The rapid cooling in Anglo-Russian relations escalated this week, with an apparent assassination attempt on Boris Berezovsky merely adding yet another twist to a tale that looks increasingly like a plot lifted from a John Le Carré novel. The news came just days after the UK expelled four Russian diplomats from London, spurred by Moscow’s refusal to extradite the former KGB agent Andrei Lugovoy, who is wanted in connection with the poisoning of Alexander Litvinenko.
The expulsions were “necessary but petty”, said Simon Jenkins in The Guardian. Russia is no more going to extradite Lugovoy – which, incidentally, Russian law does not allow – than Britain is going to extradite Berezovsky. Pundits compare the current breach in relations with the Cold War, but today’s dispute has nothing like the “cataclysmic potential”. It is more a return to old-fashioned diplomacy, to “threatening and bluffing, testing interest against influence”.
Russia in the final year of Putin’s regime is clearly going to be troublesome and bullying, but surface hostility is likely to be superseded by “an agenda of shared interests, the importance of which towers over these spats”. These include the containment of a nuclear Iran, the sensible routing of new oil and gas pipelines out of central Asia towards Europe and Africa, and dealing with the Islamist militancy now spreading north from the Middle East to Pakistan, potentially heading deep into Russia with its ten million resident Muslims.
Politically, the power may be fairly evenly split, said Edward Hadas on Breakingviews, but when it comes to economic power, “Russia has much more of it”. Russia has ample untapped reserves of oil and gas, and $400bn of foreign currency reserves, growing at a rate of $100bn a year, with which to buy imports or friends. Even if the UK doesn’t depend on Russian energy, its potential diplomatic allies in the EU do. But the UK does “punch above its economic weight” in one area of great interest to Russia – international finance. Russian firms like to list in London and Russians like to live there. Putin wouldn’t like the UK authorities to take a more intrusive line on Russian capital inflows.
Actually, Putin would much rather keep more of it at home, said Jenkins. Putin regards London – with some justice – as a city awash in the “laundered loot of Yeltsin’s privatisations”, draining Russia of investment and talent and “giving refuge to people he sees as tax-dodgers and thieves”. So far, the Kremlin has said it will keep business matters separate from the Litvinenko affair, said Ambrose Evans-Pritchard in The Daily Telegraph, but if “tempers flare” the London Stock Exchange is “directly in the firing line”. There are now 42 Russian groups listed on the LSE and Aim, with a combined worth of £267bn. The floats have been a “boon” for City bankers, accountants and lawyers. This could change. The Kremlin “is already drafting a law aimed at turning Moscow into a financial hub”.
This won’t happen overnight. For now, Moscow needs London if Russia wants, as it desperately does, to join the world economy, says Alan Philips in the Daily Mail: “money speaks louder than ideology in modern Russia”. All the same, it is bound to retaliate, said David Blair in The Daily Telegraph. And if Russia overreacts, there will probably be a second round of expulsions. “In the best tradition of the Cold War, this confrontation is likely to continue.”