Is the Brotherhood pushing the self-destruct button?


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Not long ago the Muslim Brotherhood was the most dynamic opposition force in Egypt. Now, excluded from any meaningful political participation and riven by internal conflict, it is practically indistinguishable from the country's other opposition parties. How has this come about? Elections for the movement's leadership - the 16-member Guidance Office and the position of General Guide - have demonstrated the extent of the Brotherhood's troubles. The results illustrate the profound impact of Egypt's closed political environment, deepening internal division and further entrenching the movement's conservative leadership.

Since its strong showing in the 2005 parliamentary elections, in which it won 20 per cent representation in the People's Assembly - the lower chamber of parliament - the Muslim Brotherhood has been subjected to sustained repression by the Mubarak regime. In an attempt to limit the Brotherhood's political influence, the government has systematically detained its members, condemned the movement's leaders and those who fund it to long periods of imprisonment imposed by military tribunals, and manipulated electoral procedures and election results.

The government has also introduced several constitutional and legal changes, which it admits are aimed at shrinking the space available for the Brotherhood's participation in politics. Most significantly, religious parties and political activities were banned by a 2007 constitutional amendment, and constitutional articles were changed to pave the way for a party-based electoral system. The consequences of these changes have been severe for the Brotherhood; as a movement banned by law, it must either field election candidates as individuals, or join forces with an existing legal party.

The first major outcome of all this has been a gradual closing off of the formal political sphere for the Muslim Brotherhood. In spite of its significant representation in the People's Assembly and the solid appearance of its parliamentary bloc, the Brotherhood has become an isolated movement with little influence on Egyptian politics. In fact, almost no one in the Brotherhood's leadership expects it to secure more than five per cent representation in the new People's Assembly that will be elected in the autumn.

The second major outcome has been a growing recognition by many in the Brotherhood's leadership that the movement is under siege and will remain so indefinitely. The dominant view has come to be that the Brotherhood's priority should therefore be to sustain the movement's organisational solidarity in the face of regime repression, rather than invest effort in futile political participation. In other words, the closed environment in which the Brotherhood has been operating since 2005 offers no incentive for political participation, prompting the movement to turn inward.

Under these conditions, it comes as no surprise that the Brotherhood's internal dynamics have been shaped by diverging positions on the strategic value of political participation. The inclusionist wing of the Brotherhood's leadership, which advocates participation, has inevitably lost support and organisational power over the past few years, while the isolationists have grown more influential and now represent a secure majority.

The results of the internal elections last month reflected this changing balance of power. An influential moderate, and arguably the Brotherhood's most outspoken defender of political participation, Abdul Munim Abul Futtuh, lost his position in the Guidance Office to opponents whose priority is the movement's social and proselytising efforts. In addition, Muhammad Habib, the former Vice General Guide with a reputation for building consensus between inclusionists and isolationists, failed to keep his seat in the Guidance Office. Among the four newly elected members to the Office, only Issam al Iryan can be identified as an advocate for participation. And very few of the Office's re-elected members, including the head of the Brotherhood's parliamentary bloc, Muhammad Saad al Katani, can be considered pro-participation.

Finally, the newly elected General Guide, Muhammad Badi, is known for his interest in the movement's internal solidarity and its activities in the social and religious spheres. His position on political participation has yet to be clarified. The Egyptian people have been stunned by the Brotherhood's public display of internal rifts, a division played out mostly in the media. The Brotherhood is no longer the secretive movement it once was, revealing little of its internal affairs to outsiders. Recently, figures such as Muhammad Habib have accused other leaders of manipulating the electoral process for the Guidance Office. Indeed, several voices in the inclusionist group have openly discussed the possibility of the Brotherhood's break-up.

The Brotherhood's collapse from being Egypt's most viable opposition force into a bickering rabble is being viewed with barely concealed pleasure by the Cairo regime, which is intent on keeping the country's political scene on lock-down and punishing the Brotherhood for any attempt at genuine participation. Amr Hamzawy is a senior associate at the Carnegie Middle East Centre in Beirut

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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