Dr Liam Fox, the British defence secretary, assured Gulf countries the UK's defence relationship with the region will continue.
Dr Liam Fox, the British defence secretary, assured Gulf countries the UK's defence relationship with the region will continue.

British presence in Gulf secure, says Fox

DUBAI // The British military presence in the Gulf will continue despite cuts in defence spending, the UK defence secretary says.

"We'll not be reducing, full stop," said Liam Fox, who was speaking at The Address hotel in Downtown Dubai on a stopover from Afghanistan.

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British presence in Gulf secure, says Fox Largest military spending review in decades to tackle Britain's mountain of debt will not deter government's renewed focus on region.

"There'll be no reduction to our commitment to this region either in training and exercise, involvement or in the deployment of our forces in this region."

The region has faced renewed focus from the current British government.

"This region is too important to see any reduction in a military relationship here," Dr Fox said.

British military spending is facing the largest budget review in decades, but he insisted it would "allow us to invest in increased military capability towards the end of the decade".

"We need to be able to invest in future carrier strike and joint strike fighters, but we need to maintain the number of Challenger battle tanks," Dr Fox added.

He said the British coalition government, in power since last May, was more focused on the Gulf than its predecessor. "We regard the Gulf as being key to our own security, regional security, and to the fight in transnational terrorism."

On the response by Arab governments to protests in their countries, Dr Fox said the best solution was political process, not repression.

"It is very clear that a younger generation wants to be able to enjoy freedoms that they see through TV and through the internet," he said. "And that process of change will ultimately be irresistible.

"Those who don't allow change to be a process will find it becomes an event. History should give us a very clear warning now."

In Bahrain in particular, "there needs to be an accommodation … that provides long-term stability that requires both sides to work together, so that the process of change is not hijacked by the more extreme views on both sides", Dr Fox said.

The British presence in the UAE has undergone what Guy Warrington, the British consul general in Dubai, recently called "a major strategic shift" in recent months.

"Our overall presence in the UAE is over 400 people working for the British government," Mr Warrington said. "That makes it one of the largest diplomatic operations in the world."

The UAE is the centre of the UK focus in the Gulf partly because of the large British population.

"This is the centre of our consular operation in the Gulf," Mr Warrington said. "That logic applies to other aspects of the embassy's business.

"We have our regional trade and investment hub here and a regional visa hub and regional training centre here. There's a business logic for that. It's also where the British companies choose to put their regional headquarters."

Regional unrest has played a part in this shift in focus.

"We've been given the additional resources already," Mr Warrington said. "The department has been massively reinforced because of what's been happening in the region."

There has been a renewed focus on soft power, especially after the global publicity garnered by the British royal wedding in April.

"We've got an extremely active British Council here," Mr Warrington said. "There are over 50 schools teaching the British syllabus. They're all taking British exams. There are more British universities than any other universities.

"There were more British acts, bands, theatre companies than any other country."

The new coalition government has been partly responsible for the shift, Mr Warrington said.

"We've had visits by the prime minister, visits by the Queen, the Duke of York, minister of defence - a string of ministers from DTI [the department of trade and industry], to DECC [department of energy and climate change].

"We've had a higher density of visits in that time than probably any time in UK-UAE history."

All that is buttressed by financial ties, including the Dubai ports company DP World's Dh9.6 billion investment in the London Gateway ports project.

"It's the largest foreign infrastructure investment that's ever been made in the UK and we are very grateful to DP World for funding it," Mr Warrington said.


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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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Other hobbies: football

Favorite football club: Al Ain Sports Club


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