Britain’s expulsion of four Russian diplomats on July 16 has led to a further deterioration in already strained relations between the two countries.

The decision was taken after Russia refused a request for the extradition of Andrei Lugovoi, who is Britain’s chief suspect in the assassination of Alexander Litvinenko, the former KGB officer who was poisoned with radioactive polonium-210 in London last November.

British prosecutors stated May 22 that Lugovoi should be charged with Litvinenko’s murder and requested his extradition on May 28.

The government of President Vladimir Putin denied the request, stating that extradition of Russian citizens is prohibited by its constitution. Spokesmen also said that Britain had not offered significant evidence to justify the request. Russia has held out the possibility that Lugovoi, another former agent, could be tried in Russia.

Moscow has undertaken its own investigation, including an interview with Boris Berezovsky, the Russian oligarch given political asylum by Britain. It did so based on counter-allegations by Lugovoi of MI6 involvement in the poisoning. Condemning London’s decision to expel the four diplomats, alleged to be agents of the KGB’s successor organisation, the FSB, Russia said it had repeatedly sought the extradition of Berezovsky on charges of fraud and, more recently, in connection with an interview with the Guardian, in which he stated that he was working with forces in Russia for a coup to depose Putin.

Russia has also sought the extradition of Chechen leader Akhmed Zakayev, who is based in London, on charges of terrorism. The British government rejected these requests and the offer to hold a trial of Lugovoi, indicating that it had no confidence in the impartiality of Russia’s legal system.

Litvinenko’s assassination poses very real political difficulties for the British government. London is home to numerous oligarchs, many of whom are political opponents of Putin. The assassination, utilising polonium—a highly radioactive substance—led to a public health emergency in the capital with scores of people affected.

The media warned that London risked becoming the site of internecine warfare within the Russian elite. Litvinenko, a close associate of Berezovsky, apparently signed a public death-bed statement alleging Putin’s direct involvement in his murder. Russia has derided this statement as “nonsense” and this week commenced a fraud trial against Berezovsky in his absence.

The Brown government has argued that with such lawlessness taking place on British soil, it had no option but to take retaliatory action against Moscow’s noncompliance. However, additional factors clearly influenced what must have been understood as a politically explosive decision.

Other options were open to the government, given that Russia’s constitution does prohibit extraditions. On the day the expulsions were announced the Financial Times ran an editorial urging the government to call “Russia’s bluff.”

Noting that Moscow’s refusal was “clearly in line with Russian law,” it suggested an alternative: “Russia says it will put Mr. Lugovoi on trial in Moscow. It is hard to imagine a fair trial, but why not call the Kremlin’s bluff? A sham trial would demonstrate how far Russia remains from being a civilised nation, respecting the rule of law.”

The government has argued that the four expulsions are clearly related to the Litvinenko affair, with Foreign Secretary David Miliband stating, “This response is proportional and it is clear at whom it is aimed.” Nevertheless, the government also underscored its intention to utilise the issue to demand a unified position towards Moscow within the European Union.

The expulsion was timed to coincide with Brown’s first visit to Berlin to meet with Germany’s Chancellor Angela Merkel. Hoping to place Merkel under maximum pressure to fall in behind London’s actions, Brown told a joint press conference, “When a murder is committed on British soil, action has to be taken. We believe there should be cooperation from the Russian authorities in this.”

Merkel’s attitude was less bellicose, stating her hope “that this phase will be overcome as quickly as possible and that one can continue along the lines of having a very good cooperation, which is after all what you want with Russia.”

The Guardian cited German diplomatic sources describing the expulsions as a “British overreaction.” Germany’s media was equally negative. Writing in the Süddeutsche Zeitung under the heading “Diplomatic poison,” Frank Nienhuysen said they were “not a clever move.”

He continued, “Brown and Miliband have begun a dangerous political skirmish which could also have consequences for the rest of Europe.”

“Out of a sense of duty the European Union has backed Great Britain in the escalating conflict. But many important problems will now be even more difficult to solve,” he warned, citing the status of Kosovo and the missile defence system.

Luxemburg’s Foreign Minister Jean Asselborn told Financial Times Deutschland, “Naturally we are showing our solidarity with another EU member, but you also have to have the right to question certain steps,” adding that he wondered if the dispute could have been settled using “silent, diplomatic channels.” Portugal currently holds the EU’s rotating presidency. Its foreign minister, Luis Amado, also played down the row as a “bilateral issue” between Britain and Russia.

In announcing its initial response to Britain’s actions, Russia limited itself to a threat to withdraw intelligence cooperation but warned that further measures would be taken. Moscow will be influenced by the reaction of other European powers as to how far it will go, with Deputy Foreign Minister Alexander Gruschko stating that he hoped the European Union would have “enough common sense” not to allow it to become an instrument in the affair.

