G7 fights for cash for Ukraine as Russian economy prospers – ALEX BRUMMER

The main focus of Western democracies in this financial meeting has been Ukraine, despite the conflagration in the Middle East.

The worry for the UK and Europe is that unless new resources are released, Ukraine’s fight against the Russian bear will become even tougher.

Failure would make it more difficult to release large-scale U.S. military assistance, currently stalled on Capitol Hill.

Discussions at the G7 finance ministers’ dinner were dominated by finding ways to mobilize cash for kyiv.

The obstacles to using some $300bn (£241bn) of frozen Russian assets to finance the war are clear. Britain insists that the use of seized stockpiles must comply with international law.

It is recognized that simply disbursing frozen assets could be a threat to global stability, raising questions for China and other countries about the wisdom of holding US bonds, or indeed British bonds, in their reserves.

The current goal is to find ways to use returns from tied up assets, most of which are held in euros in Belgian banks, to finance Ukraine’s domestic needs.

The direction ahead is clear, although no final decisions were made at the G7.

The goal is to find ways to leverage accrued interest payments to meet Europe’s commitment to Ukraine.

The pressure on Germany and other core EU countries to quickly put together a package is intense, with Poland and the Baltic states, supported by France, leading the way.

Smart financing, using derivatives, seems the most likely route and speed is essential. Russia’s rapidly growing economy, fueled by military production, is larger than before the conflict broke out.

All of which raises huge questions about the effectiveness of sanctions in resolving conflicts around the world.

royal maelstrom

Weak regulation and the government’s disregard for financially driven foreign ownership led Thames Water down the path to ruin.

Jeremy Hunt is determined that consumers and taxpayers do not have to foot the bill for exploitative lenders and belligerent shareholders.

There are big lessons from this farce for stakeholders in International Distribution Services, owners of Royal Mail. Any bid for the company from billionaire Daniel Kretinsky, who already owns 27.5 per cent, needs to be looked at with a clear lens.

The Chancellor spent time in New York courting foreign investment. But there are big differences between encouraging investors like Blackrock to put money into the London stock market and rolling out the red carpet to opaque private equity.

Kretinsky earned the title “Sphinx” because the origins of his wealth and how he spends it are a mystery.

The Thames fiasco tells us that the public, markets and government must be alert to the shortcomings of private capital.

There is a big difference between the way Thames has been run and the records of publicly traded Pennon, Severn Trent and United Utilities.

They too have made mistakes and the sewage discharges are objectionable. But they have nowhere to hide, with quarterly reporting requirements, careful audits and corporate governance.

Promises made to regulators by private buyers, who shift financing offshore, are virtually impossible to enforce.

Royal Mail is trusted by the NHS, HMRC, police authorities and millions of households. Hunt is clear that transparency is vital for entities providing services to the public.

Policymakers must be alert to the fact that there is no such thing as benign, financially driven ownership.

The music stops.

As Neil Young might sing, it’s the ‘Last Dance’ for Merck Mercuriadis and its innovative music royalty rights fund.

It was a brilliant idea and Merck put together a fascinating songbook that included Young, Justin Bieber and Shakira.

The speed of fundraising, mismanagement and the incursion of larger players hit the model.

The £1.1bn sale to US private equity group Concord may be a lucky escape this time around.