Singaporean Prime Minister Lawrence Wong has warned of “dark clouds over the horizon” as today’s era, he said, was “marked by the growing contest for dominance and leadership” between the US and China.
“Restrictions have already been imposed on key technologies like artificial intelligence and semiconductors. What is worrying is that security concerns are spilling over to more and more areas,” Mr Wong said on Monday.
That same day Japanese Defence Minister Minoru Kihara accused a Russian reconnaissance plane of an “air space violation” and said that his country’s air force had used flares to warn the Russian craft to leave. Just last morning, I read a report claiming that the US air force was “prepping for a nuclear showdown over Taiwan”.
Mr Wong wasn’t wrong. When it comes to the Asia-Pacific region, it often seems as though there is no shortage of storms and squalls with the potential to set off confrontations.
But a new survey, the 2024 Asia Power Index, shows a more complex – and possibly more optimistic – picture, than the “destined for war” scenario that some hawkish analysts often paint. Published by the Lowy Institute, a well-known Australian think tank, its key conclusions are that China’s power is plateauing, although Beijing is eroding America’s military lead in the region; it remains a “dominant economic partner” to countries in the region; and it retains a lead position in terms of diplomatic influence.
America’s resilience and dynamism in Asia has “confounded the pessimists”, it claims. India has risen to third place in its power rankings, overtaking Japan, which has nevertheless increased its defence and security co-operation. South-East Asian powers are on the rise, according to the report, which notes that according to its criteria Indonesia’s power “has grown more than any other index country since 2018”. Australia is said to be holding its own, and Russia, it claims, has been distracted by the war in Ukraine.
The result? A mixture of “bipolarity” (between the US and China) and what it calls “asymmetric multipolarity”.
The Lowy Institute cannot claim to be completely impartial and disinterested. Its researchers’ belief in the necessity of America’s presence in the Asia-Pacific may not be matched by all in the 27 countries (bounded on the west by the Indian subcontinent) they survey.
The institute does not go as far as John Mearsheimer, the renowned American political scientist, who although being from the “realist” school of international relations, reiterated his insistence in a recent edition of the All-In Podcast that the US could not possibly accept China becoming a hegemon in Asia, despite the fact that America has long assumed that role in the Western Hemisphere. But it doesn’t have to, or not explicitly – because what the Asia Power Index points to is indeed a growing multipolarity in the region.
The Chinese leadership has said time and again that the country does not seek to dominate either the region or globally. This is an assertion that deserves to be taken more seriously in the West, where those who accuse it of doing just that must also face the reality that the Asia-Pacific is not, in any case, a region with one giant and an array of minnows.
Neither India, with a population of nearly 1.5 billion, nor Indonesia, with close to 300 million, could possibly be labelled as such. Both countries will vigorously defend their own interests, and if you include the Association of South-East Asian Nations as a whole – which represents close to 700 million people – it is clear that the region contains a number of substantial actors.
The Chinese leadership has said time and again that the country does not seek to dominate either the region or globally
Moreover, as the report’s authors concede, non-aligned countries “are still the majority in Asia”. Despite India’s membership of the Quadrilateral Security Dialogue, with the US and its treaty allies Japan and Australia, the index still characterises the country’s stance as one of non-alignment. Its authors appear to be disappointed by that. I believe it is a strength.
I think the issue that the Asia Power Index’s authors struggle with is the same that afflicts Prof Mearsheimer: they are spending too much time looking at the region through a security lens, and a western security lens at that. This encourages a zero-sum approach when one is not necessary.
As Jeffrey Sachs, the equally renowned American academic who was in conversation with Prof Mearsheimer in the podcast, has said: “This is the American mistake, because some Americans think that if China is rising, the US must be losing. This is false. Economics is a win-win co-operative game.”
One of the index’s authors, Herve Lemahieu, wrote in an explainer that “the balance between the United States and China creates a big disincentive for competition to spill over into outright war. China has no shortage of flash points in the region, notably over Taiwan and the South China Sea. What is surprising, however, is that they have not yet turned into more deadly conflicts”.
Again, he seems to be missing the positive news in his own report. If the Asia-Pacific is now a region of multipolarity, however “asymmetric” – which according to Mr Lemahieu “allows most countries to swim between the world’s superpowers without fully committing to either” – then it is extremely relevant that the vast majority of them do not want war and are opposed to seeing their region or any part of it as a prize in a zero-sum game.
The Lowy Institute and its researchers seem to have drawn different conclusions. To me, however, its Asia Power Index – showing, as it does, rising non-aligned middle powers and a growing multipolarity – is a rare ray of sunshine. And with all those dark clouds on the horizon, that is most welcome.
