Raghida Dergham is the founder and executive chairwoman of the Beirut Institute, and a columnist for The National
May 14, 2023
Two important summits will be held on Friday. Saudi Arabia will host the Arab League summit amid major restructuring in the Arab, regional and international landscapes under a Saudi leadership determined to chart a different course. On the same day, Japan will host the G7 summit, with the focus set to be on China and Russia, particularly as the war in Ukraine enters a new phase next week.
The Jeddah summit will mark the beginning of the year-long Saudi presidency of the Arab League, with expectations surrounding its leadership’s plans. The opening act is sure to generate much media intrigue, as Syria returns to the League after being suspended for 12 years due to conflict.
The welcome extended to Syrian President Bashar Al Assad and his rehabilitation are conditional, hinging on the implementation of all his promises, which include ending drug trafficking and taking tangible steps towards a new constitution based on UN Security Council resolutions. Additionally, the reconstruction of Syria will be conditional on ensuring the return of Syrians who have been displaced and who have sought refuge in neighbouring countries. The summit will be a test of his commitments, including to disengage in one way or another from Hezbollah's activities.
Time will test Mr Al Assad's intentions, particularly as the Arab initiative to invite the Syrian regime to Jeddah faces some obstacles – such as the risk of contravening US laws. But the aim of the Arab nations is not to circumvent any US laws, but to co-ordinate efforts with Washington.
The Biden administration doesn't seem very upset about the push towards rehabilitating the Assad regime or towards seeking exemptions from the "Caesar Act", for example, which prohibits economic co-operation with the regime. However, Republicans in the US Congress will not remain silent on the matter, especially as the next election cycle draws closer. Nonetheless, they are relenting to give Saudi Arabia the chance to implement a policy of containment towards Iran and Syria through inducement rather than intimidation.
Saudi Arabia’s Ambassador to Jordan, Nayef bin Bandar Al Sudairi, hands Syrian President Bashar Al Assad an invitation to attend the Arab League this week. Saudi Embassy in Jordan
Saudi Arabia seeks to take the burden of Yemen off its shoulders to focus on its major projects
The US is encouraging Saudi Arabia's role in calming tensions and finding solutions to the region’s problems, from Sudan to Lebanon. A Gulf official has described Saudi Arabia as a "reservoir of moderation” that can be used to tackle various issues and conflicts. China is also at ease with this reservoir. However, Riyadh is cautious not to fall into the dynamic of Sino-American competition.
The Saudi vision for presiding over the League is based on the belief that the kingdom is uniquely capable of providing leadership in the region, particularly given the growing instability throughout North Africa. This is important in light of waning American interest in the region and the Russian retreat due to Moscow's preoccupation with the war in Ukraine.
Economic and developmental issues will no doubt be discussed at the summit. But due to the ongoing wars and chaos in the Arab world, the summit cannot ignore these issues.
The Lebanese file, for instance, is expected to be on the agenda, albeit with a cautious approach to support a compromise solution acceptable to Saudi Arabia. Likewise, the Palestinian cause will also be addressed, including a decision to not endorse Hamas or Islamic Jihad in their confrontation with Israel, and to promote moderation and discourage futile actions that harm the Palestinian people and their aspirations.
Iraq remains a crucial issue, as Arab countries are expected to demonstrate their support for Prime Minister Mohammed Shia Al Sudani – and to help solidify his position with a view to weaken Iran’s influence over the country.
Ending the conflict in Sudan is a top priority, with instability posing a threat to the future of the Red Sea region, which is of great importance to the Saudi leadership.
Yemen will also be on the agenda, as the conflict moves towards a possible solution, thanks to the Chinese-brokered Saudi-Iranian agreement and its outcomes. Today, Riyadh is acting as a mediator between the Yemeni factions, and it hopes Tehran will continue to exert pressure on the Houthis to accept a lasting compromise.
Saudi Arabia seeks to take the burden of Yemen off its shoulders to focus on its major projects, vision and regional leadership. The Arab League summit presents a critical opportunity to achieve these ambitions, potentially serving as the launch pad for a new era in the Arab region.
Yemenis walk through a pedestrian bridge in the old city of Sanaa earlier this month. EPA
Meanwhile, the Japanese city of Hiroshima will provide the stage for the next G7 summit comprising some of the world’s largest economies – Canada, France, Germany, Italy, Japan, the EU, UK and US. The focus will be on China and Russia (the latter was once a member of a larger G8 club but is now at odds with the West due to the war in Ukraine).
The war is undergoing an important new phase, with the UK delivering long-range missiles capable of striking deep into Russia with a radius of 300 kilometres. This has prompted speculation that Moscow could retaliate with pre-emptive attacks targeting hubs of western weapons deliveries to Ukraine on its border with Poland. While the Biden administration has stipulated conditions for the delivery of long-range missiles to Kyiv – prohibiting their use against Russian territory – the UK has not sought such guarantees.
European countries fundamentally support Ukraine, but there are divisions among them. Some welcome China's role in seeking to end the war and initiate negotiations, while others are hesitant.
The Biden administration is cautious about European acceptance of Chinese proposals, but it is aware of Europe's desire to avoid problems with China while fearing American pressure. The US is preparing to impose its 11th round of sanctions, including, for the first time, sanctions on Chinese companies thought to be supporting Russia, which could create a new crisis. Europe countries find themselves in a dilemma because agreeing to US sanctions could trigger a severe Chinese economic response towards them.
Draft proposals are being prepared to adopt a firm stance towards Beijing. Some reported American formulations propose declaring that China poses a threat to the West, which could escalate the standoff to a new level. Monitoring the Hiroshima summit, therefore, will be of utmost importance.
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.”
Wealth managers recommend late investors to have a balanced portfolio that typically includes traditional assets such as cash, government and corporate bonds, equities, commodities and commercial property.
They do not usually recommend investing in Bitcoin or other cryptocurrencies due to the risk and volatility associated with them.
“It has produced eye-watering returns for some, whereas others have lost substantially as this has all depended purely on timing and when the buy-in was. If someone still has about 20 to 25 years until retirement, there isn’t any need to take such risks,” Rupert Connor of Abacus Financial Consultant says.
He adds that if a person is interested in owning a business or growing a property portfolio to increase their retirement income, this can be encouraged provided they keep in mind the overall risk profile of these assets.
Dirham Stretcher tips for having a baby in the UAE
Selma Abdelhamid, the group's moderator, offers her guide to guide the cost of having a young family:
• Buy second hand stuff
They grow so fast. Don't get a second hand car seat though, unless you 100 per cent know it's not expired and hasn't been in an accident.
• Get a health card and vaccinate your child for free at government health centres
Ms Ma says she discovered this after spending thousands on vaccinations at private clinics.
• Join mum and baby coffee mornings provided by clinics, babysitting companies or nurseries.
Before joining baby classes ask for a free trial session. This way you will know if it's for you or not. You'll be surprised how great some classes are and how bad others are.
• Once baby is ready for solids, cook at home
Take the food with you in reusable pouches or jars. You'll save a fortune and you'll know exactly what you're feeding your child.
