French envoy Jean-Yves Le Drian arrived in Beirut on Monday evening for his third meeting with Lebanese officials in a bid to resolve the country's leadership vacuum.
The former French foreign minister plans to meet caretaker prime minister Najib Mikati, army chief Joseph Aoun and patriarch Bechara Al Rai.
He will also meet party leaders across the political spectrum, including Amal leader and Parliament Speaker Nabih Berri, Free Patriotic Movement chief Gebran Bassil, Hezbollah MP Mohammad Raad and Lebanese Forces leader Samir Geagea.
Lebanon has been without a president for nine months amid an unprecedented economic crisis that started in 2019.
France is part of the so-called Quintet Committee along with Egypt, Qatar, Saudi Arabia and the US, which have united their efforts to accelerate the nomination of a new Lebanese head of state.
In Lebanon, the election of a president traditionally follows backdoor negotiations between political parties, with rival sides trying to secure enough parliamentary support for either a two-thirds majority vote in the first round or a simple majority in the second.
Despite 12 attempts, the parliament has been unable to reach a consensus on a successor for former president Michel Aoun.
The deadlock persists amid deep divisions between supporters of Hezbollah, the powerful Iran-backed militia, and anti-Hezbollah parties, including parliament’s largest, the Christian-led Lebanese Forces.
However, there have “developments under international pressure”, a French diplomat told The National, which could potentially open a window of opportunity.
The source said Mr Le Drian's visit coincides with “a new dynamic” in the country.
The source cited Mr Berri's new dialogue initiative. The leader of the Amal Movement, a Shia party aligned with Hezbollah, called on August 31 for Lebanese parties to participate in seven days of parliamentary dialogue before proceeding to open-ended electoral sessions to select a new president.
“I’m waiting for the visit of French envoy Jean-Yves Le Drian, and I expect that my initiative will be merged with Le Drian’s initiative to reach the aspired positive result through dialogue and consensus,” Mr Berri told Lebanese newspaper Al Liwaa on Monday.
The source added that the FPM and its long time ally Hezbollah have rekindled a “dialogue momentum” following a months-long quarrel stemming from a disagreement over Hezbollah and Amal's preferred candidate, Sleiman Frangieh, who is strongly opposed by Mr Bassil.
Potential candidates
Two names are currently in circulation as potential candidates for the presidency: Christian Marada party leader Sleiman Frangieh and Joseph Aoun
France's formula, which involved appointing Mr Frangieh as the head of state, and the choice of a prime minister from the opposing camp, is no longer on the table.
“France's role is to facilitate dialogue between the different stakeholders, not to prescribe or endorse a specific name,” the French diplomatic source said.
“Our efforts are based on the written consultations we have conducted with MPs.”
In August, Mr Le Drian sent a formal letter to MPs asking what “priority projects” should take centre stage for the next president and what “qualities and skills” are required for the position.
The diplomatic source stressed the urgency of the situation, despite a facade of stabilisation maintained by the influx of dollars brought in by foreign visitors in the summer.
The government has been functioning in a caretaker capacity since May, with limited authority, while the parliament has shifted into an electoral role following the conclusion of Michel Aoun's term, and is solely tasked with selecting a successor.
Lebanon's president is responsible for signing bills, appointing the prime minister and approving the composition of the cabinet.
“Without a president, institutions are not operational, there is no fully functioning government or parliament, essentially meaning no reforms are possible,” the source told The National.
In July, the Quintet Committee met in Qatar to accelerate the election process, and said they had “discussed concrete options” to address “those blocking progress” in the process.
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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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