Picture of an old car with a the US flag and a graffiti of revolutionary leader Ernesto 'Che' Guevara taken in Havana, on June 16, 2017.
US President Donald Trump will deliver a speech in Miami this Friday in which he will present his vision of the rapprochement with Cuba. / AFP PHOTO / Yamil LAGE
A vintage car with a US flag and graffiti of revolutionary leader Ernesto 'Che' Guevara in Havana / AFP

Warmer US-Cuban relations promised benefits for a troubled economy. Then Trump came along



With olive branches extended by Barack Obama and the Castro era drawing to an end, better times seemed around the corner for the beleaguered Caribbean island of Cuba.

After decades of Cold War tension with a mischief-making superpower, set against its defiant, anti-western neighbour, warmer US-Cuban relations promised benefits for the troubled Cuban economy, freer movement and a new age of mutual respect.

How distant that all now seems. For Mr Obama's successor as US president, Donald Trump, Cuba was a rogue country to pick a fight with and he soon he began to reverse the policy of rapprochement.

And while the late Fidel Castro's brother Raul is stepping down as president in April, the first vice president tipped to take over has his own air of belligerence. Previously seen by some as a moderate, Miguel Diaz-Canel was caught on video lambasting Cubans for copying Americans in celebrating Halloween, threatening to ban an independent magazine and sounding very Castro-like in his outlook. "It was the US that invaded Cuba, [that mounted] the blockade," he said. "They have to resolve these things to have normalised relations. We don't have to give anything in exchange."

None of that was in Mr Obama’s script. He might also be dismayed to hear that as far away as the UK, some money-changers refuse to sell US dollars to customers unwise enough to disclose where they are travelling.

Before a recent visit, I was told at a London branch of the retailer Marks and Spencer I would be denied currency in line with “US policy”. A protest on social media brought a fatuous response: “Fabulous you're off to Cuba for a holiday. We're bound by M&S Bank procedures and have been informed we're unable to sell US dollars to anyone visiting or living in Cuba due to sanctions.”

Yet Britain imposes no sanctions on Cuba. Marks and Spencer is a British company. The would-be buyer was British. Good, bad or indifferent, Cuba is a sovereign state. At least there was a positive sequel; I learnt that local surcharges on conversion made US dollars much less sensible a choice than euros, sterling or Canadian dollars in any case. M&S Bank made much of this in a follow-up statement to The National, though a desire to help the consumer had not been mentioned either at the store or in the Twitter exchange.

The Trump restrictions aim to make it more difficult for US companies and citizens to deal with Cuba. Theoretically, this targets military or intelligence-run businesses but the ban is wide-reaching, affecting even the hotel I stayed in, downtown Havana’s Ambos Mundo, once favoured by the US author Ernest Hemingway.

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So far, the impact seems slight. Americans, once again limited to organised group travel for cultural or family purposes and under tighter conditions, can nevertheless plan visits, cheekily helped by advice from US websites.

Cubans appear happier than when I first started visiting 20 years ago. They are proud of their island’s resistance while seeing the obvious failings of rigid adoption of Soviet ways; butter was among commodities in short supply in Havana this month. But while tourism is strong, there is little sign yet of economic improvements reaching ordinary households. Westerners can still spend as much on dinner for two as a professional couple earn in a month.

If Mr Trump’s will prevails and a hardliner takes over from Raul Castro (who may well retain some influence), the immediate prospects are unpromising.

Many feared Cuba would lose much of its charm as more Americans and US companies arrived. “They’ll buy up all our vintage cars and leave behind Starbucks and McDonald’s,” ran a common lament.

Cubans are entitled to prefer a better living standard as opposed to “staying quaint”. But it probably takes both sides to see sense and there may be a long wait.

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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.

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“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.”

UAE athletes heading to Paris 2024

Equestrian
Abdullah Humaid Al Muhairi, Abdullah Al Marri, Omar Al Marzooqi, Salem Al Suwaidi, and Ali Al Karbi (four to be selected).


Judo
Men: Narmandakh Bayanmunkh (66kg), Nugzari Tatalashvili (81kg), Aram Grigorian (90kg), Dzhafar Kostoev (100kg), Magomedomar Magomedomarov (+100kg); women's Khorloodoi Bishrelt (52kg).


Cycling
Safia Al Sayegh (women's road race).

Swimming
Men: Yousef Rashid Al Matroushi (100m freestyle); women: Maha Abdullah Al Shehi (200m freestyle).

Athletics
Maryam Mohammed Al Farsi (women's 100 metres).