French President Emmanuel Macron attends a drone presentation on the deck of the French warship Dixmude in Toulon. Macron knows his country's place is that of a middle power. Reuters
French President Emmanuel Macron attends a drone presentation on the deck of the French warship Dixmude in Toulon. Macron knows his country's place is that of a middle power. Reuters
French President Emmanuel Macron attends a drone presentation on the deck of the French warship Dixmude in Toulon. Macron knows his country's place is that of a middle power. Reuters
French President Emmanuel Macron attends a drone presentation on the deck of the French warship Dixmude in Toulon. Macron knows his country's place is that of a middle power. Reuters

France's defence strategy prepares for a messier world


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Last month, the French government released an updated version of its Strategic Review – the French equivalent of the US's National Security Strategy. It was last updated just three years ago, but Paris deemed it necessary to acknowledge the major disruptions brought about by the Covid-19 pandemic. And if defence and security reviews are usually sombre in both substance and tone, this report paints a dark picture of the world in 2021. It also reflects how France sees both itself and Europe in a world unsettled by rising US-China-Russia competition and the behaviour of two troublesome Middle East states.

It begins by highlighting major trends shaping French national security amid growing instability in its two areas of influence: the Sahel and the Middle East.

West Africa remains a key area of involvement for the French military. But eight years after its intervention in Mali to oust militant groups – and with more than 5,000 soldiers still deployed across sub-Saharan Africa – its presence is being questioned both in Paris and in some African capitals. Local states are still mostly incapable of containing terror attacks on a sustained basis, yet France's military footprint has become a source of popular anger. The review does not offer a new path. A few days before its release, however, President Emmanuel Macron announced that his government would "adjust its efforts" in the region – a euphemism for gradual troop withdrawal.

  • French soldiers of the Barkhane force carrying the coffin of a soldier who died when two French military helicopters collided in Mali. AFP
    French soldiers of the Barkhane force carrying the coffin of a soldier who died when two French military helicopters collided in Mali. AFP
  • Troops at the French Army base in Gao, Mali, remember the 13 killed in the collision. AFP
    Troops at the French Army base in Gao, Mali, remember the 13 killed in the collision. AFP
  • The crash occurred late on November 25, 2020, during an operation in the Liptako region, near the borders with Burkina Faso and Niger. AFP
    The crash occurred late on November 25, 2020, during an operation in the Liptako region, near the borders with Burkina Faso and Niger. AFP
  • It was the heaviest single loss for the French military in nearly four decades. AFP
    It was the heaviest single loss for the French military in nearly four decades. AFP
  • President Emmanuel Macron is considering reducing the number of French troops in the Sahel region. AFP
    President Emmanuel Macron is considering reducing the number of French troops in the Sahel region. AFP
  • President Macron is this week joining a Sahel G5 summit by video link. AFP
    President Macron is this week joining a Sahel G5 summit by video link. AFP

In the section devoted to the Middle East, the paper points to the assertiveness of Iran and Turkey as exacerbating factors in the various crises affecting the region. It states that the previous US administration's "maximum pressure" approach was ineffective in reining in Tehran's destabilising role in Syria, Iraq and Lebanon. It also underlines Iran's non-compliance with the 2015 nuclear deal – an assessment that will disappoint those hoping for a mere resumption of the agreement between the regime and the world's major powers.

Interestingly, although not surprisingly, the document dedicates a significant amount of ink to Ankara's role in the world. Even though Turkey is not explicitly portrayed as a hostile entity, it is put on a par with Iran. The ambitions of Turkey in the Middle East, particularly in Libya, are questioned, as is its impact on the regional security architecture. The review is no doubt a reflection of the deteriorating relations between France and Turkey over the past few years.

The paper also takes stock of the escalating competition between the US, China, and Russia and its negative consequences for Europe. Paris has trodden a delicate path in dealing with Washington, Moscow and Beijing. As part of its core strategy, France remains a key ally of the US and military co-operation remains strong both bilaterally and through the framework of Nato. In fact, Paris relies on US intelligence and logistical support in the Sahel – although this may not last given Washington's gradual shift in focus and redeployment of resources to Asia. It is no coincidence, therefore, that Florence Parly, France's Minister of the Armed Forces, called for a continuation of this arrangement on the day US President Joe Biden was inaugurated.

The French have been candid about Iran's increasingly aggressive and assertive foreign policy. AP Photo
The French have been candid about Iran's increasingly aggressive and assertive foreign policy. AP Photo

While acknowledging the benefits of the French-American alliance, Mr Macron also aimed to "reset" relations with Russia, which deteriorated after Moscow's annexation of Crimea in 2014. This renewal led to a strategic dialogue between Paris and Moscow that has so far proved inconclusive. Likewise, just as French officials often take a cue from Washington to criticise Beijing's strategic activities in the South-China Sea and elsewhere, Mr Macron has expressed support for the EU-China trade deal signed in December, an agreement now likely to complicate the US-EU dialogue on China.

Nearly four years after Mr Macron's election, the Strategic Review reflects the struggles of a middle power such as France to defend its interests on the world stage. Despite his age – Mr Macron is only 43 – he has embraced a view of international affairs that is deeply anchored in traditional French geopolitical thought. In interviews, he has often referred to former president Charles de Gaulle as a model. One of the most influential voices at the Elysee Palace is Hubert Vedrine, a former foreign minister and a proponent of "French realpolitik", who once described French-American relations as "allied but not aligned".

Emmanuel Macron's France came to view Donald Trump's America as transactional with its allies, including Europe. EPA
Emmanuel Macron's France came to view Donald Trump's America as transactional with its allies, including Europe. EPA
France been among the most active supporters of European 'strategic autonomy'

Mr Macron aims to position France as a country that continues to matter within the context of great-power competition. If France still sees its relationship with the US as vital to its interests, it has also been among the most active supporters of European "strategic autonomy". Mr Macron believes that heightened US-China competition and the erosion of multilateralism call for a stronger EU – a belief further cemented by America's transactional approach to foreign relations, especially with Europe, under the Trump administration.

That the Strategic Review was released only days after Mr Biden was sworn in also indicates that Paris does not consider the Trump presidency an anomaly. It believes that, despite the Biden presidency, American retrenchment from the world stage is a long-term trend.

The paper does not entertain any illusions on the challenges that lie ahead. It supports recent increases in defence spending, both in France and more broadly in Europe, while acknowledging that pandemic-related costs could force budget cuts in the immediate future. It this context, the summary is both clear and makes for a sobering read: that the risk of a "strategic downgrading of Europe and its disappearance from world affairs can no longer be dismissed".

Jean-Loup Samaan is an Abu Dhabi-based researcher in strategic affairs

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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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