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It's hard to know how much Russian money is flowing through
Britain: the City and accountability are not even nodding acquaintances.
Photograph: David Levene
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Why London turns a blind eye to Russia's adventurism
Threats to Russia over its
actions in Ukraine are undermined by the warm welcome its billionaires continue
to receive in the west
Nick Cohen
The Observer, Saturday 15 March 2014 / http://www.theguardian.com/commentisfree/2014/mar/15/ukraine-crimea-sanctions-russian-investment-london
The kleptocracies that have replaced the old Soviet empire
are vulnerable, I wrote on these pages as the Ukraine crisis began. The
freezing of their assets was a non-violent response to the threat to the
integrity of a sovereign state that had not committed genocide or developed
weapons of mass destruction; that had not threatened to invade a neighbour or
provided any other casus belli beyond having a revolution against a
fantastically corrupt government.
We might have threatened Putin's elite support and made his
backers realise that they had to choose between supporting Russian adventurism
or holding on to their loot. I believed we had a fair idea of what their choice
would have been.
Russia is exposed. Putin's central bank estimated that
two-thirds of the $56bn moved out of Russia in 2012 might have been the
proceeds of crimes, bribes to state officials and tax fraud. English bankers
and lawyers, British and Dutch tax havens in the Caribbean, and estate agents
in Mayfair, the Cote d'Azur and Manhattan launder the loot.
Never mind asset freezes and visa bans; a vigorous
investigation into immoral earnings by the European and north American
authorities would have spread panic among the crime bosses. David Cameron
sniffed weakness. He warned Moscow at the beginning of March that Russia would
pay "significant costs" if it did not back down.
The crisis escalates today as Crimea votes on an anschluss
with Russia under the eyes of Putin's troops. The failure to date to impose
sanctions on or make believable threats against Russian assets tells us much
about Britain and the wider west, none of it flattering.
It isn't certain what choice our rulers will make if they
have to choose between opposing Russian adventurism and holding on to Russian
loot. Cameron may surprise us. But as things stand, it appears that the love of
money is not confined to the Kremlin. Those who covet it, those who have
pocketed or hope to pocket it, are as much in its thrall as the oligarchs who
possess it.
Consider the extent of Russian financial power in Britain.
Soviet-born billionaires occupy three of the top five slots in the Sunday Times
Rich List. One owns the satirically titled Independent newspaper and the London
Evening Standard. Another owns Chelsea Football Club. More Russians have
received special "tier one" investor visas than the citizens of any
other country. The first-class visas allow the British state, which bellows
about its toughness on immigration, to sell residency rights at £1m a pop.
BP, a struggling corporation with many connections to
Downing Street, needs Putin's favours. The Deepwater Horizon disaster of 2010 forced
the company to freeze dividends and sell assets worth $38bn, including half of
all its offshore platforms and refineries, to meet the $42bn costs of the
clean-up. The company's involvement in Russia adds nearly 1m barrels a day to
its oil production. So dependent on Moscow's goodwill has it become that the
Economist speculated that it "now exerts pressure on the British
government to pursue a Russia-friendly policy".
Analysts find it harder to be precise about the scale of
Russian money flowing through the British financial system: the City and
accountability are not even nodding acquaintances. But Thomson Reuters
calculated that companies from Russia and former Soviet states have raised
$82.6bn in London in the past two decades, large chunks of which the City
creamed off as fees.
The "English" courts are easier to monitor because
cases must take place in public. Lawyers often compare themselves to taxi
drivers, who will carry anyone who can pay the fare. I find a comparison to an
older profession more satisfying. Whichever one you care to use, Russian money
proves its truth. The lowest moment in recent history of the libel courts came
when eminent solicitors and one of London's most expensive QCs tried to sue the
London-based investment fund manager Bill Browder.
He first developed the use of asset freezes as a weapon
against Putin, in his case because Russian gangsters and state officials were
complicit in the murder of his lawyer, Sergei Magnitsky. Our legal profession
was not bothered in the slightest that Magnitsky was a better and braver lawyer
than they would or could ever be; a man who had died in a Moscow prison for the
"crime" of exposing a gigantic tax fraud. That their case that a
former Russian secret policeman had the right to sue Browder in London was
deemed by the judge to be hopeless did not appear to concern them either. They
still picked up hundreds of thousands of pounds in fees.
