 It's a triple pleasure really for me to be helping out with this afternoon's session. Partly because this very building was where I started my journalistic career in England, working for the BBC External Services. Partly because I'm an editorial adviser to Reaction and partly because I'm a fellow of Kings College having been on the council for nine years. So, however it is not about me, as you all know. We are here to discuss the economic warfare and the implications for investment for the private sector coming from that in the next stage of our defensive Europe panel. I should say we're going to talk for about half an hour then we will be taking questions for the panel from the audience. When that happens there will be people with microphones, please wait for the microphone otherwise those people will watch you online or afterwards won't know what you're saying. But without further ado let's welcome our panel. So, we have Pauline Neville-Jones who is a former chair of the Joint Intelligence Committee, also of course former security minister and next to her Dr Martin Nabias who's a banking and finance lawyer and a senior visiting referred search fellow here at KCL. Then Merrin Somerset Webb contributing editor to the Financial Times. You'll certainly have seen her output if you're rich enough to read the money section of the FT on Saturdays and finally we're joined by Jacob Gear who is head of surveillance and tracking at the United Kingdom Space Agency. Welcome to you all. Pauline, obviously we know about warfare in terms of fighting but it seems to me and I hope you agree that there are many many other components of modern warfare as we've seen in Ukraine particularly the whole question of economic muscle. And indeed used in the form of sanctions. It's worse I suppose outlining, excuse me briefly. There are basically three categories of sanctions that I can think of. There's the primary sanction, there is the secondary sanction when the operation of the primary sanctions is monitored and reinforced possibly by secondary sanctions of a kind which put extra pressure on those who are not conforming and not joining the sanctions. And the third is counter sanctions which we just seen the Russians impose via the way which they've asked for oil and gas to be paid for and also the way in which they have done something which I think is to their long-term disadvantage which is to deny the Polish and the Bulgarian markets. Now that says us something about Russian behaviour which they never did in the Cold War. They always fulfilled their contracts and now they've broken a contract which I think tells you that this is now a political weapon as far as the Russians are concerned which is bound to have effects on how the West responds. It increases the pressure to move away from supply by Russia. The other thing I think it's worth saying just about sanctions is if you have UN support and you have a UN resolution you're likely to get obviously a good deal more buy in from the rest of the world. Most of it I think increasingly that's hard to get in the case of Russia we clearly won't get it because you've got to remember the Security Council capable of blocking any resolution. So clearly adherence to a sanctions regime is going to be voluntary on the part of other other states in the world and as we've seen not everybody is in agreement. So as far as the sanctions on Russia are concerned it will be a partial. It will be a partial feast. However as the Western democracies and particularly European countries are a major purchaser of oil and gas it will have an effect. What kind of effect is a different issue? I mean the object often of sanctions now is to undermine the economy of the country concerned in order to change the policy via popular pressure on the leadership. The difficulty with this thesis which is I think true probably of all pretty much all sanctions is that the countries that are the object of sanctions are usually run by people who don't actually have much care for or truck with the welfare of their populace. Therefore the likelihood of being impressed by popular discontent and opposition is rather low. The eye of solos you can name a number. I don't however think that for that reason sanctions are ineffective. They don't always have the effect you want and they can be absolutely counterproductive as we are finding you know with the shock and I think use the word shock that's been delivered to European economies in terms of the cost of energy. So you have to think it through before you go down the sanctions regime. Martin just how unprecedented are the sanctions we're seeing on both sides. I mean what are we seeing because we're seeing government sanctions but we're also seeing businesses making. I forgot you know state on people. Magnitski et cetera say sorry. Well we're seeing a full spectrum kind of sanctions targeting Russia. I work on application of sanctions on a day to day basis. My view is from the ground it's not standing back and looking at overall and so my perspective comes from the application. Now even before this war in this country sanctions have become a very significant pot of UK foreign policy. The last time I looked at the office financial sanctions implementation website there were over 30 regimes. I think about 34 different sanctions regimes that we have to navigate around on a day to day basis and to which we have to apply EU sanctions which will diverge ultimately from the UK sanctions US and US secondary sanctions and as there are thousands of people across the city of London and on the continent trying to apply this and it's costing billions of pounds and then the war came and we saw a whole stroth of new sets of sanctions being applied trade sanctions financial sanctions immigration sanctions. I mean in this country alone over a thousand people new people have been designated sanctioned over 80 to 100 oligarchs over 100 over 100 entities so the question is how effective have they have those been? Well in the short term I think they're irrelevant to the battlefield in the middle term in my view they will strengthen Putin in the long run well that's a different story in the long run the question is do we want to have sanctions in the long run because there are a number of questions that I would want to ask policymakers who are developing these sanctions that we are asked to apply. Firstly what are the purpose of these sanctions right? Are we trying to influence the battlefield or we're trying to I mean the sanctions in respect of Ukraine are articulated in that kind of way to get Russia to desist from its destabilising actions in Ukraine are we trying to actually affect the battlefield I mean are we punishing Putin are we punishing his friends are we trying to are we trying to punish the Russian people right are we trying to affect regime change and most importantly from what I can see what do the Russians have to do in order to get out from under the yoke of sanctions right look the North Koreans know what they have to do and the Iranians also know what they have to do but what do what do the Russians have to do so that is the first point I would say the second point I would say is that not only do we have to have an articulation by the by the by the by the government as to what the purpose of the sanctions are but we also have a