Kurdish Peshmerga fighters in Iraq's Kurdistan region. AFP
Kurdish Peshmerga fighters in Iraq's Kurdistan region. AFP
Kurdish Peshmerga fighters in Iraq's Kurdistan region. AFP
Kurdish Peshmerga fighters in Iraq's Kurdistan region. AFP


Last-minute diplomacy must prevent a new wave of violence in Syria and Iraq


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November 25, 2022

Syria might not have almost 7 million internally displaced people if global diplomacy worked as it should. But despite a great deal of foreign interest, more than a decade on from the beginning of its civil war, a solution strong enough to begin a meaningful, inclusive rebuild remains distant.

While not quite as devastated, Iraq, a neighbour, also faces dangerous levels of instability. Domestically, corruption is rife, the economy is stagnant and the environment is failing. Politicians seem unable, or unwilling, to change course. Externally, the country is the target of crippling foreign interference, particularly in the case of Iranian-backed militias.

Now, both countries appear to be entering a particularly dangerous phase, which only high-level, focused diplomacy can solve safely and lastingly.

Although slightly different in nature, they revolve around neighbours' concerns about security threats posed by Kurdish groups that are present in Iraq and Syria.

  • People inspect the damage after Turkish air strikes hit a power station in Taql Baql, Syria. AP
    People inspect the damage after Turkish air strikes hit a power station in Taql Baql, Syria. AP
  • A fire rages at an oil installation hit by a Turkish air strike in Tal Awdah, in north-eastern Syria's Hasakah province. AFP
    A fire rages at an oil installation hit by a Turkish air strike in Tal Awdah, in north-eastern Syria's Hasakah province. AFP
  • Residents walk over the rubble of a building destroyed by a rocket in the town of Azaz, Aleppo province. AFP
    Residents walk over the rubble of a building destroyed by a rocket in the town of Azaz, Aleppo province. AFP
  • People look at a site damaged by Turkish air strikes in Taql Baql, Hasakah province. AP
    People look at a site damaged by Turkish air strikes in Taql Baql, Hasakah province. AP
  • A person wounded in a rocket attack in the town of Azaz receives medical care at a clinic. AFP
    A person wounded in a rocket attack in the town of Azaz receives medical care at a clinic. AFP
  • A Syrian fighter fires a machinegun mounted on the back of motorcycle during military drills by the Turkish-backed Suleiman Shah Division in the opposition-held Afrin region of northern Syria. AFP
    A Syrian fighter fires a machinegun mounted on the back of motorcycle during military drills by the Turkish-backed Suleiman Shah Division in the opposition-held Afrin region of northern Syria. AFP
  • Turkey's Defence Minister Hulusi Akar visits the Land Forces Operation Centre, in Ankara. Reuters
    Turkey's Defence Minister Hulusi Akar visits the Land Forces Operation Centre, in Ankara. Reuters
  • Mr Akar is briefed on the operations. Reuters
    Mr Akar is briefed on the operations. Reuters
  • Kurds attend a funeral of people killed in Turkish air strikes in the village of Al Malikiyah, northern Syria. AP
    Kurds attend a funeral of people killed in Turkish air strikes in the village of Al Malikiyah, northern Syria. AP
  • Women mourn during the funeral service. AP
    Women mourn during the funeral service. AP
  • Police arrest members of the Peoples' Democratic Party (HDP) during a protest against the Turkish Armed Forces' (TSK) air campaign in the northern regions of Iraq and Syria, in Ankara. AFP
    Police arrest members of the Peoples' Democratic Party (HDP) during a protest against the Turkish Armed Forces' (TSK) air campaign in the northern regions of Iraq and Syria, in Ankara. AFP

On Wednesday, Iraq said it would send border guards to its borders with Turkey and Iran, an attempt to stop ongoing attacks by them against dissident Kurdish groups. Turkey’s Kurdistan Workers' Party, or PKK, and the Kurdish Democratic Party of Iran have bases in Iraq's Kurdistan region and have recently been the targets of almost daily attacks by Ankara and Tehran.

In Syria, the situation is perhaps even more urgent. On Wednesday, Turkish President Recep Tayyip Erdogan said that his country would escalate current air strikes against Kurdish targets in Syria by launching a ground operation "at the most convenient time for us". The comments came after a bomb attack in Istanbul that killed six people. No one has claimed responsibility, but Turkey blames the YPG, a primarily Kurdish militia in Syria.

That same day, the US said that Turkish strikes in northern Syria had put some of its personnel in danger. There are roughly 900 US troops currently embedded with the Syrian Democratic Forces, a group fighting remnants of ISIS, and which is led by Kurdish fighters. It is an early warning of how complex and costly a Turkish ground invasion would be, and why it must be avoided at all costs.

There are two starkly different options for how matters could develop from here. One is to carry on the years-long habit of inaction and maintain a dangerous status quo in which major players tolerate dangerous power vacuums and lingering tensions that should have been solved years ago.

The other is that the prospect of a new, particularly dangerous round of hostilities in Syria and Iraq re-energises diplomacy. This is a vastly more constructive and regulated process than military action.

A frequent paradox of diplomacy is that it is often only fully pressed into action during the final stages before violence. This is not ideal and often does not work by late stages; the ongoing war in Ukraine is an example. But now that the situation is as bad as it is, perhaps sufficient desire to find peaceful solutions might finally be realised. In what might seem like a hopeless time for regional security, this should be the hope that policymakers cling on to. Those in power only have to look at the world around them today to see how devastating and drawn out the other option is.

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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