US president Barack Obama speaks at the US-Africa Business Forum at the Plaza Hotel, in New York City. Drew Angerer / EPA
US president Barack Obama speaks at the US-Africa Business Forum at the Plaza Hotel, in New York City. Drew Angerer / EPA

Why the rise of populism may be Obama’s legacy



In his final address to the United Nations, United States president Barack Obama warned the assembled leaders that the liberal world order was under threat from what he called “crude populism”. In words which could apply equally to Donald Trump, the Republican candidate to succeed him as president, and Russia’s Vladimir Putin, Mr Obama said that some were arguing that the future favours the strong man. “History shows that strong men are then left with two paths: permanent crackdown, which sparks strife at home, or scapegoating enemies abroad, which can lead to war.”

In some ways Mr Obama is ending his two terms in the White House in the same way he began. He set out to open a new page in the Middle East, reversing the Bush era’s imperial expansion, and with a view to make peace with Iran and reset relations with Russia. So joyous was the mood in Europe at that time that the president was awarded the Nobel Peace Prize on the basis of his fine words.

He would be shocked to learn that the legacy of his administration may turn out to be something quite other than what he set out to do – the rise of populism around the world.

The high point of globalisation has come and gone. Now voters all over the democratic world are more concerned by things they have lost – independent national decision-making, for example – than the benefits cited by economists and other experts of free trade and movement of people. The free trade deals with Europe and the Pacific nations championed by the Obama administration now seem a lost cause.

These tectonic shifts are clearly seen in the British vote on June to leave the European Union, a decision which is bound – in the words of financial commentator Martin Wolf – to make the country “meaner and poorer”. And in the rise of Mr Trump, whose victory in the presidential election in November is now a real possibility, although it still will be harder for him than for Hillary Clinton.

Mr Trump’s ascendance raises questions about what populism is. All politicians seek the popular vote, so what is new? And in US presidential elections it is traditional for every candidate to promise to ride into Washington like a western gunslinger and clean up the mess. This is one of the weaknesses of Mrs Clinton’s campaign: in no way can she claim to be an outsider. Her establishment credentials are painfully apparent when the super-rich gather for meetings of the Clinton Global Initiative, her family’s charitable foundation.

In a forthcoming book, What Is Populism?, politics professor Jan-Werner Muller argues that not all attackers of the status quo are populists. Real populists are the likes of Mr Trump, Turkish president Recep Tayyip Erdogan and the British Eurosceptic Nigel Farage who claim that they, and only they, represent the people. They tend to talk in terms of "my people" or "real people" while their opponents are dupes or traitors, and the country is better off without them, as shown by the thousands of educated people leaving Russia unmourned by Mr Putin.

Being convinced of their rightness, real populists cannot accept defeat in elections – it must be due to fraud or conspiracy, a topic often raised by Mr Trump when he has appeared to be in danger of losing. In the case of Mr Erdogan, his mindset has been reinforced by the reality of the military coup that failed to topple him.

“Populists are just different elites who try to grab power with the help of a collective fantasy of political purity,” Muller has written.

This is not to say their arguments are without merit. The American political landscape is manipulated by huge corporations and wealthy individuals with vast lobbying power. Mrs Clinton’s candidacy looks like a case of the elite within the Democratic Party deciding it was “Hillary’s turn”, an assessment confirmed by hacked emails which proved that the supposedly neutral Democratic National Convention favoured her over her rival, Bernie Sanders.

There is no doubt that wealth is concentrated in ever fewer hands, while the titans of Silicon Valley disrupt the old economy and the jobs it provided until they create their own cosy oligopoly which is proof against disruption.

All these are valid criticisms which have been picked up by Mr Trump and turned into a combustible mixture with the addition of his trademark lies, boasts and racist and misogynistic provocations.

No one knows if Mr Trump can with the presidency – it is a distinct possibility – but it is clear that the Trump insurgency will leave its mark on politics in the US and around the world even if he loses. As the economy becomes more globalised, politics is becoming more local, a process hastened by the rise of social media and the decline of the old media gatekeepers in newspapers and television.

Mr Trump has brought nation, race and religion to the forefront of politics and this will have to be acknowledged by future Republican candidates. All this is a long way from the “post-racial America” predicted after Mr Obama’s election. The president might ruefully conclude that America was not ready for a black man in the White House. Perhaps it is not ready for a woman, either.

Abroad, the “strong men” denounced by Mr Obama are not doing too badly. Mr Putin has perfected what the Russians call the “political technologies” to stay in power and manage the challenges of low oil price sand sanctions far better than predicted. Hungary, where prime minister Victor Orban’s “Christian-national” state is denounced in Brussels as a violation of European values, is the darling of the bond dealers.

Populism stole up on the world during Obama’s presidency. It is not what he wanted, and he cannot be held responsible for the result of global forces beyond his control, but that may be the legacy of his time in office.

Alan Philps is a commentator on global affairs

On Twitter: @aphilps

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.”

MATCH INFO

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If you go

  • The nearest international airport to the start of the Chuysky Trakt is in Novosibirsk. Emirates (www.emirates.com) offer codeshare flights with S7 Airlines (www.s7.ru) via Moscow for US$5,300 (Dh19,467) return including taxes. Cheaper flights are available on Flydubai and Air Astana or Aeroflot combination, flying via Astana in Kazakhstan or Moscow. Economy class tickets are available for US$650 (Dh2,400).
  • The Double Tree by Hilton in Novosibirsk (+7 383 2230100,) has double rooms from US$60 (Dh220). You can rent cabins at camp grounds or rooms in guesthouses in the towns for around US$25 (Dh90).
  • The transport Minibuses run along the Chuysky Trakt but if you want to stop for sightseeing, hire a taxi from Gorno-Altaisk for about US$100 (Dh360) a day. Take a Russian phrasebook or download a translation app. Tour companies such as Altair-Tour (+7 383 2125115 ) offer hiking and adventure packages.
FFP EXPLAINED

What is Financial Fair Play?
Introduced in 2011 by Uefa, European football’s governing body, it demands that clubs live within their means. Chiefly, spend within their income and not make substantial losses.

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