Russia For Now Holds Its Trump Card
President Putin's reprisal today was measured. (Video) He shrewdly held out his ultimate card -- energy -- as ammunition to be used as he believes the need arises.
For his domestic audience, Putin could have done no less than the expulsion of an equal number of British diplomats, and possibly also the imposition of visa restrictions that was announced. The moratorium on terror cooperation can be taken with a grain of salt -- the two sides share concern on the important grounds, and joint efforts will continue.
As noted in a comment to the previous post, Russia and Britain to a degree are tied at the waist financially -- BP for instance desperately needs continued good relations with Moscow for its current and future production and reserve base. But Russian business relies on London's capital markets as well.
Concern about Russia's future attitude toward British business is well-founded. That remains the likeliest ground for Putin's long-term reaction to what, if one listens to his remarks, he seems to regard as an intolerable challenge to Russia's image and its law. BP's investments remain Britain's soft underbelly.
For his domestic audience, Putin could have done no less than the expulsion of an equal number of British diplomats, and possibly also the imposition of visa restrictions that was announced. The moratorium on terror cooperation can be taken with a grain of salt -- the two sides share concern on the important grounds, and joint efforts will continue.
As noted in a comment to the previous post, Russia and Britain to a degree are tied at the waist financially -- BP for instance desperately needs continued good relations with Moscow for its current and future production and reserve base. But Russian business relies on London's capital markets as well.
Concern about Russia's future attitude toward British business is well-founded. That remains the likeliest ground for Putin's long-term reaction to what, if one listens to his remarks, he seems to regard as an intolerable challenge to Russia's image and its law. BP's investments remain Britain's soft underbelly.
Labels: BP, britain, expulsions, pipelines, Russia, Russian oil
9 Comments:
The Wall Street Journal has this:
Finance Ties U.K., Russia
Business Relations Could Help Contain Diplomatic Dispute
LONDON -- The diplomatic row between Moscow and London has focused new attention on Russia's thickening financial ties with the U.K., which is favored by Russian investors and is a leading funding source for Russian industry.
Some 30 major Russian companies with a combined market capitalization of $625 billion are now listed on the London Stock Exchange, according to the LSE. Nine of those have come this year. That compares with just five Russian stocks listed on the New York Stock Exchange.
Link: http://online.wsj.com/article/SB118470772280569431.html
MIke, indeed the financial wrinkle continues to fascinate. I do not think it will influence Russia's behavior in the energy sphere -- I continue to see BP as a likely ultimate reprisal target. But the financial ties between the two countries look likely to be a governor on any Russian trade retaliation; it would be too risky to start a tit-for-tat financial battle. Thanks for the link.
One interesting strand in this affair has been the Kremlin's largely free ride on the issue of the Russian constitution and extradition. There was a good response to that in the FT's letters page on Friday: http://www.ft.com/cms/s/7a2c916a-3590-11dc-bb16-0000779fd2ac.html
Full text:
Article opens door to extradition of Lugovoi
By Daniel Tarschys
Published: July 19 2007 03:00 | Last updated: July 19 2007 03:00
From Prof Daniel Tarschys.
Sir, The claim that the Russian constitution prevents the extradition of the former Russian agent Andrei Lugovoi is contestable.
It is true that one article in its bill of rights and freedoms contains what seems to be a blanket guarantee against the extradition of Russian citizens, but a subsequent article opens the door for extradition of indicted persons on the basis of federal law or international treaty.
On December 10 1999, the Russian Federation ratified three international treaties on extradition (Council of Europe conventions ETS 024, 086 and 098).
The special reservations and declarations attached to these ratifications do not seem to vindicate the refusal to extradite Mr Lugovoi, but any objections to the UK request should at any rate be based on these texts rather than on the Russian constitution.
Daniel Tarschys,
Professor in Political Science,
University of Stockholm,
Stockholm, Sweden
(Former Secretary-General of the Council of Europe)
Fred, thanks for this. You must have seen that your previous observation -- on the mutual financial need to a degree restricting possible Russian retaliation -- has been echoed in coverage in the FT and WSJ. Thanks, Steve
Sure, but note too that some on the Russian side feel the UK is the more vulnerable on this:
Alexander Shokhin, president of the Union of Industrialists and Entrepreneurs (UIE), also said that if the dispute escalates, Russian firms intending to float in London could review their plans, while firms already on the Stock Exchange may switch to other bourses if politics demanded it.
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/07/21/cnrussia121.xml
As you know, I don't buy that. But it's interesting that Shokin thinks it's a threat worth making.
Moscow Times carries an op-ed piece by Alex Goldfarb arguing that the UK needs to disclose all its evidence now to "shatter the mirror of national delusion that has afflicted the great country of Russia -- to the benefit of the Russians and the rest of the world." He claims the Brits can prove who dunnit and where the polonium 210 came from.
Whatcha think? If the Crown Prosecution Service published what it knows, is it at all likely to be the open and shut case Goldfarb suggests?
Whatever the Brits say, it would be in the form of allegations that the Kremlin would point out need to be subjected to the scrutiny of a court. I would be surprised if the Brits took that step.
Gorbachev says the conflict will be over soon.
Link (Russian): http://novayagazeta.ru/data/2007/55/08.html
Victor, Putin -- and Gorbachev now -- seem to regard this as an ordinary diplomatic row. I'm not sure his experience with Thatcher involves a murder case. I myself have been surprised that the Brits have been willing to push the case so hard and far. What is your take?
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