Russia warned the United States on Friday it would regard any US move to curb the activities of its banks as a declaration of economic war which it would retaliate against, stepping up a war of words with Washington over spiralling sanctions.
The warning from Prime Minister Dmitry Medvedev reflects Russian fears over the impact of new restrictions on its economy and assets, including the rouble which has lost nearly six per cent of its value this week on sanctions jitters.
Economists expect the economy to grow by 1.8 per cent this year. But if new sanctions proposed by Congress and the State Department are implemented in full, something that remains uncertain, some economists fear growth would be cut almost to zero in future.
In a sign of how seriously Russia is taking the threat, President Vladimir Putin discussed what the Kremlin called "possible new unfriendly steps by Washington" with his Security Council on Friday.
Moscow's strategy of trying to improve battered US-Russia ties by attempting to build bridges with President Donald Trump is backfiring after US legislators launched a new sanctions drive last week because they fear Mr Trump is too soft on Russia.
That in turn has piled pressure on the Republican president to show he is tough on Russia ahead of mid-term elections.
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On Wednesday, the State Department announced a new round of sanctions after the US determined that Russia had used a chemical weapon earlier this year in the attempted assassination of a former Russian spy in Britain. Separate legislation introduced last week by Republican and Democratic senators, dubbed "the sanctions bill from hell" by one of its backers, proposes curbs on the operations of several state-owned Russian banks in the United States and restrictions on their use of the dollar.
Mr Medvedev said Moscow would take economic, political or other retaliatory measures against the United States if Washington targeted Russian banks.
"I would not like to comment on talks about future sanctions, but I can say one thing: if some ban on banks' operations or on their use of one or another currency follows, it would be possible to clearly call it a declaration of economic war," he said.
"And it would be necessary, it would be needed to react to this war economically, politically, or, if needed, by other means. And our American friends need to understand this," he said, speaking on a trip to the Russian Far East.
In practice however, there is little Russia could do to hit back at the US without damaging its own economy or depriving its consumers of sought after goods, and officials in Moscow have made clear they do not want to get drawn into what they describe as a mutually-damaging tit-for-tat sanctions war.
The fate of the US bill seeking action against Russian banks is not certain. The full US Congress will not be back in Washington until September, and even then, congressional aides said they did not expect the measure would pass in its entirety.
While it was difficult to assess so far in advance, they said it was more likely that only some of its provisions would be included as amendments in another piece of legislation, such as a spending bill Congress must pass before September 30 to prevent a government shutdown.
COMPANY%20PROFILE
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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.”
COMPANY PROFILE
Name: Qyubic
Started: October 2023
Founder: Namrata Raina
Based: Dubai
Sector: E-commerce
Current number of staff: 10
Investment stage: Pre-seed
Initial investment: Undisclosed
Miss Granny
Director: Joyce Bernal
Starring: Sarah Geronimo, James Reid, Xian Lim, Nova Villa
3/5
(Tagalog with Eng/Ar subtitles)
The specs
Engine: 1.5-litre turbo
Power: 181hp
Torque: 230Nm
Transmission: 6-speed automatic
Starting price: Dh79,000
On sale: Now
Skewed figures
In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458.
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
Napoleon
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Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
MATCH INFO
Who: France v Italy
When: Friday, 11pm (UAE)
TV: BeIN Sports