realistic realistic expectation of what sanctions can do there's a literature on the effectiveness on sanctions we've been plying sanctions on North Korea Cuba Iran and many other countries for decades how's that going the second point I would point out that there's been a lot of self congratulation amongst policymakers and others in respect of sanctions on on Russia for Joe Biden said the ruble will turn to rubble the rubble looks pretty strong to me at this moment I understand the reasons for that and they may not be long term but that is the fact the second unescapable point and you see this working I don't like saying the front lines I don't like those military analogies but but on the ground is that we are financing both sides of the war we are actually financing both sides of the war and other reasons are explicable right we know that we cannot pull ourselves out of our gas consumption and our oil and coal and other commodities consumption but this is outrageous I mean it's immoral isn't it I mean we're in the ironic position that as we seek to curtail our imports of Russian commodities and oil and gas we're pushing the price up the Russians are earning more than they've ever earned as a result of oil and gas so over the past two months according to some figures on these figures are contested the Russians have earned over 40 44 billion dollars from their exports to to to Europe as opposed to 140 billion during 2021 they're almost 50% in terms of income of their projections for 2022 and there are other effects of sanctions too um which which you previously said these things have to be thought through and sometimes I don't think they are thought through there's a problem of de-risking I mean effectively on the ground you don't really expect financial institutions to sit around and look is this individual subject to sanctions is that individual subject doesn't work like that right people will totally de-risk from from from anything Russian so simple so ordinary people will not do and finally my last point is that your third world countries there are other countries that do not have a dog in the spot that are suffering the consequences of these rising energy prices so my answer to you is the sanctions at the moment in the long term they will hold out somehow but in the short and medium term the consequences are there for our economies and our allies economies are pretty pretty significant well thank you for that you were talking about the impact on the private sector on business there and and Mary you know these days companies investors they want to respect ESG economic and social and governance issues they want to be seen to do the right thing but how easy is it to really do the right thing in terms of wanting to have an impact of put the pressure on Russia to stop the war yeah well this is really interesting some things I've been writing about for a while but the the war has really thrown it in fairly sharp relief sharp relief you know there's been a huge amount of money pouring into ESG strategies for investing since about 2015 based on the idea that if you invest in a way taking into account all these different factors you will also do better so over time you'll outperform every index under the sun if you just behave well at the same time but the question is a how do you behave well and b is the is the outperformance bit true and we don't know about the outperformance bit but we do know is that it's voting on impossible to identify good behaviour when it comes to the corporate world you know we do an awful lot of box ticking which makes the whole thing very very rigid but we also have a million different organisations creating the boxes which makes it incredibly flexible at the same time which of course makes it completely meaningless and one of the things that I that I wrote about a few weeks ago was about the defence sector now if you run an ESG fund of any kind over the last five five years or so you will have been absolutely determined to avoid the defence sector because it doesn't tick any boxes at all it's not environmentally friendly it doesn't appear to be socially friendly it doesn't perhaps encourage good governance so if you look at any defence company you would go well that's not ESG so what do you do you exclude it and in excluding it you make it unpopular you get to the point of beginning to starved of capital you move defence companies into the private sector etc and all these are they are not good things they are bad things and along the way you take an industry that in fact we now look at and say well in fact this is this is an s and this is a g because without defence companies how can we preserve living standards how can we preserve life even so suddenly defence is an s it may be a g gosh it may even be an e if you fiddle around with the numbers enough so the concept of what is ESG and what is not is shifting all the time and the other big part of those which reflects partly what you were saying is the fossil fuel industry which has been treated as an absolute pariah by ESG for the last decade plus again constantly being excluded from ESG portfolios being treated as though it is in itself a genuinely evil thing and we see that extending into governments of wealth and as we starve our big old companies of capital and as we push our businesses not that short of it right not right now but they have been in the past and you know that's on a part why why we are where we are at the moment we have discouraged fossil fuel production in the west in countries which we might consider to be friendly including our own for that matter and that has left us overly dependent on external sources so you might say what we've what we've done is effectively kind of advanced self-sanctioned ourselves with our ESG strategies and that means a very big conversation in the investment industry right now now what about the final frontier then space how is the war impacting on space both in terms of government and increasing private sector investment well firstly let me say hello and thank you for your invitation I represent the UK space agency we're an agency part of government we look after civil matters so defence and war isn't my normal subject matter and there's people here that know more about it than I do to answer a question space is inherently a dual use sector a dual use environment everything in space can be used for civilian purposes or indeed for military and so I think we've seen the recent conflict in Ukraine prove to people just how dependent they are upon space assets or what a difference satellites in the right place at the right time can make to your work a couple of examples if I may Russians have been denying or jamming GPS all around the Don Pass region and down to the south as well so they've been using local assets to jam the signals coming down from space degrading Ukrainian armaments targeting communications on the the the side of the Ukrainians earth observation data pictures taken from satellites of the ground so that there's a famous picture of the Russian convoy inching towards and then away from Kiev all taken by commercial satellite companies that just provided their data for free to Ukraine in the world just there you go you've got an ice star capability for free on on day two of the war fantastic the one web satellites a British party