A case of Cold War blindness over Crimea
Ben Judah’s diatribe against Britain’s response to the Crimea crisis has received a great deal of attention over the past few days but its vitriol is largely misdirected.
As it is opinion rather than reportage it is fair to grant the author some leeway in tone but, in this journalist’s opinion, the piece as a whole is both inaccurate in its detail and overblown in its message. This is a shame because the stakes here are high and the subject matter worthy of more serious consideration.
Firstly, on the detail. As has already been pointed out by Allister Heath in today’s City AM the author’s claims about the Shard skyscraper playing host to ““ultra high net worth individuals” [entertaining] escorts” and bankers trading derivatives are demonstrably untrue. Furthermore the claims regarding the fate of migrants in the capital and the empty townhouses of the rich are woefully exaggerated.
These lapses could easily have been corrected with some light research, or even a quick Google search. By way of illustration, Judah claims that “London lawyers in the Commercial Court now get 60 percent of their work from Russian and Eastern European clients”.
The source linked to above for that 60 percent figure is an article in The New Republic by Oliver Bullough. However, that in turn links to another piece in the Financial Times from 2012 that links to another from that august title in July of that year citing “some lawyers” as the original source.
After a little digging I found a possible candidate in an article from The Law Society Gazette from February 2012. It quotes Steven Philippsohn, a senior partner at PCB Litigation, as saying “there is certainly a well-recognised belief that at least 60% of the work in the Commercial and Chancery divisions is Russian and eastern European-based, and that that figure is unlikely to go down”.
If Philippsohn’s conjecture is right, Judah might be technically correct – but if so it would be more through luck than forensic research. It certainly does not speak particularly highly of the quality of the research.
Ah, but am I just one of the “people who dislike the truth of Judah's argument…picking away at the decorative details, not the real argument”?
Let’s deal with the substance of the argument. According to Judah, Britain has become a nation of bankers, lawyers, consultants and art dealers whose sole duty is to service the every whim of the oligarchs. More seriously, he alleges Britain now stands willing to betray the US to protect “dirty Russian money”.
It is undeniable that Britain has played host to a number of business people who became wealthy during the “shock therapy” privatisations in 1990s Russia. From Roman Abramovich and Alisher Usmanov to the recently deceased Boris Berezovsky they have made major and very public marks since arriving in the UK. Less publically they will also have benefitted from the UK’s highly accommodative tax stance towards oversees earnings.
“Banking sanctions could turn off the financial pipelines through which corrupt officials channel Russian money. Visa restrictions could cut Kremlin ministers off from their mansions. The tax havens that rob the national budget of billions could be forced to be accountable. Britain has the power to bankrupt the Putin clique.”
This confuses two arguments in my opinion. The first is that Britain should aim to close down tax havens in order to prevent tax avoidance by the wealthy (or at least wealthy Russians). The second is that the effect of this would be to “bankrupt the Putin clique”.
The first would no doubt be a populist move but I suspect it would have limited impact. After all, the billions robbed from the national budget largely came at Russia’s expense in revenue lost during the widespread expropriation of state assets in the 90s not the UK, which has benefitted from their easy spending ways.
Moreover, the wealth of these individuals is tied to their assets. You can freeze their accounts in UK jurisdictions but you are unlikely to bankrupt them in the process, even if you succeed in cutting them off from their mansions. At best it would look petulant, not powerful.
A much more effective strategy would arguably be sanctions targeting Russia’s exports but the risk to Europe’s energy markets (made clear during the 2006 stand-off between Russia and Ukraine) may already be moving these off the table.
Yet I think the biggest miscalculation in the NYT article is the charge that the UK is somehow betraying the US by resisting banking sanctions. It suggests a Cold War mindset that frames the Crimean crisis as a stand-off between two superpowers where all other players must be either with you or against you.
Any referendum on the future of Crimea that happens while Russian troops remain on the ground cannot be deemed fair and free. It would mark an annexation of territory by a neighbouring state. Yet if, as expected, Crimea votes for independence on March 16th and the UK still fails to act it would not mark a betrayal of America but of the Ukrainian people, who apparently do not warrant a single mention in Judah’s piece.