The Munich Security Conference report praised French President Emmanuel Macron for seeking a united approach to tackling crises on Europe's doorstep. AP
The Munich Security Conference report praised French President Emmanuel Macron for seeking a united approach to tackling crises on Europe's doorstep. AP
The Munich Security Conference report praised French President Emmanuel Macron for seeking a united approach to tackling crises on Europe's doorstep. AP
The Munich Security Conference report praised French President Emmanuel Macron for seeking a united approach to tackling crises on Europe's doorstep. AP

European powers 'no more than bystanders' to crises in their neighbourhood


Thomas Harding
  • English
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Europeans have become "no more than bystanders" while serious crises have occurred on their doorstep, according to a major security report published on Wednesday.

From "the Maghreb to the Caucasus" the continent has failed to address important security issues to protect its own vital interests, the Munich Security Conference paper claimed.

The annual Munich Security Conference hosts world leaders for intensive debate on security challenges, in the world's largest gathering of its kind.

Its paper highlighted Libya, where powers from the Middle East, Russia and Turkey had intervened in an area that borders Europe, yet there was no united strategy from the EU.

“EU members cannot insulate themselves from the disarray in their neighbourhood,” the paper said.

Meanwhile, the continent is suffering major effects from Libya's turmoil, through refugees and the threat from terrorist groups like ISIS.

Libya’s turmoil also means that illicit networks are allowed to operate in North Africa, creating “a booming market for human smuggling and trafficking towards Europe”.

Similarly, the country’s oil supplies are now insecure.

But, the report said, some Europeans still regard North African countries as places that could "one day become important partners for efforts to diversify EU members' supply chains".

“The EU has shown a limited ability to assume a more proactive role and effectively protect its own vital interests, with Europeans being no more than bystanders in some of the gravest crises in their neighbourhood,” it said.

The report criticised the West for continuing "to exhibit a lack of joint action on crucial global issues".

While US President Joe Biden had declared that “America is back”, European leaders are failing to mention that they were willing to take on more responsibility, it claimed.

“Critics are irritated by a general lack of European proposals to tackle the items on a long transatlantic to-do list.

“Some already fear that Europe is missing another opportunity to resurrect the West. America is back, but where is Europe?”

With America providing the backbone of Nato, the continent remained "unable to provide for its own security for many years to come", it said.

This comes at a time when Washington is more focused on the Pacific and the threat of China.

The report recommended that the continent learns from East Asian countries that have increased co-operation to counter growing Chinese influence.

There was criticism of European hesitancy in dealing with the "autocratic assertiveness" of China and Russia.

While the Munich Security Index – an appendix to the main report on global risk – said that both countries pose a "major risk" to security, many European countries are wary of opposing them, economically or militarily.

With the climate crisis and arms race both spiralling out of control, there is now an urgency to get “at least a minimum level of global co-operation” to combat them, the report said.

It praised French President Emmanuel Macron for being among the few European leaders arguing for greater participation, quoting his remark that “we need more of Europe to deal with our neighbourhood”.

The report suggested that Europe should reach out to "like-minded partners across the globe", co-operating with a broader range of countries through either formal institutions or flexible frameworks.

There is also a need to get support for a “globally orientated but value-based multilateralism”.

It added that competition must not preclude co-operation, as “none of the major challenges for humanity can be met successfully by mere coalitions of the willing”.

The Covid-19 pandemic has also made it “painfully clear” how co-operation is hampered by geopolitical rivalries, the report said.

It further argued that broad-based collaboration is required to mitigate global warming. “To this end, the international community must urgently step up collective efforts to move away from carbon-intensive pathways.”

The authors suggested that if the climate approach was managed properly it could inspire “a race to the top” that would spur green investments and boost bold climate action.

“Competition and co-operation do not only coexist, they condition each other,” the report concluded.

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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