Democratic US Senate candidates from Georgia Rev Raphael Warnock and Jon Ossoff in Marietta and Atlanta, January 5, 2021. REUTERS
Democratic US Senate candidates from Georgia Rev Raphael Warnock and Jon Ossoff in Marietta and Atlanta, January 5, 2021. REUTERS
Democratic US Senate candidates from Georgia Rev Raphael Warnock and Jon Ossoff in Marietta and Atlanta, January 5, 2021. REUTERS
Democratic US Senate candidates from Georgia Rev Raphael Warnock and Jon Ossoff in Marietta and Atlanta, January 5, 2021. REUTERS

Democrats poised to control Senate, giving Joe Biden upper hand


Joyce Karam
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With Democrats on the brink of sweeping both seats in Georgia's special election on Wednesday, the blue party is effectively poised to control the Senate and the White House for the first time in a decade and will have the upper hand in shaping the legislative agenda.

Both Raphael Warnock and Jon Ossoff were pulling ahead in the final counts of Georgia’s special election, putting Democrats on the cusp of a Senate majority that they lost in 2014. The balance would mean a 50-50 split of senators for each party, with vice president-elect Kamala Harris becoming the tiebreaking vote for Democrats.

Democratic Senate leader Chuck Schumer is already celebrating his party’s majority in the chamber, which would make him majority leader and Mitch McConnell the minority leader for Republicans. “It feels like a brand-new day. For the first time in six years, Democrats will operate a majority in the United States Senate, and that will be very good for the American people,” Mr Schumer said in a statement.

But more specifically for US president-elect Joe Biden, the Georgia win will give him an edge in setting the first-term agenda and forming his Cabinet.

In a divided Washington, a 50-50 split is no mandate for Mr Biden and Ms Harris, but it is enough to have his Cabinet nominees confirmed and build a functioning coalition for the biggest legislative priorities.

Nominees for secretary of defence Lloyd Austin, director of the office of management and budget Neera Tanden and energy secretary Jennifer Granholm are now more likely to sail through Senate confirmation. Mr Biden has not yet named his attorney general, but he now has more leeway in naming someone that appeals to his base, such as former deputy attorney general Sally Yates or former chief judge Merrick Graland, instead of a centrist figure such as former senator Doug Jones. Other nominees such as Anthony Blinken for state, Janet Yellen for treasury and Avril Haines for director of national intelligence may still face tough questioning but will most likely be confirmed.

As the Senate control flips, so too would the chairing of committees. Prominent Senate Democrats such as Jack Reed, Amy Klobuchar, Elizabeth Warren or Bob Menendez could chair the armed services, senate rules, banking and housing and foreign relations committees.

But most critically for Democrats, the majorities in the House and the Senate will give them a path to set the legislative agenda while taking into account the policy differences and priorities in their diverse coalition. A 50-50 Senate formula will not be enough for Democrats to make wide-ranging shifts on climate change or health care, as the filibuster rule would require 60 votes. It is more likely, however, that the Democrats will be able to pass a coronavirus stimulus, protect the healthcare law signed by Barack Obama in 2010 and increase corporate taxes.

Mr Biden will have to take into account that moderate Democrats in the Senate, such as West Virginia’s Joe Manchin, could align themselves with moderate Republicans such as Mitt Romney and Lisa Murkowski, making it harder for big Democratic legislation to pass the chamber.

On foreign policy, a Democratic Congress grants the Biden administration more leverage in acquiring a foreign mandate to pressure international actors, shape outside military presence and introduce sanctions.

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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