A number of Middle East nations have begun to resurrect ties with the Syrian regime. Reuters
A number of Middle East nations have begun to resurrect ties with the Syrian regime. Reuters
A number of Middle East nations have begun to resurrect ties with the Syrian regime. Reuters
A number of Middle East nations have begun to resurrect ties with the Syrian regime. Reuters

Arab countries should 'get something' from Syria for normalisation, US official says


Khaled Yacoub Oweis
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Arab countries engaged in a rapprochement with President Bashar Al Assad should "get something" in return, a senior US official said on Thursday, accusing his Syrian regime of being behind an illegal drug trade devastating the region.

Barbara Leaf, Assistant Secretary of State, said the US had sent a message that it would not follow suit by its recent imposition of sanctions on two Assad family members for their suspected role the smuggling of the amphetamine known as Captagon.

Ms Leaf, who has visited in Jordan, Egypt, Libya, Lebanon, and Tunisia in the past two weeks, said the drug was "a new, terrible scourge across the region" and blamed much of its trade on the Assad government.

"The profiting from the Captagon trade is just another terrible example of why this [Syrian] regime deserves to be treated as the rogue it is," said Ms Leaf, whose portfolio is the Near East region.

"We don't intend to normalise," she said from London. "This regime is such a disaster for its people but also for its neighbourhood."

A drive for region-wide normalisation with Damascus has accelerated in the past two months after the earthquake last month affected parts of Syria and made it easier to deal more directly with the Syrian government.

This month, Saudi Foreign Minister Prince Faisal bin Farhan said consensus was building in the Arab world that talks with Damascus were needed, particularly on the humanitarian situation in Syria.

But Prince Faisal said it was "too early to discuss" the return of Syria to the Arab League.

Saudi Arabia is the main market for Captagon manufactured in Lebanon and Syria. Arab officials say areas in and around Damascus have become the manufacturing centre for the narcotic, with billions of dollars' worth flowing through Jordan and on to Saudi Arabia, as well as by sea.

Many Arab countries downgraded ties with the regime in Damascus for its violent suppression of the 2011 revolt against five decades of Assad family rule.

Ms Leaf said Washington has had discussions with its Middle East allies about "their shift in policy".

"They want to try engagement," she said. "Our approach on that score is that make sure to get something for that engagement.

"I would put ending the Captagon trade right at the top, alongside the other issues ... that go to providing relief to the Syrian people from the terrible decade of oppression that they suffered."

She cited the regime's failure to adhere to UN Security Council Resolution 2254, which calls for an unidentified political transition in the country as well as the release of prisoners, which human rights groups say number in the thousands.

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Islamophobia definition

A widely accepted definition was made by the All Party Parliamentary Group on British Muslims in 2019: “Islamophobia is rooted in racism and is a type of racism that targets expressions of Muslimness or perceived Muslimness.” It further defines it as “inciting hatred or violence against Muslims”.

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.”

Updated: March 30, 2023, 5:31 PM