UAE Minister of State for Foreign Affairs, Dr Anwar Gargash speaks during a press conference at his office in Dubai  on June 24, 2017. Giuseppe Cacace / AFP
UAE Minister of State for Foreign Affairs, Dr Anwar Gargash speaks during a press conference at his office in Dubai on June 24, 2017. Giuseppe Cacace / AFP

Fears of long-term consequences from Qatar crisis



The impasse over Qatar's rejection of calls from its neighbours to stop incitement and support for extremists is hardening into a long-term division that will hurt the region, according to leading experts on Gulf politics.
Jane Kinninmont, deputy head of the Middle East and North Africa Programme at Chatham House in London, has warned that without a change of heart by Qatar the consequences of the boycott would be widely felt both in the economy of the Gulf, known in Arabic as Khaleej  Al Arabi, and in the politics of the wider Middle East. 
"UAE businesses can live without the Qatari market," Ms Kinninmont said, "but it's a blow to both businesses and families who have built transnational ties over the years, encouraged by promises of GCC integration and a growing sense of 'Khaleeji' identity. 
"[It] seems likely that the Gulf standoff will continue for the long term, and that even if it is resolved, bad blood will persist. This will make the rest of the region's conflicts more difficult to resolve, as Gulf states are influential in all of them and a divided Gulf will lead to further divisions elsewhere. 
"We've already seen Qatar-Saudi divisions play out within the Syrian opposition in the early days of the uprising there, weakening the opposition's cause," she continued.
Even the refining of The Quartet's initial 13 conditions into the set of six principles, has not seen the underlying causes of the crisis addressed. 
Statements on Wednesday by Dr Anwar Gargash, the UAE Minister of State for Foreign Affairs, has increased fear that the crisis will continue for some time.
Dr Gargash said that the quartet of nations, UAE, Saudi Arabia, Bahrain and Egypt, would  "have to go on without Qatar", signalling that the discord, which began last month, was no longer temporary and that looking beyond their neighbour state could become the new normal. 
"Now that [the] Qatar crisis has taken so long, important to look beyond 'crisis' & think of it as [a] new set of relations in [the] Gulf replacing old ones," Dr Gargash said in a series of tweets.
According to Ms Kinninmont: "Both sides of the Gulf dispute are sending the message that they can wait this out. Qatar hasn't caved under economic pressure, and meanwhile the UAE is signalling that it is committed to its strategy for the long term.
"Barring Qatar's review of past policies, [the] current state will continue for a while. New regional relationship will emerge & strengthen." 
The crisis has placed "a question mark over the future of the GCC, even though the UAE and KSA are keen to imply that the GCC could forge ahead without Qatar; even if they succeed in expelling Qatar," she said. 
Alison Woods, Gulf analyst for Control Risks, a global risk consultancy, told The National that what "we have seen over the last two weeks is that there has unwillingness on either side to back down", so Dr Gargash's remarks and his "frankness" were not surprising to close observers of the crisis.
While the strong message from Dr Gargash has set a new tone for the crisis, Ms Wood notes that there are continuing efforts from both within and outside the region to bring about a resolution or to at least set a framework for serious negotiations based on a change in Qatar's policies. 
"Conversations about compromise will have been taking place through back-channel negotiations," Ms Wood said.
Sources added that state leaders and people in positions of succession have remained resolute over the dispute.
"Dr Gargash's tweets suggest that the quartet is attempting to strike a balance between maintaining the pressure on Qatar and watering down any hopes for successful mediation of the crisis, while not escalating further in the absence of international support for formal new measures against Qatar," said Kristian Ulrichsen, a fellow at Rice University's Baker Institute and the author of The United Arab Emirates: Power, Politics and Policymaking.

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Started: 2018
Founder: Siddiq Farid and Musfique Ahmed
Based: Dubai
Sector: FinTech / PropTech
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Current number of staff: 35
Investment stage: Series A
Investors: Various institutional investors and notable angel investors (500 MENA, Shurooq, Mada, Seedstar, Tricap)

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Founders: Mohammad Raafi Hossain, Daniel Ahmed
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Started: June 2022
Founder: Mohammed Alnamara
Based: Dubai
Sector: Microfinance
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Investment stage: Series A
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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.

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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.

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“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.

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“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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UAE currency: the story behind the money in your pockets
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Number of employees: 8
Industry: Sustainability & Environment
Funding: $200,000 plus undisclosed grant
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