Trade, Visas, World Cup Among Options for U.K.'s Russia Reprisal
(Bloomberg) -- Prime Minister Theresa May has threatened action against Russia over the poisoning of a former spy on British soil. But what can she actually do?
Unilateral options include the expulsion of Russian diplomats, removing the broadcast license of Russia’s English-language television arm and preventing officials from attending this year’s soccer World Cup. Other measures, including an expansion of European Union sanctions against Russia, would require international support.
Here is a snapshot of a complicated relationship that has hit a post-Cold War low and some of the options open to May.
Russia was only Britain’s 40th largest market for tourists in 2016, according to Visit Britain, though Russian data show numbers rebounded in the first nine months of 2017 after a period in which a weaker ruble hurt demand.
Isolating Russian lenders from the global correspondent banking network would be difficult. The Society for Worldwide Interbank Financial Telecommunication, a consortium of more than 11,000 banks known as SWIFT, uses an electronic messaging system to move payments around the globe. Based in Belgium, it cannot disconnect banks unless the 28 EU member states decided unanimously to impose sanctions and directed the network to take action, which is what happened with Iran in 2012, according to a SWIFT spokeswoman in London.
“SWIFT will not respond to individual calls and pressure to disconnect financial institutions from its network,” the spokeswoman said.
May risks facing off with Russia at a time when the U.K. is increasingly cut off from traditional allies. It is withdrawing from the EU and, alongside other countries, could be on the brink of a trade war with the U.S.
The U.K. is only Russia’s 16th biggest trading partner, according to data compiled by Bloomberg, but there are currently 11 EU members in its top 20. The U.K. could press the bloc to expand sanctions against Russia it introduced in 2014, though the signs aren’t good -- an ally of German Chancellor Angela Merkel said Tuesday the issue “is a matter between Britain and Russia.”
Bilateral trade data also show weakening ties in recent years, reflecting the diplomatic spat over Litvinenko’s killing and U.K. accusations of Russian interference in elections, as well as the impact of EU sanctions after Russia’s invasion of Crimea.
Russia has considerable leverage as a key supplier of natural gas to Europe. The U.K. is a net importer, and though it doesn’t buy directly from Russia, data from state-run Gazprom show more of its gas shipped to Britain via Europe since 2010.
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