Between March 2008 and March 2013, 61.6% of litigants
fighting in London commercial courts came from outside England and Wales. As
I've said before, the government is denying access to justice to the native
poor and working class with its legal aid cuts. Extortionate legal fees have
become too much for the middle class to bear. But as it closes the courts to
the British, the coalition is following a deliberate policy of turning them
over to the global oligarchy, in the hope that fat fees for QCs will produce
tax revenues for the Treasury.
If you look at the luxury market, the picture is the same.
Art, prime London property, the finances of several Premier League clubs and
the private schools are trapped in a dependency culture. As is the British
right.
The Eurosceptic dream can sound attractive when you have had
one beer too many. Let us turn our back on the collective security of the
European Union, be the great trading nation we once were, and send our ships
out on to the wide blue oceans. They forget that Victorian Britain was a great
power as well as a great trading nation. It was strong enough to put security
interests beyond economic interests. Today, Cameron worries not only about
losing Russian business, but the chilling example sanctions would set to the
buyers from China and other dictatorships shopping in London. Would they be so
willing to spend if they saw the authorities using Moscow gold as a weapon in a
diplomatic crisis?
A comparison with 1914 is instructive. At the start of the
First World War, Herbert Asquith and David Lloyd George were so determined to
maintain the European balance of power they were prepared to risk bankrupting
the British empire. We will find out later today whether David Cameron and
George Osborne are prepared to risk bankrupting a Mayfair estate agent a
century on.
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Chetniks, known for rape, murder and ethnic cleansing, have
arrived to back the Russians Sergii Kharchenko/NurPhoto/Corbis
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Wolves Descend on Crimea
By Janine di Giovanni / March 12, 2014 / http://mag.newsweek.com/2014/03/14/wolves-descend-crimea.html
When Vladimir Putin gave his first press conference since
the Ukraine crisis began, he oddly said there were no Russian troops in
Crimea—aside from those who were already stationed at a Russian Navy base.
The armed men outside administration buildings and airports
are not Russian soldiers, Putin claimed—these are "self-organized local forces
of volunteers."
Putin may be delusional—German Chancellor Angela Merkel
recently remarked he had lost the plot—but he has a valid point. There are
self-organized volunteers in Crimea.
Some have arrived via social media—one Web page, the Civil
Defense of Ukraine ("Russian Get Up!") on Vkontakte, the Facebook of
Russia, already has 7,000 followers. It encourages men, ages 18 to 45, to rush
to the Crimea to defend Russian values.
But Serbian Chetniks, led by a former Kosovo war fighter
named Milutin Malisic who brought a group of fighters to Crimea nicknamed
"The Wolves," says there are other reasons: Serbs have a
responsibility to their Orthodox brethren.
"We [represent the] Chetnik movement, and we can
compare with the Cossacks in Russia," he said. "During the wars in
Yugoslavia, a lot of volunteers fought on the Serbian side and we have decided
to help them. It is our duty to be here."
Malisic added that he did not expect many Serbian fighters
to join him. "We are a small nation," he said. "But we also
cultivate a great love for Russia."
The Chetniks might be small in number but their presence in
Crimea is still alarming. From 1992 to 1995, in the former Yugoslavia, the word
Chetnik sparked instant terror in Bosnian Muslim and Croat civilians.
These fighters wore balaclava style ski masks instead of the
traditional long beards and furry hats modeled after Russian Cossacks, but
their names were synonymous with war crimes: rape, murder, ethnic cleansing and
other hideous acts of atrocity.
They were a revival of Serb nationalists with roots that
sprang from a monarchist paramilitary that formed a resistance force first
against the Ottoman Empire in 1904.
The original Chetniks participated in the first Balkan war,
and both World War I and II, where their conservative nationalism was directed
not only against the German invader, but also the Communists, led by a Croat,
Josip Broz Tito.
