When French President Emmanuel Macron and German Chancellor Friedrich Merz wrapped up their first full-scale summit on Friday, the mood did not seem good. “Trouble at home, chaos in the world, but together they want to be strong,” was the way one German newspaper headline put it.
The test of the relationship between France and Germany does not lie in the two men’s personal relationship, which seems strong. It can be found in an angular prototype model of the next (sixth) generation of fighter jet, a €100 billion ($117.2 billion) joint project that is bedevilled by infighting behind the scenes.
Mercifully, there has not been a full-scale test of the capabilities of modern fighter jets, but a series of conflicts have provided a shattered glass picture of each model.
The F35 has been used extensively to create a wasteland in Gaza that the Israeli government appears determined to crush. It has also been used in the 12-day war against Iran. The F16 has been used in Ukraine after Russia failed to establish air supremacy for its Su-57. The Swedish Gripen jet was used in the recent combat between Thailand and Cambodia. Meanwhile, the Chinese J-10 was involved in the India-Pakistan clashes earlier this year.
What all the major powers are now looking towards is a future generation of fighter jets that transcend the current air wars. This is where it got tricky for Mr Macron and Mr Merz. The Toulon summit did not produce an outcome, hence they agreed to have another meeting on the matter at the end of the year.
The challenge for developers is that the next-gen jet must cut the link with Top Gun-era fighters and bombers to become something much more like a Star Wars-style platform. The needs of European security are to cover an electrical, aerial, spatial and ballistic spectrum through a command platform. Calling that “flying nerve centre” a fighter jet no longer adequately encapsulates the needed security role.
This week sees two prestigious Central European summits on the future of the continent. Heads of state and government, ministers and officials are assembled at the Bled Security Forum in Slovenia, where the topics are focused on how the region is responding to changing geopolitical realities.
What all the major powers are now looking towards is a future generation of fighter jets that transcend the current air wars
In the Czech Republic, meanwhile, the International Institute for Strategic Studies is hosting the Prague Defence Summit. Event organisers say it is looking at the development of a roadmap for the defence of Europe. It says the main topics are the “evolving transatlantic and European defence ecosystems, operational challenges related to deterring Russia, the role of external partners in generating European military capacity and new approaches to funding defence”.
The French-German tie-up to build a new combat platform is not the only one fielded by Europe. The British, Italians and Japanese are slightly further along and more united on their Tempest concept fighter jet. It remains to be seen how open the door is to Saudi Arabia to join as a full partner in this project. The Swedes, meanwhile, are happily persistent in developing their own lower-profile jets that have a loyal following.
Capital spending is, of course, the starting point of the development projects getting off the ground, but Europe’s resources are stretched tight. When US President Donald Trump mentioned the development of the F-50 as his legacy project to evolve the US fighter jets, there was little doubt that Congress would find the money to produce a technology unrivalled across the world.
At one level, the French-German project is embroiled in a dispute over how the spoils are divided. Reports say that the French want 80 per cent of the equity while expecting the Germans to bankroll the expenditure. How does that work? Well, the firms that are promising the digital and electronics expertise can be delivered on their side.
The fighter of the future will need an infrastructure that goes beyond the military realm. The Europeans will need to provide the cloud computing capacity that, for the moment, only the US and China possess. It will need to be integrated into a continent-wide missile shield that currently does not exist. Hypersonic missile attack systems will be a necessary component in parts of the system. Autonomous drone fighting will be the most prized facet of attack warfare. The ability to swarm with drones and nano technology, all centred into a cluster, can determine where the advantage lies.
The meetings in Bled and Prague will see questions raised over how credible the European defence spending build-up is, and if the continent can stand alone in its own defence as Washington withdraws its security blanket. Can they build systems that overcome the technological gap with the US? Can they develop across the range of threats both existing and emerging? Will there be a moment of truth when the competing development plans are merged to better manage scarce resources?
The answer from Toulon last week was that the partners are a long way off from making the hard choices that show they can master their own future security requirements.
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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.”
Killing of Qassem Suleimani
Sarfira
Director: Sudha Kongara Prasad
Starring: Akshay Kumar, Radhika Madan, Paresh Rawal
Rating: 2/5
The specs: 2018 Kia Picanto
Price: From Dh39,500
Engine: 1.2L inline four-cylinder
Transmission: Four-speed auto
Power: 86hp @ 6,000rpm
Torque: 122Nm @ 4,000rpm
Fuel economy, combined: 6.0L / 100km
SCORES IN BRIEF
New Zealand 153 and 56 for 1 in 22.4 overs at close
Pakistan 227
(Babar 62, Asad 43, Boult 4-54, De Grandhomme 2-30, Patel 2-64)
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Springsteen: Deliver Me from Nowhere
Director: Scott Cooper
Starring: Jeremy Allen White, Odessa Young, Jeremy Strong
Rating: 4/5
MATCH INFO
Uefa Champions League, Group C
Liverpool v Red Star Belgrade
Anfield, Liverpool
Wednesday, 11pm (UAE)
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