On Londongrad, Dark Money and Crony Capitalism
Six months after the nerve agent attacks in Salisbury, the British state says Russia poses a ‘real’ and ‘active’ threat to British and international security. To deal with this, we need to end the dominance of finance, the military industrial complex and other corporate interests. Britain needs to change lock, stock and barrel: ask itself what its national interests are. It must stop business as usual by locking up money for Russian billionaires, selling stocks in Russian national bonds and dealing in Russian barrels of oil and gas.
Scrap corporate interests; national interests should include everyone’s interest, including people getting about small market towns. It goes further. Really dealing with Russia has many significant socially progressive ramifications.
The City of London is the Kremlin’s laundrette, for all the money it launders for Russian oligarchs. These billionaires prop up Putin, directly empowering him as his cronies; indirectly supporting him with the businesses that facilitate Russia’s military industrial corporate complex.
The Foreign Affairs select committee set out the problem of Russian money locked away, syphoned through the City of London to its network of tax havens: “The use of London as a base for the corrupt assets of Kremlin-connected individuals is now clearly linked to a wider Russian strategy and has implications for our national security. Combating it should be a major UK foreign policy priority. The assets stored and laundered in London both directly and indirectly support President Putin’s campaign to subvert the international rules-based system, undermine our allies, and erode the mutually-reinforcing international networks that support UK Foreign policy.”
The committee set out action points, including stopping Russian businesses floating on the stock exchange, cutting out loopholes in sanctions, extending sanctions, cracking down completely on the sale of Russian national debt and stopping money laundering and global tax evasion.
Responding to the committee, the government has said it is taking steps to deal with all the issues raised. But the government promises a lot, whilst the bankers can continue to bank on piss-weak oversight.
On March 28, three weeks after the poisoning of Skripals, the Guardian reported how PM May was ‘considering’ banning the City of London from selling Russian debt. Two months later, the select committee told her to action this. Sanctions on Russia did reduce the amount of foreign owned Russian bonds, but as they are still sold on secondary markets: According to Russia’s central bank, 27.6% are foreign owned in late June, many by private pension firms.
A Bloomberg piece explains that the UK needs collective action with European partners to crack down on the Russian debt in secondary markets. Something trickier with Brexit. The UK will also not want to impact its investors, according to the analysis. But unilateral action is not impossible. Belgium stopped Russian bond sales after sanctions over Crimea.
The bottom line here is that the Russian state is still raising money directly, through the bonds it sells, in financial centres like London that sponsors its activities that pose real and active threats to UK and international security.
Breaking the Bankers’ Cartel
Alongside direct fundraising for Russia, we are selling shares and giving Putin’s cronies access to Britain’s global tax haven empire. The sun never set on the British tax haven empire; half the world’s tax evasion hubs through the City.
There are many specific examples of the City of London’s love-in with Russian Roubles. From top London law firms to former senior Tories still trading with Russia. Economically, Professor Anastasia Nesvetailova explains, in a world of Brexit the City will not willingly let go of Russia, or any other emerging markets for whatever ethical reason, as its business model depends on them.
But this story is wider.
The LIBOR rigging scandal showed just one regulatory failure. The Panama Leaks and Paradise Papers illustrate the scale of tax havens. HSBC, in one case was found guilty of enabling money laundering for terrorists and Mexican drug lords. One person ‘responsible’ at the time went on to head the BBC Trust. The Conservatives are in bed with the City’s tax avoiders, including the PM’s husband. Fundamentally, within its business model – that is only set to expand with Brexit – the financial sector relies on dodgy deals with nefarious characters. To tackle Russia, we need to put democratic oversight over the City of London and tackle our own cronies.
The government makes constant noise about how its dealing with financial corruption. The latest scheme means British tax havens will have to admit whose money they are hiding. But rest assured the billionaires – including Putin’s cronies – will likely find loopholes. We will know when the billionaire’s assets are getting taxed. Five billionaires own the vast majority of British print media: they are our canary in the treasure island.
No more Fuel to the Fire
Cracking down on the City of London corruption reads like a radical leftist solution to Russia. But in reality it is just following through with the logic of official government policy to hit Putin where it hurts. It means disavowing another official policy line let the city get away with anything. Other ways to challenge the real and active threat of Putin’s Russia have equally socially progressive implications.
The housing market is a bolt-hole for global billionaires’ money, especially in London, much from Russian oligarchs. New Zealand shows that you can ban foreign rich investors; their rationale is to stop people buying safe-houses on this melting world. Britain could ban buy-to-leave, as an effective measure to keep Russian Roubles out. The people again would benefit at the cost of the super-rich.
Britain’s military industrial complex needs to delink from Russia’s. For instance a Russian billionaire ally of Putin, Oleg Deripaska whose company is part of the military industrial complex raised £1billion floating on the London stock exchange, as the Foreign Affairs select committee highlighted. And only recently, Russia’s nuclear weapon programme was found to receive funding from British banks, and Russia was a regular attendee at DSEI, London’s massive arms fair.
Again, this has very positive implications as it opens up the question who else should we actually stop arming, or what else could we do with these skills and resources. Renewable energy is one obvious answer.
The renewables industry would also assist us delinking from Russian oil and from our reliance on gas. One clear step would be for BP to drop its sizeable share in Rosneft, the state controlled oil giant. One positive knock-on effect would be Britain stopping Russia’s Arctic oil drilling plans.
Britain should also stop fracking. Firstly, if you are worried about foreign powers poisoning the country, why let an industry that poisons for profit? Secondly, the key architect behind Britain’s fracking plan, Lord Browne, now works for a Russian oil firm involved in Arctic drilling L1 Energy. This means the blueprints for this industry extremely vulnerable for sabotage are too close to Putin and his intelligence services.
On another issue of state security, since the threat level about Russia has risen, British state security services suggest they are diverting resources away from ISIS. One way for Britain to strengthen itself on ISIS with limited resources would be to issue stronger support the Democratic Federation of Northern Syria [aka Rojava]. This is the strongest challenge against the fundamentalists, and best hope for Syrian peace. With its bottom-up councils, it is also a global leading example of democracy.
Reigning in corporate power, shifting and decentralising the economy to whittle down the City of London, stopping unpopular fracking. These are all democratic outcomes of policies to deal with Russia. The biggest democratic reaction to Russia has yet been mentioned. There needs to be a full and extensive investigation into the Dark Money pumped by Russia into the Brexit campaign, including into the DUP and Scottish Tories. Every penny of political funding to Conservatives or any other party should be returned.
Essentially, to deal with Putin’s Russia, we need to realise Putin is not an affirmation of the neoliberal age that is shifting worldwide towards authoritarianism. He is a central product of this age, he is now driving this shift. Destabilizing the world, invading countries, meddling in elections, all funded through the same crony capitalism we manage.