Lebanon may see a government in the near future, after a delay of eight months. Yet waiting on the political cartel in power to take decisions that are beneficial for the country is rarely advisable. That is why foreign countries that want to avoid a complete collapse of Lebanon should look at ways of reinforcing the Lebanese armed forces and integrating them into their efforts.
The military is a rare institution that retains appeal across Lebanon, embodies national unity and acts as a reminder of a state project – against sectarian parties and leaders who are ensuring the country’s ruin. If a cabinet is not formed soon, fragmentation could accelerate.
No one has been more guilty of this situation than the militant party Hezbollah. In October 2019, when anti-government protests began, Hezbollah sought to undermine calls for change because the corrupt system in place protected its interests. Today, the party is facing the system’s collapse. That its leader Hassan Nasrallah called for a new cabinet last week may show he recognises the risks.
Then again, Nasrallah often makes statements hiding his intentions. Yet the economic crisis is having a harmful effect on the Shiites as well, particularly on communal unity. A portion of Hezbollah's followers earn salaries in US dollars, creating resentments from supporters of the Amal Movement, another Shiite party, many of whom work for the state. Their Lebanese pound income has melted amid hyperinflation.
A continued vacuum in the government that leads to insecurity and further economic disintegration could mean the state’s breakdown. This could create dynamics that encourage sectarian parties to manage areas under their control, taking the country back to the civil war years. Even if conflict is averted, what the sectarian parties gain is lost to the state, to the disadvantage of a functional order.
In contrast, the armed forces, whatever their shortcomings, can maintain a certain level of security and represent a national alternative to the politicians and parties that have blocked progress. This is hardly an appeal for military rule, which would be a disaster for Lebanon and for the military itself.
The notion that the army is a Hezbollah tool misstates reality
However, the armed forces have long been a cause of worry for Lebanon’s political cartel, especially as they enjoy popular support. The military is a paradox in that it embodies all the contradictions of Lebanon’s sectarian society, but also has an alternative institutional belief system, allowing it to stake out an independent position with regard to the sectarian leaders and parties.
That is why a reinforcement of the military should focus on pushing the political class to be more flexible towards compromise and reform, for fear that the armed forces could gain from any popular backlash against the leadership’s behaviour.
How the army should engage with this situation is complicated. The idea is not to precipitate a war between the military and Hezbollah. This would lead to stalemate, destroy Lebanon and alienate many Shiite Lebanese.
Nor should the armed forces be prompted to openly oppose the government. This would undermine the idea of civilian control over the military and encourage political parties to exacerbate the sectarian contradictions in the institution.
A more achievable role is to encourage the army to assert its differences with the political parties, above all Hezbollah. It could do this by imposing itself as the main balancer in Lebanon, along the lines of what the army did during the civil war of 1958, enhancing its credibility. The military would maintain order, protect public property but not intervene to break up legitimate protests.
The armed forces could also highlight relations with Lebanon's partners in the West and the Arab world. In a recent speech, army commander Joseph Aoun noted that foreign states – by which he meant the US, among others – had provided vital assistance to the armed forces when the state had failed to do so.
More subtly, the military could boldly begin defining itself as the axis of a national vision in its public statements, one contrasting with the lack of vision from the political leadership. That is not to say that the army should strive to take power, but that as a national institution it should be blunter about what it regards as the ideals necessary for protecting the county in a time of crisis.
Some will see this as an electoral platform for the army commander, but this should be an institutional not a personal initiative. The aim would be to show that amid Lebanon’s myriad parochial and regional agendas, there is still a platform to take steps that can appeal to all Lebanese.
There will be those who recklessly argue that the army must be denied assistance because it is a front for Hezbollah. This is a line being pushed in the US, the armed forces’ main supplier, by the Republican Study Committee, a group of conservative congressional Republicans incited by right-wing think tanks.
However, this approach fails to see that at a time when Hezbollah is concentrated on weathering a storm of social dissatisfaction, there is room for the military to exploit the situation. The notion that the army is a Hezbollah tool misstates reality. At a time when Lebanon is under threat, the army can yet hold things together.
Michael Young is a Lebanon columnist for The National
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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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