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[Draco18s]

...but the moat doesn't seem to go all the way around.

Doesn't have to.  I'll explain.

Number one reason: Politicians. Outside of the UK, they are mostly egotistical knobheads. Inside, that's the Tories, who thankfully aren't the majority, at least not yet.
Number two reason: They're trying to show how big and powerful and rich they are, that they can afford such a ridiculous amount. Even during a depression, when they actually can't.
Number three reason: There are probably some over-priced security systems that will put in place, besides the moat. And a moat isn't really a defense since the invention of scuba-diving.

Wrong on all counts.
The embassy was designed to prevent terrorist attacks without looking like a war bunker.  The reason for the moat and the rolling parkland is so that car bombs can't drive right up to the side of the building (and this is why the moat is on the side its on: the one major road).  The design of the building itself is to give the impression of being open and inviting: elevated off the ground, large windows, open rolling parkland.