Raghida Dergham is the founder and executive chairwoman of the Beirut Institute, and a columnist for The National
October 30, 2022
As a clash of visions between key powers like the United States and China continues, energy and security infrastructure are consistently being leveraged as key elements in the new world generated by the war in Ukraine. According to the new National Defence Strategy (NDS) released by the Pentagon on Thursday, “Russia poses acute threats both to vital US national interests abroad and to the homeland” but “the most comprehensive and serious challenge to US national security is the People Republic of China’s coercive and increasingly aggressive endeavour to refashion the Indo-Pacific region and the international system to suit its interests and authoritarian preferences”.
Following the release, US Defence Secretary Lloyd Austin said that the key theme of the NDS is the need to sustain and strengthen US deterrence with China, which he said is “the only competitor out there with both the intent to reshape the international order, and increasingly the power to do so”. As for Russia, he said, despite being an “acute threat”, “it can't systemically challenge the United States over the long term”.
But what is remarkable is the growing role of middle power states like Australia, India and Saudi Arabia in the international system.
China has a vision lasting into the year 2050, and it takes into account the importance of establishing ties with regional players, in the framework of – yet beyond – the Belt and Road Initiative (BRI). Chinese President Xi Jinping, who just secured a third term, will visit Saudi Arabia soon, where he is expected to participate in three summits: a Chinese-Saudi summit, a Chinese-Gulf summit and a Chinese-Arab summit. Saudi Arabia’s Foreign Minister, Prince Faisal bin Farhan, has said that the kingdom was the top destination for Chinese BRI investment in the first three months of 2022.
Gulf relations with China do not at all reflect a pivot away from longstanding relations – particularly in the security sphere – with the US. Cementing the frameworks and institutions of US-Saudi relations is something that both Washington and Riyadh are working on, despite the apparent tension between the two countries over energy and OPEC+’s decision to cut oil production by 2 million barrels per day.
Saudi Arabia is one of China's largest foreign investment recipients. Reuters
China has a vision lasting into the year 2050, and it takes into account the importance of establishing ties with regional players
Indeed, Saudi Arabia is a regional player that can be an enabler of a new international system, something of extreme importance to the US as it sets out to lead that new system. From energy to security, Saudi Arabia is a contributor to be reckoned with.
During the Future Investment Initiative (FII) convened in Riyadh this week, senior leaders from US financial institutions were present, taking a positive role in the effort to move US-Saudi relations towards more solid foundations.
At the event, JPMorgan Chase chief executive Jamie Dimon said that the world is six months away from a recession, but that “the most important thing is the geopolitics around Russia and Ukraine, America and China”. This, he noted, “would be far more concerning than whether there’s a mild or slightly severe recession”. Regarding US-Saudi relations, he said: “Saudi Arabia and the US have been allies for 75 years. I can’t imagine any allies agreeing on everything and not having problems…They will work it through.”
Prominent Saudi speakers at the FII were keen not only to underscore the centrality of relations with the US and of expanding co-operation with other states like China, but also stressed Saudi Arabia’s determination to invest heavily in struggling Arab countries, especially since the prosperity of the Gulf means its countries are in a unique position in today’s world, hit by contraction, inflation and economic slowdown.
As Saudi Finance Minister Mohammed Al Jadaan said, the next few years will be good for the Gulf states and difficult for the wider Middle East region, and that therefore, Saudi Arabia must offer support for the region while the world “adapts”. The Saudi Public Investment Fund announced plans to invest $24 billion in five Arab countries to support their economies, including Bahrain, Oman, Jordan, Iraq and Sudan, while Egypt had received similar support recently.
What will happen in the Middle East in the medium-term future will depend in part on what Iran, the other large regional power, will do at home, in the region and in states where it intervenes through its partners, such as Hezbollah in Lebanon. Iran is preoccupied with its domestic problems, but it may yet be influenced by what is happening around it, including an effort regionally to detach public life from religious extremism. Some believe this could impact Iran’s future once Supreme Leader Ayatollah Ali Khamenei passes away, with the influence of the religious clerical elite receding. The threat here, however, is that this could allow the Islamic Revolutionary Guard Corps to rule Iran more overtly.
With hope of US sanctions being lifted fading away as a result of the clinical death of nuclear talks, the eruption of protests that have exposed the regime and allegations of Iran’s military involvement in Ukraine in support of Russia, Tehran may just continue stalling for time.
In the meantime, while many Arab states are seeking to establish normal relations with their Iranian neighbour, they are also working to protect themselves in the event of contingent threats. And one of the most important ways they are working to achieve this is to build up their states, enact reforms and ensure youth participation in building their future. Their thoughts are with their place in the evolving international order.
1. Black holes are objects whose gravity is so strong not even light can escape their pull
2. They can be created when massive stars collapse under their own weight
3. Large black holes can also be formed when smaller ones collide and merge
4. The biggest black holes lurk at the centre of many galaxies, including our own
5. Astronomers believe that when the universe was very young, black holes affected how galaxies formed
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.”
The specs
Engine: 2-litre 4-cylinder and 3.6-litre 6-cylinder
Founded in 1985 by Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, the Central Veterinary Research Laboratory (CVRL) is a government diagnostic centre that provides testing and research facilities to the UAE and neighbouring countries.
One of its main goals is to provide permanent treatment solutions for veterinary related diseases.
The taxidermy centre was established 12 years ago and is headed by Dr Ulrich Wernery.
F1 The Movie
Starring: Brad Pitt, Damson Idris, Kerry Condon, Javier Bardem
The Nobel Prize was created by wealthy Swedish chemist and entrepreneur Alfred Nobel.
In his will he dictated that the bulk of his estate should be used to fund "prizes to those who, during the preceding year, have conferred the greatest benefit to humankind".
Nobel is best known as the inventor of dynamite, but also wrote poetry and drama and could speak Russian, French, English and German by the age of 17. The five original prize categories reflect the interests closest to his heart.
Nobel died in 1896 but it took until 1901, following a legal battle over his will, before the first prizes were awarded.
Despite the extreme distance, flying to Fairbanks is relatively simple, requiring just one transfer in Seattle, which can be reached directly from Dubai with Emirates for Dh6,800 return.
Touring
Gondwana Ecotours’ seven-day Polar Bear Adventure starts in Fairbanks in central Alaska before visiting Kaktovik and Utqiarvik on the North Slope. Polar bear viewing is highly likely in Kaktovik, with up to five two-hour boat tours included. Prices start from Dh11,500 per person, with all local flights, meals and accommodation included; gondwanaecotours.com
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
The specs
Engine: 3.0-litre six-cylinder turbo
Power: 398hp from 5,250rpm
Torque: 580Nm at 1,900-4,800rpm
Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)
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
Racecard:
2.30pm: Hamdan bin Rashid Al Maktoun Emirates Breeders Society Challenge; Conditions (PA); Dh40,000; 1,600m
3pm: Handicap; Dh80,000; 1,800m
3.30pm: Jebel Ali Mile Prep Rated Conditions; Dh110,000; 1,600m
4pm: Handicap; Dh95,000; 1,950m
4.30pm: Maiden; Dh65,000; 1,400m
5pm: Handicap; Dh85,000; 1,200m
UAE currency: the story behind the money in your pockets
