Armenia's move on Turkey could be cry for help


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YEREVAN // Armenia holds its 95th Genocide Remembrance Day today amid renewed tension with Turkey over Yerevan's decision to suspend the ratification of a peace accord between the two countries.

The decision, announced by the Armenian president Serzh Sarkisian on Thursday, has highlighted the potential of the strategic South Caucasus region to become a flashpoint for regional conflict. It may also be a cry for help from Armenia, the smallest country in the region, as it eyes with alarm a military build-up in neighbouring Azerbaijan, a close ally of Turkey. Landlocked Armenia is sandwiched between the two Turkic states, which have jointly blockaded their neighbour since 1993 over the disputed territory of Nagorno-Karabakh.

Last October, however, Turkey and Armenia signed protocols to establish diplomatic relations, shortly after Mr Sarkisian attended a football match in Turkey between the countries' national teams. The "normalisation" process was supposed to lead to the reopening of the Turkish-Armenian land border in a bid to overcome hostile relations dating back to 1915, when, according to Armenia, Ottoman Turks killed 1.5 million ethnic Armenians in a purge.

It is those Armenians who are being commemorated today. Armenia wants Turkey to recognise the killings as a genocide. Even before it was signed, the agreement ran into trouble when both sides raised last-minute objections. Of particular concern to Armenia was Turkey's insistence that Armenia and Azerbaijan should reach a deal over the thorny Nagorno-Karabakh issue before it would ratify the accord. Armenia maintains the Turkish stance was prompted by Azeri objections to the deal, which neither the Turkish nor the Armenian parliament has approved.

"We have decided ... not to exit the process for the time being, but rather, to suspend the procedure of ratifying the protocols. We believe this to be in the best interests of our nation," Mr Sarkisian said in Yerevan on Thursday, in an address to the nation. Both Mr Sarkisian and the Turkish prime minister, Recep Tayyip Erdogan, however, said they remained committed to ratifying the deal, prompting analysts to suggest Armenia was trying to increase international pressure on Turkey.

That was confirmed on Tuesday. "We are just going to suspend [the discussions] for a while to see what will be the reaction from Turkey," the Armenian deputy foreign minister, Arman Giragosian, told reporters visiting Yerevan from the UAE. "We are hoping that the US and European Union could play an important role for the process of ratification and implementation." Mr Giragosian, who was personally involved in negotiating the protocols, said he also wanted to see Armenia and Azerbaijan reach a peaceful settlement over Nagorno-Karabakh, but those talks should not be linked to the Armenia-Turkey peace process.

Separate discussions on Nagorno-Karabakh should be mediated by the Minsk group of the Organisation for Security and Co-operation in Europe, which was established for that purpose, he said. Mindful of Armenia's vulnerability as a smaller, poorer, less powerful nation than its neighbours, Mr Giragosian implied that his country depended on international support for security. For instance, Russian troops patrol the country's borders with Turkey and Iran.

Regarding the possibility of a flare-up of the previous armed conflict over Nagorno-Karabakh, which ended after a 1994 ceasefire agreement, he said Armenia had never recognised the territory as an independent state. Nagorno-Karabakh lies within Azerbaijan's post-Soviet borders but is populated mainly by ethnic Armenians. "I don't think the international community would allow the war to restart," Mr Giragosian added. "But we are ready to defend ourselves."

Why Armenia's problems with its Turkic neighbours matter to the US and Europe is that the state lies on the most direct route between Azerbaijan's Caspian oil and gasfields and Turkish export facilities at the Mediterranean port of Ceyhan. Shipping oil and gas westward through Armenia would not only be cheaper than via existing routes through Georgia, but also could eventually be more secure. In 2008, a short-lived war between Russia and Georgia disrupted exports of Caspian oil and gas. Relations between the two countries remain tense.

A nightmare regional scenario could involve the simultaneous flare-up of conflicts involving Georgia and Armenia. That is not something Armenian officials care to contemplate, which is partly why Mr Sarkisian faced down criticism from "diaspora" Armenians over failing to address the genocide issue in negotiations with Turkey. Armenians from the diaspora, mainly comprising the descendants of those who fled Ottoman Turkey, are a significant source of foreign direct investment in the Republic of Armenia.

Nevertheless, today's commemoration ceremony in Yerevan will resonate with diaspora Armenians in countries from which the republic is hoping for support. The timing of the Armenia's announcement is no accident. tcarlisle@thenational.ae

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Another way to earn air miles

In addition to the Emirates and Etihad programmes, there is the Air Miles Middle East card, which offers members the ability to choose any airline, has no black-out dates and no restrictions on seat availability. Air Miles is linked up to HSBC credit cards and can also be earned through retail partners such as Spinneys, Sharaf DG and The Toy Store.

An Emirates Dubai-London round-trip ticket costs 180,000 miles on the Air Miles website. But customers earn these ‘miles’ at a much faster rate than airline miles. Adidas offers two air miles per Dh1 spent. Air Miles has partnerships with websites as well, so booking.com and agoda.com offer three miles per Dh1 spent.

“If you use your HSBC credit card when shopping at our partners, you are able to earn Air Miles twice which will mean you can get that flight reward faster and for less spend,” says Paul Lacey, the managing director for Europe, Middle East and India for Aimia, which owns and operates Air Miles Middle East.

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.”

What are NFTs?

Are non-fungible tokens a currency, asset, or a licensing instrument? Arnab Das, global market strategist EMEA at Invesco, says they are mix of all of three.

You can buy, hold and use NFTs just like US dollars and Bitcoins. “They can appreciate in value and even produce cash flows.”

However, while money is fungible, NFTs are not. “One Bitcoin, dollar, euro or dirham is largely indistinguishable from the next. Nothing ties a dollar bill to a particular owner, for example. Nor does it tie you to to any goods, services or assets you bought with that currency. In contrast, NFTs confer specific ownership,” Mr Das says.

This makes NFTs closer to a piece of intellectual property such as a work of art or licence, as you can claim royalties or profit by exchanging it at a higher value later, Mr Das says. “They could provide a sustainable income stream.”

This income will depend on future demand and use, which makes NFTs difficult to value. “However, there is a credible use case for many forms of intellectual property, notably art, songs, videos,” Mr Das says.