British government owned company had 36 satellites in a launch pad in Baikonur in Kazakhstan the Russian said thank you very much we'll take all of those and are busy looking at the various different hardware and software that's gone into them as well that's an effect of of war on our industry as well so we've seen recently a recognition of space as an important domain we've seen NATO recognising spaces of war fighting domain we've seen the UK space command stood up joining the the French US now the Australian space command Japan the military's getting more interested in this in this domain on the civilian side I think we're starting to see a lot more procurement outside of the US the US was always a procurement led space sector the government was underpinning that area I think now in the UK and other areas we're starting to see lots more chunky government contracts for space capabilities coming out and we started that conversation about sovereignty about independence about requiring national protection of the supply chain for example because people are recognising how important space is and that is starting to be felt across the space sector here in the UK and how does space do well in the ESG I don't think he gets many ratings yet but I suspect that well as I say ESG is everything and nothing there'll be some people who'll be able to find lots of boxes to take for everything in space to be a good thing and some people will find lots for them to be a bad thing I mean it's interesting because the world's two richest men are going into space aren't they and they are and again I mean Twitter is an absolute classic of the ESG conversation right so I mean again I wrote another column a little while ago one last week maybe the week before when we were talking about Elon Musk taking over Twitter and I looked at its ESG ratings and it has very high ratings um but would you necessarily give it a high rating under under s you know so once you start looking at it properly and will you give it a high rating under a high rating on s once it's owned by Elon Musk then you've given it one when it's owned by the market how much do we value free speeches free speech in s is it a g and find out if I can come in there the the same satellites I mentioned that flying over Ukraine giving free image reads the Ukrainians about six hours later they're flying over the Amazon looking for deforestation for for new changes in the main forest there that's pretty much their environmental raising debt before this conflict and now they find a new market to buy or supply their services to probably never jones as the almost politician here what do you what do you say to Martin's view that sanctions basically are pretty flawed well this was like the question we do have to ask is well what's the alternative I mean you said rightly that we're dancing both sides of the war if we didn't have any sanctions we'll be financing the other side of the war even more so you know it's it's not ideal uh it's not you know it's not perfect but I think you'll have to argue that and have to accept that it's a a contribution to to policy I think sanctions are always overwritten as to what they can achieve they don't own the whole bring down regimes but they can do them quite a lot of damage I would say that this war combined with the economic penalties that it's imposing on the existing globalized system is going to have long term consequences because I said I don't think we're going to go back you know to a status quo ante with the Russians so I think we have this is this is permanent change in the game I think and one I think it's a unless I'm quite wrong about you know how quickly this war ends we are going to find I think that we we revert to something that Ben Wallace used the term twice in the previous session containment and they were going to see quite a lot of old old policies resurrected well I mean you said that you thought in the medium term this would actually strengthen Putin regime but why because of the money well because he controls the media within Russia he controls the narrative we don't have access to the Russian people directly and he can explain the hardships that are occurring to the Russian people by our actions and one of the one of the things that's missing in our policy is any kind of counter information I'm old enough to go back to the Cold War when we had in foreign office something called information research department which was a polite title for actually interfering other people's politics I mean did it very actively and rather successfully and the Russians do it to us but what have we done so far it should be said I think the BBC well services no I mean the Russians are doing it all the time to us with with their cyber operations now but I'm not suggesting we emulate all of the tactics they use but we do need to try to penetrate what you've just tried correctly identified as being Putin's monopoly at home the other thing I would say is that though it's it does take time I think that globalised trade you know it isn't now a question of sending out finished product or stopping finished product it's very much more a supply chain and I think it is going to be the case that he's going to find that there are things missing in the supply chain which is going to hamper not only the economy but actually his military capability as well there's more inside you know Russian Russian armament of western origin than people realize so this is not without I think you know real impact actually on fighting capability um I can't can't I agree I agree with what what you say yeah I'll you you raise the issue of what is the option right and there isn't an option I agree absolutely that we should be sanctioning the Russians for their aggression what I would oppose and we haven't come to that yet is secondary sanctions what I understand what I mean by secondary sanctions is the US does it in relation to Iran and Cuba is that we sanction other countries that are dealing with the Russians I would feel uncomfortable about that because those many of those countries would be countries that have little choice because I mean we're already feeling that the consequences of India Sri Lanka there are a whole raft of countries that are of of feeling the consequences now in the short term as I said and I think we agree the impact on the war will be minimal right Putin doesn't need doesn't need us to do anything for him to prosecute the war in the short term in the middle term in the midterm as I said it will strengthen in the long term yeah because his weapon system his economy is dependent in the long term we will force down his his GDP will reduce his the consumption in Russia will reduce investment and we will create a lot of problems for what we've got to ask ourselves and that's another question which which the government has got to got to provide us is as I asked what does the Russians have to do to get out of it and how does how does this relate to our end game I mean you've asked that question but isn't the answer stop the war I mean not not not invade Ukraine I mean that's fairly simple isn't it let let that will be settled on on on on the battlefield what I'm what I'm asking is do we want to be in a position and we've been down this route before where we continue to sanction a regime that feels defeated lost