RAMALLAH // The Palestinian Authority has officially asked Israel to consider altering a key agreement regulating the two sides' economic ties, as protests simmer across the West Bank because of living costs.
Mahmoud Abbas, the PA president, made the request to the Israeli defence ministry yesterday for discussions on amending the Paris Protocol of 1994, said Hussein Al Sheikh, the PA's civil affairs minister.
Appended to the Oslo I Peace Accord signed a year earlier, the agreement defines economic ties between Israel and Palestinians in the Gaza Strip and West Bank on issues of trade relations, fiscal matters, monetary arrangements and labour.
Palestinians resent it because of provisions that favour Israel, and Mr Sheikh, who delivered Mr Abbas's request, said the Palestinian leader wanted "the reopening of the Paris Protocol" because it was "not compatible with the current economic situation".
That was an allusion to the blowback from the PA's budgetary crisis, which has worsened recently because of undelivered aid money from foreign countries and a myriad of obstacles resulting from Israel's 45-year military occupation over the Palestinian territories.
In a spate of rallies across the West Bank, taxi drivers, civil servants and students have protested against the high cost of living and the non-payment of August salaries to the PA's 150,000 employees.
The governor of the West Bank's Tubas governorate was reportedly injured on Saturday night by a barrage of stones thrown by demonstrators who had blocked roads for hours using torched tyres.
Speaking at a press conference in Ramallah on Saturday, Mr Abbas defended his government amid sharpening criticism. PA officials, for their part, have said they are powerless to resolve the economic situation because of Israel's control over their economic policy - a grievance that leads directly back to the Paris Protocol.
PA ministers "follow my orders and I am committed to what their policy development and recommendations", Mr Abbas said.
Changes to the Paris Protocol could substantially improve the Palestinians' economic lot, Palestinian officials and economists say, citing what they decry as its many imbalances that favour Israel. The agreement was supposed to be a temporary solution until Israeli and Palestinian negotiators hammered out a final peace agreement.
But that has not happened and although the protocol has since granted the PA authority over income taxes, industrial policy and public-sector employment, it gives Israel near-total authority over external trade policy.
Israel, which controls all PA border crossings under the agreement, also collects and disburses tax revenues on imported goods to the PA. This allows Tel Aviv to withhold this money as a form of punishment, which it has done on numerous occasions.
Moreover, the agreement pegs Palestinian value-added tax (VAT) levels to Israel's. Partly because of Israel's higher per-capita income, its unilateral increases to this rate have led to painful spikes in prices for Palestinians, such as a recent Israeli hike from 16 to 17 per cent.
All of this had made Palestinians precariously reliant on Tel Aviv's economy and policy whims, said Nasser Abdulkarim, professor of financial economics at the West Bank's Birzeit University.
"The general Palestinian sentiment is that the agreement actually hurts them, makes them even more dependent on Israel's economy, strengthens the occupation and makes people here worse off," he said.
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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.”
How to keep control of your emotions
If your investment decisions are being dictated by emotions such as fear, greed, hope, frustration and boredom, it is time for a rethink, Chris Beauchamp, chief market analyst at online trading platform IG, says.
Greed
Greedy investors trade beyond their means, open more positions than usual or hold on to positions too long to chase an even greater gain. “All too often, they incur a heavy loss and may even wipe out the profit already made.
Tip: Ignore the short-term hype, noise and froth and invest for the long-term plan, based on sound fundamentals.
Fear
The risk of making a loss can cloud decision-making. “This can cause you to close out a position too early, or miss out on a profit by being too afraid to open a trade,” he says.
Tip: Start with a plan, and stick to it. For added security, consider placing stops to reduce any losses and limits to lock in profits.
Hope
While all traders need hope to start trading, excessive optimism can backfire. Too many traders hold on to a losing trade because they believe that it will reverse its trend and become profitable.
Tip: Set realistic goals. Be happy with what you have earned, rather than frustrated by what you could have earned.
Frustration
Traders can get annoyed when the markets have behaved in unexpected ways and generates losses or fails to deliver anticipated gains.
Tip: Accept in advance that asset price movements are completely unpredictable and you will suffer losses at some point. These can be managed, say, by attaching stops and limits to your trades.
Boredom
Too many investors buy and sell because they want something to do. They are trading as entertainment, rather than in the hope of making money. As well as making bad decisions, the extra dealing charges eat into returns.
Tip: Open an online demo account and get your thrills without risking real money.
Sole survivors
- Cecelia Crocker was on board Northwest Airlines Flight 255 in 1987 when it crashed in Detroit, killing 154 people, including her parents and brother. The plane had hit a light pole on take off
- George Lamson Jr, from Minnesota, was on a Galaxy Airlines flight that crashed in Reno in 1985, killing 68 people. His entire seat was launched out of the plane
- Bahia Bakari, then 12, survived when a Yemenia Airways flight crashed near the Comoros in 2009, killing 152. She was found clinging to wreckage after floating in the ocean for 13 hours.
- Jim Polehinke was the co-pilot and sole survivor of a 2006 Comair flight that crashed in Lexington, Kentucky, killing 49.
What can you do?
Document everything immediately; including dates, times, locations and witnesses
Seek professional advice from a legal expert
You can report an incident to HR or an immediate supervisor
You can use the Ministry of Human Resources and Emiratisation’s dedicated hotline
In criminal cases, you can contact the police for additional support
