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3 March 2022

Why the government may be slow to cut off Russian money

Pressure to impose heavier economic sanctions shakes the foundation of parts of the UK economy.

By Ailbhe Rea

It is day eight of Russia’s invasion of Ukraine. Civilian deaths are thought to have surpassed 2,000, huge explosions have been heard in Kyiv overnight and Ukrainian officials have confirmed that Russian forces are now in control of the key port of Kherson in the south, making it the first major Ukrainian city to be taken by the Russian invasion. The International Criminal Court has confirmed it is opening an investigation into possible war crimes by Russia in Ukraine, and Sergiy Kyslytsya, the Ukrainian ambassador to the United Nations, has said Russia’s goal is not just occupation but “genocide”. 

Here in Westminster the focus is on how to hit the Putin regime economically, not simply by decimating the rouble, as sanctions have done in recent days, but by targeting the significant portion of Russian wealth that is held offshore, and, in particular, in London. 

On today’s New Statesman podcast I am joined by the investigative journalist and author Oliver Bullough, who explains the impact of the sanctions on the Russian economy so far, as well as what hasn’t been touched. He outlines how post-empire Britain has taken on the role of “butler” to the world’s oligarchs, kleptocrats and gangsters: a role suddenly being interrogated in the light of Ukraine. 

British dependence on Russian money is beginning to unravel, with new developments every day, such as yesterday’s announcement that the Russian oligarch Roman Abramovich is selling Chelsea football club and donating the proceeds to victims of the war in Ukraine. 

Meanwhile, Michael Gove, the secretary of state for levelling up, housing and communities, is reportedly drawing up plans to seize the property of sanctioned oligarchs in the UK without paying compensation. But the government is under pressure to go much faster. 

Chris Bryant, the Labour MP and chair of the standards committee, exemplified the pressure on the government this morning when he tweeted: “I don’t understand why we haven’t seized a single Putin oligarch yacht, palace or serious asset yet. Unlike our European neighbours.” But for the UK to do so will involve not just seizing certain Russia-linked assets, but re-examining how a large part of the British economy has functioned since the 1950s. It goes far beyond dependence on Russian money, asking uncomfortable questions about the kind of country the UK has become since the end of empire.

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This piece first appeared in the Morning Call newsletter; subscribe here.

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