resentful I mean we've done this before and it didn't end very well okay we don't want to make the pub squeak so what I'm saying well I mean I mean reparations is an interesting question when you see the destruction that's reparations is a good good good talking point but practically I don't see it happening I mean we can't seriously believe right I mean the Russians are facing some form of defeat right whether it's spinnable or catastrophic but I cannot imagine a circumstances where we will we will occupy in Moscow and force them to pay reparations like we did to the the Germans in in 1918 that that's that's dream time I mean remember what one of the obvious persons of sanctions is kind of disinvestment isn't it to get companies out and companies aren't pulling out so in that sense they are they're working aren't they for companies yes so if if what you want from the listed companies around the world of them to by divest themselves of all their operations in Russia immediately then yes you're getting that an awful lot are in fact the majority have and you're also having what you just said about non lack of discrimination when it comes to dealing with for example Russian people in the city etc instead of looking at who's a sanctioned and who isn't you're getting a sort of mask pullback of of all business with people with Russian connections etc so you are saying that happened absolutely but it's a bit late in the day I think is the thing to say there you know and that there is this G in ESG and all of the fund managers investment managers who over the last four or five years have been heavily invested in Russian companies should now be looking at themselves and saying well was I actually paying any attention to the G over that matter to the S so for example take the big Russian oil and gas companies now if you looked at the ESG ratings on those even through March of this year quite a few of those big companies had better ESG ratings than for example companies operating in the North Sea supplying gas to the UK and better ESG ratings than a lot of the companies that you and I would think of as being perfectly reasonable and providing perfectly adequate goods and services to consumers here so that just shows you that the wrong boxes are being ticked because if you had looked at those companies and thought well hang on a tick you know the natural resources cursed as something we've all known about for a long time and we all know we should know if we studied any economic history that if you support companies in resource rich countries the taxes of which go to support non-democratic governments you tend to end up with some kind of crisis or another and this of course is one that affects us all so were you sitting around a couple of years ago looking at your ESG portfolio and looking at what you had ticked and what you had not and had any foresight around the G possibly you would have invested differently so there's a big wake-up call here for the industry when it comes to G. Jacob we think I certainly think of a lot of space as international cooperation we had the international space centre and all the rest of it but are we entering a new era of national competition to a certain extent? I think it does appear that we are the corporation in space so the international space station which was always a Russian U.S. and other nations coalescing around that that seems to be now being something the Russians want to pull out from and stop doing the the Russian support to exploration missions going to the moon going to Mars things that have no military consequence at all seems to be lessening now they've stopped launching our science payloads there's a particular rover that's been built in stevenage called the Roslyn thank the rover needs a Russian system to get down to the surface of Mars we're now going to have to go back spend about four five years and quite a lot of money finding a new system somewhere else in the world to do the same job so there are impacts of this and it and it is becoming quite apparent that the Russians see their their space capabilities as something they can trade and take away or put back so to suit their ambitions and one final point it's yet to we'd like to see how China are going to mirror this or otherwise do they see this as a playbook they can do the same thing with there's been no change in their corporation with international partnership at the moment but they have started talking about Russian Chinese space stations at Russian Chinese moon bases so again with those allies in the military sphere seem to be coming together into the the space domain as well and that will as I said earlier have military implications in the longer term right we're going to take questions in just a moment so if you could raise your hands what we're trying to do is get the people with the microphones to you in advance so we don't have sort of awkward pauses so anyone who's got a question already uh one there at the back um we're bringing you in in a moment anyone else second question no okay well we'll have those in a moment but I want to before we go to the floor I want to ask you what's something about we haven't talked about so far magnistically sanctions in other words personalized sanctions a lot of media focus on oligarchs and of course we've had the Abbott Brown vich Chelsea situation all the rest of it are those a good idea um well there's been there's been I think a feeling that the whole um Russian investment personal oligarchic in London dirty money needs clearing up and that's been around for a very long time uh and and rightly I mean we do not want to become a washing machine for dirty money the city is probably we have been involved in that and I'm not a legal professional or a lot of other things so not and I think not particularly savory um does the present uh sanctioning of given individuals make much difference in real life no it makes it difficult for them to travel mr Putin now clearly can't leave Russia and the whole lot of other people can't leave Russia safely I mean they will they'll be subject to international arrest um so I mean it it it has it has effects on personal freedoms but um I'm to be frank a bit sceptical about it so what do you think Mary well one of the problems with that as I've you said earlier is that you know Russian money is shot through our entire system in one way or another there are lots of well of Russians living in London they're very fully invested in our financial system and if you have uh sanctions on individuals no one knows who's going to be sanction next or who is connected to who so you do end up bunging up a lot of stuff and that may be okay uh but there are a lot of unintended consequences in the financial world from sanctioning a few prominent people I should add I think then they're not as complicating a factor I mean it enables us to express disapproval and people like me on to do that um but it's not as complicating a factor as the allegations about uh you know war crimes and all the other charges of a nature which will now make it quite difficult to know whether you can actually deal with any of these people um and you have to find new interlocutors who haven't actually been no given these labels in order to have a negotiation that's also quite tricky yeah I mean the oligarchs have got a lot of bad