Written evidence from The Centre for European Reform (RUS0015)

Partner or pariah: How should the UK view Russia?

Submission by the Centre for European Reform to the House of Commons Foreign Affairs Select Committee Inquiry on the UK’s relations with Russia

Russian foreign policy and UK interests

  1. In the last decade, Russia has invaded two of its neighbours, made nuclear threats against NATO allies and EU partners, and provided protection for President Bashar al-Assad's murderous regime in Syria. As the Litvinenko inquiry showed, it has also sent its agents to murder a British citizen in London, heedless of the danger to other people. The UK's relations with Russia are bad because of Russia's policies, not Britain's.
  2. Russia does not confront the West across the board: it pursues a pragmatic policy based on its assessment of its own interests. Working with the UK and other major powers, Russia played an important part in international efforts to stop Iran's nuclear weapons programme; and Moscow also allowed NATO to move supplies through Russian territory to Afghanistan – even though Russia's 2010 military doctrine identified NATO infrastructure and the deployment of foreign troops in countries bordering Russia or its allies as military dangers to Russia.

Russia and Eastern Europe

  1. The EU believes that it will benefit from having stable, prosperous and democratic neighbours to its east; that is why in 2008 it set up its Eastern Partnership with Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine. It does not see this initiative in geopolitical terms (though in 2009, when the first Eastern Partnership summit was held in Prague, the Russian foreign minister accused the EU of trying to carve out a new sphere of influence). Some Central European countries have pressed the case for offering a long-term perspective of membership to Eastern European countries that qualify for it, but most other member-states are opposed. Even after Russia's invasion of Ukraine in 2014, when the EU accelerated the signature of its Association Agreement with Ukraine, foreign ministers only said vaguely that the agreement "does not constitute the final goal in EU-Ukraine co-operation".
  2. Rhetorically, NATO has been more positive towards the possibility of eventual membership for Georgia and Ukraine. At the Bucharest Summit in April 2008, heads of state and government said that the two countries would become members of NATO, though they did not set out a timetable. In practice, however, the alliance has been extremely cautious about taking in further members in the face of Russian objections, and at subsequent summits NATO has always managed to avoid suggesting that Georgia or Ukraine have moved significantly closer to joining the alliance.
  3. This de facto veto on EU and NATO membership has not been enough for Russia, however. Russia has supported the separatist enclave of Transnistria in Moldova since the break-up of the Soviet Union, as well as backing other separatist groups and pro-Moscow political parties in the country; invaded and divided Georgia (creating internationally unrecognised statelets in Abkhazia and South Ossetia); and invaded Ukraine, annexing Crimea and deploying its troops covertly to remove other areas of eastern Ukraine from Kyiv's control. It dissuaded the Armenian government from signing an Association Agreement with the EU inter alia by selling arms to Armenia's enemy, Azerbaijan, thus reminding Yerevan that its security depended on staying on the right side of Moscow. For Russia, the 1944 analysis of the great American diplomat and Kremlinologist George Kennan still holds good: "The jealous eye of the Kremlin can distinguish, in the end, only vassals and enemies; and the neighbours of Russia, if they do not wish to be one, must reconcile themselves to being the other".

Russia and Syria

  1. Russia is unconcerned by the amount of blood spilt in Syria's civil war by President Assad, who like his father is a long-standing client of Russia. Moscow would see his fall as a defeat, regardless of who might replace him and what their attitude to Russia might be. Conversely, if Assad with Moscow's help defeated Western proxies, that would be a victory for Russia and a defeat for the West. Moreover, Putin can contrast the effort he has put into saving his client with the 'betrayal' by President Barack Obama of American allies like former Egyptian president Hosni Mubarak.
  2. Putin also wants to use his military engagement in Syria as a route back to the international top table. He is showing that even if he does not have a solution to the Syrian problem, he can certainly make it worse. In this he seems to have succeeded: President Obama's talk in his State of the Union address in 2015 of Russia being isolated has been replaced by regular high-level contacts between US Secretary of State John Kerry and Russian foreign minister Sergei Lavrov, in which Syria is one of the key agenda items.
  3. Russia claims to be fighting the so-called Islamic State, or Daesh, in Syria; at the United Nations General Assembly in September 2015 President Vladimir Putin called for an alliance against terrorism "just like the one against Hitler". But the Foreign Secretary said publicly on January 27th that 70 per cent of Russia's airstrikes have been aimed at rebel groups other than Daesh, including those backed by the West.
  4. There is evidence that the ferocious attacks by Russian and Syrian forces on rebel-held areas in the north and west of Syria are creating new waves of refugees. It is clear that Russia sees benefit in exploiting the refugee crisis to widen divisions between EU member-states. Russian support for anti-immigrant parties like the Front National in France is well-documented; Russian propaganda outlets such as the news agency 'Sputnik' attempt to stir up hostility to refugees in Europe and to highlight tensions over migration policy between Germany and other EU countries. There could be no bigger win for Putin than the EU falling apart in acrimonious arguments about a Syrian refugee crisis which his ally Assad has largely created.

