Should you cut off a dog’s tail in one go? Or in slices? Thirty years ago, when I was running the Social Market Foundation think tank, we held a debate on liberalisation in Russia after the fall of the Soviet Union. Our star speaker was the American economist Professor Jeffrey Sachs. And it was he who brought up the dog’s tail.
Sachs became an influential figure after the fall of the Berlin Wall, an expert on dismantling planned economies, and he argued for a rapid transition to a market economy. If you are going to do something difficult, do it quickly and cleanly. Hence the tail. His advice, cogently put, worked in many parts of Europe. But our audience, myself among them, wasn’t entirely convinced.
Surely, we said, there are dangers to such a rapid move? Before you can have a functioning market economy you need legal and democratic institutions that can support them. Otherwise you get corruption and autocracy.
I think events have settled the argument in our favour. The Russian form of privatisation was a disaster and led to the wholesale theft of assets. The lack of a proper independent court system to support property rights encouraged corruption. Boris Yeltsin’s constitution granted too much power to the presidency. And now a large part of the Russian economy is back in state hands.
But here’s where I think the liberalisers were right: opening to Russia commercially, engaging with it and trying to integrate it into the world economy, was a good policy, the only possible policy. And the promise of co-operation and free exchange in world markets — or the threat of withholding it — remains one of our strongest cards in our battle with Vladimir Putin.
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Since the invasion of Ukraine there has been a strong strand of argument suggesting that what has happened is in some ways our fault, Britain’s fault. We let London become Londongrad, the home of corrupt oligarchs, buying our newspapers and our football clubs, employing our lawyers, funding our political parties and advancing the Putin agenda, a form of espionage in plain sight. Only when this had all gone disastrously wrong did we finally do something about it.
I think this argument is vastly overstated.
When Ukrainian resistance fighters fire anti-tank missiles at the advancing Russian army, they are apt to call out “God save the Queen” because the weapons were made in the United Kingdom. This country has been building the capacity of the Ukrainian military and training its officers since 2015 in an exercise called Operation Orbital. The result has been that, when polled, Ukrainians are more favourable to the UK than any other foreign country.
If in fact the oligarchs have been trying to subvert this country on behalf of Putin by buying up our institutions and politicians, they don’t appear to have done a very good job of it.
In any case, the process by which this has all been supposed to work has been a bit of a mystery. I don’t think large changes in British public policy are liable to have been effected by Lord Lebedev inviting Stephen Fry and Sir Elton John to a party, with policy shifted one canapé at a time.
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Then there’s the influence exercised upon people on the Tube reading the London Evening Standard with its cunningly disguised pro-Putin agenda. Hidden in articles supporting the European Union and metropolitan liberalism, surely you’ve seen the words Donbas and separatism spelt out with the first letter of every sentence, turning London into a hotbed of support for the invasion of Ukraine.
Having been director of policy of the Conservative Party I’ve always been pretty dubious about how influential donors are supposed to be. I am militantly for the highest standards of transparency, and for taking the greatest care not to give even the impression of impropriety. But if asked for my practical experience of donor influence I would have to say, honestly, it was negligible.
What party donors say is not just ineffective, it is also predictable. “Taxes on me and other rich people are too high,” is one. And, I admit, “recognition of my services to the community is overdue” is another. But, “If I give the party £10,000 for some leaflets, will you persuade the Foreign Office that expanding Nato into Estonia was a bad idea”? That never comes up.
And as for the theory that Brexit was the result of Russian influence, it would help if there was actually any evidence that it was. Rather than face the truth that it was brought about by, you know, British people.
I’d go further. The openness of London isn’t Putin’s biggest strength, it is his biggest potential weakness. Because we have allowed many rich and powerful people to make a home here, we are able to insist they choose. Do they wish to be part of Putin’s closed Russia or of the open trading world? And the price of being part of that is to condemn Putin’s actions.
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We view sanctions on oligarchs and their assets as being one of the best ways to strike at Putin, because it might turn them against him. I suspect this hope will be disappointed, because we have overestimated their importance to him. I don’t think protecting them is of much interest to him. And I think they are more scared of him than ready to act against him. But I do think, over time, that cutting off Russia’s access to the free trading world will undermine Putin’s regime. In the short run it may increase his support, as people rally around the flag. But in the longer term, they will lose faith in a government that impoverishes its citizens. And that lack of faith will find a way of expressing itself.
Yet to make effective a policy of closing ourselves to Russia, it was necessary to have opened to them in the past and to be willing to open to them again.
This is not, of course, just an argument about Russia. It’s an argument about all sorts of foreign investors and political figures. There is always a balance to be struck and an argument to be had about individuals and states. We are having one now about Saudis and football. But I think our bias should be towards openness, towards the belief that by trading here and buying here, we will rub off on other less open countries more than they rub off on us.
Being open to the oligarchs has not prevented us from opposing Putin’s bloody dictatorship. We are stronger than that, and so are our institutions.
