Russia's main intelligence agency said Monday it had uncovered spying by four British diplomats - using electronic equipment inside a fake rock - and accused them of channeling funds to non-governmental organizations including one of the country's most well-known human rights watchdogs.
The head of the Foreign Security Service or FSB, the main successor agency to the Soviet-era KGB, last year accused U.S. and other foreign intelligence services of using NGOs to spy on Russia and foment political upheaval in ex-Soviet republics.
The agency's spokesman, Sergei Ignatchenko, said the situation would be resolved "at a political level," the RIA-Novosti news agency reported, an apparent indication that the Russian government could expel them.
Officials at the British Embassy in Moscow and Foreign Office in London declined to comment. Prime Minster Tony Blair told a news conference that he had only heard about Russian spy allegations in media reports and he declined further comment.
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Russian state television broadcast video Sunday showing four British Embassy staff allegedly using electronic equipment concealed in the rock in a Moscow square to receive intelligence from Russian agents.
In 1996, Russia and Britain engaged in a spying dispute launched by Moscow, each expelling four diplomats.
Among the diplomats named in the TV broadcast were Marc Doe and Paul Crompton, both of the embassy's political section.
Rossiya also showed copies of documents allegedly showing that Britain had transferred money to NGOs in Russia. It described Doe as the main contact point for NGOs.
"This is the first time we literally caught them red-handed in the process of contacting their agents here and received evidence that they finance a number of non-governmental organizations," the ITAR-Tass news agency quoted Ignatchenko as saying.
In addition to a chill in Russian-British relations, the espionage announcement reflected a toughening Russian attitude toward NGOs. Earlier this year, President Vladimir Putin signed a law severely restricting NGOs' financing and activities.
Moscow has been highly suspicious of groups that promote human rights and democracy since opposition leaders came to power in uprisings in Georgia, Ukraine and Kyrgyzstan in recent years. Russian officials have accused Western nations of encouraging regime change in the former Soviet Union by financing NGOs.
In a statement released following the Sunday broadcast, Britain's Foreign Office rejected allegations that its dealings with Russian NGOs were improper.
"It is well-known that the British government has financially supported projects implemented by Russian NGOs in the field of human rights and civil society. All our assistance is given openly and aims to support the development of a healthy civil society in Russia," the statement said.
Rossiya showed a document authorizing a transfer of $41,000 in October to the Moscow Helsinki Group, a leading Russian human rights group that has been a persistent Putin critic.
The group's head, Lyudmila Alexeyeva, who was a Soviet-era dissident, said the document was a fabrication because her organization had not received any funding from British sources since 2004. She accused the authorities of seeking a pretext to launch a crackdown on NGOs.
"This is an attempt to smear a well-known group with allegations of involvement in espionage activity. They are preparing public opinion for a government move to close us down, which they can now do under the new law," Alexeyeva told The Associated Press.
"This will not stop our activities, though. I managed to keep on working in Soviet times," she said.
Fyodor Lukyanov, editor of the magazine Russia in Global Affairs, predicted the spy scandal would increase tensions between Moscow and the West as Russia chairs the Group of Eight this year.
"This will provoke a very negative commentary in the West. It will only worsen the picture since Russia already started its G8 presidency on a very inauspicious note," Lukyanov told the AP, alluding to its cutoff of gas to Ukraine over the New Year holiday, which resulted in brief shortages for other European countries as well.