Rodric Braithwaite: A crisis so serious we've forgotten how it started

We ask for a murder suspect to be extradited. The Russians close British Council offices. David Miliband says they are behaving reprehensibly. They say the British treat them like colonials. We should remember how the recent past looks through Russian eyes

The row over the British Council's Russian operations is, for now, rising on a tide of moral indignation and overheated rhetoric. Both sides seem determined to slug it out. It is indeed, as the Russian ambassador says, a proper crisis.

And yet both Russia and Britain have every interest in good relations. Several hundred thousand Russians live and work in Britain. They shop there. Their children go to British schools and universities. Their businesses queue up to go public on the London Stock Exchange. British exports to Russia of goods, services, and investment capital are growing. Both are interested in opposing terrorism, calming the Middle East, and preventing the proliferation of nuclear weapons. So why are things in such a mess?

The British Council in Russia may or may not be legally entitled to operate there, as the British claim. It may or may not have fulfilled its Russian tax obligations. These are matters to be sorted out through negotiation and in the courts. Sending in the tax police, harassing the staff, casually provocative arrests for "drunken driving" – these things happen every day in Russia. That does not justify them, and when they are directed against foreigners they do Russia no good. David Miliband, the Foreign Secretary, was exaggerating a bit when he said "such actions are reprehensible, not worthy of a great country". But one knows what he meant.

Why are the Russians as indignant as the British? Their foreign minister accuses us of treating Russia like a colony. One of my friends, a retired Russian general, complains passionately that we do not treat Russia with respect. These accusations may seem bizarre to us (though President Musharraf may feel a twinge of sympathy whenever the British High Commissioner comes to tell him how to run the former colony now called Pakistan). But we had better work out where they come from if we are to get a grip on the crisis.

The present row is not, of course, about the British Council. It is not even about the 2006 murder of Alexander Litvinenko, and the expulsion of Russian officials from London that followed. The roots lie deeper, in two issues from the Yeltsin era that still plague Russia at home and abroad: the war in Chechnya, and the rise of the oligarchs.

The West recognises that Russia has the legal right to prevent the secession of Chechnya. Western governments accepted the Russian argument that they were fighting the wider war against terrorism: the Russians have been the victims of one major terrorist atrocity after another – each on a scale experienced in Europe only by the Spaniards with the Madrid bomb in 2004. But although the Russians have not been alone in setting human rights aside in the name of anti-terrorism, Western opinion was appalled by the brutal means adopted by both Boris Yeltsin and Vladimir Putin. Very many Chechens have died, many disappeared, and many forced into exile. One of them, Akhmed Zakaev, a former minister in the rebel government, now lives in London.

When the Russian oligarchs plundered their country in the 1990s and became rich beyond imagination, the West said that was merely the price of moving to the blessings of a market economy. Ordinary Russians, who had lost their savings and livelihoods, thought differently. Mr Putin set out to bring the oligarchs to heel. Here too the methods were brutal. Businesses were harassed by the tax police, often armed and masked. Businessmen were slung into jail to rot. Others were forced into exile, often with a surprising amount of their money intact. Among the best-known, or most notorious, is Boris Berezovsky, a very rich man who was intimately involved in Kremlin politics, the Yeltsin family, and – significantly – Chechnya. For a while he supported Mr Putin. When they fell out, he too chose exile in London, whence he accuses Mr Putin of tyranny, and talks of financing a forcible overthrow of the Russian regime. The British Government's attempts to rein him in have had mixed success.

British magistrates have repeatedly rejected Russian requests for the extradition of Mr Berezovsky and Mr Zakaev, on the entirely plausible grounds that they would not get a fair trial. We have indeed a respectable record of giving political asylum, but the Russians convinced themselves that the refusal to hand the two men over was politically motivated. Maybe they were confused by our apparent willingness to extradite terrorists – and bankers – without going through a magistrates court. From 2005 the tax police and the secret servicemen turned their attention to the British Council in Russia hoping, perhaps, to force the British Government to change its position.

And then the boot was suddenly on the other foot. Mr Litvinenko, an associate of Mr Berezovsky, was bizarrely murdered in London. The British Government and British opinion were outraged. The British police identified Andrei Lugovoi as their prime suspect. Now it was our turn to apply for extradition. The Russians told us what we knew already: their constitution forbids the extradition of Russian citizens. "Change your constitution," we said in effect. British arrogance, the Russians thought: "You mean, we must change our constitution, but you can't change your magistrates' procedures?"

Just before Christmas the Russians told the British Council that, in the absence of a new legal basis for their activities, they were to close their offices in Yekaterinburg and St Petersburg by the new year. The Council defied them. To the Russians, this was yet more arrogance. "You think you can simply ignore our wishes?" they muttered. "What do you take us for?" Mr Miliband said the Russian behaviour was unacceptable, without saying how he would change it.

And so we have got to where we are: a stand-off damaging to both sides. Things have been said from which it will be hard to retreat. There is no chance that the British will swap Mr Berezovsky for Mr Lugovoi. Those universally despised people – the diplomats on both sides – are presumably thinking how to mend things. What goes up does come down in the end. But it will take ingenuity, patience, and time.

Sir Rodric Braithwaite is a former British ambassador to Moscow and author of several books on Russia