The biggest story in international trade circles last week had nothing to do with how much commerce flows around the world, and that is a problem.
It wasn't about the race to be next director general of the World Trade Organisation (WTO), even though that contest is in its closing stages. It wasn't about the near 20 per cent drop in globe cargo volumes in the first half of the year, triggered by the Covid-19 lockdown. It wasn't even about the showdown between the US, China and Europe over trade and investment barriers and its ramifications, such as the negotiations over the sale of Tik Tok's international businesses.
It was about a character known as a "Big Phil" Hogan and his resignation after travelling to a golf club dinner in the far west of Ireland. Commissioner Hogan was the Brussels pointman for international trade – one of a small handful of top figures in the global economy.
I know nothing about how Mr Hogan handles a driver on the first tee. From his lumbering physique I would guess he bashes the ball a long way. In global trade he was, however, a big hitter, leading the European Union's negotiations with Robert Lighthizer, the US trade representative and the intellectual driving force behind President Donald Trump's "America First" tilt away from globalised supply chains.
Phil Hogan, the then European Commissioner for Trade, in conversation with European Commission President Ursula von der Leyen in Brussels in January. Mr Hogan resigned after he was was criticised for allegedly breaching coronavirus lockdown restrictions in his native Ireland. EPA
Mr Hogan's rule violations, as he travelled around his native Ireland, were serial over the course of a week in early August.
The 80 members of the political and judicial elite, who dine together as a golf society, broke the country's ban on large gatherings and social distancing. He travelled between different homes, even going to and leaving an area observing a local lockdown to pick up some official papers. He was also stopped by the police for speaking on his mobile phone while driving.
The ensuing political scandal cost him and several other high-profile domestic political heavyweights their jobs.
Mr Hogan tried to brush off the calls for his resignation on the basis of his pivotal place in the trade wars. He was talking on the phone nearly every day to Mr Lighthizer, he pleaded. The negotiations over the package of US tariffs, such as 10 per cent on European cars, is clearly a vital challenge for Europe – and the buck stopped with Mr Hogan.
The offence caused by Mr Hogan was exacerbated by the shutdown mentality that set in among the Irish and many places elsewhere.
A study issued last week by King's College London examined the parallels between the British government's fears about a "deep shelter mentality" in 1940, as the German bombing blitz got under way during the Second World War, and the handling of the coronavirus-induced lockdown this year.
Edgar Jones, the author, observes that a deep psychological bond has formed associating the home with safety in recent months. The idea of a powerful political figure careening around the country as he pleased weighed far more heavily with people than the high-stakes resolution of trade issues.
Abdel Hamid Mamdouh, the Egyptian candidate leading the running to take over as secretary general of the WTO, has complained that the body is in systemic meltdown and no one seems to notice. One of four African and two Arab candidates to replace the incumbent Roberto Azevedo, Mr Mamdouh believes you have to go back to 1985 to find a time that the global trading system was so imperilled and in need of strong leadership.
Abdel Hamid Mamdouh, the Egyptian candidate leading the running to take over as secretary general of the WTO, has complained that the body is in systemic meltdown. AFP
The priorities of so many people – particularly in the developed West and in countries that together comprise the Organisation for Economic Co-operation and Development – lie firmly elsewhere. Sheltering from the coronavirus has collapsed the workplace and, with it, whole areas of life.
In London, scarcely a day goes by without pictures on social media of empty train or tube carriages during what was previously called the rush hour. People are in a deep shelter mentality and incapable of processing alternative priorities. Office districts such as the City of London or Canary Wharf are deserted, with little sense of a change in circumstances anytime soon.
In the long run, working from home will not be a seamless replacement for what went before.
A paper from Oxford Economics, a company that does global forecasting and quantitative analysis for business and government, said that working from home was straightforward while the economy was in crisis mode. However, in a dynamic, reviving economy, the evacuation of the common space does not remain sustainable.
Stay-at-home orders wiped out 20 per cent of the British economy in the first half of 2020. AFP
The pressure of reviving business life is likely to pull many out of their homes – whether or not they want to stay away
The latest US credit card data for the week ending on August 19 showed that expenditure on travel had slumped almost 50 per cent from a year earlier. In the short term, employees save from not travelling. But how long before employers use that restructuring of the relationship to reduce remuneration to reflect lower costs?
The pressure of reviving business life is likely to pull many out of their homes – whether or not they want to stay away. The world of product launches, mergers and acquisitions, and recruitment does not lend itself to scattered and dispersed populations dealing with each other virtually.
For leaders, that will mean exhorting employees to break the habit of hunkering down. To move out and engage will be a "pushmi-pullyu" process. Perhaps it even means resuming business deals on the golf course and having dinner afterwards.
Damien McElroy is the London bureau chief of The National
Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
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.”
