The war against Russia's spies just cost Putin billions from a cancelled nuclear contract

• Moscow and Czechia are expelling each others' "diplomats" in a conflict over Russia's campaign of sabotage in Europe.
• Czechia also cancelled a nuclear contract with Russia for good measure.
• "That project was critical not just for the income to Russia but for the influence over local affairs," a source told Insider.
• See more stories on Insider's business page.

Russia announced on Monday the expulsion of at least 20 Czech diplomats in a furious response to the gutting of Moscow's most critical intelligence station in central Europe over the weekend, when Czech authorities accused Russian intelligence of being behind two blasts at an ammunition storage facility in 2014.

Czechia has accused a notorious Russian intelligence unit implicated in multiple operations across Europe and the UK of conducting two operations in 2014 that led to explosions at a munitions factory in 2014. At the time, the ammunition was said to be headed for Russia's rivals in Ukraine. After a nearly seven-year-long investigation into the blasts, Czech authorities detailed the links between the Russian intelligence agency the GRU - including passports used in the 2018 Salisbury poisoning by suspected GRU agents - and began expelling Russian intelligence officers from Prague.

"Prague is a key station for [Russian intelligence] because it's got a semi-friendly government and its central location inside the European Union makes it an excellent logistical hub for operations," a central European intelligence official who tracks Russian operations in the area told Insider.

"The 18 'diplomats' that were kicked out of Czech are well-known intelligence officials from [various Russian services] and were not just involved in operations targeting Czech but also targeting much of Europe," said the official. "For operational purposes, I'm not sure there's a more important EU station for the Russians outside of Berlin."

The Russian diplomatic mission to Czech has about 120 diplomats and personnel, said Czech officials, more than twice the size of missions to comparatively sized countries or the size of the Czech mission to Russia. Russia Monday expelled 20 Czech diplomats in retaliation for the weekend's move.

Czech also barred a Russian company from bidding on billions of Euros in contracts to maintain the Dukovany Nuclear Power Plant.

"Losing this many intelligence officers will reduce the amount of activity and capabilities of the Russians for now," said the central European official. "And Putin will now see the losses of billions in contracts from the nuclear sector. That project was critical not just for the income to Russia but for the influence over local affairs the contract would give."

"This is real punishment for the Russians but I remain skeptical that this sort of thing affects their behaviour although its possible some intelligence officials have to explain how they could have gotten caught in such a sensitive and critical area as Czech," said a NATO military intelligence official.

The 2014 incident that sparked the confrontation began as two men - who years later would become world famous after allegations they conducted the Salisbury poisoning - entered Czech under one set of passports but requested access to an ammunition production facility under a second set of passports.

The ammunition was owned by a Bulgarian arms dealer who a year later would be poisoned by the same deadly nerve agent used in Salisbury. The explosion at the facility killing two Czech workers in what at the time was thought to be an accident.

But after Salisbury, the Russian unit - identified by Western intelligence as Unit 29155 of the GRU - was exposed and both Czech officials and open-source investigators were able to easily link the movements of Russian officials to a series of operations across Europe targeting Putin's enemies.