Quotes of the Day

Boris Berezovsky isn't the easiest of guests. The 61-year-old Russian exile, granted asylum by Britain in 2003, travels with personal bodyguards, as befits a man who has amassed great wealth and fierce enemies. The Russian government has petitioned Britain to extradite Berezovsky to face fraud charges, while some, claim Berezovsky, have in mind other ends for him. Scotland Yard confirmed on July 18 that a man was arrested last month on suspicion of conspiracy to murder and deported to Russia. Berezovsky said he was the target; according to the Sun newspaper, the hit man planned to shoot Berezovsky at the Hilton hotel in London's Park Lane.

A successful mission would have generated for the Hilton the kind of lurid publicity that another upscale Mayfair hotel recently garnered. It was in the nearby Millennium Hotel, last November, that Berezovsky's former employee Alexander Litvinenko, a Russian-born British citizen, drank tea contaminated with the radioactive isotope polonium-210, which killed him. British investigators identified as their prime suspect Andrei Lugovoi, like Litvinenko, a former kgb man. Moscow has turned down London's request for Lugovoi's extradition.

Spies, guns, poison, intertwined plots so convoluted that you need to keep flicking back to the beginning of the book: it could all come from the pages of a cold war thriller. But it is very of the moment. The British government's decision to protest Moscow's refusal to hand over Lugovoi by expelling four Russian diplomats is just the latest manifestation not only of an increasingly bad-tempered spat between two nations, but of the estrangement from the West of Vladimir Putin's Russia.

Unlike the games played in the cold war, when the globe was clearly divided into East and West, friend and foe, the dispute between London and Moscow is taking place in a more confusing world. As the Kremlin prepares to take the inevitable retaliatory action against Britain, the motivations of the main players appear mixed. Britain lodged the extradition request for Lugovoi knowing that the Russian constitution rules out the extradition of Russian citizens. The government anticipated this would create an impasse but says the murder on British soil of a British citizen demanded action. The Kremlin, for its part, has been at pains to improve its image abroad, hiring U.S. and British public-relations consultants to help. Yet the country has grown increasingly pugnacious, picking serial fights with Western powers. Putin has recently appeared to draw parallels between U.S. interventionism and the aggression of the Third Reich, threatened to train missiles on Europe if America sited its planned missile defense shield in Poland and the Czech Republic, and this month suspended Russian participation in the Conventional Forces in Europe treaty, which places limits on the heavy weaponry deployed on the Continent.

Katinka Barysch, deputy director of the London-based Centre for European Reform, says Russia is simply flexing its muscles. "Russia's main objective at the moment is to establish itself as a great power, to gain the respect of its international peers," she says. The country's new confidence is founded on its oil and gas reserves, which it has used for political leverage. "There's been a lot of pressure on governments to go soft on Russia because it's seen as an important new economic player," says Denis MacShane, Britain's Europe Minister from 2002-05. And Western governments have wanted Russia's cooperation on everything from combating terrorism to tackling such tricky international negotiations as the future of Iran's nuclear program. Earlier this month President George W. Bush welcomed Putin to the Bush family spread in Maine for a general air clearing at the "lobster summit."

In Moscow, however, efforts by the West to make nice don't seem to have worked. Government officials seem convinced, rather, that the West resents Russia's growing clout. One such official told Time he saw Britain's expulsion of the Russian diplomats as part of an "anti-Russian campaign" backed by the U.S. "The West is pissed off we won the 2014 [winter] Olympics, so they sought a way to prick us," he said. Andrei Kokoshin, a pro-Putin member of the Duma, dismissed the British action as "a political novice [and new Prime Minister] Gordon Brown trying to win points." Speaking to state-run TV station Vesti 24, Kokoshin added, "Should it go further, British business stands to lose much more than Russian business, because Russia is on the rise."

No question, it is. "Real disposable income is growing 10% a year, and has done ever since Putin came to power," says Barysch. That has boosted Putin's popularity, which is largely undented by his moves to assert control over the Russian media and to consolidate political power in the Kremlin. Westerners may lament the loss of freedoms in Russia, says Barysch, but "most Russians never knew they had them. What we are nostalgic about, the Yeltsin years, Russians perceived as a period of chaos, instability and great inequality."

Oligarchs such as Berezovsky made their fortunes in that period, and Western investors were also quick to spot opportunities. Britons were especially keen, and trade between the two countries has continued to flourish. British companies invested more than $5.5 billion in Russia last year, making the U.K. — extraordinarily — Russia's largest foreign investor. Thirty Russian companies with a combined market capitalization of $612 billion are now listed on the London Stock Exchange, and more are standing in line waiting for London launches. So business leaders in both London and Moscow have been watching recent developments with dismay. "Russian big business can only wish that the whole thing is over and done with as soon as possible," says Mikhail Kozhokin, the vice president of VTB-24, a major Russian state- controlled bank. "Nobody wants any disruptions. Not just in business — Britain is the favorite country where many top Russian businessmen send their children to school, buy real estate, settle their families and look forward to enjoying retirement."

Litvinenko was one of those Anglophiles. After fleeing Russia in 2000, he had planned for a life in London. Some fellow expatriates — there are now thought to be around 400,000 Russians in Britain — support the British government's moves to keep up the pressure over his case. "Nobody wants there to be visa restrictions or any impact on business," says Natasha Chouvaeva, the editor of Britain's Russian-language newspaper, the Russian London Courier. "Confrontation is not an option." But neither, she adds, "is looking the other way. It is in the interests of the Russian community that [Litvinenko's murder] is solved. If we do look away, how many others will die?"

So far, Britain and Russia seem deadlocked. And so the strange case of Litvinenko is added to the list of unfinished business involving Russia — matters such as the future of Kosovo, the deployment of forces in Europe, the role of foreign investment in the Russian energy sector. It is not a return to the cold war; but nobody, this summer, could say that relations between Russia and the West were warm.

WITH REPORTING BY THEUNIS BATES AND EBEN HARRELL/LONDON AND YURI ZARAKHOVICH/MOSCOW

• Catherine Mayer
• Death plots, spies, heady plans for world power--the wrangle between Moscow and London is the stuff of novels. But Russia's ambitions are very real