Mikhail Gorbachev with then Indian prime minister Rajiv Gandhi in New Delhi in 1986. AFP
Mikhail Gorbachev with then Indian prime minister Rajiv Gandhi in New Delhi in 1986. AFP
Mikhail Gorbachev with then Indian prime minister Rajiv Gandhi in New Delhi in 1986. AFP
Mikhail Gorbachev with then Indian prime minister Rajiv Gandhi in New Delhi in 1986. AFP


Gorbachev will continue to shape Asia long after his death


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September 02, 2022

With Mikhail Gorbachev’s passing, obituaries have had to sum up the impact of a man who led a superpower and remade the world. Naturally, they tend to focus on his success in ending the Cold War and his failure to hold together a semi-liberalised Soviet Union. But the stories about the fall of the Berlin Wall and major arms control treaties are really the story of the Cold War in the West.

Gorbachev left a separate set of legacies in Asia, which have arguably lasted longer but never became as storied, perhaps because they could only be described in terms of pragmatic realpolitik rather than soaring idealism. Perhaps that is also why there is less recognition of the extent to which Gorbachev’s policies continue to shape the region, or how his objectives in Asia have survived into his successor Vladimir Putin’s foreign policy.

It’s worth remembering that Gorbachev’s chief mission upon becoming general secretary of the Communist Party of the Soviet Union in 1985 was to reboot the increasingly stagnant national economy. It had become increasingly accepted among the party elite that the union could not dig itself out of its hole alone; it needed the co-operation of the established industrial economies of the West as well as the up-and-coming ones of the Asia-Pacific. But to open up the flows of trade and technology, the Cold War’s hot conflicts would have to be ended.

The Soviet Union was involved in a nine-year conflict in Afghanistan before it withdrew its troops beginning in 1988. Getty Images
The Soviet Union was involved in a nine-year conflict in Afghanistan before it withdrew its troops beginning in 1988. Getty Images
Gorbachev’s most ambitious vision was a collective security system for Asia that included Moscow, Beijing and New Delhi

Seeing an end to the Soviet occupation of Afghanistan was at the top of that list for both the US and China, Moscow’s two largest and fiercest rivals. Within a year of coming to power, Gorbachev was describing the Afghan war as a “bloody wound” and indicating that Moscow must get out as soon as possible. By 1989, Gorbachev had pulled off that difficult trick, paving the way for increasingly warm ties with Washington and full rapprochement with Beijing. By 1990, Gorbachev was selling advanced Su-27 multi-role fighter aircraft to China, its former enemy. This pattern of arms sales and military co-operation between Moscow and Beijing has continued ever since and grown steadily more intimate.

India had long hoped for a negotiated settlement over Afghanistan, and a Soviet withdrawal, in order to bring an end to high-level US military aid to Pakistan, the new frontline state. But by the time the Soviets had come to an agreement with Pakistan, India’s concerns had significantly shifted. Now its main worry was that extremists would replace the communists in Kabul, and export their ideology through Pakistan to India, especially Kashmir. This fear proved, at least in the Indian establishment’s view, to be both prescient and persistent, given that the very same struggles continue today. But Gorbachev remained unmoved to then Indian prime minister Rajiv Gandhi’s repeated public and private calls to action. In fact, Soviet intelligence even began to fund Mujahideen groups to protect its interests from even more radical groups.

India, however, had been given special treatment in other ways. Ever since the British withdrawal from the Indian Ocean in 1971, India had been determined to establish itself as the regional power, and relied on the heavily subsidised weapons provided by the Soviet Union to rapidly expand its military capabilities. The USSR was only too happy to help and thereby weaken the US influence in the region. In response to New Delhi’s shopping list, Gorbachev insisted on making ever more sophisticated weapons unavailable from any other source available at low prices. In a global first, this extended to overriding concern within the politburo and leasing a nuclear-powered cruise missile submarine to India.

Mikhail Gorbachev with Deng Xiaoping, China's paramount leader, in Beijing in 1989. AFP
Mikhail Gorbachev with Deng Xiaoping, China's paramount leader, in Beijing in 1989. AFP

And yet, with the end of the Cold War and facing increasingly severe economic difficulties, Moscow not only lacked incentives to spend such huge sums competing with Washington in the distant Indian Ocean, but began to see arms sales as a vital source of revenue. Arms sales to India continued, but they now took on a commercial and transactional rather than geopolitical hue. The sticker shock soon put a sharp end to the ambitious expansion of the Indian Air Force and Navy. While India’s economic and diplomatic influence have bloomed in the decades since, its military advantage in the region has never recovered.

Gorbachev’s most ambitious vision of all was a collective security system for Asia that included Moscow, Beijing and New Delhi working together to solve and prevent regional conflicts without turning to “outside” powers such as the US. This is an idea that Mr Putin has also frequently attempted to float several times in the years since.

Unfortunately, there was no common purpose either then or now that made sense to all three countries. India and China’s difficult relationship was not created by the Cold War, so its end could not produce reconciliation. Despite the best wishes, Gorbachev was never able to find a deeper, self-sustaining geopolitical or economic or synergy with India, and neither have his successors. And yet, it seems the two sides have never stopped looking, captivated by the possibilities as much as the satisfaction of simple mutual validation.

Ironically, Gorbachev’s hard work to end the Cold War in the West gave India a chance to reset its relationship with the US. Decades of suspicion and resentment began to slowly melt away as India realigned its economy with the capitalist world. There’s been little looking back ever since.

Gorbachev’s spell in power was a brief six years, and yet the transitions he oversaw were so fundamental that we’re still living with them 30-plus years later. His demise is unlikely to mean that the new order that emerged will pass from the scene.

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.”

Fixtures

Friday Leganes v Alaves, 10.15pm; Valencia v Las Palmas, 12.15am

Saturday Celta Vigo v Real Sociedad, 8.15pm; Girona v Atletico Madrid, 10.15pm; Sevilla v Espanyol, 12.15am

Sunday Athletic Bilbao v Getafe, 8.15am; Barcelona v Real Betis, 10.15pm; Deportivo v Real Madrid, 12.15am

Monday Levante v Villarreal, 10.15pm; Malaga v Eibar, midnight

Charlotte Gainsbourg

Rest

(Because Music)

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Key facilities
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  • Premier League-standard football pitch
  • 400m Olympic running track
  • NBA-spec basketball court with auditorium
  • 600-seat auditorium
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  • Specialist robotics and science laboratories
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  • Disruption Lab and Research Centre for developing entrepreneurial skills
Company%20profile
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Stree

Producer: Maddock Films, Jio Movies
Director: Amar Kaushik
Cast: Rajkummar Rao, Shraddha Kapoor, Pankaj Tripathi, Aparshakti Khurana, Abhishek Banerjee
Rating: 3.5

 

 

Updated: September 02, 2022, 5:00 AM