That’s the impact of globalisation for you. It’s the first conflict to involve major suppliers of products that the rest of the world wants and needs. The first, too, with a protagonist that is a huge draw for foreign investment, for businesses galore, from professional services and financial firms to the biggest consumer and retail brands.
Russia is a major exporter of oil and gas and is dependent upon income from their sale. Ukraine supplies much of the world with wheat. Not surprisingly, the knock-on effect from their fighting is already being felt in rising global fuel prices and fears of overseas bread shortages.
Asia, Africa, South America, Australasia — all will be dragged down. This, just as the world was emerging from the ravages of Covid-19 and there was talk of a widespread return to normality. This too, however, when inflationary pressures were already tightening, partly due to the increase in consumer demand following the weakening of the pandemic.
In many boardrooms, as if this were not enough, there is another headache: to stay or go. Every business that trades with Russians and Russia is having to examine its conscience.
Again, this is new. There were wars in the past and there are localised conflicts continuing still. Of course, there were two world wars. But back then the level of international, interdependent business was nowhere near as great as it is today.
Russia is a magnet for overseas capital. Ever since the barriers to finance and trade came down, firms and businesses across virtually all sectors have flocked to serve the 11th biggest economy and in numerous cases, to set up premises there.
Now, though, they’re being required to think hard. To make matters worse, this is the first war involving nations of this type to occur in the social media age.
Catch-22 for big brands
There is nowhere to hide. Leave, and you kiss goodbye to your expenditure and profits, not to mention your employees and customers who are not responsible for Vladimir Putin’s decision to attack Russia’s neighbour. Remain, and you run the risk of boycott elsewhere and you become a target for protests.
There’s also doing what is right. While previously companies may have been tempted to turn a blind eye to one nation striking another, claiming not to get involved in high-level politics, this is also the era of ESG, of businesses wanting to be seen to be behaving correctly, of working for the wider benefit of society and not just their bottom line.
A leading authority in this field is Yale University professor Jeffrey Sonnenfeld, founder of the non-profit Chief Executive Leadership Institute. He and his colleagues are keeping a freely available list of which companies have pulled out of Russia since it started bombing Ukraine and those that have stayed.
The roll-call of those deserting is impressively long and varied
It's been described as a “naughty-or-nice” listing, with CEOs anxious to avoid appearing on the side of “Companies That Remain in Russia With Significant Exposure.”
Mr Sonnenfeld has received calls from corporate chiefs, asking “why we didn’t have them on the right list, and what they needed to do either to clarify or actually take a stronger stance.”
The roll-call of those deserting is impressively long and varied. Luxury goods labels have shuttered their stores, TikTok has paused operations, the likes of Rolls-Royce, Toyota and Volkswagen have stopped shipping vehicles to Russia. WWE, the wrestling entertaining company, has left.
Mega brands like WWE are choking the life out of Russia's economy. AFP
They’ve been joined by law and accountancy practices, financial services firms and management consultants.
Some have gone for the foreseeable future; others are more reluctant.
So, even among “Companies That Have Curtailed Russian Operations,” there are differences, noted Mr Sonnenfeld.
BASF SE, the German chemical company, says it will “suspend new Russian relationships,” while other companies, including Apple and Chanel, have closed stores completely or terminated supply contracts.
The surprise is some names that like to regard themselves as among the most socially aware, “woke” and appealing to young people. They were slow to respond.
Frankly disengaging
In a turning point for an era, McDonald's and Coca-Cola have shut down too but cite loyalty to their local workers as a continuing priority.
It has been impressed upon them, however, that forcing an economic collapse on the Russian people is better than the alternative, of the war escalating and the West being dragged in and confronting Russia along superpower lines.
McDonald's was not in the first tranche of companies to shutter stores in Russia. Reuters
So, this is the first such war where brands have become weaponised, seen as a way of defeating Russia and hastening the war’s end.
It’s the first where the massive size of foreign investment and the position that holds in the Russian government psyche, where it’s held up as embodying openness and economic success, has made that possible.
This might well prove to be a conflict that is decided upon the economic, globally networked battlefield rather than in the shattered towns and cities of Ukraine.
Dubai Bling season three
Cast: Loujain Adada, Zeina Khoury, Farhana Bodi, Ebraheem Al Samadi, Mona Kattan, and couples Safa & Fahad Siddiqui and DJ Bliss & Danya Mohammed
Starring: Abdullah Boushehri, Laila Abdallah, Lulwa Almulla
Rating: 3/5
What are the main cyber security threats?
Cyber crime - This includes fraud, impersonation, scams and deepfake technology, tactics that are increasingly targeting infrastructure and exploiting human vulnerabilities. Cyber terrorism - Social media platforms are used to spread radical ideologies, misinformation and disinformation, often with the aim of disrupting critical infrastructure such as power grids. Cyber warfare - Shaped by geopolitical tension, hostile actors seek to infiltrate and compromise national infrastructure, using one country’s systems as a springboard to launch attacks on others.
You can donate to several registered charities through a “donation catalogue”. The use of the donation is quite specific, such as buying a fan for a poor family in Niger for Dh130.
The site has an e-donation service accepting debit card, credit card or e-Dirham, an electronic payment tool developed by the Ministry of Finance and First Abu Dhabi Bank.
You can donate online or order Smiles n’ Stuff products handcrafted by Al Noor students. The centre publishes a wish list of extras needed, starting at Dh500.
Beit Al Khair Society has the motto “From – and to – the UAE,” with donations going towards the neediest in the country. Its website has a list of physical donation sites, but people can also contribute money by SMS, bank transfer and through the hotline 800-22554.
Dar Al Ber Society, which has charity projects in 39 countries, accept cash payments, money transfers or SMS donations. Its donation hotline is 800-79.
Dubai Cares provides several options for individuals and companies to donate, including online, through banks, at retail outlets, via phone and by purchasing Dubai Cares branded merchandise. It is currently running a campaign called Bookings 2030, which allows people to help change the future of six underprivileged children and young people.
Those who travel on Emirates have undoubtedly seen the little donation envelopes in the seat pockets. But the foundation also accepts donations online and in the form of Skywards Miles. Donated miles are used to sponsor travel for doctors, surgeons, engineers and other professionals volunteering on humanitarian missions around the world.
On the Emirates Red Crescent website you can choose between 35 different purposes for your donation, such as providing food for fasters, supporting debtors and contributing to a refugee women fund. It also has a list of bank accounts for each donation type.
Gulf for Good raises funds for partner charity projects through challenges, like climbing Kilimanjaro and cycling through Thailand. This year’s projects are in partnership with Street Child Nepal, Larchfield Kids, the Foundation for African Empowerment and SOS Children's Villages. Since 2001, the organisation has raised more than $3.5 million (Dh12.8m) in support of over 50 children’s charities.
Sheikh Mohammed bin Rashid Al Maktoum launched the Noor Dubai Foundation a decade ago with the aim of eliminating all forms of preventable blindness globally. You can donate Dh50 to support mobile eye camps by texting the word “Noor” to 4565 (Etisalat) or 4849 (du).
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.”
