UK branded 'third-rank space power' in damning report

The UK has been branded a 'third-rank space power' and its lack of space defence progress deemed 'unacceptable' in a damning Defence Committee report published on Wednesday.

In order to remediate this laggard status, the report called for a Minister for Space to be appointed within the Cabinet Office to provide clear centralised direction and accountability in taking forward the UK’s civil and defence ambitions in space.

It said the need for such an appointment was made even more pressing with space systems under threat of deliberate attack from adversaries and accidental damage from collisions in an ever-more contested and congested space environment.

It also expressed incredulity that almost four years since the UK was excluded from the EU’s Galileo programme, and with tens of millions of pounds of taxpayers’ money spent on considering a replacement, the government appeared no closer to coming to any conclusions about development of the UK’s own space-based Position, Navigation and Timing capabilities.

“Russia’s invasion of Ukraine has thrown the importance of space as a defence domain into sharp relief," said Defence Committee chair Tobias Ellwood.

"In Ukraine, military satellites have been relied on to provide secure communications, intelligence, and weapons targeting. And, for the first time, we have also seen commercial systems, such as Elon Musk’s Starlink satellites, being used to support operations on the ground.

"However, with this reliance comes risk, and in today’s contested and congested space environment our systems are increasingly vulnerable to both deliberate attack and accidental damage.

“Only recently we saw Russia undertake a dangerous and irresponsible anti-satellite missile test which put the International Space Station at risk.

"Russia’s impounding of OneWeb satellites, and the potential merger of OneWeb and Eutelsat, have raised serious questions about the handing over of critical technology to foreign powers and the need for sovereignty."

Mr Ellwood pulled no punches when assessing where the UK stood in the international space hierarchy.

“Over this inquiry we heard that the UK is, at best, a third-rank space power, lagging behind Italy. And while Government has recognised there is work to do, the Whitehall machine is not moving fast enough," he said.

“When the UK was expelled from the Galileo programme there were no real winners. Now, several years and tens of millions of pounds later, we are no closer to the development of a replacement [PNT] network. Instead, the government’s new space based PNT Programme has disappeared into the ether and we risk falling further behind both our peers and our adversaries.

“The lack of progress is unacceptable. In today’s report we call for the creation of a Minister for Space to provide direction, drive and accountability for this and other critical space programmes."

UAE currency: the story behind the money in your pockets

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.”