press and and rightfully so but sometimes the reporting has gone slightly over over the line you know the oligarchs have infiltrated our our society and their money is everywhere within two seconds the government rolled them up overnight and the oh no oligarchs have ever had any I'll come to that one the one I'm thinking about if these people had infiltrated our society as as as it was claimed they were as effective as the russian air force in the first two weeks of the war which means they weren't very effective indeed there was there was one case that I looked at um of a russian oligarch that owned some newspapers and was in the house of of laws and his dad was a former kgb agent and I thought gee was that that looks pretty awkward but he's still there and we're still doing what what what we're doing so I mean it's we have a problem in this country of of of where we cannot determine the provenance of funding that's coming into it our competitors and I'm not talking about mosca I'm talking about paris amsterdam and frankford they have the same problem ours is bigger because our economy is bigger but but ultimately this is a criminal problem that that that can be managed and and is being managed to the best of of everybody's capability right let's go to the floor uh gentleman there and then we'll come there next uh has he got a microphone yep hi hi my name is larian yeah carry on um I have a question about talking about secondary sanctions so with reference to india in particular buying discounted russian energy products where which are kind of undermined the sanctions but on the other hand how would you deal with a country like that because on one hand it's causing problems when trying to counter russia but the other hand long term thinking with china you wouldn't want to alienate india because of course you have to think with the pacific region india would be a very important country to deal with they want to feel that india well um if I heard the question correctly I mean it seems to me that it would be a mistake for us to try to impose secondary sanctions on india if you really want to get support what you need to be able to do clearly is to offer them an alternative that in the short term that may be difficult in the energy market but you certainly do think that one needs to continue to talk to countries like india um you know in exchange of views and actually explaining each other's difficulties no it is not not a silly thing to be doing um similarly one wants obviously to persuade people that aligning themselves with china and this is not a brilliant idea and the chinese themselves have been so as I can see quite careful they haven't in fact endorsed they haven't in fact endorsed the takeover of of uh of Crimea um I think they regard that Taiwan issue as being the law on their side we might disagree with that but therefore I think legalism is actually quite important in this game uh so I don't actually see them as coming in right behind the Russians I think they won't discard them but I think they'll be quite careful uh so it may not be this sort of great coalescing of two autocratic countries and we need to prevent that happening and that is going to require a very skillful diplomacy and its diplomacy we keep on coming back to in this that needs to accompany the military and the economic yeah I agree with that and what was said about secondary sanctions I we there are many many countries out there india is a primary one that do not see the war the way we see the war and even if they did see the war the way we see the war do not have the economic capability to divest themselves from from uh from from the their Russian connections there's no obligation you and obligation to do so absolutely and just lastly if I can just push back on something you said Adam you said the easiest way to end sanctions is for the war to end right but it's not exactly like that because what happens to the Russians determined tomorrow will just stop right will stop we'll sit in place does that mean and right and and there they are does that mean that sanctions well I wouldn't find that at the end of the war I mean oh okay so it's your definition of what the end of the war looked at all right but it is a great risk Adam yeah I mean I just want to ask you about this I don't know what you call it I mean one of the things about the city which has grown the financial sector is basically they take anybody's money um and now there's a kind of element of nationalism if not if not racism perhaps in some cases coming into it and presumably that will mean a much smaller city in the long run won't it well not necessarily I mean it depends on how you look at our competition if everyone behaves in the same way then the city doesn't necessarily get smaller and I don't see why you can't be um an entirely open financial centre while still having in place filters to present prevent dirty money coming in and that's something we haven't been particularly good at is the filtering um but we can get better at that without being quite as indiscriminate as we're being at the moment but I mean rough guess how much of the percentage of the money going through the city is dirty money I can't make that guess I'm simply not privy to that information I mean are we talking 10th no I mean this is that the city is a hugely successful place and the majority of the money inside it is legitimate it's one of the greatest service centres in the world it's a the city of London is a phenomenal place taking away the dirty money around the edges is going to be marginal okay next question there gentlemen that hi yeah um it's the principal job of all governments to protect their citizenry what can defence and aerospace firms do to reach out to investors retailer institutional um to let them know that investment in those industries is important secondly um the amount of foreign investment in russia is dwarfed by foreign investment in china uh is the panel's feeling towards that positive um what could potentially happen with the situation in china you can speak soundly be great well do you want me to say that first one yeah investment well the first thing to say is that um they can stop telling them that it's bad right so we've spent the last five years listening to the investment industry encouraged by every lobby group under the sun and this is fair it makes sense right so after the great financial crisis the financial industry was deemed the most evil thing in the world so they need to find a way to claw back from from that depth of misery and show everyone that they're really really good people trying to do really really good things and esg is is partly in effect of that fantastic marketing campaign that they've been doing but in doing so they have simply announced esg this is good if we follow these rules is a good thing what they haven't done is stop to explain to the end invested the retail investor the beneficial investor the actual owner of all assets what that means if we do this the consequences are if we do this the consequences are i'm not entirely sure to be fed they thought this through themselves but now they're getting a good lesson and what the consequences are of the way in which they have invested and the way in which they have marketed over the last five years so what we need to see now is a reversal