Nato primed to activate missile shield despite Russian fury


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CHICAGO // Nato leaders were set to activate the first phase of a US-led missile shield for Europe yesterday, risking to further anger Russia, which has threatened to deploy rockets to European Union borders to counter the system.

The declaration by US President Barack Obama and his allies at a Chicago summit will put a US warship carrying interceptors in the Mediterranean and an early-warning radar system under command of a Nato base in Ramstein, Germany.

The alliance insists the shield is not aimed at Russia and aims to knock out missiles that could be launched by enemies such as Iran, but Moscow fears that the system will also serve to neutralise its nuclear deterrent.

"Missile defence is indispensable. We are faced with real missile threats," Nato Secretary General Anders Fogh Rasmussen said on the eve of the summit, adding that 30 states either have or seek ballistic missile technology.

"Against a real threat we need a real defence," he said.

The standoff has tested Russian-US relations for much of the past decade and been one of the primary issues addressed by Obama when he launched a diplomatic "reset" with Moscow in 2009.

Russian military chief Gen Nikolai Makarov said this month one option was for Russia to station short-range Iskander missiles in its Kaliningrad exclave, a long-running threat that has alarmed Eastern European states.

Nato had hoped that Russian President Vladimir Putin would come to Chicago, but instead he sent a lower level delegation to represent Moscow during the summit's discussion on Afghanistan.

Mr Putin, who returned to power after succeeding Dmitry Medvedev this month, was often at odds with the previous US administration over missile defence in his first two terms of office.

"Russia is sensitive about its nuclear capability because that's what makes it a superpower," said Nick Witney, a London-based defence expert at the European Council on Foreign Relations.

In a bid to appease its former Cold War foe, the Western military alliance invited Russia to cooperate in the system at the last summit in November 2010 in Lisbon, but the two sides have struggled to find common ground.

Moscow has called for joint control over the system and for Nato to sign a legally-binding guarantee that it is not aimed at Russia.

But Nato has balked at both demands, insisting on keeping two separate systems and refusing to sign a legally-binding document.

The US election also appears to have affected the pace of negotiations.

An open microphone famously caught Mr Obama telling then president Mr Medvedev in March that he could negotiate some concessions on the system if Russia gave him "space" until after the election this year.

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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