UAE currency: the story behind the money in your pockets
Indoor cricket World Cup:
Insportz, Dubai, September 16-23
UAE fixtures:
Men
Saturday, September 16 – 1.45pm, v New Zealand
Sunday, September 17 – 10.30am, v Australia; 3.45pm, v South Africa
Monday, September 18 – 2pm, v England; 7.15pm, v India
Tuesday, September 19 – 12.15pm, v Singapore; 5.30pm, v Sri Lanka
Thursday, September 21 – 2pm v Malaysia
Friday, September 22 – 3.30pm, semi-final
Saturday, September 23 – 3pm, grand final
Women
Saturday, September 16 – 5.15pm, v Australia
Sunday, September 17 – 2pm, v South Africa; 7.15pm, v New Zealand
Monday, September 18 – 5.30pm, v England
Tuesday, September 19 – 10.30am, v New Zealand; 3.45pm, v South Africa
Thursday, September 21 – 12.15pm, v Australia
Friday, September 22 – 1.30pm, semi-final
Saturday, September 23 – 1pm, grand final
The biog
Favourite Emirati dish: Fish machboos
Favourite spice: Cumin
Family: mother, three sisters, three brothers and a two-year-old daughter
Dust and sand storms compared
Sand storm
- Particle size: Larger, heavier sand grains
- Visibility: Often dramatic with thick "walls" of sand
- Duration: Short-lived, typically localised
- Travel distance: Limited
- Source: Open desert areas with strong winds
Dust storm
- Particle size: Much finer, lightweight particles
- Visibility: Hazy skies but less intense
- Duration: Can linger for days
- Travel distance: Long-range, up to thousands of kilometres
- Source: Can be carried from distant regions
Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
Will the pound fall to parity with the dollar?
The idea of pound parity now seems less far-fetched as the risk grows that Britain may split away from the European Union without a deal.
Rupert Harrison, a fund manager at BlackRock, sees the risk of it falling to trade level with the dollar on a no-deal Brexit. The view echoes Morgan Stanley’s recent forecast that the currency can plunge toward $1 (Dh3.67) on such an outcome. That isn’t the majority view yet – a Bloomberg survey this month estimated the pound will slide to $1.10 should the UK exit the bloc without an agreement.
New Prime Minister Boris Johnson has repeatedly said that Britain will leave the EU on the October 31 deadline with or without an agreement, fuelling concern the nation is headed for a disorderly departure and fanning pessimism toward the pound. Sterling has fallen more than 7 per cent in the past three months, the worst performance among major developed-market currencies.
“The pound is at a much lower level now but I still think a no-deal exit would lead to significant volatility and we could be testing parity on a really bad outcome,” said Mr Harrison, who manages more than $10 billion in assets at BlackRock. “We will see this game of chicken continue through August and that’s likely negative for sterling,” he said about the deadlocked Brexit talks.
The pound fell 0.8 per cent to $1.2033 on Friday, its weakest closing level since the 1980s, after a report on the second quarter showed the UK economy shrank for the first time in six years. The data means it is likely the Bank of England will cut interest rates, according to Mizuho Bank.
The BOE said in November that the currency could fall even below $1 in an analysis on possible worst-case Brexit scenarios. Options-based calculations showed around a 6.4 per cent chance of pound-dollar parity in the next one year, markedly higher than 0.2 per cent in early March when prospects of a no-deal outcome were seemingly off the table.
Bloomberg
Company%20Profile
%3Cp%3E%3Cstrong%3ECompany%20name%3A%3C%2Fstrong%3E%20myZoi%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%202021%3Cbr%3E%3Cstrong%3EFounders%3A%3C%2Fstrong%3E%20Syed%20Ali%2C%20Christian%20Buchholz%2C%20Shanawaz%20Rouf%2C%20Arsalan%20Siddiqui%2C%20Nabid%20Hassan%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20UAE%3Cbr%3E%3Cstrong%3ENumber%20of%20staff%3A%3C%2Fstrong%3E%2037%3Cbr%3E%3Cstrong%3EInvestment%3A%3C%2Fstrong%3E%20Initial%20undisclosed%20funding%20from%20SC%20Ventures%3B%20second%20round%20of%20funding%20totalling%20%2414%20million%20from%20a%20consortium%20of%20SBI%2C%20a%20Japanese%20VC%20firm%2C%20and%20SC%20Venture%3C%2Fp%3E%0A
The five pillars of Islam
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.”
UAE currency: the story behind the money in your pockets
Moon Music
Artist: Coldplay
Label: Parlophone/Atlantic
Number of tracks: 10
Rating: 3/5