How the UK could hit back at Russia over Sergei Skripal attack
Economic sanctions. Asset and property seizures. A crackdown on money laundering.
The British government has a range of tools it can use to strike back at Moscow after the Kremlin was linked with the attempted murder of former Russian double agent Sergei Skripal.
Prime Minister Theresa May said Monday a “weapons grade nerve agent” developed by Russia had been used in the attack on Skripal and his daughter, who were found slumped on a bench last week in the sleepy cathedral town of Salisbury.
Russian Foreign Ministry Sergey Lavrov had previously dismissed allegations of Russian involvement as propaganda.
May said either the attack was an act by the Russian state, or Russia had lost control of its nerve agent. While it awaits an explanation from Moscow, the British government is preparing a “robust response.” Here’s what that could include:
Introduce new sanctions
Britain could pursue tougher economic sanctions against Russia through the European Union, which implemented punitive measures following the annexation of Crimea that targeted businesses and individuals tied to the Kremlin.
“Whatever action the UK takes, its impact will be greater if it’s coordinated with Western allies,” said Andrew Foxall, director of the Russia and Eurasia Studies Centre at the The Henry Jackson Society.
But new sanctions could be a long shot: Building consensus within the EU can be a lengthy process, and there’s only a year to go before Britain leaves the bloc. Some EU members are likely to resist further sanctions on Russia for political or economic reasons.
Britain has more options if it acts alone.
The UK has in recent decades served as a magnet for wealthy Russians and the businesses they run.
The London Stock Exchange is home to 99 companies that are based in Russia or other former Soviet countries. A huge number of Russians live and own property in London.
Michael O’Kane, senior partner at Peters & Peters, says London was the “first port of call” for wealthy Russians. He said that Russians were attracted to the UK because of the country’s established legal system.
“They like the stability of being able to park their assets in London,” O’Kane said.
Russians also want to send their children to British schools and enjoy the culture London offers. Over 3,000 Russian students are enrolled at British schools, according to data from the Independent Schools Council.
Freeze some assets
Knight Frank estimated in 2013, before sanctions were implemented, that nearly 10% of London’s most expensive real estate purchases were made by Russians. Transparency International said last year that UK properties worth £940 million ($1.3 billion) had been purchased with what it described as “suspicious wealth” from Russia.
Some of those assets could now become targets.
“The UK has one enormous source of leverage with Russia that it has never used. This is the time to use it,” said Bill Browder, an investor in Russia who became a fierce critic of President Vladimir Putin after he was expelled from the country.
“Every self-respecting corrupt Russian government official has a property in London,” added Browder, who has campaigned against what he describes as widespread corruption in Russia.
The government could use the Criminal Finances Act, a law approved in 2017, to force Russians who may be implicated in the attack, or have close ties to Putin, to explain how they purchased property in the UK.
If they are unable to prove that the property was purchased with legitimate funds, it could be seized.
The government could also move to freeze assets if they believe human rights violations have been committed. Another option is targeting the perpetrators under terror legislation.
“In reality targeting the perpetrators will make little difference as they are unlikely to have assets in the UK,” said O’Kane. “Targeting those close to Putin who have unexplained wealth in the UK might be a quicker and more effective option.”
Tackle money laundering
Prior to the 2014 sanctions, successive UK governments had prioritized a small but growing economic relationship with Russia. May is likely to now be much more aggressive, even if comes with a financial cost. Foxall said the government could answer longstanding calls to crack down on money laundering.
“A new Russia policy has been taking shape in the UK,” said Foxall. “The government has woken up although belatedly to the threat that Russia poses.”
Some British lawmakers are asking for provisions based on the Magnitsky Act to be included in the Sanctions and Anti-Money Laundering Bill, a piece of legislation that could give the government new powers.
The United States and Canada have already passed versions of the Magnitsky Act, which is named in honor of a lawyer who worked for Browder and later died in a Moscow prison under suspicious circumstances.
“If there were to be financial damage to the UK from targeting people who have violated the country’s laws, I don’t think anyone would have a problem with that,” said Tom Keatinge, a director at the Royal United Services Institute.
CNNMoney (London) First published March 12, 2018: 1:09 PM ET