Tuesday 10 April 2018 FT FINANCIAL TIMES C002D5556 BUSINESS DAY A1 Search for rationale behind US sanctions list Selection may be warning to Moscow of how much damage new legislation could impose While Russian president Vladimir Putin attended the Orthodox Easter service at the Christ the Saviour cathedral in Moscow on Sunday, Russian and western observers were still trying to make sense of the latest round of US sanctions. Most agree that Washington’s list of 24 individuals and 14 companies goes further than all earlier Russia sanctions — cutting off people and entities from US trade, finance and investment. They also apply to non- US citizens, a proviso that could substantially increase their impact. But that is where the consensus ends. While the Treasury said the sanctions were linked to Russia’s actions in Crimea, Syria and Ukraine and its interference in the west, including its cyber activities, some observers have voiced surprise as to why some oligarchs are on the list and others are not. A senior official in Mr Putin’s administration said on Sunday that it could have been worse because Oleg Deripaska and Viktor Vekselberg, two heavyweight members of Russia’s oligarchy since the 1990s who are among the hardest hit, were not members of Mr Putin’s inner circle. “This is a blow at the periphery,” the official said, adding that from the Kremlin’s perspective, plans for a summit between US President Donald Trump and Mr Putin at the White House were still on. “They can say they are hitting Russia hard,” he said. “But we understand that they have passed on some choices that would have mattered more.” Observers in Washington voiced “ World Business Newspaper KATHRIN HILLE, MAX SEDDON AND COURTNEY WEAVER Six months into a new career, Lucy Kellaway writes herself a report card Everyone hates you, Miss” said the 11-year-old boy I had been teaching for a few weeks. “We’re so happy you’re going. We want Mr Diplos back.” After two terms as a trainee teacher I am pretty used to frank feedback, but this still hurt. For a second I contemplated crying. Teacher training is so tough it is meant to make blubbers of almost everyone — yet I have so far remained dry-eyed and was keen to keep it that way. I swallowed and tried to see it from the boy’s a sense of puzzlement. “They made a big example of Deripaska. I can’t understand why Vekselberg is selected …It could be the connection with Deripaska,” said Anders Aslund, a Russia analyst at the Atlantic Council. Mr Vekselberg is a former business partner of Mr Deripaska who holds a minority stake in his aluminium company Rusal, which has also been sanctioned. A former Russian government official said he believed the US government had settled for a selection of names that would also serve the administration’s other policies. “Targeting Deripaska may make sense in the context of their protectionist trade policies. Other targets make sense because they want to push the fight against money laundering, against corruption,” he said. “It seems that the people working on this lost their way a bit,” said a former Treasury official who was involved in drafting the sanctions imposed in the wake of Moscow’s annexation of Crimea. “The bottom line is that the US government has a very shallow bench on Russia. And so they end up acting more-or-less at random.” The seemingly erratic composition of Friday’s list reflects the broad terms of the latest US sanctions legislation in August — and is seen by many as a first hint of how much more damage could be done if Washington so desired. The Countering America’s Adversaries Through Sanctions Act (Caatsa) gives the administration a mandate to sanction Russia over anything from meddling in Ukraine, its actions in Syria, cyber operations, alleged meddling in US elections, to corruption and money laundering. ‘Teaching is bending us out of shape — in a good way’ LUCY KELLAWAY Prospect of further Trump tariffs keeps stocks muted Page A3 point of view. Hate is a strong word, but if I were him I would also rather have Mr Diplos, a 26-year-old dynamo of a maths teacher, than Miss Kellaway, a dithering, grey-haired trainee with a voice so posh one student asked: “Miss, where are you from?” Though some pupils may be rejoicing to see the back of me, I am sad to be leaving my second placement school. Trainee teachers work in two different schools and my second has been a delightful place where in just six weeks I Continues on page A2 Russian Orthodox Patriarch Kirill greets Russian President Vladimir Putin at an Easter ceremony in Moscow © AFP North Korea tells US it will discuss de-nuclearisation Move increases chances of unprecedented summit between Trump and Kim KATRINA MANSON North Korea has said it is willing to discuss de-nuclearisation with the US, a Trump administration official said on Sunday, increasing the chances of an unprecedented summit between North Korean leader Kim Jong Un and the US president. South Korean officials had told Donald Trump that Mr Kim was willing to meet