Backbench pressure, a desire to act with the US and commercial assurances see emboldened British stance over annexation
Once seen as a laggard in the western response to the Russian intervention in Ukraine, David Cameron seems to have pushed himself closer to the front, albeit in part due to the rather pusillanimous response of his EU partners.
In the face of Vladimir Putin's refusal to back down, there has been a hardening of attitudes in London, partly due to pressure from Cameron's backbenchers, a Foreign Office determination to stay in lockstep with Barack Obama, and a growing assurance that the interests of the City of London would not be fatally compromised by sanctions.
Cameron is said to have told his EU partners that there are no painless sanctions: "If you throw a punch, your wrist gets hurt." Yet the EU has already in effect sold the pass on Crimea, saying its invasion warrants only stage 2 sanctions – travel bans, asset freezes and ostracism from summitry such as the G8. Cameron knows that Germany will only go to stage 3, which would involve wider economic sanctions, if Putin threatens eastern Ukraine.
That, for the moment, leaves efforts focused on how to strengthen the impact of stage 2 sanctions on the Putin network.
There is restraining case law on how far any EU country can go. Someone's assets cannot be frozen just because they got rich off the back of friendships with a regime subject to sanctions. The European court of justice in July ordered the EU to lift an asset freeze against a Saudi businessman, Yassin Qadi, saying his links with al-Qaida were too tenuous. As Cameron has stressed, the individual needs to have a direct relationship with the action that has led to the sanction.
Britain would have liked clearer EU language specifying that individuals could be subject to sanctions for providing "material support" to the Russian government. Many of Putin's many allies in London could conceivably be caught in that dragnet.
British officials were pointing to the way in which Russian businessman Gennady Timchenko had appeared on the US list largely due to his personal links to Putin.
So Cameron's warning that Chelsea owner Roman Abramovich might be subject to sanctions was not purely designed for the tabloids. It was meant to signal a line of thinking. It also reflects a willingness in London to imagine a different Anglo-Russian relationship, even if that means pain for the City and less dependence on imported gas.
William Hague, the foreign secretary, in the Commons this week suggested the relationship will be "one in which institutions such as the G8 work without Russia; military co-operation and defence exports are permanently curtailed; decisions are accelerated to reduce European dependence on Russian energy exports; foreign policy plays a bigger role in energy policy; Russia has less influence in Europe; and European nations do more to guard against a repetition of the flagrant violation of international norms".
There was pressure on Hague from the Tory benches to go further. Sir Malcolm Rifkind, the former foreign secretary, described the scale of the western response as "pathetic and feeble". Gerald Howarth, the former defence minister, argued Britain was well placed to withstand any sanctions blowback: "Only 1.6% of our exports go to Russia, and only 1.7% of our imports come from Russia, and we are dependent on Russian energy for only 1% of our natural gas requirement."
Charles Walker, a senior official in the Tory backbench 1922 committee, said: "Russia is not the power that it once was. It is riddled with corruption, and with a population of only 143 million, it has a failing demographic. Male life expectancy there is barely 60. Russia is not the great bear that it pretends to be."
His analysis was supported by the fall in the Russian stock market, and the admission by the Russian finance minister, Anton Siluanov, that the country may have to scale back its international borrowing. Russian stocks have lost more than $60bn (£36.4bn) in market capitalisation and the central bank has spent $23bn defending the rouble.But London may have to pay a price. According to Credit Suisse, 110 Russian billionaires own nearly a third of Russian wealth, and many use London for wealth management, property purchase and to settle their legal disputes. But only 113 Russian-based companies are listed on the London stock exchange, and Russian companies have issued bonds worth $66bn in the UK over the past 10 years – only accounting for 3% of the market at most.
An early test will come in May, when western businesspeople, bankers and financiers decide whether to turn up to Putin's hometown annual investor showcase in St Petersburg. That will be the moment when the heads of UBS, BP, Deutsche Bank and other western players in Russia have to decide whether to put commerce or reputation first. Reported by guardian.co.uk 9 hours ago.
