U.S. Secretary of State Rex Tillerson and India's Foreign Minister Sushma Swaraj shake their hands after attending a media briefing in New Delhi, India, October 25, 2017. REUTERS/Altaf Hussain
US secretary of state Rex Tillerson and Indian foreign minister Sushma Swaraj shake their hands after attending a media briefing in New Delhi on October 25, 2017. Altaf Hussain / Reuters

India defends ties with Iran and North Korea in talks with Tillerson



India's foreign minister defended the country's ties with North Korea and Iran during talks on Wednesday with US secretary of state Rex Tillerson aimed at building robust relations between the two giant democracies.

The Trump administration has launched a new US effort to deepen military and economic ties with India as a way to balance China's assertive posture across Asia.

At the talks with Indian foreign minister Sushma Swaraj, both sides pledged to strengthen antiterrorism co-operation and Mr Tillerson said Washington stood ready to provide India with advanced military technology.

"The United States supports India's emergence as a leading power and will continue to contribute to Indian capabilities to provide security throughout the region," Mr Tillerson told a joint news conference with Ms Swaraj.

Mr Tillerson, who flew in from Pakistan, which he called an important US ally in the restive region, also held talks with prime minister Narendra Modi who is driving closer ties with Washington.

But India, a former leading light of the Non-Aligned Movement, a group of countries that does not want to be officially aligned with or against any major power bloc, still remains wary of any alliances with major powers lest it affect its autonomy.

India has maintained ties with Iran which is being targeted by the Trump administration for its alleged military support of extremist groups in the Middle East and for its ballistic missile programme.

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India has long sourced its oil from Iran, but in recent years the two sides have been also collaborating on key infrastructure projects.

New Delhi is pushing hard for the development of Chabahar port on the Iranian coast as a hub for its trade links to the resource-rich countries of central Asia and Afghanistan but the Trump administration's tough stance has raised new concerns over the future of that project.

Mr Tillerson struck a conciliatory stance on India's ties with Iran, however, saying it wouldn't come in the way of countries doing legitimate business there.

"It is not our objective to harm the Iranian people nor is it our objective to interfere with legitimate business activities that are going on with other businesses, whether they be from Europe, India or agreements that are in place or promote economic development and activity to the benefit of our friends and allies," he said.

America's disagreements were with the Iranian regime, and in particular the Revolutionary Guard, he said.

India is especially keen on the Chabahar port as a way to bypass long-time foe Pakistan which does not allow easy trade and transit arrangements to Afghanistan and beyond.

Mr Tillerson said the US stood should-to-shoulder with India in the fight against terrorism which New Delhi has long said is centred in militant groups operating from inside Pakistan.

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He said militant groups were a threat to everyone in the region, including Pakistan itself.

"Quite frankly my view — and I expressed this to the leadership of Pakistan — is we also are concerned about the stability and security of Pakistan's government as well," he added.

The US has been urging Islamabad to act against the groups that operate in Afghanistan, India and inside Pakistan itself. "Terrorist safe havens will not be tolerated," Mr Tillerson said.

Pakistan says it is doing all it can to fight the militants.

The talks also touched on India's diplomatic ties with North Korea, Ms Swaraj said, at a time when the US has stepped up efforts to isolate Pyongyang over its nuclear and missile programmes.

Ms Swaraj said she told the top US diplomat that some level of diplomatic presence was necessary to keep open channels of communication.

"As far as the question of embassy goes, our embassy there is very small, but there is in fact an embassy," she said.

"I told secretary Tillerson that some of their friendly countries should maintain embassies there so that some channels of communication are kept open."

India and North Korea maintain diplomatic offices in each other's capitals, though New Delhi recently banned trade of most goods with the country, except food and medicine. Trade was minimal, Ms Swaraj said.

The focus on North Korea comes as US president Donald Trump heads to China next month, where he is expected to urge president Xi Jinping to make good on his commitments to try to rein in North Korea.

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The lowdown

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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.”

While you're here
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Company profile

Company name: amana
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Investment stage: Self-funded

Keep it fun and engaging

Stuart Ritchie, director of wealth advice at AES International, says children cannot learn something overnight, so it helps to have a fun routine that keeps them engaged and interested.

“I explain to my daughter that the money I draw from an ATM or the money on my bank card doesn’t just magically appear – it’s money I have earned from my job. I show her how this works by giving her little chores around the house so she can earn pocket money,” says Mr Ritchie.

His daughter is allowed to spend half of her pocket money, while the other half goes into a bank account. When this money hits a certain milestone, Mr Ritchie rewards his daughter with a small lump sum.

He also recommends books that teach the importance of money management for children, such as The Squirrel Manifesto by Ric Edelman and Jean Edelman.

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