A Yemeni tribesman from the Popular Resistance Committees, supporting forces loyal to Yemen's Saudi-backed President, manoeuvrers a gun mounted on a pick up truck during fighting against Shiite Huthi rebels and their allies on June 30, 2017 in the area of Sirwah, west of Marib city.
Six soldiers were killed in Yemen on June 29, a military source said, as government forces seek to cement their control over Marib province, east of the rebel-held capital. / AFP PHOTO / ABDULLAH AL-QADRY
A Yemeni tribesman from the Popular Resistance Committees, militias that support Yemen's internationally recognised government, manoeuvres a gun mounted on a pickup truck during fighting against HouthShow more

Al Qaeda exploits schisms and shortages to thrive in Yemen



Amid the chaos of the overlapping conflicts that constitute the current war in Yemen, the country’s local Al Qaeda affiliate has been a stubbornly resilient force.

As the violence in the country has continued along a number of axes - north against south; Houthi against government loyalists; Saudi Arabia versus Iran; Islah versus southern secessionists, among others - Al Qaeda in the Arabian Peninsula has been able to exploit the cleavages and remain potent. The threat continues despite success after military success by the UAE and the local allies it has trained and backed, as well as US drone strikes and raids.

In May, a year after a UAE-led offensive drove Al Qaeda fighters out of the port city of Mukalla - which they had controlled, looted and taxed for a year - the US director of national intelligence Dan Coats stated that the terrorist group has been able to preserve “the resources, manpower, safe havens, local influence, and operational capabilities to continue to pose a threat”.

The group has not only been able to survive but also expand, and in some cases increase its influence by positioning itself as a crucial ally to tribal and Islamist forces across a number of battle frontlines with Houthi rebels in Taez, Al Bayda and Marib governorates.

In the absence of a political resolution that addresses local grievances and builds and empowers a central state that can provide jobs and services, Al Qaeda has filled vacuums and its fighters have found a role, while a sectarian narrative that is promoted by the group has increasing traction.

“AQAP fights alongside and supports local militias against the Al Houthi-Saleh faction in order to insinuate itself into local populations,” a recent report by the Critical Threats Project stated.

The UAE and its southern allies fighting both the Houthis and Al Qaeda face a conundrum - prioritising counterterrorist operations against the extremists can have an adverse effect on the fight against Houthis and their allies because the militants provide experienced and fierce frontline fighters. This can also create anger among anti-Houthi forces, which Al Qaeda exploits to bolster its position and propagandise against the coalition.

In a recent propaganda interview, Al Qaeda in the Arabian Peninsula leader Qasim Al Raymi called for more attacks on UAE forces and their Yemeni allies.

The terrorist group and its Ansar Al Sharia offshoot continue to conduct frequent attacks against UAE-backed Hizam Amni forces as well as Al Nukhba Al Hadramiya forces in Hadramawt governorate, according to Anthony Biswell, a Yemen researcher at the Delma Institute in Abu Dhabi.

“It is [also] important to note that AQAP considers Abyan [governorate] critical because it serves as a buffer zone for its more robust safe havens in Shabwa,” he added.

As the group allies with anti-Houthi forces, Al Qaeda has also been tactically flexible and has continued to find ways to profit from the thriving war economy that is perhaps the one area of cooperation between adversaries, despite the group’s loss of territory along Yemen’s south-eastern coast.

“AQAP attaches greater importance to the self-preservation of its members and operational capabilities than it does to territorial control,” Mr Biswell said. “In 2016, AQAP arguably preferred to withdraw from Al Mansoura, Al Mukalla, and other territories it held in Lahj and Abyan provinces than enter into a direct confrontation with a superior force.”

But when Al Qaeda is able to find a territorial or operational foothold in war-torn areas, a key objective - as with Al Qaeda affiliates elsewhere in the region - is to provide basic services and aid, as they did in Mukalla, where food and water was distributed during a time of general scarcity. “The group’s populist engagement split public opinion just enough to allow them to continue governing,” Mr Biswell said.

The Central Bank of Yemen that the government of President Adbrabu Mansur Hadi moved to Aden is still unable to pay basic salaries to public-sector employees that are crucial for millions of Yemenis across the country, providing another fertile ground for the militant group to compete for legitimacy.

Close observers of Yemen, including Mr Biswell, have called for a parallel focus on the battle for hearts and minds as a necessary component of any strategy to defeat the group that is now enmeshed in the social fabric of many parts via the conflict.

“To increase the medium and long-term chances of successfully defeating AQAP, a broad counterterrorism must go beyond military power by supporting social welfare programmes and financial support networks that generate popular support,” he added.

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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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