British Council to spend Dh160m to eliminate 'widening gap of trust'


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Against the backdrop of a high-profile clash with Iran, a UK institution is making a push to extend its influence in the Middle East. The British Council works to develop cultural relations and educational opportunities and intends to spend about £30 million (Dh160m) over the next three years in a bid to bridge a "widening gap of trust" in the Middle East, with a large priority in Iraq.

Patrick Brazier knows the council has some work to do. As the Middle East regional director of the council, he acknowledges relationships in the Middle East, have been, at times, difficult. "There is a deficit of trust and a particular need to build relationships," he said, just weeks after the council publicly withdrew from Iran and at a time when his government is engaged with its allies in two wars in the region.

The council halted operations in Tehran after the Iranian government claimed its staff had been intimidated. The chief executive, Martin Davidson, said the withdrawal was the culmination of two years of pressure from the authorities. The closing is the second incident between a traditional British foe and the council, which has faced criticism at home and abroad. In 2007, it was accused by the Russian authorities of operating illegally and violating tax regulations in that country.

Now, the council, which operates in 110 countries, is rolling out programmes in the Middle East after last year announcing plans to cut its presence in Europe in favour of increasing its focus in the Arab and Muslim world. Mr Davidson said it was time to tackle the "new challenges the world faces" by forging new relationships in the region that would help contribute to Britain's long-term security and prosperity.

Mr Brazier said in an interview that the push into the region aimed to build cultural connections as well as help British residents around the world better understand the areas where they live. But he acknowledged it is not always going to be easy. The council staff are facing specific challenges, such as operating in Baghdad. "The security environment is incredibly difficult and it creates a very tough operating environment."

The council has previously borne the brunt of anger in the region towards Britain. In March 2006, its offices in Ramallah and the Gaza Strip were attacked after the withdrawal of UK prison inspectors from a Jericho jail. However, of a recent trip to the Iraqi capital, Mr Brazier said he saw a "significant appetite" from residents to improve their situation. The council has teamed up with Nouri al Maliki's government to run new education initiatives.

The council plans to roll out a raft of initiatives in the Middle East, including teaching English, vocational education, leadership training, performing arts and a self-development programme for women. Mr Brazier accepts the council gets caught up in wider political disputes and its withdrawal from Iran is an example of it being attacked because of its association to the British government. "The council is being targeted because it comes from Britain and many in the Iranian regime are suspicious of Britain," said Sir Richard Dalton, a former British ambassador to Iran and now an analyst at Chatham House, a British think tank. "They have become very suspicious and hostile."

Mr Dalton added, however, that he believed the incident in Iran was isolated and would not affect the council's Middle East move. The council, which celebrates its 75th anniversary this year, was founded after the government became concerned about the need to promote "Britishness" abroad to counter Nazi propaganda. Its modern mission is to create "better informed, more inclusive societies", but it is not without its UK critics.

A British government report in December said senior officials failed to listen to concerns from its 7,300-strong workforce and morale in the organisation was low. David Blackie, who has worked on contract for the council providing educational services, said because it worked simultaneously as an arm of the government, a charity and also provided revenue-earning services that compete with local companies, it sometimes caused confusion about its role in a country.

Mr Blackie, who writes a blog dedicated to the council, said historically it had been well received, but could face challenges in the Middle East. "Britain has not earned a lot of friends in the Arab world with its bellicose arrangements with America. The British Council has been targeted by the foreign office to put a band aid over political ill feeling in the Arab world in particular." Last year, the government's committee on public accounts questioned the council's bosses, with one Labour MP, Austin Mitchell, asking if its premises in Russia were used for spying.

Mr Davidson denied the accusation and said the council was often vilified because they offered access to the outside world in countries that did not always welcome that stance. Mr Brazier is also quick to laugh over the suggestion of espionage. The spying rumours were a topic of amusement at the council, he said. "If there has been any spying no-one told me about it." bslabbert@thenational.ae

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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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