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Post-Brexit UK and Russia : Still worlds apart

Head of Political Risk at Hawthorn Advisors and a fellow at the Foreign Policy Research Institute

Max Hess on how Brexit has not brought Britain and Russia any closer

2021 marks the start of a fresh post-Brexit chapter in British foreign policy. The United Kingdom’s departure from the European Union sees the government set off in search of new trade partners round the world. And as it does so, major questions remain over how it will position itself with regard to China and the US. More clarity could be on the way here with Prime Minister Boris Johnson’s wholescale review of the UK’s defense, development and foreign policy. For Russia, this should present an opportunity to recalibrate its own fraught relations with the UK. The reality, however, is that nothing will likely change for UK-Russia ties.

First, Russia lacks the interest or the will to pursue a new tack. After all, it would require significant repair work. A lowpoint was Russia’s attempted nerve agent poisoning of Sergei Skripal and his daughter on British soil, despite having released him in a spy swap eight years prior. That brazen move had grim echoes of other skullduggery, like the murder of another defector, Alexander Litvinenko, with radioactive polonium. Actions like these have pushed UK officials into seeing Russia with wariness; a former director of the foreign intelligence service MI6, Sir John Sawers, declared Russia, alongside China, as the nation’s foremost threats as recently as 26 February.

Sawers also noted Russia’s willingness to try and exploit political divisions and cyber security vulnerabilities. But Russian policy includes regular reminders of its physical threat too. The Royal Air Force regularly scrambles its jets to respond to Russian activity near UK airspace, including three times in just six days last September. Sawers’ reference to exploiting political divisions brings up the claims Russia has faced of interfering in the Brexit campaign, which Prime Minister Boris Johnson’s government has been accused of investigating insufficiently.

Yet regardless of how far Russia sought to meddle in the Brexit vote, Russia has clearly not sought to try to woo the UK in the aftermath. The Kremlin’s ability to secure any kind of constructive relationship with Westminster would still have limits. Those include the Kremlin’s own internal dynamics, as well as Britain’s ties to NATO and other non-EU Western institutions. Still, the fact that Russia did not even seek to stop relations with the UK from degrading further during the Brexit process shows the Kremlin’s disinterest in pursuing a new agenda with the UK.

The feeling is mutual. There has been no significant talk in UK foreign policy circles of adopting a new Russia approach in the wake of Brexit. Britain has vowed to continue to stand by its European partners in their most visible disputes. Foreign Secretary Dominic Raab quickly denounced the Kremlin’s expulsion of EU diplomats for observing rallies in support of Russian opposition figure Alexei Navalny. That said, the UK is staying quiet on the bloc’s other major Russia issues, like the Nord Stream 2 pipeline. Johnson’s government has pursued deeper ties with Ukraine, agreeing in October 2020 to loan Kyiv £1.25 billion for the sale of eight new ships to the Ukrainian Navy. Six of these will be built in Ukraine. Britain has not, however, pushed harder for a new settlement to the Russian-Ukrainian conflict in the Donbas. Nor is its naval deals likely to extend to wider military support if clashes resume.

Since 2014, Britain has been the European leader in pursuing sanctions on Russia over the conflict in Ukraine. It has increasingly endorsed sanctions as a primary tool for Russia issues, opting for such moves as part of its response to the Skripal attack as well as over Russia’s cyber activity and hacking. While still a member, Britain worked inside and alongside the European Union on doing so; but sanctions have also been a key area of coordination with the United States. The UK adopted its own version of the global Magnitsky sanctions last July. It then targeted 25 Russians, including Alexander Bastrykin, head of Russia’s Investigative Committee.

There has also been support in parliament for even further action. Tom Tugendhat, head of the UK Foreign Services Committee, in 2018 was the sole major European politician to support sanctions on Russia’s sovereign debt issuance, a matter also attracting attention in the US at the time. More recently, Tugendhat has endorsed using the Magnitsky sanctions to target those suspected of involvement in Navalny’s recent imprisonment; the UK also sanctioned six people suspected of being involved in his poisoning last year. The UK is likely to take such action, particularly with Europe and the United States preparing similar sanctions too.

There have also been calls from the opposition and Conservative backbenches for sanctions targeting Russian corruption. In January, Parliament considered Navalny’s case once again, including a suggestion that Britain sanction major figures such as Alisher Usmanov and Roman Abramovich. Both are known to much of the British public for their sizable football investments. In response, Foreign Office Minister Baron Ahmad of Wimbledon suggested action could follow, saying that the government “will be looking to see how we can broaden the scope of the sanctions regime in the near futur,e” although Wendy Morton, also a minister in the Foreign Office, was more circumspect.

Money flows and sanctions continue

That so much of Britain’s relationship with Russia in recent years has been in the form of sanctions speaks not only to the strained nature of bilateral relations but also to the importance of money flows between Russia and the UK. On this front, however, ties have been rebuilt.

Despite a crunch in Russian lending from British banks and a withdrawal of some Russian firms from the London market in the aftermath of the 2014 annexation of Crimea and initial wave of sanctions, Russian firms have returned to London over the last four years. Polyus Gold, long controlled by Kremlin associate Suleiman Kerimov — and by now his son Said Karimov —returned to the London Stock Exchange in 2017. EN+ followed later that year in the largest Russian IPO since 2012. There has been a steady stream since, which continues with little concern in the markets from the talk of Navalny sanctions – this February, Russia’s FixPrice launched efforts to IPO in London.

Russian bond sales have also remained healthy in London, most drastically symbolised by how Gazprom sold a €750 million bond discount at a premium to investors, precisely as then-Prime Minister Theresa May assigned blame to the Kremlin for the Skripal poisoning. The Parliamentary Intelligence and Security Committee’s Russia report, issued last July, did note Russian property investment somewhat critically in relation to financial crime. It highlighted the introduction of so-called ‘Unexplained Wealth Orders’ at the start of 2018. However, despite talk of the orders being used as a tool to target Russian interests in the leadup to their introduction, there has been little follow through.

More British sanctions on Russia are likely to flow forth soon enough. Not just over Navalny’s jailing, but also in response to the crises that seem to emerge on a yearly basis in Russian-British relations. Moscow seems prone to doing something Britain disapproves of. Ultimately, individuals believed responsible will be barred from financial activities. But the almost-programmable regularity and the fact individual sanctions have no real wider systemic impact, means that the UK and Russia are set to continuously see relations edge downward. Still, there are sufficient economic and business ties, even if seen as kleptocratic or enabling thereof, to hinder either side from seeking any major escalation.

Photo: Scanpix