High Representative of the European Union for Foreign Affairs and Security Policy Federica Mogherini in Vienna. EPA
High Representative of the European Union for Foreign Affairs and Security Policy Federica Mogherini in Vienna. EPA

EU backs Serbia-Kosovo land swap idea



The European Union’s top diplomat said on Friday the bloc would support redrawing Kosovo’s border if in conformity to international law, amid concerns from some countries at a summit in Vienna.

EU foreign policy chief Federica Mogherini, who has been brokering the negotiations between Belgrade and Pristina, told a press conference in the Austrian capital that she would support land swaps as long as they abide by international law and avoid attempts to create ethnically homogeneous states.

"Whatever outcome is mutually agreed will get our support provided it is in line with international law," she said.
German foreign minister Heiko Maas said discussions about territorial swaps could have wider repercussions for the Western Balkan region. 
"We believe that this can tear open too many wounds in the population and so we are very sceptical," Mr Maas said at the meeting.
Other EU foreign ministers expressed similar concerns. Luxembourg's Jean Asselborn said he feared "very negative consequences" and Finland's Timo Soini said it was risky. Britain has also warned that land swaps might have a destabilising effect. 
Serbia's deputy prime minister Ivica Dacic said he was seeking a peaceful solution with Pristina but did not elaborate on the details. 
The presidents of Serbia and Kosovo said last week that they intend to reach a historic settlement on long-standing border issues and called on the EU to provide support. 
Despite Mrs Mogherini's decisive statement, the representatives of the countries she represents – as well as analysts who monitored the region since it came apart with the wars of the 1990's – expressed worry at the outcome of the negotiations.

Ian Bond, director of foreign policy at the Centre for European Reform, equated the idea of border changes to "sticking a hand into a hornet's nest". 
"The question is whether you can contain territory swaps between Serbia and Kosovo and say this doesn't set a precedent for anyone else," Mr Bond told The National
Revising the border between the two countries could open a Pandora's box of border issues in the Balkans, including the borders of Macedonia, Bosnia and Herzegovina, as well as Russian ambitions to control South Ossetia in Georgia and other territories.

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The minorities living outside the areas destined for land swaps would also be further isolated and further exposed to negligence and potentially abuse on the part of the authorities, Bond added. 
The proposed border adjustments are part of a deal to secure Belgrade's recognition of Kosovo independence, which would pave the way for both countries' admission to the EU. 
"If Kosovo could reach a deal which involves full diplomatic recognition by Serbia, then it would be extremely hard for the rest of the world not to recognise Kosovo," the analyst said. 
Kosovo is currently recognised by more than 100 nations but not by Serbia, Russia and five EU states, including Spain. 
Following Britain's vote to leave the European Union, the bloc has been pushing for further expansion to the east, offering the six Western Balkans countries a path to EU membership.
While Mrs Mogherini's interest in ensuring that this happens is clear, Mr Bond said that "it is not clear who Mogherini is speaking on behalf of," given the foreign ministers' staunch opposition to further negotiations. 
Mrs Mogherini is expected to meet with Serbian and Kosovar representatives next week in a new round of talks.  
As of yet, "there aren't enough details yet on what this proposal entails," Leopold Trangott, policy analyst at the think tank Open Europe, told The National. Mr Trangott however said that drawing the line between what constitutes an unlawful attempt to create a homogeneous ethnic state and what is permissible is still not clear. 
"The question is whether we will even come that far and whether land swaps will actually happen," Mr Trangott said. "There is the possibility that this will happen… and the implication is that there will be new pressures in the Western Balkans [for similar changes]."

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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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