More than 2.2 million Indian tourists arrived in UAE in 2023 More than 3.5 million Indians reside in UAE Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
If you go
Flight connections to Ulaanbaatar are available through a variety of hubs, including Seoul and Beijing, with airlines including Mongolian Airlines and Korean Air. While some nationalities, such as Americans, don’t need a tourist visa for Mongolia, others, including UAE citizens, can obtain a visa on arrival, while others including UK citizens, need to obtain a visa in advance. Contact the Mongolian Embassy in the UAE for more information.
Nomadic Road offers expedition-style trips to Mongolia in January and August, and other destinations during most other months. Its nine-day August 2020 Mongolia trip will cost from $5,250 per person based on two sharing, including airport transfers, two nights’ hotel accommodation in Ulaanbaatar, vehicle rental, fuel, third party vehicle liability insurance, the services of a guide and support team, accommodation, food and entrance fees; nomadicroad.com
A fully guided three-day, two-night itinerary at Three Camel Lodge costs from $2,420 per person based on two sharing, including airport transfers, accommodation, meals and excursions including the Yol Valley and Flaming Cliffs. A return internal flight from Ulaanbaatar to Dalanzadgad costs $300 per person and the flight takes 90 minutes each way; threecamellodge.com
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Hobbies: Salsa dancing “It's in my blood” and listening to music in different languages
Favourite place to travel to: “Thailand, as it's gorgeous, food is delicious, their massages are to die for!”
Favourite food: “I'm a vegetarian, so I can't get enough of salad.”
Favourite film: “I love watching documentaries, and am fascinated by nature, animals, human anatomy. I love watching to learn!”
Best spot in the UAE: “I fell in love with Fujairah and anywhere outside the big cities, where I can get some peace and get a break from the busy lifestyle”
Key figures in the life of the fort
Sheikh Dhiyab bin Isa (ruled 1761-1793) Built Qasr Al Hosn as a watchtower to guard over the only freshwater well on Abu Dhabi island.
Sheikh Shakhbut bin Dhiyab (ruled 1793-1816) Expanded the tower into a small fort and transferred his ruling place of residence from Liwa Oasis to the fort on the island.
Sheikh Tahnoon bin Shakhbut (ruled 1818-1833) Expanded Qasr Al Hosn further as Abu Dhabi grew from a small village of palm huts to a town of more than 5,000 inhabitants.
Sheikh Khalifa bin Shakhbut (ruled 1833-1845) Repaired and fortified the fort.
Sheikh Saeed bin Tahnoon (ruled 1845-1855) Turned Qasr Al Hosn into a strong two-storied structure.
Sheikh Zayed bin Khalifa (ruled 1855-1909) Expanded Qasr Al Hosn further to reflect the emirate's increasing prominence.
Sheikh Shakhbut bin Sultan (ruled 1928-1966) Renovated and enlarged Qasr Al Hosn, adding a decorative arch and two new villas.
Sheikh Zayed bin Sultan (ruled 1966-2004) Moved the royal residence to Al Manhal palace and kept his diwan at Qasr Al Hosn.
- Number of children under five will fall from 681 million in 2017 to 401m in 2100
- Over-80s will rise from 141m in 2017 to 866m in 2100
- Nigeria will become the world’s second most populous country with 791m by 2100, behind India
- China will fall dramatically from a peak of 2.4 billion in 2024 to 732 million by 2100
- an average of 2.1 children per woman is required to sustain population growth
Will the pound fall to parity with the dollar?
The idea of pound parity now seems less far-fetched as the risk grows that Britain may split away from the European Union without a deal.
Rupert Harrison, a fund manager at BlackRock, sees the risk of it falling to trade level with the dollar on a no-deal Brexit. The view echoes Morgan Stanley’s recent forecast that the currency can plunge toward $1 (Dh3.67) on such an outcome. That isn’t the majority view yet – a Bloomberg survey this month estimated the pound will slide to $1.10 should the UK exit the bloc without an agreement.
New Prime Minister Boris Johnson has repeatedly said that Britain will leave the EU on the October 31 deadline with or without an agreement, fuelling concern the nation is headed for a disorderly departure and fanning pessimism toward the pound. Sterling has fallen more than 7 per cent in the past three months, the worst performance among major developed-market currencies.
“The pound is at a much lower level now but I still think a no-deal exit would lead to significant volatility and we could be testing parity on a really bad outcome,” said Mr Harrison, who manages more than $10 billion in assets at BlackRock. “We will see this game of chicken continue through August and that’s likely negative for sterling,” he said about the deadlocked Brexit talks.
The pound fell 0.8 per cent to $1.2033 on Friday, its weakest closing level since the 1980s, after a report on the second quarter showed the UK economy shrank for the first time in six years. The data means it is likely the Bank of England will cut interest rates, according to Mizuho Bank.
The BOE said in November that the currency could fall even below $1 in an analysis on possible worst-case Brexit scenarios. Options-based calculations showed around a 6.4 per cent chance of pound-dollar parity in the next one year, markedly higher than 0.2 per cent in early March when prospects of a no-deal outcome were seemingly off the table.