Russia's economic relations with the UK and the world

  1. The Russian economy remains dominated by export-oriented extractive industries, especially hydrocarbons. As such, it has suffered particularly badly from the slump in oil prices since 2014. EU sanctions following Russia's intervention in Ukraine, as well as Russia's retaliatory bans on various EU food and agricultural exports, have done further damage. The IMF estimated that Russian GDP contracted by 3.8 per cent in 2015, and forecast another 0.6 per cent reduction this year (before the latest fall in oil prices). As a result there has been a sharp decline in trade with the UK: according to the latest figures from the Office of National Statistics, in the period January to November 2015 British imports from Russia fell by over 30 per cent, while exports to it fell by almost 40 per cent. This made Russia the UK's 25th largest export market.
  2. The British government's view of trade relations with Russia is mixed. UK Trade and Investment's 'Doing business in Russia' guide suggests that apart from specific sectors affected by sanctions "there remain significant opportunities for UK companies. Russia has started major investment and modernisation programmes which will provide opportunities for UK firms". UKTI's 'Overseas Business Risk: Russia' guidance, while also noting opportunities, says "Russia’s interventions in Ukraine and illegal annexation of Crimea pose a challenging backdrop for British businesses operating in Russia", and goes on to list human rights, bribery and corruption ("endemic in Russia"), terrorism and organised crime as problems. There is no direct reference, however, to the risks posed to British businesses by the intermingling in Russia of government, business and organised crime (as documented for example by Reuters in a series of articles entitled 'Comrade Capitalism', and by the American academic Karen Dawisha in her book 'Putin's Kleptocracy').
  3. Businesses must work in the interest of their shareholders, and make their own judgements about the balance of risk and opportunity in Russia. But the British government should not exaggerate the importance of Russia to the UK either as a market or as a source of productive investment in the UK economy; and it should not allow national security policy to be excessively influenced by the possibility that the UK might lose business in Russia if it took a tough line.

Soft power and information warfare

  1. Although the Russian government reduced the budget for its TV propaganda channel, RT, by about 10 per cent for 2016, it will still have about £170 million to spend, while the Rossiya Segodnya news agency (which runs the Sputnik news service) will have about another £6 million. These organisations are not in the business of providing objective news; they are arms of Russian state disinformation policy.
  2. Recent Russian military thinking has focused on the role of information and the media in shaping (or even removing the need for) fighting. Two Russian military experts, Sergei Chekinov and Sergei Bogdanov, wrote in late 2013 (before Russia's annexation of Crimea): "A new-generation war will be dominated by information and psychological warfare that will seek to achieve superiority in troops and weapon control and depress the opponent's armed forces personnel and population morally and psychologically... Information and psychological warfare will largely lay the groundwork for victory".
  3. The Russian state not only wages propaganda war against foreigners, but also uses disinformation and fake stories to shape domestic opinion. In February 2015 the BBC Monitoring Service reported on the successful use by the Russian domestic media of psychological conditioning designed to excite extreme emotions of aggression and hatred in its viewers.