Once seen as a laggard in the western response to the Russian intervention in Ukraine, David Cameron seems to have pushed himself closer to the front, albeit in part due to the rather pusillanimous response of his EU partners.
In the face of Vladimir Putin's refusal to back down, there has been a hardening of attitudes in London, partly due to pressure from Cameron's backbenchers, a Foreign Office determination to stay in lockstep with Barack Obama, and a growing assurance that the interests of the City of London would not be fatally compromised by sanctions.
Cameron is said to have told his EU partners that there are no painless sanctions: "If you throw a punch, your wrist gets hurt." Yet the EU has already in effect sold the pass on Crimea, saying its invasion warrants only stage 2 sanctions – travel bans, asset freezes and ostracism from summitry such as the G8. Cameron knows that Germany will only go to stage 3, which would involve wider economic sanctions, if Putin threatens eastern Ukraine.
That, for the moment, leaves efforts focused on how to strengthen the impact of stage 2 sanctions on the Putin network.
There is restraining case law on how far any EU country can go. Someone's assets cannot be frozen just because they got rich off the back of friendships with a regime subject to sanctions. The European court of justice in July ordered the EU to lift an asset freeze against a Saudi businessman, Yassin Qadi, saying his links with al-Qaida were too tenuous. As Cameron has stressed, the individual needs to have a direct relationship with the action that has led to the sanction.
Britain would have liked clearer EU language specifying that individuals could be subject to sanctions for providing "material support" to the Russian government. Many of Putin's many allies in London could conceivably be caught in that dragnet.
British officials were pointing to the way in which Russian businessman Gennady Timchenko had appeared on the US list largely due to his personal links to Putin.
So Cameron's warning that Chelsea owner Roman Abramovich might be subject to sanctions was not purely designed for the tabloids. It was meant to signal a line of thinking. It also reflects a willingness in London to imagine a different Anglo-Russian relationship, even if that means pain for the City and less dependence on imported gas.
William Hague, the foreign secretary, in the Commons this week suggested the relationship will be "one in which institutions such as the G8 work without Russia; military co-operation and defence exports are permanently curtailed; decisions are accelerated to reduce European dependence on Russian energy exports; foreign policy plays a bigger role in energy policy; Russia has less influence in Europe; and European nations do more to guard against a repetition of the flagrant violation of international norms".
There was pressure on Hague from the Tory benches to go further. Sir Malcolm Rifkind, the former foreign secretary, described the scale of the western response as "pathetic and feeble". Gerald Howarth, the former defence minister, argued Britain was well placed to withstand any sanctions blowback: "Only 1.6% of our exports go to Russia, and only 1.7% of our imports come from Russia, and we are dependent on Russian energy for only 1% of our natural gas requirement."
Charles Walker, a senior official in the Tory backbench 1922 committee, said: "Russia is not the power that it once was. It is riddled with corruption, and with a population of only 143 million, it has a failing demographic. Male life expectancy there is barely 60. Russia is not the great bear that it pretends to be."
His analysis was supported by the fall in the Russian stock market, and the admission by the Russian finance minister, Anton Siluanov, that the country may have to scale back its international borrowing. Russian stocks have lost more than $60bn (£36.4bn) in market capitalisation and the central bank has spent $23bn defending the rouble.But London may have to pay a price. According to Credit Suisse, 110 Russian billionaires own nearly a third of Russian wealth, and many use London for wealth management, property purchase and to settle their legal disputes. But only 113 Russian-based companies are listed on the London stock exchange, and Russian companies have issued bonds worth $66bn in the UK over the past 10 years – only accounting for 3% of the market at most.
An early test will come in May, when western businesspeople, bankers and financiers decide whether to turn up to Putin's hometown annual investor showcase in St Petersburg. That will be the moment when the heads of UBS, BP, Deutsche Bank and other western players in Russia have to decide whether to put commerce or reputation first. Reported by guardian.co.uk 9 hours ago.