker at the conference. He has claimed “health education in schools is used to introduce homosexual propaganda” because “It teaches the children that homosexual acts are equally valuable and natural as heterosexual”, continuing “The Church condemns behaviour of homosexuals as evil and it has the right to say it.”

Also speaking was another Croatian MP, Vesna Vučemilović from the Homeland Movement, a coalition of minor right-wing and far-right parties which opposes abortion and same-sex marriage.

Jayawardena and Cates were approached for comment and asked what the values of the IOF are, as they understand them.

Jayawardena’s office replied, “Ranil was present for a short part of the conference – to set out his own views – and our records do not indicate that he shared a platform with anyone representing the International Organisation of the Family.”

Cates’ office was also keen to stress that speaking at the conference didn’t constitute sharing a platform with other speakers. “She spoke on a panel.  Nobody from that organisation was on the panel.  They were all MPs or MEPs.”