Vested Interest: In Hock to Oligarchs?

May 2, 2014

By Elliott Goat

Opening the debate organised by Standpoint magazine, which took place at the Frontline Club on May 1, Standpoint Editor Daniel Johnson began by restating the motion: This house believes that Britain is more interested in doing business with Russian Oligarchs than standing up to Vladimir Putin.

Standpoint

L-R Peter HItchens, Tony Brenton, Daniel Johnson, Ben Judah and Roger Boyes.

Ben Judah, reporter for Standpoint from Russia and Ukraine and author of Fragile Empire: How Russia Fell In and Out of love with Vladimir Putin, asserted that, fundamentally, “British laws should not be violated.”

“The [Putin] regime functions as an asset stripping regime which rips billions and billions of dollars out of the country every year. This money is then transported out into tax havens and a vast amount ends up in Britain – under the Union Jack.”

According to Judah, of the estimated $93 billion that was laundered through Britain in 2013 only 0.26% of assets were frozen by the UK government. Although not dependent on PEPs (Putin Exposed Person), certain elite sectors of Britain’s economy are PEP-addicted: such as high-end property, commercial courts, PR agencies, London private wealth management and English public schools.

For Judah, from Blair to Osborne any attempt coming from the House of Commons to tackle shell companies, which function as offshore vehicles offering anonymity to foreign investors, has been “shot down”, demonstrating that Britain “is not interested in fighting overseas corruption”.

Tony Brenton, British Ambassador to Russia from 2004 to 2008, responded by questioning the meaning of motion and how this should affect Britain’s response to Putin.

“The line I am going to argue is that we should do business with Putin, including doing business with Oligarchs.” While acknowledging the corruption and repression within Russia, Brenton, nevertheless, argued that this should not solely dictate Britain’s response to Putin.

“Our current policy of engagement [which has been a unified western policy since 1991]… which maintains business and strengthens links has, up to a point, worked. Trade has grown, the market economy has become better established, more Russians are coming over here for good or bad reasons, and the constituency in Russia which doesn’t like the way Russia runs itself has grown steadily stronger.”

The alternative, according to Brenton, is a return to the Cold War policy of containment and the use of sanctions where, “we don’t talk to them, we don’t trade with them, we don’t let them into any organisation. We, in the words of President Obama, isolate them.”

There is a need, continued Brenton, “to look at the world from a Russia point of view,” where, since 1991, they feel that they have been “systematically neglected, humiliated and encircled”.

Roger Boyes, diplomatic editor at The Times, rejected Brenton’s belief in the need for a Russian-centric view of the current situation, instead arguing against what he believed to be the fallacy that engagement changes Russia and against the concept of Russian victimhood.

“I don’t think that Russian paranoia should be the basic principle of British foreign policy… the truth is that Putin is playing us, trying to split Europe.”

Boyes warned of the dangers of this current situation of interdependency.

“There is too much of this ‘leaning in’ towards Putin – seeing an extraordinary interweave between Russia’s commercial interests and our own humble role as the concierge of the Oligarchs.”

“The point is… why are rich Russian’s coming to Britain? Because Russian courts are rubbish, because Russian schools are very limited. The kind of things that a Russia with money wants and wants to invest in are not there. He has been denied these things. By making it more complex for him to do that, by restricting their visa access we are saying stay where you are, invest your money at home and improve your own civic society and your own social structure. We can help the Russians in their path into the post-Putin era. It is an act that will not only recover our self respect but also help Russia find a way forward.”

Challenging this assertion, Brenton rejected Boyes’ claim. “We are not going to change the internal dynamics of Russian politics. What we can do is stand firmly critical of their appalling human rights records… but we actually make it harder if we enable Putin to stand up and look like a Patriot.”

“More important, if we want to help the Russian people, is to get out of the Ukrainian quagmire, and begin trading with them and relating to them.”

In response to this analysis, Judah reasserted the responsibly for the situation in Ukraine at Putin’s need for a quick victory to boost his own decreasing popularity. Forming a direct correlation between the stripping of Russia’s assets, the removal of money into British offshore accounts, a lack of investment in Russia and the Ukraine crisis, Judah related the means by which to combat the spread of Putinism with “stopping the moral degeneration of Britain”.

Suggesting the need to impose emergency checks on Russian cash buyers and the establishment of new regulators on high-end oversees investment, Judah stated that “you could in fact be helping by imposing tougher anti-Russian standards at home”.

Rejecting this policy as an unwarranted return to a cold war mentality of containment, Brenton concluded that the most effective way of removing Putin is rather through the process of engagement, “by developing these social links that will eventually undermine him from below”.

Ultimately, he concluded that if you are going to start closing down these links with Russia, and by extension – if you are morally consistent – with China, Saudi Arabia and Nigeria you have to realise that “we depend on these countries to give us employment and prosperity.”

“It is a big bad dirty world out there and you need to get your hands dirty if you are going to make any kind of living at all in it.”

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