Europe

US and EU lead push to prevent war

The US and the EU are leading the diplomatic push to prevent all-out war between Georgia and Russia.

The United States and the European Union are leading a diplomatic push to prevent all-out war between Georgia and Russia, calling for a ceasefire as Russian tanks rolled into a rebel Georgian province. Envoys from the US, EU and Organisation of Security and Co-operation in Europe (OSCE) were being deployed to Georgia to seek an end to the fighting in Russian-backed South Ossetia, a breakaway region of Western-backed Georgia.

The US deputy secretary of state John Negroponte yesterday summoned the Russian Charge d'Affaires Alexander Darchiyev to the State Department to press Moscow to cease military operations in Georgia. "The United States calls for an immediate ceasefire to the armed conflict in Georgia's region of South Ossetia," the US secretary of state Condoleezza Rice said in a statement yesterday. "We call on Russia to cease attacks on Georgia by aircraft and missiles, respect Georgia's territorial integrity, and withdraw its ground combat forces from Georgian soil."

The US was working actively with its European allies to launch international mediation to end the crisis, Ms Rice said, adding that senior US officials have spoken with the parties in the conflict. "We underscore the international community's support for Georgia's sovereignty and territorial integrity within its internationally recognised borders, as articulated in numerous UN Security Council resolutions," she said.

President Bush was being kept abreast of the crisis even as he attended the start of the Beijing Olympic Games, his spokesman said. Russian tanks and troops surged into South Ossetia yesterday to repel a Georgian offensive to reclaim the region amid fighting said to have left hundreds dead. South Ossetia broke from Georgia in the early 1990s. It has since been a constant source of friction between Georgia and Russia, which disputes Tbilisi's hopes of joining Nato.

South Ossetia has long sought unification with North Ossetia, which is inhabited by the same Ossetian ethnic group but ended up across the border in Russia after the 1991 collapse of the Soviet Union. The Georgian government, led by President Mikheil Saakashvili, announced it would withdraw 1,000 of its 2,000 troops who are part of the US-led coalition in Iraq to help the fight in South Ossetia. The Pentagon said Georgia had requested aircraft to move its troops out of Iraq.

The EU presidency said it was in contact with all protagonists and working to secure a ceasefire "so as to avoid an extension of the conflict". The EU "calls on all parties to cease hostilities and to resume, without delay, so as to secure a political solution to the crisis, which respects Georgia's sovereignty and territorial integrity," it said. The EU foreign policy chief Javier Solana has been busy on the phone talking with, among others, the Russian foreign minister Sergei Lavrov and the Georgian foreign minister Ekaterine Tkeshelashvili, a spokeswoman said.

At the United Nations, however, the Security Council failed to agree yesterday on a statement calling for an immediate truce in South Ossetia. The 15-member body was scheduled to try again today. Diplomats said a Belgian-drafted compromise text also urges the warring sides to "show restraint and to refrain from any further acts of violence or force," calls for respect by the parties of past accords and for the provision of humanitarian aid to victims.

The Russian ambassador Vitaly Churkin insisted on the need for Georgia to agree to a formal renunciation of the use of force by either side. The Georgian reintegration minister, Temur Yakobashvili, told the French Le Figaro newspaper that Western diplomats would have a huge say over the outcome of the conflict. Asked what will happen next in the Caucasus, he said, "much will depend on the reaction of the West."

"Will they stay sunbathing on the beach? Or will they give a clear signal to Russia so that it does not cross certain limits?" *AFP

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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.”