Russia’s grip on Europe is gradually tightening – we can’t wait for the next attack to do something about it

We’re used to hearing about acts that could be pulled straight from an Ian Fleming novel, writes Jack Straw, but there are many worrying developments that you won’t read about in the morning papers

Putin has embarked on actions which collide with western interests (AP)

In recent days, the BBC’s retelling of the 2018 Salisbury poisoning has gripped millions of British viewers, reminding us of the continued threat from Russian state and non-state actors.

This despicable act undermined UK-Russia relations like no other event in recent history. Russia has continued to deny any culpability despite the overwhelming evidence. For me, this poisoning symbolises the ever-present threat of Russia’s efforts to destabilise the UK and European Union.

As foreign secretary at the time of Vladimir Putin’s first state visit to the UK in 2003, I was strongly in favour of ushering in a new era of UK-Russia cooperation. Colin Powell, former US secretary of state, used to say that we must practice progressive realism when it comes to dealing with Russia. That remains my view. Russia continues to be an important international player, in the UN security council and elsewhere, and cannot be wished away. It feels burnt by its pre-invasion cooperation over Iraq, and in respect of the west’s air campaign against Muammar Gaddafi in 2011. It continues to cooperate with the UK, France and Germany over the Iran nuclear deal. However, despite high spending on its military, it is no match for the US, which spends 12 times as much, nor China, which spends four times its budget. Russia’s population is declining, and its GDP per head is just 50th in the world. It feels isolated, surrounded by potentially hostile forces, and weak.

A series of the nation’s actions, from its 2008 invasion of Georgia, to the annexation of Crimea, and the murder of 298 civilians with the shooting down of Malaysia Airlines Flight 17, along with those Salisbury poisonings, means that Russia has embarked on actions which collide with western economic and national security interests.

While many of Russia’s confirmed and suspected acts could be pulled straight from an Ian Fleming novel, there are others which don’t make the cover of the morning papers.

These include illicit financing and soft loans to increase both control and influence. Few efforts appear excluded from Russia’s playbook, much of it focused on weakening the North Atlantic Treaty Organization (Nato) and the European Union as a whole.

In mainland Europe, Nord Stream 2, which will run Russian natural gas to Germany and other EU member states, has been described as a geopolitical project. Once completed, Nord Stream 2 will make Germany an ever bigger European hub for abundant and cheap Russian gas. The numerous European sceptics have even been joined by a bipartisan group of US senators in expressing concern that the gas pipeline weakens European energy security and increases the dependence of western European countries like Germany and Austria on Russian oil and gas.

Sberbank, which is widely known as “Putin’s bank”, is heavily involved in financing the Nord Stream 2 natural gas pipeline. Its Vienna-based subsidiary, Sberbank Europe (SBAG), finances deals across Europe that deepen Russia’s geopolitical sphere of influence.

A recent example involves one of Austria’s best-known water brands, Gussinger Beverages. The company’s efforts to restructure gave Sberbank its latest foothold, though the investment has been problematic. Gussinger, which was owned by E&A holdings, is now reportedly controlled by Russian oligarch Andrei Kotchetkov, a member of Putin’s inner circle. Senior Austrian political figures such as Franz Loschnak, former minister of interior and Andreas Staribacher, former minister of finance, are involved as board members of the parent company, E&A holdings.

In 2019, Sberbank Europe sold more than 11 million Euros of E&A debt in Gussinger to Regent Capital, a European investment firm with US shareholders. As part of that transaction, Regent Capital received an E&A collateral package from Sberbank. Gussinger was a significant portion of the package. The collateral is alleged to have been fraudulent, by which the transference of debt coincided with the consolidation of control of the remaining assets.

Regent Capital has just filed legal proceedings in Austria’s Commercial Court, alleging that Sberbank failed to transfer assets that amount to Sberbank Europe defrauding western investors, a clear example of Russia’s malign influence in Europe. When Russian banks cheat, western companies like Regent Capital lose out.

The tactics have not gone entirely unnoticed.

While Sberbank’s transaction was signed off on by Alexander Witte, the chief risk officer who sits on the Board of Directors, Igor Strehl, who was responsible for Sberbank’s lending practices, approved the deal with Regent Capital.

Strehl is now under investigation by the prosecutor-general’s office in Vienna, while financier Strehl has been accused of peddling “soft loans” across Europe, quasi-official extensions of Russia’s foreign policy. By using Sberbank as a proxy, Russia continues to strengthen its grip on many EU member states, which are traditional UK and US allies.

Our allies in Vienna have ground to make up in this struggle. Austria was one of just a few EU countries not to expel Russian diplomats over the poisoning in Salisbury. Karin Kneissl, Austria’s foreign minister from 2017-19, invited Putin to her wedding, dancing with him for the cameras as the world looked on.

Others in Europe have been less accommodating.

The UK and EU member states need to take a hard line against Russian proxies that seek to do us harm. As a first step, the UK and EU member states like Austria should send a strong signal through both bilateral action and the courts, that Russia’s malign activities, including Moscow’s predatory and mafia-like lending practices, disinformation campaigns and economic warfare are unacceptable.

If these practices are to continue, then one option would be for all Russian banks to be sanctioned by the EU, the UK and the US, cutting Russia off from European capital markets.

I have been seated across the negotiating table from Putin at a time when we were able to do serious business with him. But I’m afraid that their current strategy is to exert greater geopolitical influence through a combination of economic and energy initiatives, punctuated by the occasional and often lethal attacks which grab the world’s attention. We should not have to wait for the next attack for Europe’s democracies to come together, enforce the rule of law against Russia and her proxies and stand strong in the face of Moscow’s disruption.

Jack Straw is a former foreign secretary, justice secretary and home secretary with responsibility for the UK security services