Well, eventually the UK has lost its patience with Russia over the Litvinenko affair and expelled four FSB officers in London under diplomatic cover .
Many observers consider that a tit-for-tat response is to be expected, in fact Russia will need to consider its options very carefully. As major problems emerge in the logistics of Russian gas supply, the position of the Russian economy looks increasingly fragile. The preponderance of the energy and basic products sectors has supported the Rouble at prices that makes much of the rest of the Russian economy fundamentally uncompetitive. The squeeze on Russian industry that was seen before the August crisis of 1998 is back with a vengeance. However, whereas then, there was increasing efficiency in the oil and gas sectors, the Kremlin-led forced consolidation of energy assets into national champions, such as Rosneft and Gazprom, has drastically reduced the efficiency of Exploration and Production and long term investment has been all but abandoned. This, together with the encouragement of domestic demand, is placing the sector at risk of being unable to deliver supplies that have already been contracted. Furthermore, stripped of the energy and basic products sector, the Russian economy is tiny.
Meanwhile the formal repudiation of the CFE treaty, concerning Russian deployments of conventional forces was another step in the erosion of international confidence in the Putin regime (in any event the presence of Russian forces near Pskov had been breaching the treaty for some time). Russia has a rapidly dwindling pool of political capital and international goodwill to draw on.
Therefore though Russia may feel the affront, they will need to consider their response to Britain's justified anger over the agonising public execution of Litvinenko extremely carefully. Any response that the UK regards as an escalation will be greeted with further measures from the British side- and some of these could involve an expensive price for the delicate Russian economy. Meanwhile. if the Russians go after the BP joint venture, the UK has a planned response that would be commensurate- and could shut out direct Russian economic relations with the major global organisations for months if not years. A disproportionate Russian response on the diplomatic side will result in further expulsions by the UK and more restrictive visa issuance, rather than the easing that was currently planned- again more damaging and inconvenient for Russia than for the UK.
This is not over yet- but in this poker game, the UK has a psychological advantage- let us see if Mr Putin ups the ante or folds.