and we are getting that already you're already seeing a lot of the big fund managers as i said earlier saying well yeah defense new maybe that's okay and our fossil fossil fuels actually kind of turns out we need them and oh do you know what the coal we need to make this deal to make the wind turbines maybe that's not so bad after all um so we're seeing that reversal already it's beginning to become more nuanced so we need to see a a much more nuanced marketing approach from the city a much more nuanced approach to what is good and what is bad and also i'm one of the things i talk about a lot of my work is a kind of radical transparency from the fund management industry to their end clients this is what we're doing this is what the companies were investing in do these are the consequences of how we and they invest in what they do and how do you feel about it so you know there is that there's been a huge information gap between the industry and the beneficial owners of the assets that industry managers and i hope that if there is any silver lining at all to drag out here one of them may be a change in that dynamic i'm asking if we're moving towards as as point says a containment era does that mean pulling back in china as well well you know that the precedent has been set now the way we have treated russian individuals and russian money in this country is that is that is that can be used against chinese money as well and other other individuals that we do not take too much to at the moment i mean i if i can just say one thing about about about the oligarchs and and and and the city member of parliament got up and named and shamed lawyers who were defending oligarchs for reasons that you've set out because they were representing the oligarchs and and apparently defending their money i think that is wrong okay the the lawyers follow the law if members of parliament do not like the law then they must change the law right and as law panic you see said quite explicitly oligarchs that is the way we we work we have due process in this country and that's what differentiates ourselves from putans russia and mass murderers like oligarchs both of them have the right to legal legal services as as you and i agree with with with what you said the city is a massive massive component of of of the british economy i i i don't think that dirty money impunes the reputation of the totality of the city it's a criminal problem but the reputation of the city its capabilities its employment you know strength is massive and i don't think we should go around adopting some of the talking points of our competitors do we need more regulation more regulation well i want to say about something about china in that respect yeah i mean we just passed an act which is intended actually to make it harder to make investments or cooperate with china in areas which the government has defined as being technologically or industrially very important and i think there's large degree of agreement about their definitions not necessarily going to be so easy to implement uh but nevertheless what you can see this has really nothing to do with what we're talking about about ukraine it's a much longer term uh tender trend towards on-shoring the americans are doing it more vigorously than we are but i think we're all going to do it and other and even countries like germany having seeing their cut their ip no stolen absolutely consistently by by the chinese now are much less keen on investment in in china they'd rather do it at home and export so there is a change in structures going on which i think what what happens now in russia of course is going to reinforce i mean all of these things if you regard globalisation as good news which broadly has brought a lot of prosperity though some inequalities i would say uh these are all in a sense backward moves but i think they're they're now they've got them with the wind behind them and i think we are going to see it happen i mean jackham in your area of space do you see any difference between russia and china in terms of attitudes towards cooperation rule of law and all of that six months ago the russians were more cooperative than china were and now we'll see that paradigm has shifted quite substantially it's interesting what you were just saying we are we are now seeing that the on-shoring is the word you used i mentioned sovereignty earlier independence we are seeing that push in the space sector as well export control being talked about much more openly and just a fact of life for companies it used to be the u.s companies were hot on that and u.k companies sort of shrugged now companies start to have the export control officers they're getting used to that way of working as well and actually you can see it being a good thing for the u.k economy as long as we don't try and shift and cliff edge the capabilities of the supply chain we need we gradually move them over and onshore them as you say is there room in in space a corporation with china yes very much so it is fantastic the the academic collaboration we have with them at the moment on a number of areas it's the actual missions you you give us that bit and we'll give you that part that isn't quite working just yet good afternoon my name is romexenium head of ASG at london based asset manager and previously i was in the bridge to army for almost 10 years and i just wondered if the panel could comment on one particular sanction which i think has been perhaps particularly remarkable both in the context of this particular conflict but also perhaps more broadly the impacts that we might see down the line and that's the u.s freezing of russia's foreign effects reserves yeah i mean i'm sorry no go ahead i mean almost i think 300 billion of russian reserves were frozen and like 100 billion of they go yeah i mean this was part of putain's war chest that he put in place to to get russia through through through the sanctions right and i will agree that that was one aspect that he that he did not did not expect but i will say that the that the he has undertaken a number of other methods to shore up the ruble i mean russian imports are decreasing anyway right so the balance of payments position in russia is not as bad as as we what one would have thought would be the situation by now but obviously yeah for sure that that has been a powerful move however it raises questions and the last point i made it raises questions about how much countries can can trust an american dollar denominator system because if the americans and the west can do this um well maybe it's not the safest way maybe we should look at the chinese system of course the chinese have their own their own their own problems that have been at the moment they don't even allow free foreign exchange to go out which is why the russians couldn't put their money there in the in the first place but yeah i would say that has been one of the more powerful sanctions that have have been put in place unlike the oligarchs which look good when we get hold of their their boats and we chuck their girlfriends out of their houses in kensington okay those kind of foreign exchange um freezes are very important for me i can say i think very important point has just been made um i do think it has uh results that potentially go wider than just russia um and one of the issues is going