Election results expose dramatic shifts in power


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Iraq’s parliamentary elections, held at the end of April, exhibited a tectonic shift in the demographic balance of power and sectarian polarisation.

Due to a low Sunni Arab turnout in mixed provinces, Iraq’s parliament has an outright Shia Islamist majority, having increased to 181 seats out of 328 for 2014. Whereas 2010 saw a high-water mark for the Sunni Arab-secular Shia coalition, winning 101 seats – 91 of those under the Iraqiya coalition headed by former (secular Shia) prime minister Iyad Allawi – those two groups have been reduced to just 76. The Kurdish parties managed to add five seats, increasing to 62.

The results left Sunni Arab factions both weaker and divided. Speaker Osama Al-Nujayfi’s Mutahidun won 27 seats, a clear Sunni plurality, but a pyrrhic victory since his factions held 45 seats in the outgoing parliament.

Next came Mr Al-Allawi’s cross-sectarian but predominately Sunni Nationalist Coalition with 21 seats. Salih Al-Mutlak’s Arab Coalition won 11. Then there were ten seats won by assorted Sunni factions aligned with Nouri Al Maliki, the prime minister (who is Shia), and five won by the secularist but predominately Shia Civil Alliance.

Once the scale of their loss was clear, Sunni leaders began an effort to unify. Their idea was to form a “Union of Nationalist Forces” (UNF), a broad coalition of Sunni Arab MPs to act as a negotiating counterweight to the Shia Islamist bloc and the Kurds. Talk of the move began on May 19, the day official results came out.

The UNF began to implode a week later when a fight broke out on Al-Baghdadia television’s Studio 9 programme, hosted by the controversial pundit Anwar Al-Hamdani.

On May 26, Mr Al-Allawi met with Sunni leaders at Mr Al-Nujayfi’s house to finalise the new front, but hardly had they met than one of Mr Al-Allawi’s elected MPs, Abdullah Al-Jiburi, appeared on Mr Al-Hamdani’s programme and began denouncing other Sunni MPs of either selling out to Mr Al-Maliki or giving in to threats of legal action.

The essence of Mr Al-Jiburi’s allegations was that Mr Al-Maliki had threatened two major figures within Mr Al-Nujayfi’s Mutahidun – Jamal Al-Karbuli of Anbar and Salim Al-Jiburi of Diyala – into supporting his bid for a third term.

Most controversially, Mr Al-Jiburi claimed that Mr Al-Karbuli held an “open market to buy Sunni MPs”, a meeting at which he himself was present. Mr Abdullah claimed this was part of a long-planned effort to create a group who would, based on either greed or fear, vote to re-elect Mr Al-Maliki.

From there the controversy spread to a variety of evening talk shows on other Iraqi television channels and consumed the Sunni political class, causing Mr Al-Nujayfi to stop talking about the UNF altogether. In the case of Mr Al-Karbuli, corruption charges date back to his time as president of the Iraqi Red Crescent.

Mr Al-Karbuli was reportedly released from prison shortly before Maliki’s reelection in December 2010, and his brother Ahmad Al-Karbuli became industry minister at that time. His own service has been dominated by allegations of corruption. Despite widespread suspicion, there was no hint of prosecution until after Mr Al-Karbuli broke with Mr Al-Maliki last summer. There were several pre-election leaks, and indeed last month a Maliki-linked website reported that the judiciary had approved a warrant for Mr Al-Karbuli. Both Karbuli brothers were in legal jeopardy.

Mr Al-Jiburi’s situation is more straightforward. Three criminal charges on obscure claims of ties to terrorism have been raised. He said that they were dropped recently, but said there was no intervention by Mr Al-Maliki.

Together Mr Al-Jiburi’s and Mr Al-Karbuli’s factions within Mutahidun appear to make up a majority of Mr Al-Nujayfi’s 27 MPs. Although Mr Al-Jiburi is unlikely to be able to pull all the MPs from his party away from this group, with Sunnis already weakened, the combined impact of their defection would be devastating.

The picture became clearer on May 30, when Mr Al-Karbuli and Mr Al-Jiburi stood together with a group of Sunni leaders known to be allied with Mr Al-Maliki at a press conference and appropriated the UNF name. They endorsed Mr Al-Maliki’s “majority government” principle.

Ironically, one of the “Maliki Sunnis” was Ahmad Abu Risha, the Anbar tribal leader, who had been a vociferous critic until a year ago when security sources began leaking that Mr Abu Risha was tied to Al Qaeda. Then in December, Mr Abu Risha’s nephew, Muhammad Khamis, appeared in a propaganda video run on state television claiming he was an “emir” in the Al Qaeda offshoot of an extremist faction.

So the younger Abu Risha flipped sides and began fighting with government forces. When Muhammad Khamis was assassinated by a suicide bomber last Wednesday, the government left unsaid that five months earlier it had fabricated criminal allegations against him. Politicised arrest warrants worked before, and they may well work again.

Kirk H Sowell is a political risk analyst based in Amman, Jordan, and is the publisher of the biweekly newsletter Inside Iraqi Politics

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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.”

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