Europe’s cautious response reflects concerns over the impact of London-Moscow tensions under conditions of growing antagonisms between Russia and the United States over a range of issues, any one of which threatens to destabilise international relations.

Britain has supported Washington over the stationing of its anti-missile system in Poland and the Czech Republic, which Putin warned was a direct threat to Russia. On Saturday, Putin retaliated by issuing a presidential decree announcing Russia’s withdrawal from the Treaty for Conventional Armed Forces in Europe (CFE).

After talks with President Bush in Washington on the days the expulsions were announced, Polish President Lech Kaczynski said it was a “foregone conclusion” that US missiles would be stationed in Poland.

Moscow and Washington are also at loggerheads over Kosovo. Moscow, which has a veto on the United Nations Security Council, has said that it will not accept the province’s independence from Serbia—the agenda now being pushed by the US and the European Union. The US and Europe’s foreign policy chief, Javier Solana, have both threatened to bypass the UN if Moscow does not fall into line.

These high-profile disputes unfold against the backdrop of an ongoing struggle over control of strategic supplies of oil and gas.

The US and Britain had hoped that wars in Afghanistan and Iraq would consolidate their grip over oil supplies in the Middle East and the Caspian Basin. Instead, both have become bogged down while Russia has made significant economic and political advances based on its own oil and gas reserves and those of its satellites.

Russia’s GDP has trebled since 2002, largely thanks to rising prices for oil and gas. It has used this strengthened position to thwart US plans to establish its control of strategic pipelines and re-establish itself as a major regional and global power broker.

This week Reuben Jeffrey, under-secretary at the state department for economic, energy and agricultural affairs, was in Moscow to meet government officials and oil industry executives and to warn against the use of energy as a “weapon of diplomacy.” His trip comes just weeks after Russia agreed a deal with Kazakhstan and Turkmenistan to build a new natural gas pipeline across central Asia to Russia that tightens Moscow’s hold over energy routes out of the region.

Both the US and Europe had urged Kazakhstan and Turkmenistan to build a pipeline west across the Caspian Sea to Turkey that would provide a non-Russian route for gas supplies.

Russia has also stepped up the concentration of oil and gas supplies within its borders under the state-owned Gazprom, cutting out potential overseas investors, including the Anglo-Dutch Shell and Anglo-American BP, and undermining what the Financial Times has described as “a key plank of US policy in the Caspian to end Russia’s dominance over export pipelines and discourage investment in routes across Iran.”

The Guardian’s Julian Borger noted July 17 that “Moscow has foiled European attempts to build alternative routes for the transmission of oil and gas to Europe from central Asia” and has “been strikingly successful in dividing Europe, making separate pipeline deals with Germany and the Czech Republic, and last week granting French energy company Total a 25 percent stake in developing a massive gas field in the Arctic.”

Gazprom already supplies a quarter of Europe’s gas and oil. Although only a fraction of Britain’s supplies currently come from Russia, it is believed that this will have to rise exponentially over the next decade or so. Gazprom has said that it aims to supply 20 percent of Britain’s gas by 2020.

The company has also made aggressive attempts to secure control of previously nationalised European energy companies, including the gas distributor Centrica in Britain, leading to complaints that Europe risks dependency on a hostile power.

With so much at stake, however, there is concern that the Brown government is endangering significant British commercial interests in Russia itself—one factor explaining the suggestion by Brown’s spokesman, Michael Ellam, that Britain might accept Lugovoi being tried in a third country as a compromise.

Britain was the largest foreign investor in Russia last year, with British companies investing £2.7 billion. In the first three months of this year alone, £1.5 billion was invested directly by Britain. The Independent noted that this is almost nine times the $364 million (£179 million) invested by US companies. Total investment by BP and Shell alone has been valued at more than £8 billion. In addition, Russia is the fifth largest exporter of goods to Britain.

Commenting on the diplomatic tensions, Hans-Jorg Rudloff, chairman of Barclays Capital, warned in the Financial Times, “If governments continue to play with matches, inevitably there will be fire.”

Tuesday saw Britain’s Royal Air Force take the extraordinary decision to scramble fighter jets to intercept Russian Tupolev “Bear” bombers. The RAF said the bombers, which have the capability of carrying nuclear weapons, were heading towards British air space. Russia’s air force commander, Col. Gen. Alexander Zelin, rejected the accusation, stating that the bombers were flying planned training flights over neutral waters.

A Defence Ministry spokesman in London also said the bombers turned back long before reaching Britain.

Zelin told Itar-Tass that speculation that the flights were linked with the diplomatic row between London and Moscow was “sheer raving.”