Soldiers march in a military parade marking the 61st anniversary of Cyprus' independence from British colonial rule in Nicosia last October. Cyprus was split along ethnic lines following Turkey's invasion in 1974. AP Photo
Soldiers march in a military parade marking the 61st anniversary of Cyprus' independence from British colonial rule in Nicosia last October. Cyprus was split along ethnic lines following Turkey's invasion in 1974. AP Photo
Soldiers march in a military parade marking the 61st anniversary of Cyprus' independence from British colonial rule in Nicosia last October. Cyprus was split along ethnic lines following Turkey's invasion in 1974. AP Photo
Soldiers march in a military parade marking the 61st anniversary of Cyprus' independence from British colonial rule in Nicosia last October. Cyprus was split along ethnic lines following Turkey's inva


Could Russia follow the Cyprus model in Ukraine?


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January 17, 2022

The drums of war are beating a bit louder this week after diplomatic talks failed, Russia moved more military might to the Ukrainian border, a massive cyberattack struck Ukrainian government websites, and so-called Russian saboteurs were rumoured to be laying low in eastern Ukraine in anticipation of orders from Moscow.

One reason many analysts expect Russia to launch an offensive is that its government has long seen Ukraine as not a real country but as Russian territory, as President Vladimir Putin detailed in a 5,000-word essay last summer. In addition, Moscow is thought to fear that a stable Ukraine could become a member of Nato and possibly the EU, bringing those powerful Russia-opposed blocs to its border.

Such thinking is likely to have driven Russia’s 2014 annexation of Crimea and the resulting conflict in eastern Ukraine, where bits of its Donetsk and Luhansk provinces are now controlled by Russia-backed separatists. Yet, this has apparently failed to sufficiently weaken Ukraine or erode its democracy: President Volodymyr Zelensky has significantly reduced Russian influence; and Nato, the US, EU, UK and Turkey have in recent months shown increased willingness to back Kyiv.

So it may be once again into the breach for Russia. Moscow’s ideal outcome for Ukraine, should the war come to pass, might be something like the current situation on the island of Cyprus, which has been divided since a 1974 Turkish military invasion sought to head off an Athens-backed coup.

Turkey’s occupation of the northern third of the island, known as the Turkish Republic of Northern Cyprus (TRNC) and recognised only by Turkey, failed to keep the Republic of Cyprus from joining the EU, in 2004. But on nearly all other counts Turkey might view the invasion as a success.

As I detailed in these pages last year, talks to resolve the dispute and reunite the island have failed again and again, to the point that Ankara and Turkey-backed TRNC President Ersin Tatar now advocate a two-state solution. After decades of pushing for a bizonal federation, more than four out of five (81 per cent) Turkish Cypriots share their view, according to a 2020 poll.

Yet, this is largely because Turkish settlers now represent about half of the TRNC population, shifting its religiosity and political stance. Turkey’s 40,000 troops in northern Cyprus have turned it into a satellite state, where Ankara is able to shape everything from laws to school curriculums and act to access energy resources in the disputed waters surrounding the island.

Last year, Turkey established a drone base in the north that Nicosia says heightens tensions and highlights Ankara’s “expansionist” agenda. If the current momentum continues, UN Secretary General Antonio Guterres said in a recent report, a negotiated settlement for Cyprus could soon become unattainable. Just last week, the US dropped out of a planned pipeline project with Cyprus, Greece and Israel because in leaving out northern Cyprus, it is likely to increase tensions with Turkey. And let’s not forget that this is all framed by constant tensions between long-time rivals Turkey and Greece, who have fought several wars and nearly came to blows again in summer 2020.

A joint strategic exercise of the armed forces of the Russian Federation and the Republic of Belarus in the Nizhny Novgorod region last September. AP Photo
A joint strategic exercise of the armed forces of the Russian Federation and the Republic of Belarus in the Nizhny Novgorod region last September. AP Photo

As with Moscow’s purported view of Kyiv, the Cyprus policy of the ruling AKP has long been aligned with its domestic efforts to build a strong nationalist identity and its regional goal of power projection, as detailed last year in the British Journal of Middle Eastern Studies. There are also historical parallels, as the Ottoman Empire ruled Cyprus for more than three centuries, much like the Russian Empire and the Soviet Union controlled Ukraine.

Meanwhile, the EU side of the island – its hands tied by the persistent presence of the TRNC – has developed a predilection for the illicit. Like many smaller states around the world in need of generous allies, Cyprus has built its economy around a financial sector geared toward luring foreign investment.

Low taxes and minimal regulation, and the presence of the Orthodox church, have made it a haven for Russian investors. A decade ago, Russian deposits in Cypriot banks were already worth $31 billion, more than the island’s gross domestic product. Then Greece’s 2013 financial crisis spilled into Cyprus and the government offered nationality to foreigners willing to invest €2 million ($2.2m) in real estate.

