UK joins game of Russian roulette with sanctions plan

Linda J. Dodson

The Magnitsky Act was devised as a way to target individuals, while avoiding blanket sanctions on a country that would disproportionately hurt the poorest members of society.

“The brilliance of this legislation is that it’s individual,” says Kara-Murza. “In previous times, sanctions would target entire countries for the actions of a small group of unelected crooks.”

The Magnitsky Act is personal, he adds: “It doesn’t punish 140 million people, in the case of Russia, for the actions of Putin’s unelected clique.”

But privately, some business leaders are concerned.

Saudi Arabia, which saw six members of its crown prince’s inner circle sanctioned under the new law, has poured hundreds of billions of pounds into Britain in the form of lucrative arms deals and targeted investments.

Likewise, the Government has staked a substantial portion of its post-Brexit trade aspirations on the Persian Gulf countries, something that could be jeopardised in future by the new sanctions, says John Binns, a partner at BCL Solicitors specialising in financial crimes.

Currently, a deal for Saudi Arabia to purchase Newcastle United Football Club hangs in the balance, as the body governing Britain’s Premier League deliberates as to whether the team’s new owners will be “fit and proper”.

“These are unilateral sanctions, the first time that the UK has done its own foreign policy sanctions separate from the UK,” says Binns. “So it does raise the prospect of where these individuals and businesses are going instead.

“A company that suddenly can’t do business in the UK can go elsewhere, and if the EU doesn’t follow our lead, they can go to our neighbours.”

The question of whether the Act allows for corrupt individuals and companies, in addition to human rights abusers, to be targeted is crucial, says Binns.

“That is something that would bring a lot of Russians and Russian entities into the picture,” he adds. “But also China, including corporations and individuals.”

This past week, a bipartisan chorus has emerged calling for Carrie Lam, the leader of Hong Kong, to be sanctioned under the UK Magnitsky Act, a move that would almost certainly anger Beijing.

And with projects such as the £22.5bn nuclear power plant Hinkley Point C hinging on Chinese investment, the Chinese Communist Party has a powerful bargaining chip in shielding loyal officials and executives from British sanctions – particularly as the country strikes out on its own following its exit from the European Union.

“The longer that wish list of targets gets, the more impact on business it will have if the Government goes for it,” Binns says.

“It does become a cost-benefit calculation for politicians as to whether they want to say no to foreign money on a principled basis.”

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