Khartoum risks a regional war with land grabs



Where Sudan seemed to be inching towards a stable partition, now it is speeding towards renewed war. Barely bothering with an excuse, Khartoum's forces seized the contested border region of Abyei late last month. At the weekend, southern forces were warned to vacate the border states of Blue Nile and South Kordofan, with another northern offensive feared.

This is a blatant territory grab by the north in the lead up to the south's independence on July 9. Abyei, Blue Nile and South Kordofan were all granted special status in the peace deal of 2005 that ended two decades of civil war between the north and the south. All three are supposed to hold elections to determine their eventual status - a process that Khartoum seems intent on hijacking.

It's not just that facts on the ground will be hard to change once northern forces have seized military control. The Sudan People's Liberation Movement in Juba has backpedaled as fast as it can, refusing to be provoked by the Abyei offensive, with no interest in restarting hostilities before independence. But where a full-scale retreat from Abyei was possible, Juba will find it difficult to withdraw from other border states with such alacrity, for both strategic and political reasons. It is just a question of how far northern forces can go before they force a war.

Tens of thousands of southerners have fled Abyei in recent days, and there are allegations that the north is moving in tribesmen to take their place. Evidence that civilian homes have been razed suggests possible war crimes - a familiar charge against Khartoum's president, Omar al Bashir, who already faces International Criminal Court charges relating to the conflict in the western region of Darfur.

In a country that has suffered decades of brutal fighting at a cost of some 1.5 million lives, what makes this conflict so troubling is its predictability. The UN, US and EU have long called for direct talks on issues of borders, oil revenue and currency. Mr al Bashir has resisted at almost every juncture.

Peace is still attainable. The African Union's announcement on Tuesday of a demilitarised zone along stretches of contested borders could present a welcome pause in hostilities. The question now is whether joint patrols of contested areas - a key element of the 2005 peace deal - will be ignored going forward as they were in Abyei.

These regions will remain a flashpoint until treaties and elections establish a fixed border. In the meantime, Khartoum's attempts to impose its own puts the entire region at risk.

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Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
 
Round 3: February 7-9, Dubai Autodrome – Dubai
 
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
 
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
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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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