Recommendations for UK and Western policy

  1. The FCO acknowledged in evidence to the Foreign Affairs Committee last year that it had less depth of Russia expertise than in the 1990s. The National Security Strategy and Strategic Defence and Security Review of 2015 says that the government will "extend our expertise on Russia". The FCO has called on the experience and knowledge of a number of former British Ambassadors to Russia and others who served in the region, particularly since the Ukraine crisis began. But expertise is no use if decision-makers do not listen to it, or if wishful thinking about Russia's attractions as a market outweighs sober advice about the national security threats it poses.
  2. While they are small in number, the FCO already has experts on Russia and the former Soviet Union (as it has on other areas of the world and on key thematic issues) in the form of its Research Analysts. The expertise of Research Analysts was recognised by the Foreign Affairs Committee in its 2011 report on the role of the FCO in UK government. But it is not clear that the views of Research Analysts working on Russia (or on other subjects) reach ministers, particularly in cases where their analysis differs from that of generalist officials in policy departments.
  3. The FCO has worked in recent years to reduce the risk of group-think; but its approach to Russia prior to 2014, driven by government targets for increasing exports to the BRICS countries, seemed to be focused more on increasing trade and investment than on the growing risks Russia posed to neighbouring countries and to Europe more broadly, even though these should have been obvious after the murder of Litvinenko in 2006 and the invasion of Georgia in 2008.
  4. The FCO should have an equivalent of the US State Department's 'Dissent Channel', established so that staff can "express dissenting or alternative views on substantive issues of policy, in a manner which ensures serious, high-level review and response". 
  5. The FCO has not yet published a business plan for 2016 and beyond, but it should not repeat the mistake of the 2012-2015 version, where under the heading of "Building Britain's prosperity" the first action listed was: "Prime Minister to visit Russia to recalibrate the bilateral relationship, building upon the fledgling UK/Russia Partnership for Modernisation, and developing further opportunities for broadly based co-operation where it is in our interests". It should take a more critical look at whether its economic engagement with Moscow is contributing to positive change in Russia, in areas such as rule of law. There is a real risk, as Chatham House's James Sherr suggested in evidence to the House of Commons Defence Committee in 2009, that Russia is "reversing the plumbing": lowering standards of financial probity in the EU and the UK to those of the former Soviet Union, rather than improving its own standards.
  6. With the possible exception of the Litvinenko case, the UK's problems in its relationship with Russia are not unique. EU and NATO members also feel the effects of Russian foreign policy, economic policy and information war, sometimes much more acutely than the UK (Lithuania's agricultural exports to Russia in 2013, before Russia imposed sanctions on them, amounted to 2.6 per cent of GDP). It therefore makes sense for the UK to work with its allies and partners in formulating and implementing its policies towards Russia.
  7. This has indeed been the UK's approach in responding to Russia's intervention in Ukraine: the UK was among the most active countries in discussions of sanctions against Russia (though not in the effort to find a political settlement, which was led by Germany and France). But almost two years after Russia annexed Crimea, the UK should take the lead in calling for a more comprehensive assessment of Western policy; it should not leave the running to France and Germany; and it should engage closely with countries in the Nordic-Baltic region which feel particularly vulnerable to Russian pressure. The UK has increased its military involvement in this region, but the Ministry of Defence should consider whether there is more it could do to help allies there to strengthen their defence capabilities, or whether Britain could have a more visible military presence in countries such as Poland.
  8. The short-term aim of Western policy should be to deter, constrain and if necessary punish actions which damage UK and Western interests, while continuing to co-operate in areas where there are shared objectives; the longer term aim should be to create incentives for Putin or more probably a successor to move away from zero-sum approaches to the West and to work within the framework of the liberal order – in other words, to make Russia a "normal country", which was President Boris Yeltsin's original aim in taking the Russian Federation out of the Soviet Union. 
  9. The most important way in which Russia is still not a normal country – or at least, not a normal European country – is its lack of effective rule of law. In many cases, the Russian elite benefits from its absence within Russia to enrich itself, and makes use of stronger legal frameworks in the West in order to protect its assets. The UK, as Europe's major financial centre, could make it much harder for illegitimate wealth to be laundered, whether through the City of London or elsewhere.