Crimea and Punishment
They came to the attention of the legendary British war
hero, Fitzroy Maclean, who was sent into Yugoslavia during World War II by
British Prime Minister Winston Churchill to penetrate the guerrilla war and
work with Tito and his partisans.
Part of Maclean's brief was to find out "who was
killing the most Germans," regardless of political ideology or
affiliation. It was believed to be royalists and their military arm, the
Chetniks, led by General Draza Mihailovic.
Maclean and Churchill's focus was more directed toward Tito.
Postwar, there was some regret about lost opportunities: that military aid had
not been given to Mihailovic and his men, but instead was given to Tito and the
Communists. (Maclean did eventually conclude that the partisans were killing
even more Nazis than the Chetniks).
When Yugoslavia broke up after 1991, it was no great
surprise that ultra-Serb nationalists went back to men they considered
heroes—the Cossack-like Chetniks. But according to Tim Judah, an expert on
Serbia, their appearance in Crimea was expected.
"Just as small numbers of Russians, Greeks and others
came to help the Orthodox Bosnian Serbs during the Bosnian war, a handful of
Serbs have now turned up to help their Russian brothers in Crimea," he
said.
But he finds a strange irony in their mission. "They
are self-proclaimed Chetniks, whose forebears in the Second World War both
fought against and collaborated with the Nazis against Communist forces,"
he says. But their alliance is a "weird distortion of history," as the
Russians claim they are against "fascist" Ukrainian Banderovts—who
were Ukrainian nationalists and, just like the Chetniks, both resisted and
collaborated with the Nazis against the Communists.
The British journalist Misha Glenny called the revival of
the Serb nationalists in Yugoslavia in the 1990s one of the most "hideous
and frightening aspects of the fall of communism in Serbia and
Yugoslavia."
"This breed, which finds nurture in the perpetration of
unspeakable acts of brutality, encapsulates all that is irrational and unacceptable
in Balkan society," he wrote in his book The Fall of Yugoslavia.
At the time, Glenny observed that the thought pattern and
actions of the nationalists were not "peculiar to Serbia, but only here
have they been allowed to fulfill their sick potential with no barriers."
After the Kosovo War in 1999, the Chetniks laid low. But the
Ukraine crisis has clearly sparked a common feeling of Slavic unity.
The Serbian press responded by saying there are only a
limited number of Chetnik fighters in Crimea—five, to be exact—and that they
were being used for minor jobs, such as manning checkpoints. They also
questioned Malisic's background and motives.
"If the Russians did their homework, they will
certainly beg the Chetniks not to help them," says Zoran Kusovac, who is
based in Belgrade for Jane's Defense Weekly. He says the Chetniks are basically
bandits.
"Wherever these pompous 'defenders,' with idiosyncratic
headgear, appeared, the population they allegedly were there to protect
disappeared for good," he says. "As did all video recorders,
televisions, fridges, tractors and cars—regardless of their owners' ethnicity
or creed—that were within reach of these bearded creatures."
Traditionally, Serb and Russian nationalists are closely
aligned by their Orthodox Christian religion, their Slavic roots and their
anti-Western perceptions.
In Tito's Yugoslavia, most school children were taught
Russian as a second language; and when Yugoslavia disintegrated, Russia became
the natural hiding place for war criminals and other disreputable Serbs—such as
the much-loathed Mira Markovic, wife of former wartime President Slobodan
Milosevic, who died in prison while defending himself against war-crime charges
at the International Criminal Tribunal for the former Yugoslavia.
Serbia has always been something of a foothold for Russia
inside the Balkans, and the Russians have poured large amounts of money into
the dire Serbian energy sector.
While other Europeans reacted with horror to Putin's
interference in the Ukraine, in Belgrade, several thousand pro-Russia
demonstrators took to the streets on March 3, holding placards reading:
"Crimea is Russia and Kosovo is Serbia."
Officially, though, Serbia is playing it diplomatically.
This year Serbia began talks to join the European Union and most young Serbs,
when interviewed, say they would prefer to forget their pariah reputation and
their past—the war crimes, the international isolation, the U.N. sanctions, the
bombardment by NATO—and move on.
"Let's face it," said one young Belgrade-based
graphic artist. "The future is in Europe. It's not here."
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