By exposing the secret fortunes of Putin’s circle in the West, sanctions against them would become effective.Senior Fellow, Atlantic Council
On March 26, a broad coalition of Western countries simultaneously expelled Russian intelligence agents masquerading as diplomats. They did so in protest against the attempted murder with the nerve agent Novichok of the former Russian intelligence agent Sergey Skripal and his daughter Yulia in the British city of Salisbury on March 4.
This action was unprecedented. Not only the United Kingdom but at least 22 other countries expelled Russian agents. On no other occasion has a country expelled Russian diplomats in solidarity with other Western countries. Ukraine participated, although it is neither a member of the North Atlantic Treaty Organization (NATO) or the European Union (EU). Finland and Sweden each expelled one Russian, although they are not members of NATO. Western coordinated action against Russia has been taken to a new level.
Also the total number expelled, close to 130 people, is unprecedented, more than twice as many as in any previous mass expulsion. The United States expelled 60 Russian officials, beating the record of President Ronald Reagan of 55 in 1986 and President George W. Bush’s 50 expulsions in 2001, while President Barack Obama expelled 35 intelligence officers in December 2017.
These expulsions have been carried out with considerable speed, only three weeks after the initially mysterious poisoning, because the Russian nerve agent Novichok was a tightly-held Russian chemical weapon. This was a clear violation of the important Chemical Weapons Convention that was opened for signatures in 1993 and came into force in 1997. It is almost comprehensive, with 192 countries, including Russia, having ratified this convention that prohibits any use of chemical arms.
The Kremlin deliberately left its fingerprints. The attack occurred two weeks before the Russian presidential elections and served to mobilize the nation for President Vladimir Putin. The obvious intention was to show the UK as weak and isolated from a divided West. Its expulsion of 23 Russian intelligence agents was instantly followed by Russia’s expulsion of 23 British diplomats plus the closure of the British Council and the British General Consulate in St. Petersburg. The Kremlin message was that Russian traitors and opposition activists abroad must not feel safe. Russian official television gloated over the poisoning seemingly taking credit, while implausibly claiming that anybody but Russia had carried out this action.
Through this coordinated action, the West has shown that it is neither weak nor splintered. The damage to Russia will be far greater than to any Western country. NATO has 29 members and the EU 28 members, neither of which will welcome any of the expelled Russian agents again. Increasingly, Russia is becoming a rogue state that no longer plays by any international rules.
Yet, several commentators claimed that the Western expulsions were old hat. Russia can and will respond with similar actions, reinforcing the isolation of its people from the West. It would be more appropriate to select measure targeting the small Kremlin elite that is responsible. The Kremlin likes talking about its asymmetric responses. The West should do the same and such discussions are under way. The new slogan is: “Follow the money!”
Since the early 1990s, the Russian elite has exported an annual average of $40-$50 billion a year. This money is taken out of Russia through a few offshore havens and then invested in anonymous companies in primarily two countries, the United States and the United Kingdom, which enjoy good rule of law, allow anonymous companies on a large scale, and have deep financial markets. The total amount of privately-held dark Russian money in the West is usually assessed at around $1 trillion, an enormous amount. Up to half of this amount may be held by Putin and his cronies.
Twenty-nine Western countries do not allow anonymous companies, and the others should follow. By exposing the secret fortunes of Putin’s circle in the West, sanctions against them would become effective. The sanctions Putin has reacted most sharply against were the Sergei Magnitsky Rule of Law Accountability Act of 2012 and the personal Western sanctions against his closest business friends of March 2014.
These acts prohibited named people from travelling to the United States and made their assets there subject to a freeze, but the US authorities have failed to find any such assets, presumably because they are hidden under layers of anonymous shell companies. The US needs to reveal the beneficiary owners of all companies and police them properly. In 2015, the US Treasury assessed that $300 billion was laundered in the country each year. The same is true of Britain, where the National Crime Agency estimates that $125 billion is laundered annually. This is not permissible for the sake of national security and it can hit the Kremlin cronies at their weakest spot.
Anders Åslund is a senior fellow at the Atlantic Council in Washington.
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