Mosul and the long road to revival


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July 08, 2022

Five years after Mosul was liberated from the clutches of ISIS, the task of rebuilding Iraq’s second city continues to be a challenge.

Mosul is one of the Arab world’s most historically and culturally significant cities. But by July 2017, much of it was reduced to rubble by months-long fighting between ISIS and Iraqi forces, the US and other allies. Freedom from the tyranny and violence of a terror group that had occupied the city for three years came at a high cost, with up to 11,000 civilians killed and more than 50,000 houses damaged by the end of the campaign.

At the time, the reconstruction cost for Mosul and the rest of the Nineweh province was estimated to be about $5-7 billion. Five years later, however, large parts of the city remain in disrepair. The airport lies in ruins and full-fledged hospitals are few and far between. As The National reported, a lack of funds, inefficient bureaucracy and corruption are mostly to blame.

But at the heart of Mosul’s reconstruction story, amid inadequate government support, are the resilience, dynamism and imagination of its 3 million residents, many of whom are rebuilding their homes and livelihoods with limited resources and funds, sometimes having to reach into their own pockets.

Residents such as Bassam Mohammed Hashim told The National about having to re-use bricks from damaged houses to rebuild. It is the sort of inventiveness in the face of adversity that is amply evident across the city, in all walks of life.

Start-ups in Mosul. Handout
Start-ups in Mosul. Handout

Fewer government jobs due to cost-cutting by the state have led young, tech-savvy entrepreneurs to start their own businesses. Wasla, a taxi-booking service, is one of almost 100 start-ups dotting the landscape today in the technology, transport, tourism, education and entertainment sectors. As Wasla’s founder, Omar Sinan, 22, said: “Entrepreneurship not only solves problems, but also creates jobs that the government can no longer offer, as well as develop the economy.”

Indeed, with its market projected to grow over the next decade, as the city is gradually rebuilt, there is plenty of space, scope and capital, particularly foreign capital, for youngsters to start their own businesses.

The revival of Mosul is a happy and hopeful reminder of generosity and shared humanity when it is needed most. Whether it is the UAE’s assistance to rebuild the city, including Al Nuri Mosque, the EU’s support for start-up incubators, and the UN Development Programme’s myriad reconstruction projects, the world has stood behind Mosul as it emerges from the rubble.

Sadly, however, the past five years have also been an indication of the Iraqi government’s inability to fulfill its responsibilities. There have been mitigating circumstances, such as a drop in oil revenue from $92bn in 2014, when ISIS captured Mosul, to $66bn in 2017, when it was liberated. That year, government revenue was $22bn short of the World Bank's estimated $88bn necessary for the nationwide post-war reconstruction. Political dysfunction in Baghdad, as it struggles to form a government, has further undermined its ability to deliver.

However, with crude prices at an all-time high today the government has a narrow window of opportunity to get its finances in order and use the funds to speed up the process of rebuilding all its devastated regions, including Mosul. Surely the last thing both Mosul and Baghdad want is a return to the kind of neglect that led to the very rise of ISIS a decade ago.

Emma Sky's Iraq essay: A tour through Iraq's side streets, seeking the country's path to peace

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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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About Karol Nawrocki

• Supports military aid for Ukraine, unlike other eurosceptic leaders, but he will oppose its membership in western alliances.

• A nationalist, his campaign slogan was Poland First. "Let's help others, but let's take care of our own citizens first," he said on social media in April.

• Cultivates tough-guy image, posting videos of himself at shooting ranges and in boxing rings.

• Met Donald Trump at the White House and received his backing.

Updated: July 08, 2022, 3:00 AM