Raghida Dergham is the founder and executive chairwoman of the Beirut Institute, and a columnist for The National
May 22, 2022
The Kremlin could find itself on the verge of escalating Russia’s war with Ukraine in the Donbas region, even as it weighs its options over how to respond to the likelihood of Sweden and Finland joining Nato after decades of maintaining neutrality.
Moscow likes to mark historical events, so there are two important dates to keep in mind.
On June 12, Russia will celebrate its National Day. By then, it will look to achieve some sort of a breakthrough in what is effectively a shadow war between itself and Nato inside Ukraine. December 28 marks another important occasion – the 100th anniversary of the erstwhile Soviet Union’s foundation. Since Russian President Vladimir Putin considers the USSR’s collapse three decades ago to be the “greatest geopolitical catastrophe of the 20th century”, he will be hoping for a substantive victory by the end of the year.
Nato, meanwhile, is scheduled to hold its annual summit in Madrid on June 29 and 30 to consider how much more involved it needs to be in the war.
There are whispers in the West that the alliance may be keener than it was two months ago to enforce a no-fly zone over Ukraine. Many member states, including the US and Germany, have so far resisted Ukrainian President Volodymyr Zelenskyy’s request to create one. There is a genuine concern that if Nato changes its position, the prospect of a direct aerial combat is almost certain, which could pave the way for a major war involving the rest of Europe.
The thinking in Russia today is less strategic, but more tactical
Another development that will almost certainly trigger major tensions in Eastern Europe is if Poland decides to allow the US to deploy nuclear weapons on its soil. This will force Moscow to do the same in Kaliningrad, the tiny exclave it controls just north of Poland. Warsaw has yet to decide whether to give the US, a fellow Nato member, the green signal.
Moscow seems resigned to the prospect of Sweden and Finland joining Nato. It has avoided making direct threats against the two countries in recent weeks, even though their joining the alliance will effectively convert the Baltic Sea into “a Nato lake”, as one expert who did not wish to be named put it to me. Indeed, this would give Nato the ability to control the waters around Kaliningrad, which provides Russia’s only base in the Baltics.
The major hurdle for Nato right now is the objection that one of its members – Turkey – has sounded to allowing Sweden and Finland in. It has pointed to Sweden’s refusal to disavow its support of the Syrian Democratic Forces, considered an offshoot of the banned Kurdistan Workers Party. Ankara, though, may be willing to strike a deal with the West in return for dropping its veto, which could include EU aid necessary for Turkey to continue housing Syrian refugees within its borders, and US approval to readmit Turkey into its F-35 fighter jet programme.
Ankara’s possible acquiescence will come as a blow for Moscow. But Nato’s continued revival is not the only challenge Russia faces. Its strategic foothold in the Middle East where, it has built valuable relationships over the years, is also in danger of loosening.
Its much-vaunted achievements in Syria, for instance, have become secondary to its objective of returning Ukraine to its sphere of influence. But such has been Moscow’s focus on Ukraine that the war there could well determine its presence inside Syria, where it is aligned to the Assad regime.
The thinking in Russia today is less strategic, but more tactical. This applies especially to Moscow’s equations with Israel, Iran and Hezbollah.
Ambassador Vassily Nebenzia, permanent representative of the Russian Federation to the UN, attends a Security Council ministerial debate in New York last week. AFP
Russian-Israeli relations have soured in recent weeks for a number of reasons, including the latter’s belated criticism of the Ukraine war. Whether this drifting of sorts means that Iran, an ally of Russia, will be tempted to provoke Israel into another proxy conflict in the region – without Russia’s willingness to restrain Tehran – remains to be seen. The jury is also out on whether Hezbollah will attempt to create tensions on Lebanon’s border with Israel, forcing the latter to seek Moscow’s help to rein in the group.
The important thing to note, however, is that just months ago, Russia was an important actor shaping major international decisions. Today, its global influence is limited to its UN Security Council veto power through which it can at best paralyse the international body. It has little assistance to provide to Iran and is undecided on what role to play in the discussions to revive the nuclear deal between Tehran and the Security Council members, plus Germany.
This receding of Russian influence has benefited Washington.
US President Joe Biden’s leadership is now being taken seriously – not just in Europe, where he has brought Nato members together, but in the Middle East also, where he has used his administration’s strong ties with Israel to persuade it to shed its previously neutral stance on the war. Moreover, he has overcome the notorious partisan divide in Washington to sign a $40 billion aid package to Ukraine. What merits close attention is his ongoing charm offensive with the Arab nations, which could also have important implications for the world at large.
With fewer allies in its corner, the pressure is weighing even more heavily on the leadership in Moscow. Which way the wind blows, in a manner of speaking, in Ukraine’s eastern regions of Donetsk and Luhansk over the coming weeks could well determine whether Russia can gain some of the ground it has lost since the war began in February.
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.”
Company profile
Date started: 2015
Founder: John Tsioris and Ioanna Angelidaki
Based: Dubai
Sector: Online grocery delivery
Staff: 200
Funding: Undisclosed, but investors include the Jabbar Internet Group and Venture Friends
UAE currency: the story behind the money in your pockets
White hydrogen: Naturally occurring hydrogen Chromite: Hard, metallic mineral containing iron oxide and chromium oxide Ultramafic rocks: Dark-coloured rocks rich in magnesium or iron with very low silica content Ophiolite: A section of the earth’s crust, which is oceanic in nature that has since been uplifted and exposed on land Olivine: A commonly occurring magnesium iron silicate mineral that derives its name for its olive-green yellow-green colour