to be how long could you keep that kind of freeze on how long could you keep that kind of freeze on but you know other countries are going to look at this i would put some money you know on the chinese reducing their dollar reserves and seeking another thing which is you know trying to get international contracts written in renminby euros reducing the impact which the americans exploit to the full of the of the dollar being the currency of international settlement they are putting that at risk i think so you know it's something which they really need to think about how far they take it you agree i just agreeing yep nod nod entirely absolutely i mean that's been something that's been talked about for a long time but this might be one of the triggers to it actually how i what direction would you think it will will shift in what currency dollar dollar dollar will what would you what currency would you buy right now uh are you trying to get me on cryptocurrency where did you buy cryptocurrency no i wouldn't um what currency do i buy right now probably still the dollar absolutely this stuff doesn't happen quickly right now definitely the dollar but and this is a gradual change do we end up with not one main currency being that the settlement currency across the world do we end up with you know think about the way that the world has moved was this period of global globalization where we all do everything together but we're moving towards a much more fractured world and that may affect the currency markets as well and where's the uk going to be is it going to be in the dollar zone or the euro zone dollar zone yeah what are you what what this you're moving me into lots of gas work here this this reduces the impact of secondary sanctions because essentially secondary sanctions is pursued by the us are pursued through their ability to stop people's contracts right down the road but the reason Americans can be so aggressive is because they're reasonably confident what are the alternatives i mean what what what are you going to do do you find alternatives yeah but for large large sums and for for the huge percentages of your economy if we're if we're looking at you know friends showing on showing reshoring whatever whatever you like to call it we get that currency fraction anyway sorry okay let's get a question then then we'll come to the lady there tim sticking's i'm a journalist at the national um if the wall settles down into a long battle in the east uh at what point do we think western governments start losing interest or cracking on sanctions or or stop being able to sell sanctions to the public as being sort of politically necessary because of the dire situation i missed the beginning of the question well if if the the war grinds on at what point do we get bored with i think the questions is is a good one how long can we keep up this level of enthusiastic unity uh it will require a lot of effort you know i mean and when we get into the autumn and it starts getting cold uh and everybody has a domestic crisis as well uh it's an excellent question and the government's got to work hard at keeping people you know in a sense inspired by by the good cause i mean martin does does history tell us anything about how long you can sustain these sort of sanctions what this is not my area so our domestic politics i i know who as little as i would have met well i would have i what i do know anecdotally is that most people most people are influenced by domestic issues and economic issues not by foreign policy issues and the fact is ukraine is far away what we know about that conflict is uh you know what i mean it's not so far and of course if we have a danger of escalation we may be in an entirely different political military situation i mean you know this the question was what happens if it grinds on if it grinds on but it grinds on with maywells as we heard this morning and i think it's right it may well be escalating well will pressure mount do you think from the city and elsewhere to to drop these things well it depends on inflation numbers and cost of living crisis political fuss you know as long as inflation remains high uh you know you can look at the sanctions and look at the war and say you know this is where it's coming from it isn't necessarily by the way it's coming from all sorts of areas but that's the the obvious place and so how long does the the political unity remain to allow that cost of living crisis to just carry on do you think it might if it does go on sort of further fracture international cooperation i think it might do it's interesting what you said about cost of living crisis let's wait six months and that inflation going up and people can't heat their homes or buy their food or whatever it may be and then the the cost of sanctions becoming clear to the uk public it might be difficult to continue selling that but you're right it's the autumn and winter time when this is going to get really really in people's faces there you are hi my name's Emma Cosmo and i'm an ma student at kings um we've talked a lot about china and um changing away from the dollar and i've been looking at armenia a lot and their alignment with russia and with iran and my question is as they move towards the ruble what does this mean for iran what does this mean for armenia that has quite a close relationship with the west how is that going to change well i mean turning to iran right i mean we know this is a separate topic in itself i mean there are strong efforts at the moment to to reach an agreement with iran a revitalisation of the jcpoa and then there will be a relaxation of sanctions against iran in the hope that that relaxation on the sanctions will come with an ability to moderate iran's proliferation behaviour right um now um i is that a good idea well i i don't want to want to go into that but if if sanctions are reduced on iran well then there will that will be one area where commodities may derive from and may help like ameliorate some of the pressure that that that that that that is on us um and i think that is some of the thinking behind us but whether it's a good idea in itself or that that is a that is a totally separate issue but from a from an economic issue yeah i can see an agreement with iran whereby iran is able to export its commodities to us will will will relax some of the pressure certainly relax pressure on those developing countries that are really starting to suffer uh from from russian from once you really talk about the converse though yes exactly i think the russians have a have a potential interest you know undermining the parents of jcpoa negotiations in order to form a little ruble family along with you armenia and possibly to some others i mean this is this is the kind of counter counter sanction you know which we must expect to happen do you see that happening mary sorry you're outside my area here really currencies i thought that was well you know the details in here of armenia and uh no no i just wondered whether whether i you see the possibility that an emerging ruble group or something yes i mean that's what i meant earlier when i said with the with the pullback of globalization and the pullback of the dollar over time you are going to end up with much larger currency groups competing with each other and this is symptomatic possibly possibly of