Ben Wallace took part in a wreath-laying ceremony at the Tomb of the Unknown Soldier by the Kremlin Wall in Moscow. Reuters
Ben Wallace took part in a wreath-laying ceremony at the Tomb of the Unknown Soldier by the Kremlin Wall in Moscow. Reuters
Ben Wallace took part in a wreath-laying ceremony at the Tomb of the Unknown Soldier by the Kremlin Wall in Moscow. Reuters
Ben Wallace took part in a wreath-laying ceremony at the Tomb of the Unknown Soldier by the Kremlin Wall in Moscow. Reuters

Russia says relations with Britain are 'close to zero'


Tim Stickings
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Russia handed Britain a diplomatic rebuke on Friday as it described relations between the two countries as "close to zero, and about to cross the zero meridian and go into negative".

The remarks by Defence Minister Sergei Shoigu came despite two ministerial visits from Britain in two days aimed at defusing the crisis in Ukraine.

After a week of frenzied diplomacy, western leaders were due to huddle on Friday afternoon in a call between US President Joe Biden and the heads of Nato, the EU and European governments.

UK Defence Secretary Ben Wallace, who was in Moscow for talks on Friday, said he had told Mr Shoigu about the "tragic consequences" that any invasion of Ukraine would have.

He said "took seriously" Moscow's claim that it is not planning an invasion, and was open to giving Russia reassurances to address what he called its misconceptions about Nato.

But Britain endured a second day of taunts after testy exchanges on Thursday between Foreign Secretary Liz Truss and Russia's Sergey Lavrov.

"The military and political situation in Europe is becoming increasingly tense. And it is not our fault at all," Mr Shoigu told Russian news agencies.

Mr Wallace travelled to Moscow armed with the threat of tougher sanctions if Russia invades Ukraine, after the British government gave itself wider powers to punish people and businesses linked to the Kremlin.

Asked about Mr Lavrov's description of his talks with Ms Truss as being like a conversation between "deaf and dumb", Mr Wallace said he believed his own discussions had improved the atmosphere.

"I think minister Lavrov is a master at these types of engagements and making those types of comments," he said. “In our discussion there was absolutely no deafness or blindness."

Russian drills

Russia is pressing ahead with military drills close to the sensitive border, with 400 troops taking part in a tactical exercise on Friday in a region near Ukraine.

The drills were expected involve 70 military vehicles, grenade launchers and unmanned aerial equipment, the Russian Defence Ministry said.

The ministry separately said the Russian Black Sea Fleet had held exercises including training on "searching and destroying ships of a mock enemy". War games with its ally Belarus are set to run until February 20.

New satellite images taken this week appeared to show further Russian movements in Crimea, Belarus and near Ukraine, after the build-up of more than 100,000 troops had led to fears of an invasion.

Keen to avoid a war, diplomats and heads of government have criss-crossed Europe this week in the hope of persuading Russia to back down, even though Moscow denies intentions to invade Ukraine.

UK Prime Minister Boris Johnson weighed in with a visit to Poland and Nato headquarters on Thursday, after France’s Emmanuel Macron and Germany’s Olaf Scholz made headline visits to Moscow and Washington earlier in the week.

Mr Wallace, who laid a wreath at a Moscow war memorial on Friday, said relations with Russia were above zero but that progress was slow.

Western powers have repeatedly told Russia it would face severe costs if it invades Ukraine but have kept details vague on what those sanctions might be.

Britain moved to toughen those sanctions this week by widening the pool of potential targets, to include businesses of strategic significance to the Kremlin.

The Russian navy's amphibious assault ship Kaliningrad sails into the Sevastopol harbour in Crimea. AP
The Russian navy's amphibious assault ship Kaliningrad sails into the Sevastopol harbour in Crimea. AP

These could include the defence, chemical, mineral extraction, communications and financial service industries, the UK Foreign Office said.

The order came into effect before being scrutinised by MPs, who now have 28 days to approve the changes – a manoeuvre criticised by some opposition figures.

“It is completely autocratic for the government to publish legislation without any opportunity for anybody to scrutinise it,” Labour MP Chris Bryant said.

Western powers reject Russia’s demands that any further eastward expansion of Nato should be prevented. Alliance leaders say this is none of Moscow’s business.

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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.”

Updated: February 11, 2022, 4:10 PM