Ban Ki-moon recommends end to Iraq sanctions

Most disputes related to 1990 invasion of Kuwait have been resolved, UN secretary general says.

Reuters

June 20, 2013

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UNITED NATIONS // The secretary general of the United Nations, Ban Ki-moon, yesterday recommended moving a step closer to ending all of the UN sanctions imposed on Iraq more than two decades ago after the country's former leader, Saddam Hussein, invaded Kuwait in 1990.

Despite the fall of Saddam in 2003 after an invasion led by the United States, the UN has not fully lifted the sanctions.

If the UN Security Council accepts Mr Ban's recommendation, it would be a significant political boost for Baghdad as it struggles to restore its international standing a decade after Saddam was removed.

Iraq is still subject to a UN arms embargo and asset freeze on individuals and entities linked to Saddam.

Mr Ban has recommended that the remaining humanitarian issue between Iraq and Kuwait - related to missing Kuwaiti citizens and property - be dealt with under Chapter 6 of the UN Charter, which urges countries to peacefully resolve any conflicts.

Up until now, the issue has been dealt with under Chapter 7 of the charter, which allows the Security Council to authorise actions ranging from sanctions to military intervention.

The Iraqi foreign minister, Hoshyar Zebari, has said that if the Security Council agrees to Mr Ban's recommendation, Iraq's only outstanding Chapter 7 obligation would be to pay the remaining US$11 billion (Dh40.4bn) it owes Kuwait in compensation. He added that Iraq could clear this debt by 2015 if payments continued at the current pace.

US-led troops drove Iraq out of Kuwait during the 1991 Gulf War.

For years, Kuwait opposed removal of Iraq from Chapter 7 due to unresolved disputes about the border, missing persons, property and other issues. But those have largely been resolved.

"The governments of Iraq and Kuwait have demonstrated statesmanship and respect for each other's national interests, in reaching a mutually acceptable and beneficial arrangement," Mr Ban said in a report to the Security Council.

"Should the Security Council agree with my recommendation, Iraq will exit Chapter 7 with regard to this file and will be one step closer to restoring its international standing ... an objective long sought by the leadership of the country following the removal of the regime of Saddam Hussein."

Mr Ban said the UN political mission in Iraq should be given responsibility for facilitating the search for missing Kuwaitis and nationals of other countries, or their remains, and property, including the country's national archives.

The Security Council is due to discuss the issue later this month.

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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