GCC impasse is about the role Egypt plays in region



The unprecedented withdrawal of their ambassadors to Qatar by Saudi Arabia, the United Arab Emirates and Bahrain – as well as Egypt – probably constitutes the most serious rift in the Gulf Cooperation Council since its foundation. But its deepest causes and implications reach far beyond the immediate Gulf region.

There is a complex regional and international context at work, and a wide range of grievances, mainly about Doha’s regional sponsorship of Muslim Brotherhood parties. But if there is a paramount cause for both the timing and scale of this rebuke, its epicentre almost certainly lies in Cairo.

Ever since the downfall of former president Hosni Mubarak, Riyadh and Doha have been at odds over Egypt’s political future. But the stakes are now much higher, particularly given the thaw between Washington and Tehran, and the concomitant anxieties about Gulf security this has provoked.

Much of the Arab world welcomed the military intervention in Egypt last year in response to overwhelming popular pressure to remove the out-of-control Muslim Brotherhood Egyptian president Mohammed Morsi.

Few were more enthusiastic than Saudi Arabia and its allies.

But this dispute is no longer just a matter of competing ideologies or rivalries between monarchies – let alone the foolish narratives about “counter-revolution” that have tended to dominate the conversation in Washington among credulous academics. Instead, it is about Egypt’s role in the unfolding new Middle Eastern strategic landscape.

With US president Barack Obama making suggestive comments about Iran being “strategic”, “not impulsive” and responsive to “incentives” – and continued American talk about a “pivot to Asia” and, implicitly, away from the Middle East – alarm about where US policy may be headed and what to do about it has been growing. Riyadh has not been shy about both bluntly expressing its concerns in public and, at the same time, making calculated overtures aimed at communicating to the United States that it remains an indispensable partner.

As the Gulf states look across the waters at a looming, powerful and would-be hegemonic Iran – and the prospect, whether remote or imminent, of a fundamentally different American approach – this has prompted an urgent drive to shore up their strategic position. It’s not just the possibility of a new, or simply reduced, American role in the region. Both Iraq and Syria are in chaos, and their central governments are aligned with Tehran. Added up, all this explains the almost unprecedented feeling of vulnerability in some key Gulf states.

This is precisely where the new Egypt becomes a crucial player in the Arab world, and even for Gulf security. Egypt is by far the largest Arab state, with a probable population of more than 90 million people. It has considerable military resources, although its present ability to project armed force may be limited. But its potential hard-power might – and its existing cultural and political influence in much of the Arab world – cannot be underestimated.

Simply put, the GCC states that withdrew their ambassadors from Doha have every reason to believe they need a strong, stable and committed Egypt in order to acquire new strategic depth that is otherwise unavailable.

This probably best explains the timing and seriousness of the message of unmistakable anger over Qatar’s ongoing support for what is perceived by those GCC states, and Cairo, as support for subversion in Egypt and beyond. Such subversion threatens to sabotage the creation of a Gulf-Egypt axis that could provide the Arab world with the beginnings of a substantial new strategic posture vis-à-vis Iran and, potentially, a changed American role in the region.

Yet all these sources of anxiety should be tempered with some sobering perspective.

First, the GCC states will probably again patch up their differences, as they always have in the past. Qatar will, over time, undoubtedly have to significantly amend its policies. But that’s probably a matter for the future, the point having now been unmistakably made. In all likelihood, they will eventually do so voluntarily.

Second, the Gulf-Egypt axis is likely to develop apace and, unless circumstances change fairly radically, it will provide the fundamental basis for a regional Arab coalition that possesses much greater strategic heft and depth.

Third, hand-wringing over any radically altered American role is premature. The “pivot to Asia” remains theoretical. In reality, the US strategic presence in the Gulf region is not drawing down. If anything, it is building up, including $72 billion (Dh265bn) in arms sales to, and the maintenance of major military bases in, Arab Gulf states. Fiscal-year plans for 2015 and the latest US quarterly defence reviews do not downgrade the American presence in the Gulf region at all, making it at least as significant a priority as Asia.

None of that guarantees there won’t be some version of a feared historic change in American calculations. But Iran is still treated in every US strategic guidance document and review as the primary threat to American interests in the area, and changing that will require a dramatic reconceptualisation at every level.

Nonetheless, it’s understandable that, under present circumstances, Gulf states would look for greater strategic depth. Egypt may be their only real option, and Cairo seems equally enthusiastic about the partnership. Therefore, Doha has been duly put on notice that it’s not going to be allowed to get in the way of achieving such a new Arab axis.

Hussein Ibish is a senior fellow at the American Task Force on Palestine, a columnist for Now Media and blogs at www.ibishblog.com

On Twitter: @ibishblog

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Rufus Thomas, Bear Cat (The Answer to Hound Dog) (1953)

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Elvis Presley, Mystery Train (1955)

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Johnny Cash and the Tennessee Two, Folsom Prison Blues (1955)

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Carl Perkins, Blue Suede Shoes (1956)

Within a month of Sun’s February release Elvis had his version out on RCA.

Roy Orbison, Ooby Dooby (1956)

An essential piece of irreverent juvenilia from Orbison.

Jerry Lee Lewis, Great Balls of Fire (1957)

Lee’s trademark anthem is one of the era’s best-remembered – and best-selling – songs.

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▶ Emirati sea bass tartare Yuzu and labneh mayo, avocado, green herbs, fermented tomato water  

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Second course

▶ Local mackerel Sourdough crouton, baharat oil, red radish, zaatar mayo

▶ One Flew Over the Cuckoo’s Nest Quail, smoked freekeh, cinnamon cocoa

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Name: Direct Debit System
Started: Sept 2017
Based: UAE with a subsidiary in the UK
Industry: FinTech
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When Umm Kulthum performed in Abu Dhabi

Known as The Lady of Arabic Song, Umm Kulthum performed in Abu Dhabi on November 28, 1971, as part of celebrations for the fifth anniversary of the accession of Sheikh Zayed bin Sultan Al Nahyan as Ruler of Abu Dhabi. A concert hall was constructed for the event on land that is now Al Nahyan Stadium, behind Al Wahda Mall. The audience were treated to many of Kulthum's most well-known songs as part of the sold-out show, including Aghadan Alqak and Enta Omri.

UAE currency: the story behind the money in your pockets

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.

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“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.

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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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