US President Donald Trump speaks in West Virginia this week. Leah Millis / Reuters
US President Donald Trump speaks in West Virginia this week. Leah Millis / Reuters

The spectre of Trump-Putin meeting looms over Nato summit



This is the month that Donald Trump reveals the true colours of his electoral promise to make America great again. As he prepares to fly to Europe for a summit meeting of the Nato alliance, a visit to Britain to take tea with Queen Elizabeth and then a ground-breaking meeting with Russian President Vladimir Putin, Western leaders are in state of heightened anguish.

In place of the comforting noises about wartime alliance and shared values that usually emerge from the mouths of US presidents as they head to the old continent, Mr Trump has written strongly worded, even threatening letters, to European members of the Nato alliance demanding that they pay more towards their defence.

The talk in Nato circles now is that Mr Trump could fatally undermine the alliance, by storming out of the summit or casting doubt on the US nuclear umbrella over western Europe, the basis of its security since 1949. Even if Mr Trump performs no theatrics, he has short-circuited the Nato meeting by agreeing to meet Mr Putin in Helsinki just a few days afterwards.

The conclusion in Europe is that Mr Trump seems determined to disrupt, perhaps to the point of destruction, the foundations of the US-led international order – Nato, the European Union and the World Trade Organisation.

Mr Trump kicked EU members in the teeth by promising to impose stiff tariffs on the import of EU-made cars and by ignoring pleas that European companies should be spared sanctions if they trade with Iran. At the same time, he has ordered draft legislation which would blow up the internationally agreed global trading system and allow the US to impose tariffs at will.

To the Europeans, it looks as though Mr Trump has no time for international organisations or agreements, but only wants to deal with strongmen such as Mr Putin, Chinese leader Xi Jinping and North Korean dictator Kim Jong-un.

Mr Trump has learned during his real estate career that tough talk and bluster cost him nothing and can intimidate his opponent. It could be that a global trade war and the collapse of Western security architecture don't materialise – the EU member states might cower before his will, accepting that the old America they knew is gone and they have to accommodate the new. His tough talk is yielding some results with Mexico, where his threats to tear up the North American Free Trade Agreement are already frightening companies away from investing south of the border.

But one question remains for the Middle East: if Mr Trump’s goal is to bring the Iranian regime to its knees through the “toughest sanctions in history”, how does quarrelling with allies help? Sanctions work only if they are near universally imposed, which was the case in Mr Trump’s stand-off with North Korea – even China, the ally of the Kim dynasty, joined in.

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The White House thinks the choice between doing business with America and with Iran is a simple one. And it is today. But the more the US weaponises the dollar, the faster the rest of the world will work on finding alternatives to the US-dominated financial system.

It could be that Mr Trump sees disruption of the status quo as an end in itself, like the old Facebook motto, “move fast and break things”.

But Iran is not North Korea. If Mr Kim agrees to forsake his nuclear weapons, it will be because he can rely on China keeping his regime in power.

Iran has no godfather to rely on. And the imposition of US sanctions on Tehran is hardly a new policy – it has been the status quo for almost 40 years, during which Iran’s global reach has only increased.

A broader interpretation is that Mr Trump wants to forge a tripartite alliance of the top three oil producers – Saudi Arabia, Russia and the US – to raise the pressure on Iran. Why else would John Bolton, Mr Trump’s national security adviser, a Russia hawk who has made a career of castigating politicians who kowtow to authoritarian leaders, go to Moscow to pay court to Mr Putin?

These three countries can ensure the stability of the oil market when, on November 4, the US imposes the second stage of its sanctions on Iran, harming its oil industry, among others.

Israel meanwhile continues to bomb Iranian positions in Syria with the aim of preventing Iran establishing permanent bases near its borders. At the same time, Israeli officials have been briefing Washington ahead of the Trump-Putin summit on the growing fractures in the Iranian leadership and street protests against economic hardship, according to the Israeli journalist Ben Caspit.

In these big power moves, the European allies appear irrelevant.

Will Mr Putin want to play ball? Iran is Russia’s partner in the Syrian war and the survival of the Assad regime would not have happened without Iranian boots on the ground and Russian air power. But it is no secret that the Kremlin considers Iran’s determination to use Syria as a military colony to be hampering the Russian goal of achieving a peace settlement. The Kremlin has made it clear that Iranian troops must leave Syria, along with the Americans and the Turks.

The Kremlin may also appreciate the application of some pressure on Iran. But it should be recalled that Mr Putin’s achievement in the Middle East is to be the leader that every country – Saudi Arabia, Israel, Iran and all those between – needs to talk to.

As a proclaimed supporter of international legitimacy, and in particular the Iran nuclear deal which Mr Trump has abandoned, he is unlikely to give up that hard-won position to go into battle beside an administration that, in the words of Mr Trump’s personal attorney, Rudy Giuliani, is “now very realistic in being able to see an end of the regime in Iran”.

This month may well see Mr Putin brought in from the cold. But such an experienced and historically-minded leader will not easily adopt the full Trump doctrine.

Alan Philps is editor of The World Today magazine of international affairs

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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.”