Dr Andrew Foxall is Director of the Russia Studies Centre at The Henry Jackson Society. 

If the UK were to take the lead on Western sanctions against Russia, the UK’s economy could profit considerably. But the West evidently does not have the stomach, nor the stamina, to implement meaningful sanctions. Or so say the sceptics of sanctions who claim they could only ever be symbolic. Advocates of sanctions in a bid to stop Russian aggression, on the other hand, argue they have changed the Kremlin’s behaviour. The first two rounds of sanctions have come and gone, and yet nothing has changed.

Deep divisions in the European Union on Russian sanctions appeared in early March because member states would have to share the pain that economic sanctions against Russia would bring. France opposes sanctions because it is dependent on Russia for defence contracts, whilst Germany and Italy are heavily dependent on Russian gas.

Last month in the UK a civil servant was photographed arriving at Downing Street with a crucial document under his arm. It recommended that Britain should “not support, for now, trade sanctions” or “close London’s financial centre to Russians”. The UK has begun to talk a good game subsequently – Foreign Secretary William Hague called this week for “far-reaching economic, trade and financial sanctions” – but, for all the talk, the UK’s position remains unchanged.

What, however, are the wider implications of sanctioning Russia on the UK? President Putin already believes the UK to be “a small island no-one pays any attention to”. In the absence of using military force, isolating Russia from the world’s major economies is the strongest leverage the West, and Britain, has to deter Putin.

It is essential for the UK to insist that a concept of “business as usual” with Russia won’t happen without the Kremlin changing their aggressive and destabilising behaviour that has demolished the post-World War Two international order. The UK would show it is no longer more interested in Russian money than in protecting Ukrainian sovereignty.

The UK should impose sanctions on British-based Russian and Ukrainian oligarchs who have supported Putin’s folly in Ukraine; those directly connected to the Kremlin. If the government followed the route of “retrospective justice” for the way these individuals earned their money, it is not clear where it would stop – but it would act as punishment for helping to enable Putin to act as he does This would affect some of London’s most well-known Russians, including: Alisher Usmanov, who has significant interests in communications, property and technology businesses in the capital; Mikhail Fridman, a shareholder in Alfa Group, the biggest financial and industrial investment group in Russia; and Roman Abramovich, owner of London-based Chelsea FC.

The UK needs to adopt a Magnitsky List as the US did in 2009, and as the European Parliament did earlier this month. It would impose sanctions on 32 Russian officials implicated in the death of the lawyer-turned-whistleblower Sergei Magnitsky, and it would finally send a clear message that the UK is getting tough with corrupt individuals and human rights abusers in Russia.

The City of London needs to look hard at the way it launders ill-gotten money and, in doing so, legitimises the reputations of shady individuals. This would apply not only to Russia, but to rogue regimes the world over. The Financial Services Authority should take seriously its “fit and proper person” test, which aims to increase professional standards by scrutinising individuals’ backgrounds.

Sanctioning Russia could lead to Russian money flooding out of the UK, and in turn the City of London. This would be no significant loss. The UK sold £1.2 billion of banking advice and insurance to Russia in 2012; representing merely 1 per cent of UK financial service exports. Sanctioning Russia could lead to a fall in London property prices. Again, this would not be significant; despite all the media coverage – such as the reality show Meet the Russians – Russians account for only 2 per cent of the prime London market. With Russia’s economy in stagnation, and Moscow increasingly seen as a risky place for investment, London may become an even more attractive safe haven for Russians.

The UK is better protected than other European countries against the potential negative impacts of sanctions against Russia; its banks are less exposed than its European counterparts. The UK and the government in Westminster should seize the moment to finally lead Europe; a role it has long coveted.