Even before the end of confinement imposed by coronavirus, violent protests had resumed in Lebanon against economic conditions, particularly in the northern city of Tripoli. The Lebanese army was deployed to contain the demonstrators, many of whom had escalated their actions by setting fire to banks. A young protester was killed in one of the melees, while dozens of soldiers were injured.
Two of the main pillars of Lebanon's stability are the banking system and the military. What happened last week underlined that the first is on the verge of a breakdown, threatening Lebanon's finances, while the second is under mounting pressure. Unless there is a rapid injection of dollar liquidity into the banking sector, it will not survive. And unless relief is given to an increasingly impoverished Lebanese society, the army cannot forever be relied upon to curb the protests.
Sunniva Rose: Reminiscing about war years
That is not to say that the military will stage a coup. Rather, as the Lebanese pound loses its value – which has already dramatically eroded the salaries of state employees, including soldiers – the willingness of officers and troops to back the politicians against the people will decline. It is conceivable that if the situation deteriorates further, the military will quietly begin to resist repressing social unrest, insisting that this is the job of the security forces.
If that were to happen, two things could ensue. Protesters, sensing that the tide is turning in their favour, could become even more brazen in their attacks against leading politicians and their interests; and, in response, the politicians could resort to playing on sectarian sensibilities to portray any attack against them as an attack against their religious community. That could push them to resort to autonomous security means to protect their interests, and themselves.
Aya Iskandarani: Test for Hezbollah supporters
In this October 25, 2019 file photo, supporters of Hezbollah leader Hassan Nasrallah hold his picture in Beirut. AP Photo
Autonomous security is a polite way of saying that sectarian militias could emerge to do what the army is unwilling to do, namely control the streets. With the financial system no longer functioning and the army increasingly failing to protect state officials, the very notion of a state would lose whatever meaning it still has as security institutions are replaced by sectarian armed gangs.
Some politicians would prefer to resist such a development on the grounds that they need the state as a facade for the corrupt oligarchy they have put in place; and to avoid a slide into civil war that would devastate the lucrative edifice they have exploited since the end of the war in 1990. The reality is that while many politicians became prominent during the war years, they are not keen to take Lebanon back to that time, seeing little to gain from it.
Michael Young: Hezbollah and the system
Moreover, Hezbollah, Lebanon's most powerful party, would regard a new civil war as a threatening sideshow to its main task of advancing Iranian interests regionally. That is why some of the party's foes abroad fantasise about a new civil war in Lebanon, believing it would sink Hezbollah in a debilitating conflict, just as the war in 1975 did to the Palestine Liberation Organisation.
With this in mind, Hezbollah and the rest of the political class have accepted a step that they previously would have preferred to avoid. They have asked for assistance from the International Monetary Fund. While their intentions are certainly mercenary, once they are locked into a bailout programme, the politicians' ability to ignore IMF conditions would be relatively limited.
Shadi Ghanim: The currency crisis
Our cartoonist Shadi Ghanim's take on the hit dollar savings have taken in Lebanon due to the country's ongoing financial crisis
That even Hezbollah has accepted the necessity of an IMF bailout, if the fund itself agrees to one, is a testament to the desire of Lebanon’s politicians and parties to salvage what remains of the state. That is why the political class will try to do two things in the weeks and months ahead: save the banking sector, even if it means they have to put their hands on bank deposits; and ensure that the army is spared the worst consequences of widening protests.
Lebanese Prime Minister Hassan Diab is sprayed with disinfectant as he arrives to attend a legislative session in Beirut. Reuters
This suggests that Hezbollah may in the future be tempted to replace Mr Diab’s government with a so-called national unity government, which alone would be able to reach a broad political consensus on an economic plan to address the dire financial situation.
Hezbollah is militarily strong, but today that is hardly enough. The party does not want a new civil war, it seeks an economic revival to assuage an angry population, which only the IMF can provide, and it is willing to make concessions to secure its long-term security. All this will force Hezbollah into making difficult choices in the coming weeks. The party’s domestic rivals will be looking for ways to exploit this to narrow its margin of manoeuvre, while increasing their own.
Michael Young is editor of Diwan, the blog of the Carnegie Middle East programme, in Beirut
UK's plans to cut net migration
Under the UK government’s proposals, migrants will have to spend 10 years in the UK before being able to apply for citizenship.
Skilled worker visas will require a university degree, and there will be tighter restrictions on recruitment for jobs with skills shortages.
But what are described as "high-contributing" individuals such as doctors and nurses could be fast-tracked through the system.
Language requirements will be increased for all immigration routes to ensure a higher level of English.
Rules will also be laid out for adult dependants, meaning they will have to demonstrate a basic understanding of the language.
The plans also call for stricter tests for colleges and universities offering places to foreign students and a reduction in the time graduates can remain in the UK after their studies from two years to 18 months.
The Al Barzakh Festival takes place on Wednesday and Thursday at 7.30pm in the Red Theatre, NYUAD, Saadiyat Island. Tickets cost Dh105 for adults from platinumlist.net
UAE tour of Zimbabwe
All matches in Bulawayo Friday, Sept 26 – UAE won by 36 runs Sunday, Sept 28 – Second ODI Tuesday, Sept 30 – Third ODI Thursday, Oct 2 – Fourth ODI Sunday, Oct 5 – First T20I Monday, Oct 6 – Second T20I
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.”
