Afghanistan may be a major jewel in China’s Belt and Road Initiative


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China has started the process of extending the China-Pakistan Economic Corridor (CPEC) to Afghanistan, and then stretching it to the country’s other neighbours in the Middle East and Central Asian nations as part of its Belt and Road Initiative (BRI).

Analysts say China’s economic goals including accessing the vast potential for minerals in Afghanistan, and to be in a position to reap rewards from the reconstruction of the war-torn country once the process begins.

“China can expect a lot of economic benefits by investing in Afghanistan. Such investments will strengthen Chinese projects in Pakistan, and also help China to access natural resources in Afghanistan. Afghanistan also has the abundant potential of hydroelectricity, which Chinese companies can tap and sell in Pakistan,” Ahmed Bilal Khalil, a researcher at the Centre for Strategic and Regional Studies in Kabul, tells The National.

CPEC is one of the six economic corridors in China’s hugely ambitious BRI, which aims to link infrastructure across Asia, the Middle East and Europe, and use these facilities to build and connect industrial zones. Others include the China-Mongolia-Russia Economic Corridor and the New Eurasian Land Bridge connecting China to Turkey and other parts of Europe.

Beijing also plans a China-Central Asia-Western Asia Corridor enhancing China’s links with the Middle East and Turkey and the China-Indochina Peninsula covering Indonesia, Thailand, Cambodia, Laos and Vietnam. Others are the China-Pakistan Economic Corridor and the Bangladesh-China-India-Myanmar Corridor (BCIM).

Some parts of South East Asia already have fairly well developed connectivity, including a major road starting from Kunming in China that runs into Vietnam and Laos. But BCIM may be difficult to implement because India is reluctant to join the Belt and Road programme as it maintains one of its components, CPEC, is violating Indian sovereignty by passing through the disputed region of Kashmir. Myanmar, meanwhile, supports some parts of Chinese investments but it has blocked others including a US$3 billion hydroelectricity dam that China wants to build and send the electricity generated across the border for its own needs.

China is already considering a set of six projects that can be implemented by extending CPEC to Afghanistan. These projects include the Turkmenistan-Afghanistan-Pakistan energy transmission line and a motorway or rail connection from Peshawar in Pakistan to Kunduz in Afghanistan and possibly into Central Asia. A motorway project between Peshawar and Kabul is also on the cards and there is also the possibility of building a road link between Torkham and Kabul to join an existing road with Pakistan. Railway lines already under consideration include one linking Pakistan’s Landi-Kotal with Afghanistan’s Jalalabad, and another from Pakistan’s Chaman to Afghanistan’s Speen Boldak, Mr Khalil says.

A huge hydroelectricity project to produce 2,800 megawatts on the Kunar River has been under discussion for a long time. But implementing this project is not straightforward because there is no water sharing treaty between the two countries, Mr Khalil says.

M K Bhadrakumar, an author and former Indian diplomat, can see why China is interested in Afghanistan. “One trillion dollars worth of mineral resources are available in Afghanistan. Extending the BRI to Afghanistan will facilitate extraction of the minerals to the Chinese economy. It will also facilitate export of China’s industrial surplus to Afghanistan.”

But David Kelly, the director of geopolitics at the Beijing-based consulting firm, China Policy, says investing in Afghanistan is fraught with risks that include fears of project disruptions by the Taliban.

“We have been told by diplomats and knowledgeable sources that there are fierce competition and differences between different regions of Afghanistan,” he tells The National. “Building in one region might result in opposition from another region. China is accustomed to negotiating with a central authority … It is not comfortable in places like Afghanistan where there is no central authority.”

Meanwhile, the Chinese railway equipment manufacturer CRRC Tangshan announced yesterday that it has delivered 19 subway trains with 95 subway carriages to Turkey’s port city of Izmir. Each subway train has a maximum capacity of 1,286 passengers.

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A timeline of the Historical Dictionary of the Arabic Language
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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.

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“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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Notable salonnières of the Middle East through history

Al Khasan (Okaz, Saudi Arabia)

Tamadir bint Amr Al Harith, known simply as Al Khasan, was a poet from Najd famed for elegies, earning great renown for the eulogy of her brothers Mu’awiyah and Sakhr, both killed in tribal wars. Although not a salonnière, this prestigious 7th century poet fostered a culture of literary criticism and could be found standing in the souq of Okaz and reciting her poetry, publicly pronouncing her views and inviting others to join in the debate on scholarship. She later converted to Islam.

 

Maryana Marrash (Aleppo)

A poet and writer, Marrash helped revive the tradition of the salon and was an active part of the Nadha movement, or Arab Renaissance. Born to an established family in Aleppo in Ottoman Syria in 1848, Marrash was educated at missionary schools in Aleppo and Beirut at a time when many women did not receive an education. After touring Europe, she began to host salons where writers played chess and cards, competed in the art of poetry, and discussed literature and politics. An accomplished singer and canon player, music and dancing were a part of these evenings.

 

Princess Nazil Fadil (Cairo)

Princess Nazil Fadil gathered religious, literary and political elite together at her Cairo palace, although she stopped short of inviting women. The princess, a niece of Khedive Ismail, believed that Egypt’s situation could only be solved through education and she donated her own property to help fund the first modern Egyptian University in Cairo.

 

Mayy Ziyadah (Cairo)

Ziyadah was the first to entertain both men and women at her Cairo salon, founded in 1913. The writer, poet, public speaker and critic, her writing explored language, religious identity, language, nationalism and hierarchy. Born in Nazareth, Palestine, to a Lebanese father and Palestinian mother, her salon was open to different social classes and earned comparisons with souq of where Al Khansa herself once recited.

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