The Russian-flagged cargo ship 'Zhibek Zholy' was anchored off Karasu in Turkey for several days. AFP
The Russian-flagged cargo ship 'Zhibek Zholy' was anchored off Karasu in Turkey for several days. AFP
The Russian-flagged cargo ship 'Zhibek Zholy' was anchored off Karasu in Turkey for several days. AFP
The Russian-flagged cargo ship 'Zhibek Zholy' was anchored off Karasu in Turkey for several days. AFP

Lavrov says Russia open to Black Sea grain deal as Ukraine summons Turkish ambassador


Tim Stickings
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Russia said on Friday it was open to a Turkish-brokered deal to ferry badly-needed food exports through the Black Sea, as Ukraine went public with its frustration at Ankara over the grain crisis.

Speaking at a G20 foreign ministers' meeting in Indonesia, Russia's Sergey Lavrov said Moscow was “ready for negotiations” to shepherd grain vessels out of Ukrainian ports and towards the Mediterranean.

Turkey and the UN have sought to mediate as Russia and Ukraine blame each other for the evolving global food crisis, caused by a standstill in grain and fertiliser exports that has led to soaring food prices and fears of widespread hunger in Africa.

Ukraine does not trust Moscow's assurances that its navy would pass up the chance to exploit a gap in Ukrainian coastal defences if a shipping corridor is opened.

But there is a wariness among western countries about sending their own warships to keep the peace in what could be seen as an escalation, and Turkey has said its navy could act as a potential escort.

“Ukraine must unblock its ports, clear them or ensure safe passage through minefields, and outside the territorial sea of ​​Ukraine, Russia and Turkey are ready ensure the safety of the relevant ships,” Mr Lavrov said, according to Russian news agency Interfax.

Russian Foreign Minister Sergei Lavrov arrives at the G20 Foreign Ministers Meeting in Bali, Indonesia. EPA
Russian Foreign Minister Sergei Lavrov arrives at the G20 Foreign Ministers Meeting in Bali, Indonesia. EPA

“When the negotiations will continue, I can't say, I haven't been to Moscow for several days, but I can confirm that we are always ready.”

Opening the Black Sea is regarded as essential to shifting the bulk of the 20 million or so tonnes of grain that Ukraine has been unable to export, because workarounds such as rail wagons and river barges have far less capacity.

A spokesman for UN Secretary General Antonio Guterres said on Wednesday that his efforts for a grain deal were continuing but would not comment on potential sticking points in the talks. An adviser to Turkish President Recep Tayyip Erdogan said he was hopeful of a deal and that Russian diplomats were engaging in the talks.

The delicate diplomacy suffered a setback on Thursday when Ukraine publicly criticised Turkey and summoned its ambassador over the release of a Russian-flagged vessel suspected of handling stolen grain.

The cargo ship Zhibek Zholy had been detained by Turkish authorities at the port of Karasu while they investigated what Ukraine said was a “particularly egregious violation” during an emerging food crisis.

But ship trackers showed it apparently heading back towards Russia, and Ukraine said the vessel had been allowed to leave despite “criminal evidence” it had presented to the Turkish authorities.

“Ignoring the appeal of the Ukrainian side, in the evening of July 6, the ship was released by Turkish authorities,” the foreign ministry in Kyiv said.

The Turkish ambassador in Ukraine was summoned to the ministry to “clarify this unacceptable situation,” spokesman Oleg Nikolenko said. There was no immediate response from Ankara.

Turkey has criticised the Russian invasion of Ukraine but sought to maintain cordial relations with Moscow. It hosted tentative peace talks between the two warring parties in March.

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.”

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Updated: July 08, 2022, 9:53 AM