  10. This is not a Russia-specific issue; nor is it a question of sanctions. It is a matter of ensuring that existing laws and regulations are consistently applied. Reports by the Financial Conduct Authority and its predecessor, the Financial Services Authority, repeatedly note that firms in the financial sector are not managing high-risk customers effectively.
  11. Transparency International has documented the amount of suspicious investment in UK property, and the potential for abuse of the Tier 1 investor visa scheme. This scheme offers visas in return for the purchase of assets in the UK. The Home Office has now closed some but not all of the loopholes in the scheme which could allow corrupt officials to get UK residency. According to data from the Home Office’s Migration Advisory Committee, Russian citizens have benefited disproportionately from the Tier 1 scheme, receiving about a quarter of the visas in 2008-2013, more than any other country. There is no public information on who these Russians are or the sources of their money, but it is noticeable that in 2014 Russians received less than 2 per cent of the separate Tier 1 entrepreneur visas (aimed at people who set up businesses and create jobs in the UK).
  12. But with all these weaknesses, the UK still does more than a number of other EU countries to combat money-laundering from Russia and elsewhere. Britain should work with EU authorities to make compliance with anti-money laundering regulations both tighter and more consistent throughout the EU.
  13. The murder of opponents and critics is a particularly egregious violation of the rule of law. If the UK does not respond firmly to the murder of Alexander Litvinenko, it risks encouraging not only the Russian government but others to think that they can use state-sponsored violence against their enemies living in the UK without any consequences.
  14. Following the publication of the public inquiry report into the murder of Litvinenko, a number of MPs and others called for the UK to respond with something modeled on the American 'Magnitsky Act'. This law imposes visa bans and asset freezes on a list of Russian officials involved in the death of Sergei Magnitsky, a lawyer working for a British investor in Russia, Bill Browder. Ministers argue that they already have the powers they need to exclude individuals from the UK. But the sharp Russian reaction to the Litvinenko inquiry shows that publicly naming and shaming senior Russian figures involved in criminal activity against the UK has an effect.
  15. Better still than a British 'Litvinenko' Act would be co-ordinated European action. The UK should encourage the EU’s foreign policy High Representative, Federica Mogherini, to put forward proposals for EU action against any Russian official identified as involved in the murder of Litvinenko – an EU citizen in an EU member-state at the time of his death – or in other state-sponsored assassinations in Europe (such as the murder of a Chechen refugee in Vienna in 2009, which a court in Austria concluded was carried out "on behalf of a foreign power").
  16. As in the Cold War, it is essential for the UK and its allies and partners to fight and win the information war, both at home and in Russia. OfCom sanctioned RT in September 2015 for three broadcasts made in 2014 which it judged to have breached rules on impartiality; but given the output of the network and the philosophy behind it the regulator should subject it to much more scrutiny.
  17. The West must also find ways to give the Russian population and others influenced by Russian propaganda objective information which challenges the Russian government's narratives. The National Security Strategy and Strategic Defence and Security Review announced additional funding for the BBC World Service, which is welcome, but there is no guarantee of how much of this, if any, will go to Russian language broadcasting. The UK should also invest in other initiatives to develop independent Russian language media, as recommended in the European Endowment for Democracy's 2015 report 'Bringing plurality and balance to Russian language media'.
  18. The UK should use another element of its soft power, education, to make a long-term investment in Russia's development. Of 28 European universities taking part in the EU's 'Erasmus Mundus' programme of scholarships and other educational exchanges with Russia, only one, Glasgow, is British. Russians received around 14,000 visas to study in the UK in 2014; the UK should ensure that it is not just educating the children of the current elite, but that it is offering scholarships to the most promising students it can find in Russia. Apart from the academic benefits of student and professional exchanges, increased educational links are a long-term investment in improving the UK's and the West's relations with Russia.

Conclusion

  1. It would be wrong for the West to isolate Russia, if that implies a complete end to contact. Equally, it would be wrong for the West, including the UK, to pretend that Russia is a normal partner. Partnership will be difficult as long as the Russian authorities put so much effort into frustrating Western foreign policy aims and persuading the Russian people that the West is the number one threat to their country. For the British government and its allies, the right mix of policy should include pragmatic co-operation on issues of mutual interest and resolute defence against hostile action of whatever kind. The biggest mistake the British government can make is to suggest that behaviour such as the murder of Litvinenko might be overlooked in return for help in Syria. That will neither achieve peace in Syria nor on the streets of London.

 

January 2016