The UAE and Israel are poised to play the role of “regional influencers” across the spheres of economy and security, and even on the challenges posed by Iran-sponsored terrorism, according to leading think tank directors.
The signing of the Abraham Accords has been received as an act of “political courage and imagination”, a webinar heard. The accord also had the considerable economic potential for the wider Middle East, especially after Sudan, Oman and Morocco signed up.
“It's helping to set a new tone,” said John Raine, of the International Institute for Strategic Studies. “I think that Israel and its new partners have it within their powers to make each other both more secure and richer.”
With America pivoting towards the Indo-Pacific region there was also a possibility that the accords could make the two countries the “powerbrokers” in normalising regional politics.
“They could potentially be regional influencers in the Middle East in trying to powerbroker a number of regional conflicts [and] manage transnational threats from Islamic groups or non-state actors sponsored by Iran,” said Dr Sanam Vakil of Chatham House, the London-based think tank.
The Abraham Accords, signed six months ago, was arguably the most significant foreign policy achievement of the Trump administration leading to the normalisation of relations between Israel, the UAE and Bahrain.
“It has changed something which 10 or certainly 20 years ago looked as though it could never be changed,” said Mr Raine, a former British diplomat. "Let's not forget the potential financial and commercial relationships. We cannot but wish them well."
He considered that the military and economic power of Israel and the UAE could give the region confidence to have “strategic autonomy” following an American drawdown.
That would provide a strong alliance to act as a buffer against Iran’s ambitions, particularly as the Israelis viewed Tehran’s nuclear ambitions as the “principal threat” to regional stability.
“I think there is an understanding that everybody needs to live with each other whether they like it or not because, otherwise, they will get weaker and specifically under a Biden administration, there is maybe not the security umbrella anymore,” said Sebastian Sons of the Centre for Applied Research in Partnership with the Orient.
The Centre for Geopolitics webinar also heard from Ms Vakil, a Middle East specialist, on the potential trade benefits. “What we're seeing in terms of trade and tourism, between the UAE and Israel in particular, that will spread beyond those two countries into others around the region.”
There was also a chance they could de-escalate tensions around the broader Middle East with moderation from Turkey and the Biden administration bringing calm. “There is a huge agenda for normalisation,” said Ms Vakil with Washington “shepherding the de-escalation” of the Yemen conflict and renegotiating a robust nuclear deal with Iran.
She also suggested that there had been a “generational shift” leading to a more “pragmatic, transactional national interest”.
“I see the UAE, in particular, taking the lead in this process,” she said. “It has a very robust and activist foreign policy and it sees itself as a role model for the broader Middle East.”
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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.”
Groom and Two Brides
Director: Elie Semaan
Starring: Abdullah Boushehri, Laila Abdallah, Lulwa Almulla
Rating: 3/5
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Islamophobia definition
A widely accepted definition was made by the All Party Parliamentary Group on British Muslims in 2019: “Islamophobia is rooted in racism and is a type of racism that targets expressions of Muslimness or perceived Muslimness.” It further defines it as “inciting hatred or violence against Muslims”.
Stage result
1. Jasper Philipsen (Bel) Alpecin-Fenix 4:42:34
2. Sam Bennett (Irl) Bora-Hansgrohe
3. Elia Viviani (Ita) Ineos Grenadiers
4. Dylan Groenewegen (Ned) BikeExchange-Jayco
5. Emils Liepins (Lat) Trek-Segafredo
6. Arnaud Demare (Fra) Groupama-FDJ
7. Max Kanter (Ger) Movistar Team
8. Olav Kooij (Ned) Jumbo-Visma
9. Tom Devriendt (Bel) Intermarché-Wanty-Gobert Matériaux
10. Pascal Ackermann (Ger) UAE Team Emirate
The bio
Favourite book: The Alchemist by Paulo Coelho
Favourite travel destination: Maldives and south of France
Favourite pastime: Family and friends, meditation, discovering new cuisines
Favourite Movie: Joker (2019). I didn’t like it while I was watching it but then afterwards I loved it. I loved the psychology behind it.
Favourite Author: My father for sure
Favourite Artist: Damien Hurst
Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory