Greek ditch widens divide with Turkey


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ISTANBUL // Turkey's government is concerned over a plan by neighbouring Greece to dig a giant trench along the joint land border. The project, which appears to be designed to ward off refugees and repel a possible Turkish military assault, could undermine efforts to normalise relations between the two countries, analysts say.

"We are following the recent developments in Greece about digging a ditch at the Turkish border with concern," Egemen Bagis, Turkey's minister for EU affairs, said earlier this month. "I hope our Greek friends are not after a foreign crisis to divert the attention from their domestic crisis," Mr Bagis added in reference to the financial turmoil in Greece, which is close to bankruptcy and has to rely on help from the European Union and the International Monetary Fund.

It was "surprising to see Greece spending funds in such a project at a time when it is muddling through a financial crisis", Mr Bagis said. "For a more effective solution, Greece should have chosen to increase its cooperation with Turkey against irregular migration rather than coming up with palliative solutions."

Greece is digging a 120-kilometre trench along its north-eastern border river Evros, or Meric in Turkish, to hold back recurring river floods but also to stem illegal immigration, the Athens daily Ta Nea reported. The ditch, which is being built by the military, is reported to be seven metres deep and 30 metres wide. About 14.5km had been dug as of early August. The online edition of the Greek newspaper Ekathimerini reported the trench was to be filled with water, adding that the project was treated as a "military operation".

Turkey is a transit country for refugees from Asia and Africa trying to get into the European Union. Close to 120,000 illegal migrants arrived in Greece last year, and the government in Athens has accused Turkey of not doing enough to stem the flow. Earlier this year, Greece announced plans to erect a 12.5km fence in the border area, but the project has yet to be launched. Greece has also called in Frontex, the EU border patrol agency, to help secure the land border.

A senior Turkish diplomat rejected the Greek charge that Turkey was not doing enough to keep refugees from crossing into the EU. "We have been preventing illegal immigrants in the Aegean as well as the land border," the diplomat said. "But I think Greek authorities have difficulties in their effort to that end."

The Turkish Hurriyet newspaper reported one of the functions of the ditch was to make it impossible for tanks to cross from Turkey into Greece. The government in Athens was planning to redeploy army units from the border region to islands in the Aegean once the trench was ready. While the land border between Turkey and Greece is undisputed, the two countries have been at odds over the exact definition of the border in the Aegean.

Mr Bagis said he was puzzled by the military aspect of the trench project. Turkey had proposed negotiations with a view to the disarmament of the Aegean region, the minister said. "Yet due to the harsh conditions of the financial crisis, our Greek counterparts seem to have forgotten our proposal."

Muzaffer Vatansever, an analyst at the International Strategic Research Organisation, or Usak, a think tank in Ankara, said there was a risk that Turkish-Greek relations could be affected by the trench.

When Greece announced its fence project in January, Ankara reacted angrily because the fence was seen as a symbolic wall of the EU, which Turkey wants to join. The trench could provoke similar feelings, Ms Vatansever said. "This project has the potential to rock relations."

Ties between the two neighbours and Nato members used to be strained by territorial claims, problems of the respective Greek and Turkish minorities and the Cyprus conflict. In 1996, Turkey and Greece came to the brink of war over a disputed island in the Aegean, but relations have improved markedly since the late 1990s. There have been several meetings between Recep Tayyip Erdogan and George Papandreou, the two prime ministers, who are reported to have developed a close personal relationship, and officials from both countries have been conducting discrete talks about ways to solve the Aegean dispute.

Ms Vatansever, the Usak analyst, said while Greece did have genuine concerns about the influx of refugees, it should have sought talks with Turkey instead of building a trench, which was unlikely to reduce the number of refugees anyway. "Greece should sit down with Turkey and say: How can we solve this?" she said.

Earlier this year, Turkey and the EU finalised a so-called re-admission agreement that would oblige Turkey to take back all refugees that have used its territory to enter the EU without the proper paperwork. The agreement would be an important step in reducing pressures on countries like Greece, but Turkey refuses to ratify the treaty because the EU has rejected Ankara's demand to talk about improved visa conditions for Turkish citizens travelling to Europe.

Ms Vatansever said misunderstandings between Turkey and Greece were part of the problem. Politicians and the public in Greece, a relatively small country of 11 million people compared to Turkey with more than 70 million, tended to regard events connected with Turkey "solely from a security point of view", she said. That perspective failed to realise that Turkey had changed its foreign policy outlook in regard to Greece to a more cooperative stance. "Greece is reading changes in Turkey the wrong way," Ms Vatansever said.

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A comparison of sending Dh20,000 from the UAE using two different routes at the same time - the first direct from a UAE bank to a bank in Germany, and the second from the same UAE bank via an online platform to Germany - found key differences in cost and speed. The transfers were both initiated on January 30.

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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.”