him to discuss de-nuclearisation, but the administration comments on Sunday mark the first time the US has officially confirmed the information with North Korea itself. “I confirm that the United States and North Korea have been holding talks in preparation for a summit, and that North Korea has confirmed its willingness to talk about de-nuclearisation,” a National Security Council spokesperson China’s fund industry predicted to grow fivefold by 2025 At $7.5tn, it would be the world’s second-biggest asset management market CHRIS FLOOD China will provide the “single largest growth opportunity” for global investment managers, with the country’s mutual fund assets forecast to multiply fivefold to reach $7.5tn (Rmb47tn) by 2025. This expansion could create a fee pool for running mutual funds worth $42bn a year, a lucrative new stream of profits for international managers with an established Asian presence, according to UBS, the Swiss bank. “The opportunity is substantial but it all depends on the progression of reform and deregulation,” said Kelvin Chu, an analyst with UBS. China is on course to become the world’s second biggest fund market, behind the US. Beijing unveiled far-reaching reforms in November intended to accelerate the growth of China’s under-developed investment industry with less than 5 per cent of Chinese household assets held in mutual funds. It plans to relax or eliminate foreign ownership limits on Chinese financial services groups, including asset Brazilian court orders Lula to hand himself in Page A4 told the FT. The spokesperson would not say who had met with North Korea officials, describing the details as internal US preparations, but added that “a comprehensive, whole-of-government effort in support of the president is actively under way”. The US, which has maintained backchannel lines of communication with North Korean officials, has accelerated efforts to prepare a summit in earnest since Mr Trump unexpectedly agreed to meet Mr Kim. Cliff Kupchan, chairman of Eurasia Group risk consultancy, said North Korea’s reported commitment to discuss “de-nuclearisation” significantly increases the chances that Mr Trump will meet Mr Kim. However, he added that it does not make a positive outcome more likely. managers, a change that is designed to attract greater involvement by large international players. Foreign asset managers own minority stakes in 19 of the country’s top 30 mutual fund companies, often in partnerships with domestic commercial banks. “The lifting of foreign shareholder limits in mutual fund companies should be appealing to many [international players],” said Mr Chu. Some global managers, including BlackRock, Vanguard and Invesco, have recently acquired or applied for wholly foreign-owned enterprise licences, which allow them to offer private funds. The total fee pool for running private funds, separate accounts and mutual funds could be worth about $71.5bn by 2025, according to UBS. In his annual letter to shareholders this week, Larry Fink, chief executive of BlackRock, welcomed the Chinese government’s decision to allow foreign players to acquire majority control of mainland fund companies. “China is a significant long-term opportunity for BlackRock,” said Mr “We don’t know what Pyongyang means by the term, and they’ve got a record of backtracking on commitments,” said Mr Kupchan. “This prospective encounter is still a minefield for President Trump.” Chung Eui-yong, South Korea’s national security director, announced last month outside the White House that US- North Korea talks were possible. “President Trump . . . said he would meet Kim by May to achieve permanent de-nuclearisation,” Mr Chung told reporters after meeting with US officials. Mr Trump later hailed the breakthrough but cautioned that the policy of putting pressure on Pyongyang would stay in place. The Wall Street Journal was the first to report that the North Korea had confirmed its intent to discuss de-nuclearisation. Fink, adding that the world’s largest asset manager was preparing to bring its expertise in investing, risk management and technology to mainland clients “if and when” the Chinese market opened further. Stewart Aldcroft, Asia chief executive of CitiTrust, the securities and fund services arm of US bank Citigroup, said Beijing’s decision to allow foreigners to own 100 per cent of mainland fund management companies as early as 2020 had provided a “huge opportunity” for international players. “The challenge is partly in comprehending the scale of the opportunity in China, as well as getting set up to participate. Many global managers are disbelieving, sitting in their offices in New York, Boston and London. They need to come and see for themselves,” said Mr Aldcroft. He noted that about $17tn in assets is held in unregulated wealth management products. “Chinese regulators want a large proportion of those assets to move to the regulated areas so they are making it easier for fund management companies to operate,” said Mr Aldcroft.