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U.K. is infused with Russian money, making crackdown hard

LONDON (AP) — As Prime Minister Theresa May solemnly told a packed House of Commons last week that she would expel 23 Russian diplomats over the nerve-agent attack on a former spy, British investors across town were lending millions of dollars to Moscow’s state-controlled natural gas giant, Gazprom.

The company’s bond issue is just one example of how Russia has become entwined in the British economy. Wealth accumulated from the sale of state assets after the breakup of the Soviet Union, as well as Russia’s vast energy and mineral resources, flows through British banks and investment funds, buoys the property market and boosts the sales of luxury retailers.

That makes it difficult for the U.K. to impose meaningful sanctions on Russia for fear of harming British business interests and innocent Russians. While critics call for Britain to freeze the assets of President Vladimir Putin and his friends, the government so far has limited its response to expelling diplomats, suspending high-level meetings and threatening to crack down on dirty money. The National Security Council meets Tuesday to discuss further sanctions.

The response reflects a contradiction at the heart of British policy, said Nigel Gould-Davies, an associate fellow in the Russia and Eurasia program at the Chatham House think tank.

“Russia is a skillful and growing threat to the U.K., yet Russia’s elite uses the U.K., like no other country, to legitimate and protect its wealth,” he said. “A whole industry of U.K. financial, legal and related services benefits from this. They are wealthy, well-connected and benefit enormously from Russian custom. They do not want to see this harmed.”

Underlying calls for tougher action is the sense that at least some Russian money is dirty, a view fed by the recent BBC drama “McMafia,” a fictional account of the links between Russian mobsters and the government.

Britain has said it will crack down on “serious criminals and corrupt elites,” suggesting that it may use a new tool called “unexplained wealth orders” to seize the assets of wealthy Russians whose assets outstrip their legitimate sources of income.

But the government also went to great lengths to stress the positive contributions Russians have made to British society.

“There are many Russians who have come to this country and made their lives here and contributed magnificently to our culture and our society, and they feel threatened,” Foreign Secretary Boris Johnson told the BBC. “It is very important that we do not allow a miasma of suspicion about all Russians in London, and indeed all rich Russians in London, to be created.”

Britain has long been attractive for the Russian diaspora — the place to buy property, educate children at prestigious schools and, critically, to fight legal battles in courts that have a history of fairness. In addition, London is only a four-hour flight from Moscow, it has an established Russian community and many cultural links.

As a result, an estimated 59,000 people who were born in Russia now live in Britain.

“Russians are quite Anglophile,” said Philip Worman, managing director of GPW Ltd., a political risk, investigations and dispute consulting firm. “The Russians like British culture. They like our perceived ideas of justice and fair play.”

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