At least two US-sanctioned Russians and a number of Malaysian and Cambodian figures who have been linked to financial crimes back home have also become Cypriot citizens under the scheme. Nicosia has since toughened the review process and launched an investigation to strip nationality from dozens of people because of possible “mistakes”.

But the problem is far from fixed. “You never know what kind of influence you are granting when you give golden passports to people connected with opaque regimes,” Stelios Orphanides, a Cypriot investigative journalist, told the Financial Times.

Political polarisation and military tensions, hesitant western involvement and dark economic dealings that offer a haven for oligarchs – sounds a bit the way Russia might envision a partial occupation of Ukraine. This is not to say Cyprus is unappealing or a failed state.

  • Turkish President Recep Tayyip Erdogan reviews a guard of honour with Turkish Cypriot leader Ersin Tatar before he departs from the Turkish Republic of Northern Cyprus, a breakaway state recognised only by Turkey. Reuters
    Turkish President Recep Tayyip Erdogan reviews a guard of honour with Turkish Cypriot leader Ersin Tatar before he departs from the Turkish Republic of Northern Cyprus, a breakaway state recognised only by Turkey. Reuters
  • The Turkish president reviews a guard of honour with Turkish Cypriot leader Ersin Tatar. Reuters
    The Turkish president reviews a guard of honour with Turkish Cypriot leader Ersin Tatar. Reuters
  • Mr Erdogan reviews a guard of honour with the Turkish Cypriot leader. Reuters
    Mr Erdogan reviews a guard of honour with the Turkish Cypriot leader. Reuters
  • Mr Erdogan reviews a guard of honour with the Turkish Cypriot leader. Reuters
    Mr Erdogan reviews a guard of honour with the Turkish Cypriot leader. Reuters
  • Mr Erdogan reviews a guard of honour with the Turkish Cypriot leader. Reuters
    Mr Erdogan reviews a guard of honour with the Turkish Cypriot leader. Reuters

Its many gorgeous beaches draw crowds of tourists in the summer and it's generally seen as a stable democracy. Yet, the Turkish military presence gives the island the feeling of a powder keg ready to blow. (Another interesting parallel: just as Russia is the main source of foreign investment in Cyprus, Turkey, as of last year, is the largest foreign investor in Ukraine.)

Tensions are particularly high in the north of late, due to the devastating impact of the falling Turkish lira, which the TRNC adopted in 1976, and frustration with Turkey's influence as parliamentary polls loom next week. The region faces a long-standing international embargo and is hugely reliant on the Turkish economy.

Last October, local news outlets reported on a list of more than 40 prominent Turkish Cypriots barred from entering Turkey, including former TRNC president Mustafa Akinci and many top lawyers, activists and journalists. Turkish Cypriots have not taken kindly to their supposed benefactor essentially silencing those who disagree with its policies.

The blacklist, combined with growing economic hardship, has driven thousands of Turkish Cypriots into the streets in protest of what they perceive to be Ankara’s overreach. Many have called for an electoral boycott, seeing the vote as essentially controlled by Turkey, and some have launched organisations that oppose Ankara and call for a federal solution.

“Turkey is our biggest problem,” Sener Elcil, who heads the Turkish Cypriot teachers’ union and is among those barred from Turkey, told The Guardian last week. “It should keep its hands off Cyprus and take its lira and go away.”

Still, if it takes Russian-occupied Ukrainians nearly half a century to begin to unite and rise up, Moscow is likely to be pleased with the outcome.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Recharge as needed, says Mat Dryden: “We try to make it a rule that every two to three months, even if it’s for four days, we get away, get some time together, recharge, refresh.” The couple take an hour a day to check into their businesses and that’s it.

Stick to the schedule, says Mike Addo: “We have an entire wall known as ‘The Lab,’ covered with colour-coded Post-it notes dedicated to our joint weekly planner, content board, marketing strategy, trends, ideas and upcoming meetings.”

Be a team, suggests Addo: “When training together, you have to trust in each other’s abilities. Otherwise working out together very quickly becomes one person training the other.”

Pull your weight, says Thuymi Do: “To do what we do, there definitely can be no lazy member of the team.” 

US tops drug cost charts

The study of 13 essential drugs showed costs in the United States were about 300 per cent higher than the global average, followed by Germany at 126 per cent and 122 per cent in the UAE.

Thailand, Kenya and Malaysia were rated as nations with the lowest costs, about 90 per cent cheaper.

In the case of insulin, diabetic patients in the US paid five and a half times the global average, while in the UAE the costs are about 50 per cent higher than the median price of branded and generic drugs.

Some of the costliest drugs worldwide include Lipitor for high cholesterol. 

The study’s price index placed the US at an exorbitant 2,170 per cent higher for Lipitor than the average global price and the UAE at the eighth spot globally with costs 252 per cent higher.

High blood pressure medication Zestril was also more than 2,680 per cent higher in the US and the UAE price was 187 per cent higher than the global price.

Updated: January 17, 2022, 4:00 AM