An EU-GCC ministerial meeting in Oman next month will set the tone for future ties between the two blocs, the European Union's first special envoy to the Gulf region, Luigi Di Maio, told The National.
Relations between the two sides are undergoing a “positive and strategic transformation", he said.
Mr Di Maio, the EU's special representative to the Gulf, arrived in the UAE on Wednesday on a three-day visit after taking office in June. His post was created following the launch of an EU-led strategic partnership with GCC countries last year.
The meeting in Oman is “a good opportunity for us and will be a new milestone of our relations”, Mr Di Maio said in an interview at the EU delegation office in Abu Dhabi.
“Our relations have not been at the level that we deserve,” he said.
Mr Di Maio said the EU and the GCC, comprising the UAE, Saudi Arabia, Oman, Qatar, Kuwait and Bahrain, must take the lead in helping Africa and poorer countries in the Middle East with climate change.
Since "the European Union, the UAE, and GCC countries, in general, are important donors [to] humanitarian aid projects" around the world, the next step would be to "collaborate more in third countries, for instance, all the countries in Africa or in the Middle East that are under the negative effects of climate change, they need our help", he said.
The former Italian foreign minister said he had focused on listening as he visited regional states and met their leaders in recent months, in order to understand individual sensitives.
“We can write the perfect strategy in Brussels but we need to work together about how we can converge and execute our shared ambitions and priorities.
“The real point is now to prioritise with the countries of the GCC and of the region, to have a road map, a common road map to go ahead,” he said.
The EU, which has established a close trading and investment relationship with Gulf states during the past few decades, is proposing to expand ties by including green transition and energy security, regional stability and global security, people-to-people contact, and new levels of institutional co-operation.
Regional stability
Mr Di Maio said the EU saw diplomacy as the only way to ensure regional stability, and would welcome any process towards that goal, including normalisation of ties.
"We want to support any kind of de-escalation in the region because there is no economic development and prosperity without security stability," he said.
"Mutual understanding, respect and non interference were the words that I heard a lot of times during the last few days of my visit here."
Mr Di Maio said collaboration on humanitarian aid was another area of focus.
European ties with the UAE
Mr Di Maio that although the EU-UAE relationship was not at "the level it deserves", there was momentum and the Cop28 global climate summit in Dubai would boost ties.
"Your presidency on climate, renewables, the protection of the environment, will be vital," he said.
Cop28 will be the first summit to evaluate the progress made since the Paris Climate Agreement in 2015, which calls for action to limit temperature rises to 1.5°C above pre-industrial levels.
The UAE is "doing an amazing job when it comes to climate change and especially on hydrogen and it's an interest of the European Union", Mr Di Maio said.
Hydrogen, which can be produced using renewable energy and natural gas, is expected to play a key role in the coming years as economies and industries switch to a low-carbon world to mitigate climate change.
The UAE has more than a dozen hydrogen projects in the making.
Mr Di Maio held talks with senior Emirati officials, such as Sheikh Abdullah bin Zayed, the Minister of Foreign Affairs, on Wednesday in Abu Dhabi.
He toured the capital and visited the Sheikh Zayed Grand Mosque, which he described as impressive.
"Everything you are building here [in the UAE] is about tolerance and how to bring together people. And this is a very important signal and message to all the world," he said.
"Cop28 is a very important boost by supporting the UAE ambitions, and your presidency on climate, renewables, the protection of the environment, will be vital," he said.
Defence review at a glance
• Increase defence spending to 2.5% of GDP by 2027 but given “turbulent times it may be necessary to go faster”
• Prioritise a shift towards working with AI and autonomous systems
• Invest in the resilience of military space systems.
• Number of active reserves should be increased by 20%
• More F-35 fighter jets required in the next decade
• New “hybrid Navy” with AUKUS submarines and autonomous vessels
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UAE v United States, T20 International Series
Both matches at ICC Academy, Dubai. Admission is free.
1st match: Friday, 2pm
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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.”