US calls on Lebanon to quickly elect president 'free of corruption'


Jamie Prentis
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The US believes Lebanon needs to elect a president “free of corruption”, who can unite a deeply divided country entrenched in one of the worst economic crises in modern history.

Six months after Michel Aoun departed the presidential palace in Baabda, the State Department said the solution to Lebanon’s problems could only come internally and not from the international community.

“Now is the time for action to select appropriate leadership and save the country from further disaster,” it said.

Parliament has failed to elect a president during 12 sessions, with no candidate coming close to the threshold required to become head of state.

Speaker Nabih Berri has not called MPs back to vote on the issue for months, such is the impasse.

The US urged Lebanon’s political leadership to “move expeditiously to elect a president to unite the country and swiftly enact the reforms needed to rescue its economy from crisis”.

“Lebanon’s leaders must not put their personal interests and ambitions above the interests of their country and people,” it said.

While Lebanon is used to long delays in electing its president — it took two-and-a-half years for former army chief Mr Aoun to secure enough support — the vacuum is unprecedented.

Prime Minister Najib Mikati’s cabinet is in a caretaker status and severely stripped of its power. The state is also nowhere near to meeting the required conditions for a bailout from the International Monetary Fund after reaching a preliminary agreement last spring.

“While it is for Lebanon’s elected leaders to form their own government, the United States believes Lebanon needs a president free of corruption who can unite the country, advocate for transparency and accountability, put the interests of Lebanon’s people first, move towards national unity, and implement critical economic reforms, chief among them those required to secure an IMF programme,” the State Department said.

MP Michel Moawad has at times been able to count on about a third of the 128-seat legislature for support in the presidential race. But that is well short of the threshold needed and his campaign appears to have stuttered to a halt.

He has been able to count on a faction of MPs largely opposed to Hezbollah, the Iran-backed armed group and political party that holds significant sway in the country.

Hezbollah and its Shiite ally the Amal Movement, led by Mr Berri, have announced their support for Suleiman Frangieh, whose grandfather served as president from 1970-76.

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UAE currency: the story behind the money in your pockets
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German intelligence warnings
  • 2002: "Hezbollah supporters feared becoming a target of security services because of the effects of [9/11] ... discussions on Hezbollah policy moved from mosques into smaller circles in private homes." Supporters in Germany: 800
  • 2013: "Financial and logistical support from Germany for Hezbollah in Lebanon supports the armed struggle against Israel ... Hezbollah supporters in Germany hold back from actions that would gain publicity." Supporters in Germany: 950
  • 2023: "It must be reckoned with that Hezbollah will continue to plan terrorist actions outside the Middle East against Israel or Israeli interests." Supporters in Germany: 1,250 

Source: Federal Office for the Protection of the Constitution

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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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Updated: May 02, 2023, 10:02 AM