that beginning i put pressure on kazakhstan and georgia yep laid out there hi yeah carry on hi ana mcdonald from amati global investors um i wondered what effect you felt that if we do decide to roll over on our sanctions when times get a little bit tough at the end of this year what kind of precedent that sets when we look at taiwan and china and taiwan still makes 80% of the world's semiconductor chips for years one for you i mean i'm a bit deaf on what do you think the impact of what is happening in ukraine the sanctions and all the is having is going to have on calculations about china and taiwan on both sides i guess that's a 64 000 dollar question was that right yeah right um well first of all i think they'll watch very carefully i don't think they'll do anything you know for quite a bit until they have sized up i suppose how serious we are i think we're probably turned out to be more serious in opposing russia than they expected and they will have taken notice of that and i'll say well if they can do that there um a bit bit perhaps you know take the americans a bit more seriously over taiwan uh they will look to see how the rest of the world reacts and whether we manage to alienate other people such that actually they do have a conguri of people in their corner and i've no doubt that they will you know pushing out a message of a kind which increases their level of support um and i think i think that one is is frankly all to play for but i think they will i think in fact they will be they will be careful because what they now know is that actually contrary to previous expectations uh the western world can be quite serious and they'll wait to see whether we're actually willing to use force i'd say one french foreign policy expert and and cynic said to me if this goes bad to bad badly for russia and i was china i wouldn't look at taiwan i'd look at cyberia but i mean one of the you asked right at the beginning you know why will we why will we um engaging in sanctions i think right at the beginning so that i think you know for a long time we've been engaging in sanctions because we wanted to evade military action i mean it's a it's a you know substitute policy for actually uh yes the day is going to come i think where we are i'd be very surprised if we get away with what's happening in ukraine without actually being faced with the question of whether we don't have to take military collective action i agree that chinese has been watching what is happening with our sanctions very carefully and they have been quite surprised by the unity of effort and the strength but my own view in relation to china into one is that the main decision the main point that will influence their decision will be a military one can they do it militarily and not if they can do it militarily then they will have they will deal with the sanctions as as it comes that's an open question i think so i mean that's a separate issue right but i don't think sanctions in themselves no matter how effective against against the russians will will ultimately determine what course of action china adopts against Taiwan if they do anything that's because they will be confident that they can do it right can i can i chip in on that's what i was talking about earlier with the whole esg thing and the lack of consideration around g another area where the investment industry has been fairly lax in its analysis has been looking at the g around china so you know there's been an awful lot of focusing on individual companies in china in individual areas of growth and an awful lot looking at the fact that the companies that people are hoping to make large amounts of money from over the next decade or so are encased inside a system that doesn't necessarily fit either the s or the g that would suit the ordinary retail investor where they can stop to think about it and that's another thing that the industry has to sit down and have a really good think about over the next couple of years right this is going to be our last question uh from gentlemen there uh george Bernatia rural canadian navy um i'm just curious as the sort of discussion trends towards talking about the long term goal of sanctions which might be along the lines of containment how do you one keep them effective over a long term without secondary sanctions uh understanding the reason you wouldn't want to oppose them but they're not usually effective without them and how do you avoid getting further into not just the cost of living crisis but the wider supply chain crisis we already talked about semiconductors as being sort of one of the next battlefields uh the things that go along with that globalization issue seems to be the next questions we have to solve strategically and how do we start doing that right question about secondary sanctions and driven by the americans particularly if this goes on won't you have to use secondary sanctions for the sanctions continue to be effective morning yeah over time sanctions the power of sanctions will dissipate and the united states will no doubt try to impose secondary sanctions i would say that against the EU and the UK the US um tries uh secondary sanctions and we have blocking regulations right they're blocking regulations that prevent UK and EU companies from complying with american sanctions now the three thirds right the three thirds that in many circumstances you then find yourself between a rock and a hard place you either comply with american sanctions you comply with UK and US or you comply with UK or EU sanctions what to do right the unofficial answer is you comply with american sanctions because the because the consequences of not doing so can be so huge in terms of financial penalties that many many many companies uh ultimately end up complying with americans but the various legal stratagems that you can do to to avoid that dilemma okay i'm just going to ask you all finally for a final thought to end what has been an absolutely stimulating uh panel what Jacob i would say that the the the crisis in ukraine has shown how important space is to all the military nations that are involved here but also i think it shows how important cooperation is internationally to to get into mars and the moon and that is now starting to suffer right um the most important thing that comes out of this is the importance of uh you know the financial industry the industry i watch doing an awful less not less in the way of uh a box ticking and marketing an awful lot more in the way of thinking very carefully about what is good and what isn't good for us as a whole very different things yeah sometimes you often read a financial warfare weapons of war financial weapons of mass destruction i saw financial shock and awe in the financial times most important thing to remember financial war is not real war yeah real war is boom boom financials war is something completely different often used as a panacea as a as a as a substitute for real action calling well i would like to think you know we were we were advancing i think we're on a even if we win this war i was like my starting proposition i think it's the future is going to be less good than it is at the moment um we could go really bad so i think we're going to very difficult beginning of the century well on that cheering note thank you very much indeed to my panels thank you